How much does an information system cost?

The price of an information system can be determined precisely after a pre-implementation analysis is made. This is why it’s normal that the price very often differs from the commercial offer. Therefore don’t look at the price of the system as the main criterion for choosing it.

The price is most important, ain't it?

The price for installing an information system

  • Pre-implementation analysis

    The first investment is an introductory analysis of the existing corporate processes and information systems. The output of the analysis is a project-document that describes the automation of your processes in a new system and serves as the basis for its subsequent implementation. Set out in the project will be the scope of the work, the method of addressing individual steps, and a precise work timetable and schedule of financing.

  • License

    The basic item of the cost of the information system is its license, which is calculated based on either the modules or users. Licensing modules requires clearly defining the scope of using the system for each user. Licensing users allows users to use all the tools of the system - the only limitation is access rights. In some cases the modular approach is financially better, in some the user.

  • Special touches

    The standard installation of a complex information system requires it to be adapted to the particulars of each company. In some ways, standard tools can be too detailed and complex and need to be simplified. Conversely, in some cases the standard features need to be enlarged using special scripts. The amount of special modifications will have an impact not only on the total acquisition cost, but often also on the future cost of any system updates.

  • Data conversion

    In order for you to compare your historic data with current figures or the future results of your company, the data from original information systems, Excel spreadsheets and paper documents needs to be converted. It is necessary to establish and complete registers and then create conversion scripts that will transfer this data to the new information system.

  • Training and assistance in the deployment

    A temporary slowdown in the running of the company occurs after the transition to the new system because users have to get used to the new processes, activities and the software environment. It is therefore necessary to retrain all future users prior to deployment. The better they are prepared, the faster they will get used to the new environment. It is likewise necessary to count on the presence of consultants during the first weeks of operation to provide knowledge and moral support for users during their first steps.

The price for operating an information system

  • Monthly fee

    In addition to acquisition costs, you must also reckon with a monthly fee for the system vendor that guarantees support for required legislative changes, perhaps the continuous development and optimization of the system standard so that it reflects current trends in the market for business software. It can also include charges for other services like hotline or emergency support.

  • System upgrade

    Information systems also become obsolete. Our experience tells us that the life cycle of corporate systems is roughly seven years, after which the system needs to be implemented again or else a different system chosen. The ideal solution is to implement minor upgrades to the system at yearly intervals or every other year. This way the time and financial demands of reimplementation are spread out across ongoing phases and keep the system in the best possible form.

We don’t want to wait till the project for the final price. Is it possible to determine a maximum price threshold as part of the commercial offer?

Yes, of course a price threshold can be set as non-negotiable. In similar cases, however, the project doesn’t go with the aim of finding the optimum solution, rather to keep the result within the margins of the price confines. The result is not a collection of tools, processes and recommendations to give the company maximum benefit, only an attempt to reach a business agreement.

Petr Figura, project manager of the team in Brno

Petr Figura

Key questions

Is it possible to prepare minimum and maximum variants within the project and then decide which course to take?

Yes, it’s possible to designate individual features, tools and processes within the project as critical for success or only as recommended. And as part of the business talks after the end of the project, find the optimum solution at the desired price level. The important thing is that a deferred recommendation is not discarded and can be included later on. The system can be set up to be prepared for these changes.

Is the licensing for modules or users preferable? What are the advantages and disadvantages of both licensing models?

The obvious advantage of the modular model is that you only pay for what you really need. A complex information system is built, however, on the interconnectedness of individual processes and information across individual modules, or the entire firm. And it is precisely user licensing that allows and emphasizes this advantage. Our experience shows that licensing for modules is only ideal for the ERP vendor to keep siphoning more money out of the customer.

Where can savings be made when purchasing an information system? And where, on the other hand, are savings not worth it?

Any customized adjustments to the system makes both the actual implementation and the subsequent operation of the system more expensive. It is therefore necessary to clearly specify which changes need to be done in order to retain the competitive advantages hidden in the processes and which exist from the fear of changes. The biggest room for reducing costs, not only in installation but also in the subsequent maintenance of the system, is precisely in this area. It certainly doesn’t pay to save on training and assistance from vendor consultants in trial and routine operations.