If you don’t know what the hidden costs of ERP manufacturing software modules can be, then you could be in for a painfully abrupt wake-up call when you look at the final bill. Let’s take an example from our friends in the automotive industry:
That new car you saw advertised on TV with a great low price of only $13,999. We all know there is no way that you could possibly leave the dealership and only spend $13,999 on the car you want. That price is for the baseline model, which only really includes some doors, a gas tank, and a few tires for your troubles. If you actually want the car with things like air-conditioning, windshield wipers, seat belts, automatic transmission, cup holders, etc. it will actually cost something like $22,999 – a more than 60% price increase from what you were originally quoted!
In the same way, don’t be fooled by the low sticker price of *most* ERP manufacturing software vendors. This price is often for the “baseline” model that will not completely suit the needs of your business, and force you to pay for “upgrades” to get the features and functionality that you actually need and want.
Independent ERP expert witness, Panorama Consulting, recently conducted a survey and determined that the average ERP manufacturing software user license only comes with 70-80% of the functionality that users need. This means that right off the bat, there’s a 20-30% functionality gap that you will need to account for.
This gap will be sold piecemeal in the form of modules, add-ons, and “upgrades”, and it might not be just a 20-30% increase in total license cost either, but the tip of the proverbial iceberg. Sometimes you have to purchase another ERP manufacturing software upgrade package for $20K-$50K to even be able to purchase the modules that you need; and at prices of $1000 per module, this can add up very quickly!
Now imagine that you need to add on another 4-5 modules per license to get all the functionality that you need for your business. You can see how this can go beyond the 60% price hike that car dealerships make you pay for the features that you want.
The sad part is that unlike the car dealer where you leave the lot knowing what you’ve paid for, you won’t know if you have all the add-ons and modules that you need until after you have purchased your ERP software, implemented it, and are using it day to day.
At this point, if you call up your ERP vendor wondering where the other half of your software went, you will be told that you need to spend an additional 60% of your total license fees to receive all the functionality that you need. Ouch. Looks like we found the rest of our iceberg!
But now it’s too late. You’re stuck. You’ve already spent thousands of dollars and hundreds of man hours only to find out that you will need to spend even more money and man hours on features you thought you already paid for.
Don’t fall victim to this age old trick of bait and switch. If you are in the middle of an ERP manufacturing software evaluation, look for a software vendor like Jobscope that includes every module past, present, and future with every software license purchased. No tricks, no games, no fine print, and most importantly, no surprises!