5 Symptoms of Overspending on your Cloud ERP

Although Cloud-ERP SaaS solutions providers promote lower total cost of ownership in order to close the deal, it is common for Cloud ERP subscription licensing fees to grow over time.  

For years, Rubenstein / Justman Management Consultants (RJMC) has been assisting our clients to negotiate SaaS based subscription licensing fees for Cloud-ERP hosting.  Not only is it critical to understand your “go-live” fees but to anticipate and plan for increased fees into the future.  What are some of the symptoms of overspending on your ERP and what can you do to stay ahead of the game? 

5 Symptoms of Overspending on your Cloud ERP

1. High Ratio of Unused "Shelfware"

You pay monthly for seats that remain unassigned or for functionality you do not need.  Another culprit is mistakenly assigning a license to inactive employees or employees who have recently changed position responsibilities but their access authorities do not reflect their new role.

2. Mismatched User License Tiers

Do your casual / “view only users” hold expensive "Full Power" licenses when they may only need "Read-Only" access?

3. Frequent Variable Usage Overages

Be aware of the amount of data storage and server memory that has been negotiated on your initial ordering document.  It is common for your bill to spike due to increased data storage needs.  Data is an important item to model so that you don’t experience surprises six months or a year into your implementation when the system is being fully engaged.  Similarly you may experience increased fees from unanticipated high transaction volumes and / or a large number of API calls to support your integration needs.

4. Paying for Duplicate SaaS Tools

Does your ERP include functionality that is currently being addressed by other standalone SaaS solutions in your organization like CRM, WMS, Payroll, FP&A, Demand Planning or others.  If you have plans to incorporate this functionality into your ERP in the future, don’t invest in that functionality until you need it!

5. Automatic Renewal Price Creep

The typical annual licensing and subscription increase rate for ERP systems ranges from 3% to 8%.  This item must be addressed during contract negotiations.  That is the time to request a rate freeze for a predefined period of time or similarly to negotiate a rate increase that aligns with your budget.  At contract negotiation time you are in the driver's seat - take advantage of your leverage to save money into the future.

Reach out to Rubenstein / Justman Management Consultants when you are embarking upon a new or renewal licensing agreement with your software provider.  We can save you dollars on day one that will protect you into the future.  Engaging with RJMC is the best way to control your subscription licensing fees for ERP and other SaaS solutions!