Software
Software
What is the cost of the software? What
is the cost of adding 1 more user in 1 month,
in 2 years? How often does the vendor increase
prices? Will the vendor
freeze prices for the first 12 to 24 months
after your company purchases the software?
Optional Modules
Many vendors offer optional modules that
extend the functionality of the base software
package. You need to identify the optional
modules that you will need to run your business
and then identify the modules that can help
you improve your operations.
Tip: Do not buy optional
modules that you will not use for 12 to
18 months after implementation. Get the
core software system up and going and then
add optional modules when your people are
ready for it.
Custom Modifications (Keep it simple)
The less program modifications you make
the better. Your implementation will go
faster, your costs will be less, and technical
support will be easier.
If you do need some software modifications,
then identify the modifications and agree
to a fixed price and development timetable
prior to purchasing the software package.
Tip: Find out how much
custom modifications generally cost before
buying a software package.
Implementation
Who will implement the software? Will it
be done by your own staff or will it be
done by outside consultants.
For publishers that need the assistance
of outside consultants the implementation
cost should average between 50% and 100%
of the software's cost.
Tip: Ask for a fixed price
contract when hiring a consultant.
Training
We find that the best way to introduce
a new system is to have a few employees
trained in the software, and then let these
employees train other employees.
Hardware
File Server
All software packages require a dedicated
file server for proper operation. This may
be an Intel file server, a Linux server,
or an IBM iSeries server.
Tip: We recommend buying
a new server in conjunction with the launch
of a new ERP system. You want to purchase
the most powerful system that you can afford.
Database Engine
Some software packages require the purchase
of a database engine, such as Oracle (about
$50,000) or SQL Server (about $5000).
Workstations
Can your current workstations be used?
Do they need to be upgraded with more RAM?
Do you need to purchase new workstations?
Tip: Major hardware vendors
such as Dell, HP, and IBM will often offer
discounts for major purchases if you ask for
it. Typically the discounts range from 5%
to 10% off the list price, and vendors may
match the price of comparable, but lower priced
hardware. Example, we have found that Dell
will match the price of Compaq file servers.
Maintenance
Technical Support
Most vendors offer clients a technical
support contract that offer a limited amount
of free technical support. Support beyond
this limit is billable based on time.
Also, many vendors offer a period of free
technical support following the installation
of the software.
Tip: In the purchase agreement
ask your vendor to extend the period of
free technical support.
Tip: Have one or two employees
become the in-house software experts to
minimize your technical support costs.
Software Upgrades
Their are two methods used for software
upgrades.
Method 1, the client receives all interim
releases free of charge and major upgrades
are billable to the client. These major
upgrades are usually billed at 25% to 50%
of the cost of the original purchase price.
Method 2, the client's technical support
contract includes all software upgrades
that are released during the term of the
contract, including major and minor releases.
Staffing
Some systems may require a dedicated IT
staff for proper operations. This includes
the non ASP versions of SAP and Vista.
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