TVision Technology Limited
How much will my Microsoft® Dynamics™ NAV implementation cost?
The exact cost to purchase and implement any ERP-type software is only known once the project is finished. This is not exactly what the Finance Director wants to hear, even though you can be sure he’ll be adding at least 10% to all figures as contingency!
At the initial stages of the project, we ensure a well structured and robust budget is established since whatever the overall end cost of the project, unexpected costs can play havoc with financial control. We also make sure that everybody is clear about the constraints and expectations of what the project will deliver. We are always looking to deliver a long term relationship with clients and keep this very much in mind right from the first discussions about a new project.
What IT can and can’t deliver can be a confusing area, so we keep everything transparent. We follow an implementation methodology that locks down a go-forward budget usually after the initial analysis phase is completed. Project management and strict change control procedures are essential in ensuring that projects are delivered to meet all expectations, including budgetary.
The famous quote from Donald Rumsfeld explains the situation perfectly:
“There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know.” Donald Rumsfeld
Microsoft® Dynamics™ NAV - Software Budget
Known Knowns
Microsoft Dynamic NAV Software Licence cost
The basic licence is priced on a User Based Pricing model, priced by concurrent users, i.e. the number of users who may be logged into the database at anyone time regardless of how many individuals have a log-in.
There are two versions of the Microsoft Dynamics NAV licence, Business Essentials and Advanced Management. Advanced Management provides a licence to more of the software, including CRM and manufacturing elements. Business Essentials is more restricted but does include financials and distribution elements and so costs less per user. Neither option limits the number of concurrent users (although if you require more than 300 concurrent users on a single site you may be better advised to look at large-scale systems such as SAP, Oracle and Microsoft Dynamic AX).
The more users you have, the lower the price per user you pay. Once we know which version best fits your project and how many concurrent users you require, we can tell you the software costs.
Known Unknowns
Additions to the Microsoft Dynamics NAV licence
This is unlikely to be in terms of users, although clients do sometimes revise this through the course of the project which would then effect the budget. It is quite possible that optional areas of functionality, for example UK BACS file output or Liquidity Forecast tools will be added as the implementation proceeds. Sometimes these will also require applications objects.
Optional areas of functionality maybe standard Microsoft Dynamics NAV software, such as UK BACS file output or Liquidity Forecast tools illustrated above. These are based on a one off cost to add the feature to the licence (regardless of the number of users). Some of the optional areas are only available on the Advanced Management version, for example Service Management, so they can have an impact in deciding which version is right for you.
There are also add-ons available from the partner channel which may be of benefit, often these have their own pricing models. For example UK Payroll is available as an official add-on and is priced based on the number of active employees to be paid.
Application objects are the building blocks for developers. They are blank tables, reports, forms, codeunits, dataports and XMLports that need to be purchased for any development. The standard licence comes with a reasonable allowance so this is usually only a consideration if your project requires a significant amount of bespoke work. However, we won’t know exactly how many objects are required until detailed analysis has been completed (but we are usually not bad at estimating).
There is also the issue of scope change and how this may impact on the budget for the software licence. Although this will increase/decrease the cost of the licence, it’s such a transparent area that usually gaining approval for such changes is an easy argument.
Microsoft Dynamics NAV - Support & Maintenance
Known Knowns
Maintenance agreement and End-user support
We know the basis of support and maintenance calculation and we know it is mandatory for the first year. The software itself is supported by a Microsoft maintenance agreement, the “enhancement plan” and is based on 16% of the licence. The enhancement plan provides entitlement to upgrades, service packs and use of CustomerSource on-line community and training facility.
End user support, telephone helpdesk etc, is provided by the partner and we know that we charge 10% of the licence value for this.
Other add-ons such as Payroll may have an additional support cost although most follow the same model as standard.
Known Unknowns
We don’t know how much in real money the annual support and maintenance fee will be until we have agreed the software licence configuration.
Non standard support
We don’t know if you will require non-standard support. Standard support is Monday to Friday, 9am to 5.30pm. Additional support is available, subject to negotiation.
Microsoft Dynamics NAV - Implementation Services
Known Knowns
Service costs
We know what our day rates are, £950 for Project Management and £850 for all other services (training, development, consultancy, data migration etc. Please see our white paper “Implementing Microsoft Dynamics NAV” for more information on our services.
We know that as a very rough guide, services tend to be 1.5 to 2 times the software cost, but again, that depends on your project.
We know that consultants’ out of pocket travelling expenses are typically charged.
Known Unknowns
In house vs bought in services
Some tasks can be either brought in-house or bought in from the partner. Your project team, how much time will they have to devote to the project and how well the project is supported by senior management and the rest of the company will all have a bearing on the amount of services required to be ‘bought in’.
The approach to be taken, especially regarding data migration and training and the amount of analysis you’ve carried out, will also affect the service budget.
