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Answering “How much does an ERP system cost?” is as easy as answering “How much does a car cost?” Everyone understands that there is only one answer: it depends. In both cases, many factors affect the total and prices vary enormously—from one extreme to another, or, in this context, from SAP to the forest.
About 55 highly diverse ERP systems are available in Poland, produced by Polish companies and global corporations. They can be segmented by industry, functional specialization, company size, and licensing method. Their total value is the sum of a long series of module, service, license, and consulting-labor prices. It is therefore worth asking:
What is included in the cost of ERP implementation?
Like every IT solution, ERP requires a hardware-infrastructure layer. It may already exist and work well, require modernization, or need to be built from scratch. Relevant purchase and launch costs include:
- network infrastructure—routers, switches, fiber-optic connections, etc.,
- servers and server licenses: physical machines with suitable operating systems,
- storage for business data and backups,
- peripherals such as printers, scanners, code readers, sensors, and servomechanisms,
- database licenses and necessary utility software.
Once an ERP system and implementation provider have been selected, the owner must also budget for:
- the ERP license itself, unless the system is used in the cloud,
- service, update, and modification agreements, which determine TCO (Total Cost of Ownership),
- analysis and implementation work, usually billed in labor hours,
- functional modifications adapting ERP to the company,
- the internal implementation team’s work,
- user training,
- unexpected failures and downtime after production launch.
Because total ERP implementation cost is relatively high, the agreement defines the scope, hardware investments, hourly rates, team sizes, and schedule in detail. Each has a price, yet projects still often exceed both budget and timeline.
Several early purchasing decisions determine the proportions between component prices:
- What will the system architecture be?
- Will it run in the cloud, on-premise in the company’s Data Center, or in a hybrid configuration?
- Will the ERP license be perpetual, fixed-term, named-user, or annual?
- Do fees cover the complete solution, or are modules priced and licensed separately?
- What does implementation work include?
The final price also depends greatly on whether the company buys an off-the-shelf solution or builds one from scratch for its exact needs. Bespoke development is increasingly rare because broad configuration options and industry best-practice libraries make it possible to find a ready solution requiring far less modification expenditure than new code.
Learn more about Mindbox solutions: ERP implementation, customization, and maintenance
ERP system price versus functionality
Comparing ERP functionality with estimated implementation costs reveals strong proportionality, although exceptions occur. A unique, essential function may require an additional module and deep system modifications, raising the total price by ten or several dozen percent. Full computerization of every process is not always worthwhile, but spreadsheets cannot replace ERP functions.
Simple ERP systems for small companies cost tens of thousands of zlotys. For somewhat larger single-site trading, distribution, or service companies, prices range from tens of thousands to over PLN 100,000. Manufacturing processes and extensive logistics require hundreds of thousands. For geographically distributed businesses with complex processes and distribution networks, spending starts at about half a million zlotys. There is no clear upper limit: failed and abandoned projects have consumed around EUR 500 million.
In every case, moving more processes into the new system costs more. Using best practices and adapting operations to available functionality is one way to reduce ERP implementation costs.
ERP systems and subscription and licensing models
Buying an ERP license may seem simplest, but typical agreements contain burdensome restrictions. Five-year licenses are common, after which the vendor may terminate the agreement; renewal can cost more than ten percent of a new license. A perpetual license costs more, and not everyone wants to pay for something whose usefulness in five or ten years is uncertain.
These restrictions led to subscription models with annual or monthly fees. In Poland, about 30% of SMEs and about 50% of large companies use this ERP licensing method[iv].
Looking more deeply at IT infrastructure suggests focusing on the business and leaving the rest to external providers. ERP can be used as SaaS (Software as a Service): the computing-platform provider owns it, and the company pays monthly or annually for application use. Hardware purchase, configuration, and maintenance costs disappear; the provider maintains and modernizes the application, stores data, and secures the platform. This is attractive, given that 63% of companies[v] prefer cloud solutions to on-premise ones.
The cost of ERP security
Business data is priceless. 98% of surveyed IT professionals identified data security as the most important ERP selection criterion[vi]. ERP data can be protected procedurally—for example through password policies, restrictions on mobile logins over unsecured networks, and encrypted communication—and through hardware for backup and Disaster Recovery. Hardware has the greatest effect on implementation cost, whether a tape drive or a modern Flash array. Scalability, high availability, safeguards, and capacity requirements may make this cost substantially exceed ERP implementation itself.
How much does ERP maintenance cost?
Experts estimate annual ERP maintenance at several to more than ten percent of the license price. These necessary expenses cover new-version installation and access to new functions, adaptation to changing legal requirements, and failure support. Without these three pillars, proper ERP operation is impossible. A provider’s credibility matters so that it does not disappear after several years, leaving nobody to update procedures such as tax settlement.
ROI on an ERP investment
Calculating ERP implementation costs is relatively simple; verifying financial results is much harder. ROI (Return on Investment) is difficult because there is no uniform methodology, and benefits vary widely by functionality in both tangible and intangible areas.
Generally, the same economic indicators from historical periods should be compared with those during ERP operation, providing an incomplete but useful picture. The largest benefits usually arise in logistics and warehousing through lower inventory. Lower machine-operation and labor costs also matter, along with improved production organization and equipment utilization. These directly affect profit and loss and release cash that can be attributed to annual savings using the organization’s standard internal rate of return. Every company must calculate its ERP ROI individually according to its operations.
Example ERP implementation and maintenance prices
ERP implementation contracts are trade secrets. The same system may have very different prices depending on modifications, users, and selected modules, so reliable examples are scarce and of limited value. Nevertheless, the Navireo warehouse module for SMEs costs PLN 800 net, sales PLN 1,900, and HR and payroll PLN 5,900. All modules total PLN 30,400. For larger companies these prices can be multiplied by ten, and for the largest by one hundred. SAP charges roughly PLN 14,000 for a full single-user license, while an implementation consultant costs EUR 700 per day. Costs may be substantial, but gains and benefits are many times greater.
Bibliography:
[i] https://www.raport-erp.pl/
[ii] https://gsd.pl/blog/ile_kosztuje_system_erp
[iii] https://blog.symfonia.pl/finanse-i-ksiegowosc/planowanie-biznesowe/oprogramowanie-firmowe-w-subskrypcji-czy-jest-sie-czego-bac/
[iv] https://cdn2.hubspot.net/hubfs/4439340/Panorama-Consulting-Group-The-2020-ERP-Report.pdf
[v] https://www.erp-view.pl/erp/15165-o-wyborze-erp-decyduje-bezpieczenstwo-rodzaj-bazy-danych-nie-ma-znaczenia.html
