Identifying the ROI of ERP

When implementing any new service, product or process in an organisation, the key performance indicator is the return on investment.

Defining this metric in advance will enable you to decide whether it is worthwhile committing new changes to current business infrastructure. It doesn’t matter whether this is a new implementation or an update of an old system, measuring the ROI is still important, and the benefits may not always be clear.
It is sometimes easier to work out the costs of an ERP implementation than to calculate the money actually saved (or indirectly gained). This is due to the fact that the benefits have to be fully realised before they can be measurable. Companies should at least understand the cost implications from the start, so they can go into any new project with their eyes wide open.

Taking timescales into consideration can also be important because of the complex nature of ERP solutions, so looking at the timings of payments and when returns can be expected is key, and means the company is not adversely affected or vulnerable because of how costs are laid out.

This is more of a consideration when it comes to ERP in the cloud, as costs are based on a monthly pay as you use rate, which may actually suit businesses who are seeking for greater predictability in their budgeting and financial management, and who are less concerned with running their infrastructure off premise.

It’s imperative where possible, to ensure that you go into any project with your eyes open, and with at least a basic understanding of the cost vs reward, making sure it’s the right fit for your business.

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