Which is Sweden’s most expensive ERP system?
11 Mar 21
Is it possible to ask that question? Yes, you can, but the answer is somewhat divided and would result in something with the classic consulting cliché “It depends on”. Based on experience and insight into +500 selection- and implementation assignment regarding ERP systems over a 25-year period, we can easily state that an ERP system can unfortunately cost extremely much.
As an advisor, you are often both surprised and frightened by the cost that many of the implementation projects result in. And even more surprised that customers accept these costs. At the same time, it is difficult to draw a similarity between a high investment and a high operating cost being the same as an expensive system. The expectation is, of course, that a new ERP system will contribute with business values and where potential benefits should be set in relation to the cost of the system’s implementation costs and its operating costs. And you can in the same way turn the question around to “what does it mean if we do NOT implement a new ERP system”. Postponing the necessary investment also has a price, and in a time with high speed of busines changes, this price can be very high.
When performing an analysis of the cost of an ERP system, you must first clarify which cost components should be included in the valuation. Although the license prices between different two systems may seem relatively similar, it can differ greatly in other costs such as implementation, operation, support, upgrades and not least the customer’s internal costs for governance. This is also the reason why there are many arguments both for and against the statement that cloud-based ERP systems are more expensive compared to locally installed ERP systems. One can thus base the calculations on completely different bases and land in completely different conclusions.
So, what does an ERP system cost then? The very short answer is SEK 7,037 per employee and year. However, this should not be confused with “per user” but literally “per employee”. The significantly longer answer that requires both basic data and explanations is that we have made a summary from +200 selections and implementations that have been carried out in Sweden, Denmark and Norway in recent years. And with a mix of both cloud-based ERP systems and locally installed (so-called Onpremise). Our data is based on facts where we have produced key figures both regarding the customer’s sales and the customer’s number of employees.
The ERP systems which today show the highest cost in terms of total operating costs over 5 years (in relation to the customer’s total sales) are SAP S/4HANA, Microsoft Dynamics F&O and Microsoft Dynamics BC. And the Business Systems that show the lowest cost with the same key figures are Xledger, Sage X3, Pyramid and Jeeves. If we instead use the KPI of total cost in relation to the total number of employees, SAP Business One and Sage X3 end up at the top with Unit4 and Xledger as the lowest. The conclusion is that it is important to understand the basics and KPI´s before comparing the ERP systems to avoid drawing wrong conclusions.
It is also important to distinguish between the cost of implementation and the cost of operation, including subscription of licenses, operation, support and maintenance, which can give different results when comparing ERP systems from different vendors.
More facts about the cost of ERP systems are available in our recently published analysis “The Cost of a new ERP system”. The report can be downloaded free of charge below.