Cost of ERP software

Below article explains the typical cost of ERP software

ERP software provider from ERP software solution for manufacturing in Malaysia SAP , Peoplesoft , Oracle..... Navision, Skala....... Globalsoft, Karensoft...... When talking about ERP software, most Malaysian with some ERP knowledge will come across the above ERP provider. The first 3 company, we normally position them as "tier 1", then the next 2 is "tier 2" and the last 2 is "tier 3" ( of course there are many providers in market for tier 1, 2 and 3, the above named companies are just an example) What does it mean ? well , tier 1 , 2 and 3 is the service scope and different market segmentation they serve. For "tier 1" provider, they normally target on Multi Nationals Corporation (MNC) with the budget of millions dollars, and "tier 2" provider target on listed companies and large organization with the budget of less than a million, and "tier 3" provider target on Small and Medium Industries (SMI, mostly manufacuturers) with the budget of less than RM 200,000. (USD 55,555.00) Does it mean that SMI can only find "tier 3" for their ERP solution ? Wrong. If you aware of the trends in Business and I.T, This rule has been changed because some big players like SAP also starting to tap in to SMI market and introduce the ERP solution that less than RM 200,000. (USD 55,555.00) This could be a good news to SMI because with that budget they can buy a stable, proven and reputable ERP software. Then, what happen to "tier 2 " and "tier 3" providers ? I am regret to know some tier 2 providers are still unaware of the business trends, they are still concern on finding big corporation with the budget of RM 300,000 to RM 800,000. When I was talking to such providers, they normally say " SMI ? They got budget or not ? If got more that RM 300,000 (USD 83,333.00)then could be considered........" They don't know the other side is saying : " Tier 2 provider? They can lower the price or not ? If they can lower the price to below RM 200,000, (USD 55,555.00) then I will be glad to find one" - from the SMI Obviously, closing a deal with the budget of RM 300,000 to RM 800,000 is much more profitable compare to closing a deal with the budget of RM 200,000. (USD 55,555.00) Most Tier 2 providers will give many reasons why they do not go to below RM 200,000 ...... For example, company image, less profit, high overhead etc..... then , consider what SAP does, is SAP so stupid to sell its light version of ERP for less than RM 150, 000 (USD 41,660.00)? If the answer is Yes, then why SAP is still the Top ERP provider in the world and capture the most market share ? If the answer is No, then who is stupid ? The "tier 2 provider ?" We are always talking about "long-term business partnership". It sounds good. But when it come to practice, many tier 2 providers just concern on short term profit, and ignore long term benefits. Just imagine, these SMI will keep growing, one day, they may become MNC and listed companies as well, if you are smart enough, target to the right SMI with the potential to grow big , lower the ERP software price for them to use, when they grow, they will ask for more from your ERP software - and eventually, throughout the period, your ERP software price selling to those SMI will sure exceed RM 300,000 and above. and one more important reward - they trust you. For tier 3 provider, they are targeting on SMI with the budget lower than RM 200,000 - sometimes could be RM 100,000 (USD 27,777) . Anywhere , with that price, the SMI also cannot expect too much on features or customization, and could be some bugs in that system. Finding a good tier 3 provider could be a challenge, especially, if you come across the ERP failure under the SMIDEC e-manufacturing grant (now has been changed to loan) , you will know what I mean. However, there are still many good tier 3 ERP provider in the market, the only thing is the SMI need to be careful on selecting the right ERP provider. If you want to know how to wisely select ERP provider, then send me an email. see my article of how to select ERP software solution for manufacturing article.