Is Annual Maintenance for On-Premises ERP Worth the Cost? Find Out.
Let’s be revolutionary here. Let’s think outside the box. What if you didn’t have to pay annual maintenance for on-premises ERP anymore?
Ready to get truly innovative? Imagine this: What if, by eliminating annual maintenance fees, you had the opportunity to implement exciting, cutting-edge updates including the latest in AI, Machine Learning, and Robotics technologies?
If this sounds like a great deal to you, it’s time to compare the value of annual maintenance for on-premises ERP vs. the cloud update model from a leading Cloud ERP like Acumatica.
How to Compare the Value of Annual Maintenance vs. Cloud Updates
When comparing and contrasting the value of annual on-premises maintenance versus the value of cloud updates, there are two main areas you need to focus on: what you pay and what you get.
What You Pay
Let’s talk numbers.
- Annual Maintenance Fees Add Up to the Cost of a New ERP Every Few Years
As we all know, it’s expensive to invest in a new on-premises ERP. After paying the full costs for your solution and add-ons, plus training and implementation, it’s hard to justify spending any more for your on-premises ERP.
But spend you must, because each year you have to pay those annual maintenance fees. Without them, you won’t be able to access critical software upgrades, service packs, and tax updates, and you’ll be barred from learning resources and quite a bit of customer service.
Maintenance fees typically range from 15%-30% of your initial software purchase, which means if you spent $50K on your ERP, you’re looking at ongoing costs of $7,500 – $15,000 per year going forward.
That adds up.
In fact, if you do the math on those fees, you’ll realize that (in our example), annual maintenance for on-premises ERP means you’re essentially re-buying your ERP every 3-7 years. Unfortunately, however, you’re not buying a new ERP every few years… you’re simply patching and updating your aging ERP until it eventually reaches end of life.
You can think of this like the first nice car that you bought. It was great at the beginning, but eventually you started paying more money in tune-ups and repairs than it was worth in trade-in value because it was just so darn old and out of date. When you finally got a new car again, it was such a relief.
Like old cars, old ERPs eventually run into unfixable problems. At a certain point, that old ERP may break down and require an emergency upgrade – or the issues you face could be more insidious and costly over time, such as increased cybersecurity risks.
- Cloud Upgrade Costs Are Included in Your Subscription Costs
This will be a short section because it’s pretty simple. Instead of complex math, you just need to remember that the costs of maintenance and upgrades are included in the subscription price of Acumatica.
No annual maintenance fee to speak of.
Yes, the subscription price will increase over time, as all subscription prices do, but not by much. Plus, since Acumatica doesn’t require a massive upfront software investment, it will take you a while to spend as much on your subscription-based Cloud ERP as you did initially on your on-premises ERP.
What You Get
This is where it gets really interesting.
- Fees for Annual Maintenance for On-Premises ERP Don’t Deliver Many Benefits
Have you noticed that your on-premises ERP’s updates and upgrades have been pretty boring in recent years? For their mid-year 2020 release, one on-premises ERP announced a series of bug fixes for bugs that shouldn’t have existed in the first place.
I don’t know about you, but I’m rather offended at the idea of having to pay money so I can get repairs for things like a buggy password requirement, Word formatting issues, inaccurate financial values, error messages on common financial processes, and employee filing status errors. Those bugs are things that should be fixed regardless – annual maintenance for on-premises ERP should deliver more.
By the way, this is completely real. This is exactly what maintenance fee payers for a popular on-premises ERP can look forward to accessing in June 2020.
Not surprisingly, this same on-premises ERP has a less-than-exciting software update planned for the end of this year, in which they’ll finally implement minor changes users have been requesting for years, such as copy/paste abilities, additional form fields, and a bigger print preview window.
Yawn.
Remember that math we talked about earlier, in which it became clear that business leaders with on-premises ERP are essentially re-buying their ERPs every 3-7 years? That means that, best case scenario, those on-premises ERP users are making a massive ERP re-investment every few years… so they can get tax updates and the ability to copy/paste.
Is that really worth it?
- Cloud Upgrades Deliver Cutting-Edge Capabilities
Cloud upgrades and updates include all the boring stuff that you pay for with annual on-premises maintenance fees like bug fixes and UI enhancements, but if you choose the right Cloud ERP, those updates also include a lot more.
For example: Acumatica 2020 R1, released earlier this year, included:
- Machine-learning-driven expense entry, which automatically captures and enters expense data from a picture of a receipt
- Fully-native, fully-supported eCommerce integration
- BatchMaster, QA, and JAAS manufacturing integrations
- Data mining benchmarks for the construction industry
- Robotic Process Automation integrations to streamline manufacturing and warehouse operations
- Paperless picking using the Internet of Things (IoT)
- Embedded PDF editing, saving you from the task of downloading a local copy of a PDF, just so you can edit or sign it
- AI-driven image tagging, so you can upload photos into your ERP and have them automatically searchable
All of those updates were included with the subscription cost of Acumatica and, best of all, users could choose when it was most convenient for them to receive these updates.
If we return to our car analogy, the included upgrades in Acumatica’s Cloud ERP can be compared to leasing a nice, new car over time – a car that you can upgrade every 6 months to have the latest cutting-edge technology, the best gas mileage (or range), and the zippiest handling. (And, because I couldn’t resist: it’s also a car that delivers unmatched mobility because it can go anywhere at any time! Get it?)
Remember also that Acumatica will be coming out with another round of leading-edge updates in a few months for their 2020 R2 edition. That will also be included in the subscription cost.
Are Your Costs of Annual Maintenance for On-Premises ERP Worth It?
If you’re considering an ERP upgrade because you want a more agile, more modern, more cutting-edge ERP with great performance, you may want to reconsider your outlook on maintenance fees. In today’s cloud age, you don’t have to keep paying annual maintenance fees to get very little in return.
As I said in the beginning of this article: Let’s be revolutionary. Let’s think outside the box. Let’s be innovative.
Let’s start talking.
PC Bennett Solutions offers a personalized, full-service experience for customers by implementing business management technology. Through a hands-on approach, PC Bennett Solutions helps companies get the most out of their software system. The team provides training, implementation and customization of Acumatica. Headquartered in the Seattle area and with offices in Dallas, PC Bennett Solutions is one of the largest exclusive Acumatica resellers. For more information, visit www.pcbennett.com.
