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Various Types of Enterprise Resource Planning (ERP) Software Licenses

Year 2013
June 2013
Various Types of Enterprise Resource Planning (ERP) Software Licenses
03 Jun 2013

Unlike a off-shelf accounting software, commercial ERP software vendors tend to price and licensed their product differently. Different brand, different tier of ERP System basically charged differently. Before you make any ERP Software purchase, do ensure that you understand the licenses. In the market, commonly there are 2 types of licenses. Named User License and Concurrent User License.

What’s the Difference?

Concurrent User License allows you to purchase ERP Software license based on the maximum number of users, accessing the application at any point in time without restricting how many PC can be accessing from. While a Named User License usually will link to a specific user name or computer. That means if you have 100 employees going to use the ERP, you must buy 100 named user licenses while concurrent users basis may only need you to buy eg, 30 concurrent user licenses even if you have 100 employees whom may be using the ERP System.

Areas to consider

1. How fast will your company grow that from eg 100 employees to x% growth in workforce that will require the use of the ERP system?

2. Some commercial ERP vendors will further break the user license to different categories such as Professional, Light etc types of users. How clearly are you able to define the role of each of your employee such that you do not break the rules of their licenses?

Not buying a standard ERP software but rather a customized ERP system?
Well, probably you’re wondering why you still need to pay license when you’re heavily customizing a ERP system? Typically most of the ERP vendors will offer a basic package and vendors whom are capable of performing customization will then modify their basic ERP to further enhance to include your unique business requirements in. Thus, basic licenses are still payable to most, if not all ERP vendors.

Clearly comparing both options, and be it a standard or customized ERP, concurrent user licenses tend to be cheaper and much manageable for company whom are buying ERP as it involved less complex definition and computation of users license counts since most of the time, the actual concurrent users tend to only be a portion of your entire workforce only.  The possibility of commercial vendor offering unlimited user licenses is quite unlikely since most ERP commercial vendor rely on licenses to establish their support maintenance fees.