Calculating the implicit value of your ERP system doesn’t have to be a hit-or-miss affair. You just have to know where to start…
‘Hey big spender’ is no longer the mantra of global corporates. Tough economic conditions have forced organisations to provide a more detailed justification of the IT spend and to take a more focused approach when it comes to maximizing return on investment.
Measurable benefits that will improve the business have become the order of the day. Companies want to know that their investment is going to pay off.
But quantifying the benefits of your software can be a tricky and often error-laden task, particularly if you aren’t sure what you are looking for. An exercise in identifying the factors that give your business a competitive advantage and allow you to reap financial rewards can reduce the uncertainty and allow you to set clear business objectives.
So where should you look for value in your ERP solution beyond its ability to address obvious operational difficulties? Here are a few good places to start:
An effective ERP system can reduce overheads and re-focus employees on more value-added tasks, such as sales or optimising inventory, by automating repetitive and manual-intensive processes. Automation also reduces the frequency of manual errors.
Track and trace
ERP improves the track and trace process of raw materials and decreases the substantial costs attributed to inefficient manual recalls of goods. These costs include overtime hours for employees, disruption of operations and increased storage costs.
IT maintenance cost reduction
ERP can eliminate the support burden on your IT team by eliminating the need to maintain multiple, disparate systems. Cutting the unproductive man-hours dedicated to troubleshooting systems that don’t speak to each other can have a positive impact on the bottom line.
Better forecasting and inventory control
Forecasting and predictability can be significantly affected by the linking of your order and stock management systems. This results in reduced stock and the freeing up of capital.
Cash collection improvement
Rapid, more accurate and frequent invoicing leads to faster approvals and a reduced payment cycle.
An improvement in data quality and the accuracy of reporting provides execs and managers the data they need to make better-informed and more timeous business decisions.
Margin visibility improvement
The integrated tracking of materials and labour costs improves visibility into orders. This allows the business to make better decisions for orders based on profitability, client size and/or commitment dates.
Software portfolio consolidation
A unified solution equates to a reduction in software licensing costs.
Increased customer revenue
The integration of customer information with order history can assist business owners to identify and respond to customers in danger of terminating relationships and re-engage with lost customers.
The benefits that arise from ERP’s ability to collect, manage and distribute business intelligence across the entire supply chain are significant and varied. Modern businesses can leverage their systems to increase productivity, lower costs, shorten lead time and improve market share.
Putting a precise number on many of these advantages may be a complicated undertaking. However, managing an organisation streamlined by the integrated business processes of an effective ERP system may just leave you with the time on your hands to ponder these details.
SYSPRO is one of the longest standing and largest independent, international providers of ERP systems for manufacturers and distributors worldwide. SYSPRO has for more than 35 years delivered on its promise to provide thousands of its customers globally with the tools required to effectively operate and compete. Backed by a truly dedicated and professional team of employees and partners around the world, the company’s ability to innovate and develop technologies based on the needs of customers is one of the reasons why SYSPRO enjoys one of the highest retention rates in the industry.