The Old Joel on Software Forum: Part 4 (of 5)

ERP module pricing

Sorry for those who don't like what's happening, but I ain't gonna stop for you.

Ok, I have been to some ERP related sites - Amdocs, SAP, PeopleSoft, Siebel, AccPac, FrontRange Solutions etc., but nowhere do any of the products/solutions mention any price related information. I can guess, those solutions are not sold as-is. They'd probably need to determine a price on a case basis.

So, this question is for those folks who've bought or sold functional modules for enterprises, what are these softwares priced like? Gimme a ball park figure for a particular module you bought or sold.

Like, Siebel's On-demand CRM is the only place I got to see a money-figyure of $70 per person month. But that was a custom solution. What for product pricing?

Also, I'd be interested in hearing from Clay Dowling, what issues he faced with VB while thinking of developing ERP systems front-ends. And what was the difference between custom as against customized apps. (7th May 2004 http://discuss.fogcreek.com/joelonsoftware/default.asp?cmd=show&ixPost=139050&ixReplies=14)

Sathyaish Chakravarthy
Tuesday, May 11, 2004

Pricing for enterprise solutions....

Grab client by feet
Shake him for all he worth.
However money he has is the price
Pick a number between 1 and 100
Apply this as a percentage to price, and charge as annual support costs.

Seriously though. Do some googling on the Oracle sales to the State of California for some examples.

Tapiwa
Tuesday, May 11, 2004

>Do some googling on the Oracle sales to the State of California for some examples.

Thanks for the lead, dude! You're a blue-eyed chum. :-)

Sathyaish Chakravarthy
Tuesday, May 11, 2004

>Pick a number between 1 and 100
>Apply this as a percentage to price, and charge as annual support costs.

On a lighter side, how odd is it to choose numbers greater than 100? ;-)

Sathyaish Chakravarthy
Tuesday, May 11, 2004

sometimes it is greater than 100. A bit like the Gillete pricing model. You get the shaver for almost nothing. They make their money on the razors

Tapiwa
Tuesday, May 11, 2004

Our experience is that no matter what price the vendor quotes (which will be outrageous), we automatically reduce it by %50. It's amazing how much negotiating room there is built into stuff like that.

Of course, most of my experience is with Medical systems, but the pricing model is very similar.

Steve Barbour
Tuesday, May 11, 2004

Gimme a figure, please?

Sathyaish Chakravarthy
Tuesday, May 11, 2004

>Our experience is that no matter what price the vendor quotes (which will be outrageous), we automatically reduce it by %50. It's amazing how much negotiating room there is built into stuff like that.

Reminds me of a local joke, Steve, where a street-smart-hole was warned about swindlers rigging prices almost double, so when he went shopping for an underwear, he kept halving the price iteratively until he got away with two underwears for free.

;-)

Sathyaish Chakravarthy
Tuesday, May 11, 2004

Well, we were just looking at a RIS system (Radiology Information System, it handles appointment scheduling and tracking of films, but does not do digital imaging) and the initial quote from our preferred vendor was $500,000. This is a system made by the same vendor who created our practice management system and will integrate into our PMS (Practice Management System) without any customizing.

The next vendor down on the list quoted $300,000, but that price does not include all the work to tie it directly into our PMS which would probably run another $80,000 - $100,000.

And of course, both of these will also have to tie into the PAC system (Picture Archiving and Communications System, which will do the digital imaging bits) that we haven't actually bought yet because we are in the process of receiving suitors for that one as well.

The PACS pricing should end up making the RIS pricing look small in comparison due to all the hardware that we'll have to buy to go along with it.

But, back to the preferred vendor, we've always managed to get their price down about 50% before we buy. Mostly because we are one of the few groups of providers that do everything electronically with their system and we're willing to let them bring potential clients in to see what we do, that and we're a bunch of tight wads.

Steve Barbour
Tuesday, May 11, 2004

Though not strictly related to Supply Chain Management, I got a fair idea of what apps cost in the US markets. And I appreciate your coming out with this kind of information. Would you be comfortable telling me how much does that $500,000 measure against your sales (percentage), against your monthly working capital needs (how many times of it), and how many employees do you have in your organization?

Sathyaish Chakravarthy
Tuesday, May 11, 2004

I'd be comfortable, but I don't have that info. Sorry, it's not my baliwick, and the powers that be haven't felt the need to share ;-). We get our budget to cover normal expenses and then we bug the finance committee when we need more for large projects like the RIS or PACs.

I can tell you that we have about 85 providers (the number seems to increase every three months, but that's close enough) and at last count, we had somewhere in the neighborhood of 600 users.

We have about 50 PCs, and the rest of the users have access through about a dozen Citrix servers and associated Wyse winterms.

Steve Barbour
Tuesday, May 11, 2004

Whenever I see the words Information System I hang garlic over all the doorways, perform an exorcism, turn of the lights and phone and crawl into a drawer in the cupboard.

We have a Student Information System that does not actually allow us to get any information at all, and one of the modules for thait is a Dormitory Information System, which consists eight months work porting an Access .mdb used by one person to Oracle and "integrating" it.

Now if somebody offered me any kind of "Integrated Information System" I think I'd take up suicide bombing!

Stephen Jones
Tuesday, May 11, 2004

above comments are very true ... how much money have you got?

Anyway -- I am a SAP consultant and SAP software fees are in the order of $3,000 - $5,000 per user + 15% annual charge.

This excludes consulting / implementation. For that you can budget similar numbers. And then hardware + support later on and and .......

...... slightly off topic. A lot of people knock SAP but it is a great system from a software design perspective. Worth looking at (purely for ideas) if you implement other enterprise systems.

Liam
Tuesday, May 11, 2004

It's really simple, actually.

Let ∆wt+1 ≈ rm,t+1 + kw + µ1 −(ct − wt).

Then ∆wt+1 can be expressed in the following trivial manner:
∆wt+1 = ∆ct+1 + (ct − wt) − (ct+1 − wt+1) .

Therfore, ct − wt = Et∞X j=1 j (rm,t+j − ∆ct+j) + ρkw 1 − ρ

Finally,
price = ·(1 − δ)1−γθ + δ ³EtU 1−γt+1 ´1θ ¸ θ1−γ+12[µθ−2θσ + Et - h(log X − Et [log X])2i.

Stop with the incessant questions!
Tuesday, May 11, 2004

I have no idea what this means but it's amusing. (I don't think most sales people understand series or dot products or anything else in here.)

Let ∆wt+1 ≈ rm,t+1 + kw + µ1 −(ct − wt). Then ∆wt+1 can be expressed in the following trivial manner: ∆wt+1 = ∆ct+1 + (ct − wt) − (ct+1 − wt+1) . Therfore, ct − wt = Et∞X j=1 j (rm,t+j − ∆ct+j) + ρkw 1 − ρ Finally, price = ·(1 − δ)1−γθ + δ ³EtU 1−γt+1 ´1θ ¸ θ1−γ+12[µθ−2θσ + Et - h(log X − Et [log X])2i.

mb
Tuesday, May 11, 2004

ok, that was a test. Joel, your software doesn't understand Unicode!

mb
Tuesday, May 11, 2004

I did a project for Nextel as Amdocs contractor. It's a few $M.

Evgeny Gesin /Javadesk.com/
Tuesday, May 11, 2004

You said you wanted a price.

The bank I used to work for had an SAP implementation, the installation, including training, came in at over $200m USD.

I find it hard to imagine a situation where you couldn't develop something better internally for less than that.

Bank Employee
Tuesday, May 11, 2004