The decision to introduce or replace an ERP system is strategically decisive in many cases and, in addition to the many benefits associated with process improvements and efficiency increases, also represents a cost-related risk for the organisation.
In this article, we would like to provide an overview of the costs that need to be calculated. It is important to note, however, that each project is unique and may require additional resources that are not covered in this article.
The costs depend on the following factors, among others:
- Company size and number of users
- Number of licences required
- Selected hosting variant (on-premise or cloud)
- Degree of individualisation
- Branch
The costs incurred in the course of this can be classified or categorised in different ways:
- One-off / ongoing (recurring) costs
- Internal / external costs
- Various types of costs (consulting, development, ...)
It should be noted here that during the course of the project - especially if it is carried out in phases - one-off costs may be incurred repeatedly, but the processes are then self-contained. Multi-phase implementation is recommended for larger projects with a clearly delineated scope that can be prioritised.
In order to make this indication of effort particularly clear, we have used a fictitious example on which the following statements are based:
- Branch: Trade
- Number of employees: approx. 20
- Special requirements: none
Pre-project
.The pre-project is one of the most important phases in the implementation of an ERP system. In it, the scope of the project is defined, an as-is system analysis is carried out, stakeholders are defined, requirements are collected and a roadmap through the project is drawn up. Only with a properly executed pre-project can pitfalls in the implementation be identified at an early stage and cost drivers discussed or eliminated in advance
.As a rule, we calculate a pre-project with 3 person-days for preparation and post-processing + 0.75 person-days per contact person:in whom is consulted for the mapping of the processes via Odoo
Implementation
:different effort typesThe actual costs for an implementation result from
- Conceptual design and consulting effort
- Data migration effort
- Configuration effort
- Process testing
- Training effort
- Project management effort
- Go-live support
(In particular, the effort for data migration should not be underestimated. Often data is not available in a structured form and/or has to be processed intensively in order to be used optimally in the Odoo infrastructure. Odoo itself calculates, for example, 50 hours of additional effort if a trading company wants to have the products sold via e-commerce imported by Odooesee her).
.Estimating the effort for an implementation project in advance and without the corresponding information is very difficult due to the many decisive parameters. However, our experience from previous projects has shown that the implementation costs for an SME, such as our trading company, are around 5,000 - 6,000 euros per ERP workstation
Degree of individualisation
.Our approach to implementation projects is, in the first step, to stay as close as possible to the Odoo standard. Keeping this in mind drastically increases the maintainability of the system
In selected cases, however, individualisations are necessary and make sense. This is especially the case if they support a unique selling point of the company or enable process improvement in a core process.
The development effort for customisations basically results from the following elements:
- Technical conception
- Coding
- Testing
- Documentation
- Deployment
- (Maintenance and Support - see below)
IIn practice, it has proven useful to prioritise non-go-live-critical individualisations at the end and only tackle them after an initial go-live. Some interventions that were originally considered important are subsequently considered obsolete with more Odoo experience.
Licences
Odoo licences (Enterprise)
Since 2022, Odoo has a new, simplified pricing model according to which the licensing takes place per user. In addition, a distinction is made between the "Standard" and "Custom" pricing plans.More about this can be found here.
The standard pricing plan is limited to a use of Odoo completely without customising (that means also without SUPPLiot modules), which is important to know when making a decision.
Practice shows that for most SMEs the custom plan is necessary. The custom plan costs EUR 37.40 per user with annual billing (as of 04/2023) (in the first year only: EUR 29.90).
Odoo In-App-Purchase
In addition, Odoo offers specific functions of the system by means of "In-App-Purchase". Examples of these in-app services are:
- Mailing via an external service provider ("Odoo Snailmail").
- SMS dispatch
- Automatic text recognition for incoming invoices ("Odoo OCR")
These services are charged per "transaction" and can be purchased in packages. An overview of the available Odoo in-app services can be found
Automatic text recognition for incoming invoices ("Odoo OCR") here.
SUPPLiot-Apps
.For central requirements that come up again and again - especially in the practice of Austrian companies - we at SUPPLiot have meanwhile created separate standard modules for Odoo for our customers, which we are constantly developing further
An overview of our apps and solutions can be found here:Among the most important are.
- An interface module for the financial accounting software "BMD", which is widely used in Austria.
