TVision Technology Limited
How much will my Microsoft® Dynamics™ NAV implementation cost?
Every Finance Director wants a major project such as an ERP software implementation to come in on budget and on time. Choosing the right software partner and clearly defining the goals and targets of the ERP functionality are the first, and in many ways the most important, steps in meeting both financial and time requirements.
The success of a major software implementation relies on the working relationship between the client and the software partner. Realism and honesty from both client and partner are vital if the project is to come in on budget. The client must be honest in terms of what the software is required to achieve: the partner must be honest and realistic in describing what the software can deliver. The greatest source of all those unexpected costs that play havoc with financial control are either when the client adds extra functionality as the project progresses or when the partner has been 'economical with the truth' in an attempt to compete on price.
At the initial stages of the project, we ensure a well structured and robust budget is established, so that the we understand what the client wants and the client understands exactly what the fully implemented software can be expected to deliver.
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 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 any one time regardless of how many individuals have a log-in. There are also different types of licenses for “light” users and those accessing via a web-browser, mobile or third party application. This can become more complex so is much better to discuss with a person as to which users need what licences. For the purpose of this explanation the focus is on concurrent users as these form the core of the licence.
There are two versions of the Microsoft Dynamics NAV licence, Business Essentials and Advanced Management. Advanced Management provides access 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.
The more users you have, the lower the price per user you pay. When 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 “Business Ready Enhancement Plan” and is based on 16% of the licence. The BREP 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 for Project Management and Consultancy. Consultancy includes 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.
To the Cloud! (Or can it be hosted?)
You can elect to purchase your licence for on or off premise use. Hosted solutions generally mean that your system is maintained on a server elsewhere that you may or may not own; however, you would still purchase the licence.
You can pay on a rental basis, often referred to as Software as a Service (SaaS) although the phrase “Cloud computing” is becoming promoted as the term for computer services consumed on subscription via a network, usually the web. The vast majority of ERP implementations are on-premise. The advantage of on premise is the control of both security and performance. Some of this is undoubtedly emotional and as people feel more confident in consuming technology on a rental basis we expect the demand to grow.
If you would like further information on the cost to subscribe rather than buy, please contact us.
Get your estimate
If you can give us a high-level scope and number of users, we will happily provide an estimate for your project.
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.
