May 25, 2016Doug Hadden
A story this morning about problems with a $21 million ERP project for the Loudoun County reminded me of concerns about the cost of FreeBalance software. It’s public money, so it ought to be a concern. FreeBalance focuses exclusively in the government market. Most of our customers are at the national rather than sub-national level. Most of the national level customers implement FreeBalance for all core government financial transactions. You might think these implementations must be at an order of magnitude higher price than what Loudoun County has budgeted.
With the Total Cost of Ownership (TCO) in mind, most FreeBalance national-level customers pay less for similar functionality than many cities and counties in the United States.
There are startling figures for local government spending on ERP systems:
- City of San Diego exceeded the $36.5 million budget
- Marin County exceeded the $30 million ERP budget
- City of Portland Oregon original $14 million ERP budget cost $47 million
- Jefferson County ripped out a $20 million ERP implementation
Many governments release tender prices on bid opening. We track these prices. These bids tend to be full costs over a five-year period including implementation, training, middle-ware and some equipment. It doesn’t include cost overruns or the TCO related to upgrading and adapting software. Nevertheless, FreeBalance customers appear to enjoy a significant initial cost advantage compared to Tier 1 ERP. The average Tier 1 ERP price is 185% higher than FreeBalance. The median Tier 1 ERP price is 225% higher.
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