The role of the CFO is in a constant state of change. Once the “chief numbers person” and “head of the ‘no’ department,” today’s Chief Financial Officer has new roles, new responsibilities, and new opportunities.
Following our last blog on the signs that CFOs may see that their company’s ERP solution is faltering or failing, and blogs on ERP implementation successes and failures (building an internal team, knowing your path), we would today like to turn our attention to two inherently linked considerations and what they mean to you.
The Modern CFO’s Path to Success with ERP
An Enterprise Resource Planning (ERP) application is an investment—expected to last 7-10 years or even more, require a significant amount of time and resources to get up and running, and help employees complete some of the most business-critical tasks that go into running an organization.
Added to this, the path to purchase is often filled with pitfalls and challenges, politics and posturing. As the executive who holds the purse strings, understanding not only how much a solution costs but how much value it provides to your company is a necessity.
Whether you are leading the charge to new Cloud ERP or are providing the assistance and support needed as a C-Suite executive sponsor, understanding the decisions ahead of you is part of your path to success.
Understanding the Other Side of the Coin: Deployment Models
This said, while you have a clear understanding of the monetary side of the equation, the deployment discussion may feel like a foreign language. It’s likely been more than five years since your last ERP project, and you may have not even considered the cloud at the time—especially if it has been more than a decade since your last project.
Pricing and deployment are inherently linked, and as you forge toward a decision, you will need to plan for both and understand how the two fit together in calculating TCO, ROI, and other metrics critical to your ERP decision. For more information on the different types of deployment models for ERP, click here.
How the Cloud Has Changed ERP Pricing
The cloud has changed the way businesses operate and has changed the way applications are priced as well. More and more companies are choosing cloud ERP solutions and electing to go with a software as a service (SaaS) license. This means that the vendor will host the software and your employees will access it online.
SaaS vs. On-Premises Pricing
With cloud ERP pricing, you typically don’t buy the software licenses or hardware — you pay a subscription fee that scales up or down based on your number of users. This works out cheaper up front than buying a perpetual license for the software along with the hardware you’ll install it on.
Compared to an on-premises deployment, which features higher up-front costs and ongoing support fees of 16 to 20 percent of the current list price of the software, cloud costs are baked into the monthly or annual pricing for license, hardware costs, and IT expenses (for data backup, security, and so on).
Multiple Types of Cloud Pricing
While there is a major difference between cloud pricing and on-premises pricing, there are also two methods of cloud pricing—per-user and resource-based.
The Per-User Problem
In addition to the cost of the software itself, most ERP vendors will charge a fee for every user of the system. Software vendors usually charge more for users that require access to the system as part of their work compared to “light” users, who only require occasional access for minor tasks, such as price look ups or to enter time and expenses.
This is an extensively vendor-friendly pricing model, in which everyone is treated the same no matter how they use a product.
Resource-Based Pricing: The Fair Alternative
Rather than the traditional per-user model, there is an alternative: Consumption based/resource-based pricing. One of the many things that makes Acumatica unique, businesses are charged based on the resources your company requires for the transactions you anticipate. And you can always increase or decrease these resources when necessary.
Offering a much more flexible pricing built to handle the changing needs of your business, you start with what you need now to handle the transaction volumes you expect and adjust resource levels and data storage as your business grows, to maintain the correct service levels as you add users and increase transactions. The Acumatica pricing model comes in incremental tiers and can be adjusted as needed.
Learn more by watching the video below or visit: Acumatica Pricing.
Go Modern, Go Milestone
Embracing your role as a modern CFO is your call to take your business into the future, embracing a new mentality that leverages technology to facilitate growth and operate more efficiently. Whether you are just beginning your journey to new technology or have begun evaluating your options, we would love to help.
At Milestone Information Solutions, we have helped companies just like yours to leverage the right ERP technology for their business for over two decades, and as a leader in the ERP implementation field, we understand exactly what it means to drive a business further. We invite you to download the Modern CFO ERP Buyer’s Guide, read our case studies and success stories, and contact us for a free consultation.