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Measuring the Value (ROI?) of your ERP

“Business software providers are regularly asked to provide

a tool to demonstrate ROI (Return on Investment) on the

purchase and implementation of their system.

But there is a cautionary tale to some of these tools…”

Return on Investment

“Remember a number of years back when you were sold insurance and investment policies – the salesperson would reveal graphs on

the 5, 10, 15, 20 year predictions of how your investment would perform. You also had the choice of high, medium, and low risk, and

each of these had different graph predictions.

All of which was both mind-boggling and very convincing.

And how have those investments actually performed against the Sales graphs?”

There are many factors that will affect your expectations and influence the actual ROI,

some of these include…

Buying an ERP solution and having someone predict the ROI you will get from your investment is pretty much the same.

1. You and your Staff’s Commitment to the Project

1.

Without executive buy-in and involvement in the project, the less likely the staff are to be

fully committed to ensuring the project delivers on expectations.

2. Your IT, Processes and Business Maturity

A number of organizations do not examine their own IT maturity and end up buying and implementing a system their organization is not ready for, or is too

complex for their simple processes.

2.

3. The Effectiveness of your Business Processes

3.

Every company has their unique way of doing business and NO ONE should tell

them how to run their business. However, staff can be too intimately involved in the processes to see the obvious possibilities

of streamlining and eliminating unnecessary activities.

4. Your Sustainability Initiatives and Reduce Waste Policies

This is something facing all of us and we need to examine what is currently possible for our organizations and what we can plan for the future. Whatever your plans, your business solution should be capturing and reporting on relevant sustainability information.

4.

5. Your Company’s Strategy

…and how well the implementation team and operational staff understand and take steps to achieve it.

5.

Unless your strategy is well accepted and understood by everyone in your business Value Chain, it will not flow through to the operational levels, and will not impact business processes. This will result in the implementation team only providing your staff with the tools to deliver on

what they think they need.

6. Your Business Objectives for Buying an ERP System

However, unless the business objectives that senior

executives expect a new ERP system to achieve are clearly

defined and understood by all, it will have very little chance of

proving real benefit.

ERP System

6.

A number of organizations decide to look for and buy a new system because their old

systems’ licenses are expiring, because they are dissatisfied with the existing

system, because they have bought another company, because they have changed their

business – the list is endless.

7. What are you changing - just the Business System?

Or the business system and processes?

Or the business system processes and people?

7.

In the book Thinking About ERP it is explained in great detail that the more you change, the greater the risk of failure, the longer the time to deliver, the greater the

costs, but then also the greater the benefits.

Guide to Selecting, Implementing and Operating ERP

Canadainfo@ca.syspro.comTel: 604 451 8889Toll Free: 1 888 259 6666

UK and Europeinfo@k3syspro.comTel: +44 (0) 161 876 4498

A strategic approach for executive decision makers.

Thinking About ERPThe Executive’s guide to settingstrategy for selecting, implementing and operating ERP.

Africainfo@za.syspro.comTel: +27 (0) 11 461 1000

Americasinfo@us.syspro.comTel: +1 (714) 437 1000Toll Free: (800) 369 8649

Asia-Pacificinfo@au.syspro.comTel: 02 9870 5555Local Call: 1300 882 311

All of the mentioned are factors that would need to be considered and somehow put into an ROI tool to be

able to truly predict the expected ROI.

What do you think should be in an ROI tool?

Do you think it’s feasible?

Discover some of the ways in which you can keep the variables listed in this presentation in

check and easier to manage. Next

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