IT costs can add up quickly, but shop owners rarely sit down see how much they’re spending. It can be surprising how much everything costs when you put it all together, especially if you host your ERP software yourself. Below is a list of IT costs that accompany an ERP system if it’s hosted at the shop, or on-premise, and not on the cloud.
If you’re hosting your own software, you need to have a server in order to run your ERP software. Servers are one of the largest expenses on this list. For a midsize shop, they can range between $3,500 and $5,500. A good estimate, then, is $4,500. Because they run 24/7, servers do periodically need to be replaced. The average lifespan of a server is about 5 years, so this expense would come up again.
Microsoft SQL Licenses
Once you have the server, you need a SQL license to be able to use it. The cost for a SQL license starts at $800 with an additional $200 per CAL (Client Access License) and there is typically a minimum of 5 CALs. However, the number of licenses you will need depends on the size of your shop. At a conservative estimate, these licenses will have a one-time cost of $1,000.
Security and Virus Protection
Computer security and virus protection have become more and more important. After all, you need to protect the information in your ERP system. You don’t want any malicious person to be able to access your data to ransom it, steal it, or delete it altogether. A good security program will cost around $1,000. The cost of security is much less than how much it would cost to recover from getting hacked.
IT Labor Costs
In order to get the server, SQL licenses, and security set up correctly, you may need to have a professional do it. All of these processes can be complicated, and your shop depends on getting them right. That being said, such critical labor does not come cheap. The national hourly average for an IT consultant is $150, so a 40-hour contract would cost $6,000. Another option is to hire an IT employee to your company. This cost could be much more varied.
The best software in the world is useless if your data disappears. You know how critical quotes, estimates, client information, part history, and jobs are to your shop. So it’s even more critical to be sure this data is backed up frequently to ensure nothing is lost. A good data backup program will cost around $1,000. Just like the security program, this software becomes invaluable when you need it.
The total cost of everything listed above is $13,500. All of it is necessary for an on-premise ERP system and that’s before you add in the cost of the software itself. However, an ERP system on the cloud doesn’t need any of these expenses. Because it is hosted remotely, there is no need for the shop to have a server, which also saves them the cost of the SQL licenses. The set-up is considerably easier, so there’s no need for the IT labor either. Finally, the information is automatically backed up as part of being hosted on the cloud, so there’s no need to pay for another kind of data backup. There are many differences between on-premise and cloud-based ERP systems, but the IT cost is one of the biggest. Being informed about these differences means your shop can pick the right software and potentially save some money.
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