Once top two partners are selected from the Evaluation Phase, please request for proposal which includes the following points for 3-year Comparison:  

• ERP Software Licensing Fees 

Cost of the software which is typically user-based licenses. Plan and optimize the user licenses based on processes. There are two ready-to-purchase options for ERP – On-Premises & Cloud Model. On-premises is more of CAPEX model as there are up-front investments needed for infrastructure whereas Cloud is more of OPEX model as the infrastructure will be provided by software provider/vendor.  

• Annual Maintenance Cost of Software 

The market rates for On-Premises AMC model are typically around 17% to 22% of the software pricing. This will be a recurring cost for ERP on annual basis and helps you stay updated with current localization requirements. In-case of Cloud Model, the AMC is included in the monthly subscription fees.  

• Infrastructure Cost (Hardware & Internal Network Requirements) 

On-Premises: There are many components to the infrastructure such as server, operating system for server, database licenses, upgrade of existing PC/Printers, LAN, security etc. to accommodate the change in ERP software.  

Cloud: This is not appliable for cloud model as the subscription pricing covers the infrastructure requirements of business.  

• Partner Implementation Cost (Inclusions & Exclusions) 

The standard implementation cost should include phased approach of blueprint, design, develop, user testing, user training & deployment. Ensure that the customization requirements for your business process are also covered in the implementation along with scope agreed for initial phase of Go-Live. An understanding of project exclusions such as travel cost, accommodation, advanced integrations, etc. will be helpful to plan budget.  

• Recurring Partner Support Cost  

This is an on-going cost for the partner to help in managing the implemented                      software for your organization. This can either be ticket based or time-based approach to support your users.  

Summarizing the above for ease of understanding:  

Component Cost	On-Premises Model	Cloud Model
License Cost	One-Time	Recurring Subscription on Yearly/Monthly Basis
License AMC	Recurring Yearly	Included in Subscription
Infrastructure	One-Time	Included in Subscription
Implementation Cost	One-Time	One-Time
Partner Support	Recurring	Recurring

Note: However, there are often unforeseen expenditure during implementation so having around 10% contingency budget will be a prudent decision.  

PAYMENTS: 

1. Payments should be made as per project milestones for ensuring project on-track to Go-Live 
2. The software licenses are usually paid upfront to the software seller including AMC 

ROI Calculation: Give-Away 

DOs: 

1. Have clear understanding of component cost while analysing the budget 
2. Get a 3-year estimate for both on-premises and cloud models for comparison  
3. Allocate a budget for future enhancements after Go-Live  
4. Do your research and confirm there are no hidden costs in the proposal  
5. Speak to minimum of 3 references during this phase 
6. In addition to the Product/Partner Questionnaire (Research Phase), also ask for commitment given by vendors in alignment with their estimated budgets 

DONTs: 

1. Do not PROTOTYPE as this will not work for ERP implementations. If you have doubts, skip the product/vendor. As they say often, “If you don’t risk anything, you risk even more” 
2. Do not negotiate hard as this creates friction and risks transparency from the partner before the project is initiated  
3. Do not compare two implementation service quotes based on pricing only, take into consideration the reference feedback, expertise, quality of consultants etc.