Without a solid business case for moving to new ERP software it is unlikely that the funding required to select, implement and support a better system will be approved. One of the key drivers for the selection and implementation of any new ERP solution will be the realisation of quantified benefits.
Understanding and evaluating the costs versus projected benefits of each system being considered will enable you to determine which alternative is likely to provide the greatest return for your proposed investment.
Cost/benefit analysis of moving to new ERP software
In order to achieve the targeted business benefits of your ERP project you need to identify the potential costs/benefits of implementing and using new software. Then you need to compare these to the cost/benefits of your continuing to use current software system.
Your analysis should take the form of;
- Quantitative data (i.e. which consists of measurable data such as the cost of the software, the cost of tailoring the system to suit your needs, implementation, training, support, upgrades (if required) etc) and,
- Qualitative data (i.e. data with a high degree of subjectivity – difficult to quantify but still an important variable. These can include the benefits gained from user satisfaction, streamlined procedures, ease of use, instant access to key data, greater visibility, increased productivity, improved reporting, increased integration etc).
For most companies, the primary factor shaping the business case for a business management software upgrade is ROI (Return on Investment). Companies expect a new system to pay for itself in a very short period of time. This goal is entirely achievable BUT ONLY with the right solution.
Clearly defining goals for your ERP initiative and then monitoring the success of the project in achieving these goals is extremely important.
From our experience, the right software for your business will instantaneously improve your day to day operations with a return on your investment within a year to 18 months.
So our advice to you… before embarking on a new system implementation, be sure to write up a cost/benefit analysis for each software application being considered in order to help you decide which ERP to opt for. It might be a time-consuming task that nobody wants to do but believe us when we say, it will be well worth the effort!