Comparing Enterprise Resource Planning (ERP) software vendors can be a difficult process, but with due diligence and knowing what to look for, you can arrive at an informed decision. Starting with functionality, industry expertise, and the ability to manage your processes – there are a lot of factors to consider when comparing different vendors. Especially those in the same vertical that provide much of the same functionality. Once you’ve been able to narrow down your list of vendors based on functionality, and you start to receive formal quotes or proposals, several other areas of comparison can help you make the best decision.
Differences in Software Costs
First and foremost, make sure that you’re comparing apples to apples.
Are the numbers you are looking at directly comparable? Vendors differ in the way they price their products, so the first thing to do is reduce the pricing into comparable costs. If you notice that one vendor is significantly more costly or less expensive than the others, consider the reality that it might be in a different category of software and therefore not truly a fit for your needs. If you’re looking at comparable systems (especially in the ERP space), there shouldn’t be a significant difference in price quotes. However, if you’re trying to compare an introductory accounting solution such as QuickBooks, with an all-in-one ERP solution, you will notice significant price differences (and significant differences in the functionality available).
Differences Due to Discounts
Some software vendors will provide deep discounts within the first year of service to help make the sale, and then increase those prices in the following years. Pay attention when reviewing any “discounts” provided by the vendor. How long do these discounts last? How often does the software vendor increase its prices? Many vendors will provide discounts to close the sale and then increase those prices significantly starting the next year. These price increases can hurt even more when they come from vendors who charge monthly software fees, that are paid upfront or annually. Even if the vendor bases the price on a monthly fee, make sure to check if these costs are truly charged monthly, or upfront every year.
Differences in Implementation Costs
When you’re reviewing the fine print details on each quote, one of the easiest mistakes to make is to miss the details regarding the implementation and services involved.
Most vendors these days are upfront and honest in estimating these costs, but there are a few software vendors who tend to lowball these costs to a customer - in the old "bait and switch" approach. If some vendors seem to have a much lower cost for implementation than others, this raises an obvious question: why the difference? If one vendor specifies service costs of $2,000 and the other $20,000, there is likely a big difference in the scope of the services being offered.
Perhaps you plan on manually keying in data from your old system to your new one. This is a common thought but in practice is rarely feasible except in the case of a startup business. Even if some data has to be entered manually, you still need to consider such data migration issues as sales history, order history, opening balances at go-live, and other accounting history.
Ask for a detailed description of the type of data migration included in each quote/proposal you have received. Some vendors, as a default, include no allocation for data migration costs. While other vendors will help you scrub your data, restructure it according to your desires and perform the entire import for you. And then there are many somewhere in between.
Differences in Training Costs
Differences in training offered are often as big as those in data migration. If not detailed specifically, training often merely includes training resources (such as videos) with no live training. Implementing an ERP system without proper person-to-person training is generally not a good option, so you will end up opting for proper training which may double a quote that didn’t include it from the start.
As you can see, there can be a significant difference between the costs and services provided by different ERP software vendors. And frequently, these differences are not so obvious but rather hidden in the fine print of software vendor quotes and proposals. If you don’t remember to ask some of these questions during the sales process, make sure to at least read through the fine print before you make a decision.