How much will my Microsoft Dynamics NAV implementation cost?

December 16, 2016 11:31 am Published by NB: This piece also applies to Microsoft Dynamics 365 Business Central. Dynamics NAV is the former name of this solution. The success of a major software implementation relies on the working relationship between the client and the software partner. Realism and honesty on both sides are vital if the project is to come in on budget and deliver the required outcomes. 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 unexpected costs and budget over-runs are that either the client adds extra functionality as the project progresses or the partner has been ‘economical with the truth’ on what the software can deliver in an attempt to compete on price. At the initial stages of the project, TVision ensures a well-structured, realistic and robust budget is established. To do this we make sure we understand exactly what the client wants the software to achieve and the client understands exactly what the fully implemented software can be expected to deliver. We are always looking to deliver a long-term relationship with a client 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. In defining the go-forward budget, there are three areas to consider
  • the software licence cost
  • maintenance and support
  • implementation services
In all three areas, there are some items that are easier to assess than others. 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
Please contact us at TVision for a no-obligation discussion about what you want to achieve from your Dynamics NAV implemention project

Microsoft Dynamics NAV – Cost of the Software

The Known Knowns There are two ways of paying for software, on-premise or in the cloud. On-premise, or a hosted solution, means the client pays a monthly subscription and installs it on their own server, wherever that may be located. The alternative is subscription based cloud licensing. Historically, the majority of ERP implementations have been 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 for subscription based implementations to grow.

The Starter Pack

The starter pack contains core functionality addressing business processes for accounts and distribution. It also includes three full user licences. This means a small company may only ever need the starter pack, enabling Microsoft to boast that companies can get up and running for less than £3,400!

Extended Pack

The Extended Pack provides further functionality, addressing areas such as manufacturing, full jobs/projects and CRM. Please note that this means CRM within Dynamics NAV not Dynamics CRM. Our article Microsoft Dynamics NAV v Microsoft Dynamics CRM explains the differences.

Full User

A full user is a concurrent licence that can access all the system although the individual user may be restricted through the permissions associated with their log in.

Limited User

A limited user is a concurrent licence that can read all of the system but can only write to a limited area. Again, the individual actual user is restricted through the permissions associated with their log in. The Known Unknowns

Additions to the Microsoft Dynamics licence

All implementations need to include the Starter Pack and any additional full user licenses. You may also need the Extended Pack and we can advise on this. Also consider how many limited user licenses will be needed. As a guideline, limited users are usually people who perhaps 10 years ago would not have been given access to the ERP system as it simply wasn’t cost effective or necessarily very helpful. With the development of ERP software, it is easier to give more access to more employees. A common split across an organisation is usually around 60% limited users to 40% full access users. Two common extensions to the basic functionality are There are also many other add-ons developed by TVision. Additional cost will be involved if a project requires significant development although this is becoming less and less likely as the functionality within Dynamics has increased. As the most flexible ERP system in the mid-market sector, it continues to attract those whose business processes are niche or even unique, as well as being an excellent fit for more standard enterprises. All implementations rely on application objects, the building blocks for developers. These include blank tables, reports, pages, codeunits, dataports and XMLports that need to be purchased for any development. The standard licence comes with a reasonable allowance so extra cost is usually only a consideration when a project requires a significant amount of bespoke work. While it is not possible to know exactly how many objects are required until detailed analysis has been completed, TVision is very experienced at successfully estimating the likely requirement once we are familiar with a project. Any change in scope of a project will always impact the budget for the software license, whether to increase or decrease it. This is such a transparent area that usually gaining approval for such changes is an easy argument.

Microsoft Dynamics NAV – Support & Maintenance

The Known Knowns

Maintenance agreement and End-user support

Support and maintenance is obligatory for the first year. Software support is provided 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 the CustomerSource on-line community and training facility. End user support, telephone helpdesk etc, is provided by TVision as the Microsoft partner and we have set charges for this. The Known Unknowns Since the actual cost of annual support and maintenance is dependent on the exact software licence configuration, it remains a known unknown until the scope of the software license is known.

Non-standard support

Standard support covers Monday to Friday, 9am to 5.30pm but if additional support is needed, this is available, subject to negotiation.

Microsoft Dynamics – Implementation Services

The Known Knowns

Service costs

Project management and consultancy costs can be estimated based on your project. As a very rough guide, experience has shown that service costs tend to be 1.5 to 2 times the software cost. Consultancy includes training, development, consultancy, data migration etc. An outline of the way we approach an implementation is described in our article Implementing Microsoft Dynamics NAV. The Known Unknowns

In house vs bought in services

Some tasks can be either brought in-house or bought in from the partner. Some projects are able to call upon more in-house resource than others and are better supported by senior management and by the rest of the company. The approach to be taken, especially regarding data migration and training and the amount of analysis that has been carried out in-house by the client, will all affect the service budget. There is an internal cost in allocating in-house people to the project. One option may be to consider taking on temporary staff to free up more time.

The Unknown Unknowns

There aren’t too many scenarios that can’t be predicted in terms of risk assessment, but there are some. Your company could be bought out, your project manager could be head-hunted and leaves, your building could be struck by lightning. These are all rather exceptional and probably don’t justify too much consideration at the early stages of project costing.

Get your estimate

Once we have a high-level scope for your project and know the likely number of users, we will happily provide an estimate. To obtain more information on a project budget for your implementation, please contact us at TVision. We know obtaining costings can be a difficult area but we are always transparent, we 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.

Other resources you may find useful

Common mistakes in implementing ERP solutions and how to avoid them How to choose your implementation partner