So – as a forward thinking MD you have identified a few areas in your business where you could make cost savings. Streamlining business processes, rationalising IT databases, reducing working capital tied up in invoices and stock and giving your people a single view of your customers to name but a few.
Although you can see a clear need for new software, how can you justify the spend and prove you are right to invest?
In today’s terms, return on investment has evolved and we need to be thinking more about short term savings, longer term speculation and finally the ‘soft’ benefits of your investment.
Longer term benefits
ERP is not just about delivering software – it is about a roadmap of business improvements that will grow with you over time. Providing you with the platform and flexibility to enable your business to change and grow over time, supporting not only your business process now, but also your IT strategy and expansion plans moving forward.
Short term benefits
Quantifying short term benefits is far easier as these are more about the visible benefits an ERP solution provides. Measuring a reduction on the amount of dual data processing, a reduced amount of inventory you have to keep on stock or streamlined maintenance of multiple applications and databases are simple to qualify- but let’s face it, they become business as usual in a very short period of time, forcing us to think about the bigger picture.
These benefits are far less tangible to senior management, but will be felt operationally across your organisation – it is important to gain end-user feedback to ensure you measure the benefits of new software felt by your people. These include:
Reliability – The inability to access software can cost businesses thousands of pounds a year. Think of the BlackBerry melt down earlier in 2012 and the Natwest banking disaster that stopped millions of customers accessing their funds. Reliable applications and platforms to run them are a quantifiable benefit and should be qualified where possible.
High user engagement with software – Most software vendors will tell you that their software is ‘easy to use’ and they have an ‘easy to navigate user interface’ but user adoption is much more than that. Make sure you bring your end users on the journey with you, get your people involved in the selection process, data cleansing, and testing and I guarantee you will have much more engaged end users.
Reduction in errors – This can be more about the cost of ‘doing nothing’, but still a measurable benefit with the right reporting.
Better customer service levels – this benefit comes through increased visibility of information, and helping your people gain customer centric access to information rather than user centric data silos. Customer attrition is easily measured and should be a key measure of success, as well as ROI.
Free your people up to focus on higher value tasks – This is simple, let your ERP solution do the menial tasks while your people focus on your customers.
Simple upgrade path – As with all software, new features and technology will come into the market place. Ensure your ERP Solution supports you now and in the future, not only with the basics but with add-ons that will make you easier to do business with.
Choosing an ERP solution is the first step on the road to making improvements across your business, I cannot stress enough the importance of setting out your criteria to measure success right from the outset, this will help you make the decisions that are right for you, your team and your business whilst giving you the platform to communicate upwards the rewards of your hard work.
Product Marketing Manager for Sage ERP X3