Why are Pharmaceutical Organizations considering Dynamics 365 over SAP – What about cost?

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My previous article looked at two important reasons pharmaceutical organizations might prefer Dynamics 365 to SAP:

  1. Business process functionality
  2. Cloud enablement

Since then, several people have asked me to comment on another key advantage that Dynamics 365 has over SAP: cost. Let’s now turn to this important consideration for pharmaceutical organizations.

Cost Advantages: Short and Long Term

When considering the price tag of an ERP implementation, it’s important to review both the initial deployment fee and the total cost over a period of time, typically five years or more. Dynamics 365 offers a compelling case whichever way you look at it:

  1. Hardware: When an organization subscribes to Dynamics 365 on Azure, there are no upfront hardware costs. There are no servers to purchase or provision, and there are no resource and server room expenses. This also avoids ongoing extended warranty and refresh costs for the hardware. Disaster recovery is included in the subscription, so there is no need to provision failover hardware, or to set up a disaster recovery contract with a third party.
  1. Software: There are no licenses to purchase for ERP, virtualization software or database, avoiding a potentially significant initial cost, plus ongoing annual maintenance and upgrades. An important consideration when shopping ERP licensing or subscription is included functionality, which varies based on the suite or module chosen. When you subscribe to Dynamics 365, regardless whether you subscribe 20 or 2,000 users, you get access to all This provides price certainty, avoiding potential future costs if organizations decide to deploy additional functionality.
  1. Implementation Services: Hardware and software costs are just two costs to consider; often the initial partner implementation services costs are the largest upfront investments. Multiple analysts have reviewed average implementation costs of the major ERP solutions, and the published data varies considerably, but all reports show that a Microsoft Dynamics 365 deployment costs significantly less than other Tier 1 deployments (SAP and Oracle). At one extreme, CIO magazine reports the average SAP implementation cost as six times the average Microsoft Dynamics 365 implementation cost; other analysts measure it at about twice the cost. Whichever report you review, there is no doubt that a Microsoft Dynamics 365 implementation costs significantly less.

When you consider the hardware, software and implementation services costs of an implementation, Dynamics 365 can potentially offer a much quicker return on investment than other Tier 1 solutions. Upfront hardware and software costs can be avoided entirely through subscription, and implementation costs have been shown to be significantly less.

If you add the relative cost of implementation to Dynamics 365 advantages discussed in my first article, it’s not surprising that many pharmaceutical manufacturers are deploying Dynamics 365 as their enterprise solution of choice.


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