There is an internal cost of you allocating your people to the project; whether you should consider taking on temporary staff to free up more time is another option you may decide is right for you.
Out of the blue stuff
Unknown Unknowns
There aren’t too many scenarios we can’t predict in terms of risk assessment but there are some. Such as your company is bought out, your project manager is head-hunted and leaves, your building is struck by lightning. As these are all pretty exceptional, we probably don’t need to worry too much at this stage of trying to get a feel of how much your budget is likely to be.
Different Cost Scenarios
Having been perhaps a little reluctant to put a hard and fast price tag on Microsoft Dynamics NAV, the following scenarios have been prepared to help give a better idea of the figures. These are for illustration purposes only and although based on experience, they are not real project budgets. Please note; prices for illustration and although correct at time of publication may be subject to change. All prices excluding VAT.
Finance System
Microsoft Dynamics NAV is an excellent standalone finance system as well as a full ERP. Most finance requirements are met by the Business Essentials option.
15 User Finance Licence Scenario – Business Essentials |
£ |
Foundation (includes one user) |
1,110.00 |
UK BACS |
115.00 |
Concurrent Users, plus 14 @ 1,000 per user |
14,000.00 |
Total Licence Cost |
15,225.00 |
We know that support and maintenance would be 10% and 16% of the licence value, so in this scenario annual support and maintenance would be £3,958.50.
Using the general rule of thumb for service calculation (1.5 to 2 times the software), the initial budget for services would be estimated around £25,000 to £30,000. This always assumes minimum data migration and a train the trainer approach.
The total initial budget for this project would be in the region of £40,000 to £50,000.
Distribution System
Microsoft Dynamics NAV is an excellent solution for companies involved in buying and selling goods. The Business Essentials licence option provides inventory, sales order processing and purchase order processing as well as the core financials. In this scenario let’s suppose the company also has a French office where users will want to see screens in their language.
30 User Distribution Licence Scenario – Business Essentials |
£ |
Foundation (includes one user) |
1,110.00 |
UK BACS |
115.00 |
Additional Language Pack |
1,380.00 |
Concurrent Users, plus 29 @ 945 per user |
27,405.00 |
Total Licence Cost |
30,010.00 |
We know that support and maintenance would be 10% and 16% of the licence value, so in this scenario annual support and maintenance would be £7,802.60.
Using the general rule of thumb for service calculation (1.5 to 2 times the software), the initial budget for services would be estimated around £45,000 to £60,000. This always assumes minimum data migration and a train the trainer approach. This excludes implementing the French office where the choice could be that the client manages the roll out, we manage the roll out and / or we engage a local Dynamics NAV partner to provide local training and support.
The total initial budget for this project would be in the region of £80,000 to £100,000.
Distribution with CRM and Service Management
This scenario is based on the above; however, the requirement includes full CRM and Service Management. This means that the Advanced Management option would be required. Basic CRM is included as standard within Business Essentials (contact details, task management, integration to Outlook); however more comprehensive CRM is included with Advanced Management and Service Management is an option only available with Advanced Management.
30 User Distribution Licence Scenario – Advanced Management |
£ |
Foundation (includes one user) |
1,960.00 |
UK BACS |
115.00 |
Additional Language Pack |
1,380.00 |
Service Management Package* |
2,300.00 |
Concurrent Users, plus 29 @ £1,665 per user |
48,285.00 |
Total Licence Cost |
54,040.00 |
*This package provides all 5 areas that comprise the Service Management suite, they are available individually.
We know that support and maintenance would be 10% and 16% of the licence value, so in this scenario annual support and maintenance would be £14,050.40.
The general rule of thumb for service calculation (1.5 to 2 times the software) is unlikely to be applicable as we’ve added to areas that can be complex, CRM and Service management (complex in terms of the processes you follow), so for this scenario we would increase the ratio to 2 to 3 times the software. The initial budget for services would be estimated around £110,000 to £160,000. This always assumes minimum data migration and a train the trainer approach. Again, we’re not including an allowance for France.
The total initial budget for this project would be in the region of £180,000 to £230,000.
Cost summary
These scenarios are all very much wet finger in the wind! The hope is that they help you understand how the budget would be constructed and begin to set expectations of what your project budget ball park is likely to be. The more we know about you, the more detailed the budget will be, especially around service days which would be broken down into number of days needed for each activity rather than the lump sum used in the scenarios.
To obtain more information on project budget for your implementation, please do not hesitate to contact us at TVision . Because it is a difficult area, we are always transparent, will happily show price lists and spreadsheets used for service day calculations. We also have an implementation methodology that carefully monitors the go-forward budget (the budget set once the analysis and scope have been signed off) and enforced change control procedure so that once the budget is set, it is only changed through full agreement of your project manager and project sponsor.
