Can SMEs Afford SAP?

AffordSAP

This post was previously published on 29 August 2014. For more up to date information on the PIC scheme and other budget initiatives, please refer to our most recent blog post on Singapore Budget updates, with the latest available information from IRAS. For the full details, visit the IRAS PIC site.

Last week, we posted about how some companies become paralysed by a fear of change and how they need to embrace, rather than fear it in order to grow and succeed. But for some companies, the fear of change might be focussed solely on the financial side of their business.

Leaders know that they want to upgrade their systems in order to go for bigger deals, but they are worried about the cost of such technology, especially as they won’t get a guarantee that this will help them to grow or make them more profitable. Short-term cash flow is also a major concern for many growing organisations that simply do not have the funds available to make large-scale investments.

So in this post, we dispel some of the myths around how much an SAP Business One implementation costs, in the hope that this element of fear can be eradicated for SMEs wanting to grow, but worrying about the cost of such growth.

At Blue Ocean Systems, we hear from a lot (if not all) potential clients that they are initially discouraged from exploring SAP Business One because they think it will be too expensive for them, and that because they are still such a small company, they won’t get the full benefits. And we always have the same reply…

SAP Business One is a solution specifically designed and priced for the SME market.

As a competitively priced out-of-the-box solution, it remains affordable for SMEs, while being a complete and robust system that is synonymous with the SAP brand.

A typical SAP Business One investment has four different components:

1. Systems Infrastructure

What’s needed in order to install and access SAP Business One in my office?

a) A server for SAP Business One and workstations (clients) for the SAP Business One users to access the system.

b) The SAP Business One server can be located on-premise, co-located at a data centre or deployed in the Cloud. [Read more here]

c) It is assumed that a Local Area Network (LAN) with adequate bandwidth is available. In addition, a static IP address to set up remote access to the SAP Business One server via the Internet is also required.

d) Systems software and specific components for systems security, backup, etc. are also required.

When Blue Ocean Systems starts to engage a new client, we will go through a survey to understand your existing systems infrastructure. We’ll help you to assess what can be reused and we will also suggest what needs to be acquired (if anything). Learn more about how we help to make implementations more successful here.

Investment: For systems infrastructure, the investment is generally a one-time purchase, depending on what the client already has. Additional investments may be required if the SAP Business One user base grows in numbers.

2. Licences

How many licences are included in SAP Business One?

a) SAP Business One licences for up to 5 users can be purchased under the Starter Pack edition. From the 6th user onwards, the regular edition of SAP Business One will apply.

b) There are two types of SAP Business One licences for each named user: Professional and Limited (with variations for Finance, CRM & Logistics users).

c) Professional licences have access to all SAP Business One functions. Specific access can be restricted by user authorisations. This access is designed for senior management who need to have access to various business information (ERP) functions (transaction and reporting).

d) Limited licences have limited functionality that matches the operational roles within an SME. They generally cost about half of the Professional licence.

Blue Ocean Systems works with our customers to minimise SAP Business One licence costs, by recommending only the purchase of licences required for specific role types.

Investment: The investment depends on the number of licences required within the SME. Additional costs are incurred as the user base grows and more licences are needed.

3. Services

What other services do I need to pay for with SAP Business One?

a) SAP Business One requires configuration to be used effectively. As such, the investment for services typically differs between companies. A straightforward implementation usually takes around 20 man-days, whereas a more complicated project can go up to 35 man-days. We will discuss your needs to estimate how many days your implementation will take.

b) The factors that affect the service fee include;

1. Scope of configuration required based on the number of SAP Business One modules to be activated

2. Configuration of industry or functional apps (add-ons) to extend core SAP Business One functions

3. Customised development of additional functionality specific to a company’s needs (not often required)

4. Forms and reports to be developed beyond those that are available with the core system.

Investment: The investment here is one-time. Additional investments may be required in a few years’ time if there are plans to extend the use of SAP Business One. For example, you may decide to activate mobility features or extend your sales channel with an e-commerce site, etc.

4. Maintenance & Support

How much will I need to spend on maintenance of SAP Business One?

SAP Business One’s annual maintenance covers the software costs of upgrades, new releases and expert level support. Software maintenance ensures that your critical business information system is kept up-to-date with features and functions that sustain your investment.

Many of our SME customers may not have dedicated in-house SAP Business One experts to support queries arising from users of the ERP system. Blue Ocean Systems offers support packages at several levels based on the needs of our customers. The key services of this support package include phone support, on-site support (optional), patch fixes, data back up and restoration (if required). The annual Blue Ocean Systems support typically ranges between $3000 and $6000. This depends on the number of planned support hours, the complexity of the deployed solution, number of users to be supported, etc.

Investment: This is an affordable recurring annual cost that will help you realise the full value of your IT investment while gaining flexibility and agility.

What’s my overall investment?

Although SAP is often associated with enterprise grade implementations that may cost a bundle, SAP Business One based solutions are designed for growing SMEs who have outgrown their current accounting package and/or Excel-based solutions.

Typical implementations can range between SGD 30,000 to SGD 100,000.

Several factors affect the investment amount including your existing infrastructure, the amount of licences needed, the scope of implementation services as well as the ongoing maintenance and support required (if any).

Is there any financial support available to SMEs for an SAP Business One investment?

Yes! Read here to learn more about how SMEs in Singapore can leverage the PIC and other government initiatives.

Also, for companies that qualify, Blue Ocean Systems can arrange low cost payment plans that can spread the investment over 12 or 24 months – perfect for SMEs concerned about cash flow.

If you are pleasantly surprised about the cost of implementing SAP Business One within your organisation and would like to talk to us, contact us today for a no obligation chat and estimate.

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