What Small Business Owners Should Know Before Investing in Operational Software

Thinking about buying ERP software for your business?

You're not alone. Thousands of small business owners make this decision every year. And for good reason - the right operational software can revolutionize your business.

But here's the problem:

The majority of small business owners know NOTHING about what they're getting into. They watch a flashy demo, sign on the dotted line, and are then slapped with unexpected charges that wreak havoc on their budget. The reality is that the cost of an ERP goes FAR beyond the initial price tag…particularly when you consider ERP integration cost.

Learn everything you should know BEFORE you spend your first dollar.

Let's jump in!

Here's what you'll uncover:

• Why ERP Integration Cost Matters So Much
• What Actually Drives The Real Cost Of ERP
• Common Mistakes Small Business Owners Make
• How To Budget Smartly For Operational Software

Why ERP Integration Cost Matters So Much

Let's start with the elephant in the room.

For most small business owners considering ERP software, the monthly subscription fee is top of mind. However, that price tag represents only a fraction of the overall story. In reality, the cost to integrate an ERP system often becomes your largest investment.

Why? Because your ERP must integrate with every other application you already have. Which means:

• Your accounting software
• Your ecommerce platform
• Your CRM
• Your inventory tools
• Your payroll system

Every one of these connections has a cost associated with it. And the costs are significant. Each ERP integration costs on average from $3,000 to $15,000 depending on its complexity. Take that times 5 or 6 tools and you will begin to see how ERP integration costs can spiral out of control.

As you budget for ERP integration cost, the price of the software itself is just the tip of the iceberg. Take this Microsoft business central pricing overview for instance. It provides a good baseline for the underlying software cost. Then factor in the cost to integrate it on top….that's where all the nasty surprises lurk.

Here's the kicker:

According to studies, 55% go over budget on their ERP project. Integration is one of the leading causes.

What Actually Drives The Real Cost Of ERP

So what actually pushes your total ERP bill up?

Here's the honest breakdown.

The Number Of Integrations

The more tools you have already integrated, the more costly your project will be. If you own a small business with 3 integrations, you will pay significantly less than one with 10 integrations. Before purchasing anything, write down every tool your team utilizes daily. You'll have a much better idea of what your costs truly are.

The Level Of Customisation

Off-the-shelf ERP is cheap.

Custom ERP is not.

Heavy customization can increase your base license price by 50% to 200%. The more you customize, the higher the cost. The guideline here is simple. Use standard functionality as much as possible. If your processes are really unique, that's okay. Just know what you are getting into.

Training & Change Management

Your team needs to actually use the thing you just bought.

Training is mandatory. It's also not free. Either pay for it upfront or you'll pay for it downstream in the form of low adoption/wasted spend.

Data Migration

There is a cost to extract all your data out of your legacy system and load it into your new ERP. Many business owners overlook this. Ask your vendor for an estimate early.

Common Mistakes Small Business Owners Make

There are common errors people make again and again. Avoid these and you'll save yourself a lot of headache (and money).

Mistake #1: Considering only sticker price. The monthly license fee is only part of the equation. Add costs for integration, training, data migration and customisation to arrive at true total cost.

Mistake #2: Purchasing excess software. You do not need every module available from day one. Get what you need, then add more modules as your business grows. This will not only keep your ERP integration cost lower but will allow time to fully adopt your current modules.

Mistake #3: Failing to compare vendors. Obtain estimates from at least 3-5 vendors. Compare 5 year total cost including monthly fees.

Mistake #4: You don't have an adoption plan. Industry statistics show that approximately 68% of ERP projects fail to achieve project goals. Why do so many ERP projects fail? People, not technology, are the leading cause. Ensure you have a plan to train and onboard your team.

How To Budget Smartly For Operational Software

Ready for the good news?

ERP Doesn't Have To Cost A Fortune. Follow These Steps to Do it Right.

Start With A Real Number

The average small business will invest $3,000 to $25,000 their first year on cloud based ERP. That's your baseline. Now tack on:

• Integration fees (roughly $3,000 – $15,000 per tool)
• Training (never skip this line item)
• Data migration (varies wildly – always get quotes)

Put those three numbers on top of your year 1 software costs and you have a realistic budget.

Go Cloud First

Cloud ERP costs less upfront and gets you to ROI faster than on-premise systems.

It's the smart play for most small businesses. No servers to deal with. No maintenance. Less upfront cost.

Prioritise Your Integrations

Not every tool needs to talk to your ERP.

Really.

Begin with integrations that will benefit you the most time-wise. Your accounting software, ecommerce platform, and CRM typically rank highest. Everything else can wait until later.

Plan For Adoption

The coolest ERP in the world is worthless if nobody is utilizing it. Budget for training from the start of your project. Have someone on your team advocating for the rollout. Touch base with your users monthly for at least year.

Final Thoughts

Enterprise resource planning software is typically the largest technology purchase a small business will ever undertake.

Do it right and your data improves, decisions are quicker and customers love you. Do it wrong and you're throwing money at a system that no one uses. Literally. Black and white.

ERP integration costs should be thoroughly planned out prior to signing on the dotted line. Tally up the actual costs. Evaluate vendors thoroughly. Implement on a small scale then ramp up.

To quickly recap:

• Look past the sticker price to see the real ERP integration cost
• Get quotes from 3 to 5 vendors
• Start with only the essential integrations
• Budget for training and data migration upfront
• Pick cloud over on-premise for faster ROI

Do that and your ERP will pay for itself many times over.