Enterprise Software Blog

Key elements of an enterprise software budget

Since the world is becoming more software-centric, businesses are rolling out enterprise software of all hues. It has been proven that enterprises using custom software are performing better financially compared to others that don't use software.

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As a rule of thumb, a standard non-subscription enterprise software ranges anywhere between $10K and $500K, depending on the functionality and feature list.   However, drawing up a specific budget, and more importantly, adhering to it can be quite a challenge.Here are the key factors to consider when budgeting for enterprise software.

 1. Software Development costs

Since enterprise software is mostly custom built for specific tasks, it varies in price drastically. The cost of any particular enterprise software is often a function of the feature and function list.

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Another key consideration is the technology used. For instance, a proprietary stack would cost more than an open-source stack.

Enterprises need to make a trade-off upfront between the range and depth of the software, and the investment they are prepared to make.

2. Licensing Costs

Unless the enterprise is developing the software solution in-house, they would need to purchase the license from the developer. Annual licenses, common with subscription or software as a service (SaaS) offerings, is a popular and convenient option, where enterprises purchase a per-user license from vendors.

Such licenses are generally all-inclusive, including technical support, software maintenance, and hosting.

3. Hosting Costs

It is not enough to develop the software. The developed software has to be hosted.

Nowadays, the trend is hosting in the cloud, which is much more convenient, cost effective, and perfectly suits the needs of mobility. The enterprise generally enters into a Service Level Agreement with the provider, fixing the payment, and securing a guaranteed level of service, in return.

As a rule of thumb, cloud vendors generally price about 1/3 of the upfront license cost of on-premises solutions, on an annual basis.

4. Implementation Costs

After developing and hosting the software, it has to be implemented, meaning it is to be installed, up and running at every place the software is supposed to function. Generally, implementation will cost the same as the license, but complex implementations, spread over multiple geographies, can cost more.

The cost of implementation would also depend on whether there is a need to buy new systems or terminals to run the software.

5. Operations Costs

The most underestimated part of the enterprise software budget is the operations costs, such as boarding costs or costs to bring users to the system, training cost, and also the opportunity cost in lost productivity as people forsake their earlier system, and get familiar with the new software. However, the opportunity cost, and for that matter, all cost pays back for itself in a short while, if the software is good enough to boost productivity and unlock new opportunities.

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