- A module for mapping the cash register ordinance in the Odoo cash register system.
- :Branch-specific modules
- Odoo 4 medical
- Odoo 4 logistics
Third-party apps
In individual cases, it may make sense to buy in modules or services from third-party providers (including from the Odoo App Storeto provide functionalities.)
The Odoo-App-Store .advertises almost 40,000 additional modules created and offered by various third-party providers worldwide. However, it is important to note that the quality of the modules offered varies greatly. Thanks to our many years of experience, in many cases we are able to give an assessment of the module quality in advance during the analysis workshop and make appropriate recommendations
.Together with our clients, we determine a budget pot for the project that should cover the purchase of any third-party modules, in order to make this point calculable as well
Hosting
.)If Odoo Enterprise is used without any additional modules, hosting via "Odoo-Online" is already included in the licence. In most cases, however, we recommend a hosting variant that allows the installation of additional modules and further functions (such as test server, backup management, ...
"In all our projects, we principally recommend the use of the hosting variantOdoo.shwhich is optimised for the use of Odoo - you can find a cost overview" here.
Basically, an SME should expect hosting costs of around EUR 80-150 per month, as in our example, if Odoo.sh is chosen as the hosting variant. You can also find out more about Odoo.sh in our blog post about Odoo hosting variants.
Other hardware
In addition to hosting and associated server costs, other hardware costs should also be considered, in particular:
- IT infrastructure
- Printers (classic printers, label printers, receipt printers)
- PCs and mobile devices (e.g. tablets for processing stock orders)
- Barcode scanners
- and others
Other consulting
The conversion of an ERP system can give rise to additional consulting requirements in various subject areas. It is advisable to calculate the cost of external consulting services in the following subject areas:
- Legal advice (mapping of general terms and conditions, order processing, ....)
- Tax consulting (especially for integration via interface)
Internal costs
Our experience has shown that the assignment of one (or more) internal contact person(s) at the client is a critical success factor in ERP projects. The more know-how is built up internally, the better the system can be flexibly adapted to internal needs and the more efficient the communication between the implementation company and the customer.
The time expenditure of this internal contact person is to be evaluated with 2-3 person days of internal effort per external consultant day in order to successfully complete a project.
Replacement of the old system
If an ERP system was already in use, the shutdown of this system must also be taken into account. In addition, it should be noted that licences may have to continue to be paid for in order to comply with the legal record-keeping obligation (see Retention Guidelines).
Maintenance and support
In principle, the following applies: "The more individual the implemented solution, the higher the resulting maintenance effort". Maintenance is strongly dependent on the degree of individualisation and the selected hosting variant.
The costs for maintenance and support arise from expenses in the following areas:
- Database monitoring (Is the database running as it should? Are there undetected errors in the system?)
- User support
- Bugfixing
- Updates
- Upgrades
- Maintenance of individual code
In particular, the maintenance of individual code, but also the operation and maintenance of third-party code, represent a large share of the costs.
Practice has shown that about 25 - 35 % of the initial development costs are incurred annually for maintenance.
This maintenance service can also be obtained via Odoo as a kind of "insurance". Odoo prices this maintenance effort at EUR 16 per 100 lines of individual code (more here).
Optimisation phase
An IT system must grow with the organisation and support it in the best possible way. For this reason, we consider it essential that the system is permanently optimised and adapted to the new challenges of the company.
Particularly important are the months after go-live, when an optimisation of the processes can lead to significant improvements in use. In the standard case, we assume an operational stabilisation phase of 6 months after go-live with approximately 3 person days per month for optimisations.
Conclusio
In summary, it can be stated that for an ERP implementation not only licence costs (in this case of Odoo), but also other cost items such as
- Implementation
- Customizing
- Hosting
- Training
must also be taken into account in order to obtain a realistic indication.
Companies can reduce these external efforts considerably by building up internal know-how, especially in the user area. However, it is advisable to choose a good mix of internal services and external consulting. ERP implementation service providers, with their experience from a large number of projects, handle certain points more efficiently and quickly or avoid typical errors preventively, which in turn contributes to the success of the project
Further resources:
- Odoo effort calculator for the implementation of an e-commerce solution: https://www.odoo.com/de_DE/webdesign
- Odoo pricing page: https://www.odoo.com/de_DE/pricing-plan
