How real is your TCO?

Avi Troub | Nov 5, 2017
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Let’s talk TCO. That’s Total Cost of Ownership and so that we’re absolutely clear, it’s the “TCO of your current ERP implementation project” that we want to address. We want to help you define and recognize your organization’s real, or actual TCO and in the process, reveal some of the not-so-small hidden costs that often go unnoticed or worse, mysteriously become invisible whenever someone is trying to sell you an ERP system.

As a long time ERP software vendor, we’ve accumulated a lot of project planning know-how and skills. But when it comes to ERP project assessment, pricing and scheduling, many other factors come into play before you can even begin to rack up expenses.

What is TCO?
TCO is a financial estimate intended to help buyers and owners determine the direct and indirect costs of a product or system. To help our customers realize and maintain low TCO, Priority recommends a checklist of the 3 key expenses for ERP projects:

  1. Internal resources (IT, manpower, operational costs, admin costs)
  2. External services (consultancy firms, freelance consultants)
  3. Software (licenses, upgrades, maintenance)

The true total cost of the ERP system’s deployment, however, is usually unclear during the evaluation process, because these expenditures are not readily apparent until they come up over the lifecycle of the project. Some (but not all) of these “unexpected” or “hidden” costs can include:

  • Data conversion and improvement (both from existing systems and ongoing)
  • Add-ons (external components), private customizations, satellite utilities (websites, BI, BPM, document management, email, etc.), their interfaces to the main ERP application and their migration through ERP upgrades (service packs and advanced versions)
  • Identity management and security enforcement

How to achieve low TCO
All of these hidden costs require careful analysis and time to learn. Here are some of the major factors that can determine the TCO of your ERP solution, helping you to ensure the highest value for your money. The challenge is to select an ERP solution that not only meets your business needs, but one that can help you tackle and ultimately, minimize these hidden costs:

  • Check your IT expenses! One of the larger hidden costs is the expense of your IT staff and internal resources. Your IT team is the cornerstone of your ERP system and the applications that work with it. You want an ERP system that can seamlessly integrate with as many applications as possible, reduce the costs of maintaining a large IT team and the time and resources required to handle numerous and often, costly applications.
  • Installation time. ERP system installation can take months. This is dependent on several factors on the vendor side, such as skilled project analysis and a highly competent project team. On the customer side, your IT staff, in close cooperation with your management team (e.g. CIO, CDO, etc.), needs to be on board 100% long before installation begins. As a team, you and your vendor need to have a clear understanding of installation costs and timeframe.
  • Implementation. You want quick system implementation, as it will unquestionably lower your TCO, saving on project time and costly resources. Implementation costs largely depend on the scope and core functionality of your ERP system and just how well it’s adopted by your employees. You want a system that ranks high in flexibility and ease of use with tools such as user-level configuration utilities for data migration, interactive training tools incorporated into the system and easy-to-understand documentation and Help tools.
  • Software costs. Today, ERP vendors offer a myriad of pricing plans and options, from on-premise to cloud or a combination. If your organization is primed and ready for cloud-based ERP, you will benefit from market-proven, lower TCO due to a low-cost fee per user, per month. Cloud-based ERP helps save on the cost of servers, operating systems, middleware, databases, system maintenance and security.

The Priority Advantage: Flexibility and highest value for money
To deliver solutions that offer the best value to our customers, Priority’s flexibility, combined with a unique commercial and operational model, offers the most cost-effective ERP solution on the market today. This results in a TCO that is up to 70% lower than enterprise ERP giants. As an indication of the tremendous value we deliver to our customers, we have more than 97% annual renewal rates.

How do we do it?
We Make ERP Easier. We work hard to help customers recognize and reduce hidden costs in their ERP system implementation and deployment. Priority brings an innovative alternative to the weighty, cumbersome ERP systems offered by traditional vendors. We deliver lower-risk solutions that are built to support system openness, interoperability and flexibility to optimize our customers’ business performance and agility.

We are strongly committed to enhancing the user experience and in doing so, develop ERP solutions that are exceptionally easy to implement, easy to use and learn. The bottom line? To save you costly IT, operational and administrative time. We offer a range of customization tools to enhance and develop the product over time, to get your organization up and running faster. These tools provide quick and easy system integration, implementation and enhancements to become competitive and cost-effective and include a built-in Business Process Management (BPM), Mobile App Generator, REST APIs and more.

Market recognition
PAC, one of Europe’s leading independent software and IT services research and consulting firms, elaborates on Priority’s key advantages, stating, “Priority emerges as new challenger in the global ERP software market, ranking high in flexibility, functionality and performs well in a competitive bid on price. Success is attributed to their international business growing rapidly (30%+ in 2015), particularly in the UK.”

Customers talk
It’s Priority customers who benefit from our commitment to their achieving the best value for money. Erez Adam, CIO at Neopharm, a global marketing and distribution solutions provider for healthcare and life sciences, comments, “In just 9 months, we implemented Priority for 250 users at all 5 company sites. Overall project costs ended up 20% lower than competitive offers.”

Graham Walls, Finance Director at Inspiration Healthcare, (LON: IHC), a global supplier of medical technology for critical care and operating theatres, says, “Priority proved to be the most comprehensive system out there. TCO was 50% lower than the next competitor and that was including implementation.”

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