How Much Is Software Implementation?
It is one of the most common questions asked at the start of the search and select process. And quite rightly so.
People need to know the cost in order to know whether the project is even distinctly possible.
The question is more pertinent if you have never been involved in a software implementation project before. Software isn’t one of those regular purchases, like a stationary order or a utility change. Most companies will only implement new software on a handful of occasions. How could you possibly know the answer to this question, without context or prior experience?
Before answering the main question, it’s probably worthwhile dealing with that other issue you need to contend with:
Why do I need to pay for software implementation?
Isn’t it possible to self-implement?
Although, you really need to understand what you were doing in order for it to be completely successful.
Nobody knows your business like you do. When it comes to defining your business processes and best practice you will likely have a good idea of what you want your software to achieve for you.
That’s not to say you wouldn’t necessarily benefit from an outside perspective. Your software partners will bring a different point of view to the table. One which has been honed over multiple implementations across multiple businesses and potentially multiple sectors. There is benefit in that alone.
Nobody knows the software better than your implementation partner. They will be able to steer your businesses processes to match the software capability. They will help you to customise and adapt the software to your business. They will understand all the navigation paths to take to change fields, and they will customise all your documentation and forms.
Of course, you could learn it yourself, but you would likely disappear down some dark alleys trying to figure out, even something relatively simple.
You are paying for their expertise. Expertise which has been honed over years of implementation practice. That expertise will save you time, and therefore money. And their expertise will give your project the best chance of success. This is not a cynical ploy to get you to part with your money. A Software Consultancy exists almost exclusively to service this market space. They hire people and grow on the revenue generated from sharing this knowledge with you. It’s as legitimate a way to survive as any services business.
Of course, you can learn it yourself. But that doesn’t mean it is money for old rope.
After all, I know plenty of people who like to “tinker” with car engines. After years of playing about with motors in their driveway, they probably know more than most, but I still wouldn’t take my car to them to get the brakes fixed.
[Find out more about Software Implementation here]
So… How much is software implementation?
Let’s keep the car analogy going for a short while longer.
Nobody could give you an accurate answer to the question: “How much does it cost to buy a car?”
There are too many variables. You will need to refine your question based on multiple scenarios to come up with the correct ball park figure.
Is the car second hand or new?
If the former, how old is it? How many miles on the clock? What’s its general condition? Is it MOT’d?
What make is the car?
What features does it have?
Are you paying cash or credit?
You get the picture.
The same is true of software costs. The price of implementation will depend upon a number of factors:
- What type of software are you implementing?
- Are you using standard functionality or is it going to be highly customised?
- Are there any integration points required?
- Are you adding modules?
- Do you have a large number of departments/users?
- Do you have tightly defined business processes?
Only when you know and understand these points will you be able to get a true cost of software implementation.
[Read about How Much is ERP here]
General Rule of Thumb
That said, there is a general rule of thumb.
Just like a new car might cost an average of £25-28k, software implementation has a typical value too.
You will likely find that implementation of cloud based software will circa double your costs in year one.
That is a 50:50 ratio of software costs to implementation costs.
So if you are paying for £10k of annual software licenses you might find your implementation to be circa £10k or thereabout.
The variances come into play when you need something non-standard – like an integration, which might add £3-5k onto your bill (depending on complexity). Or maybe your solution is multi-company, where you need multiple charts of accounts and additional finance set ups. Or most commonly, you might have added some modules to your configuration which makes the scope wider than standard ERP.
By way of exmpale, you may have added some kind of advanced inventory module to your standard ERP. This would give you the ability to track stock or manage serialised products, or use barcoding and scanning, or setting up matrix items. Each of these are distinct activities which need set up in the system accordingly. The more additional functionality you require, the higher the implementation costs.
If you have a more complex requirement, with multiple non-standard functions, the ratio might be 40:60 or 30:70 software to implementation.
To find out how much software implementation is, you will have to pick your “make and model” and get a cost for the software you want to drive. You can probably work out much of the rest from there.
Written by Emma Stewart – Sales & Marketing Director at Cofficient
We provision smart cloud based business software, to smart, growing businesses.
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