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How to Get the Best ROI from Your ERP Investment

There is no doubt that installing a new ERP software can be a big step.  Whenever a business invests, the first thing to consider is the ROI (Return on Investment) to ensure the benefits are worth the capital and resources being invested.

Below are some of the factors that should be considered when analyzing the ROI of such an investment.

Initial Installation Costs

The initial installation costs can vary considerably depending upon the deployment of cloud-based software vs. on-premise software.  For an on-premise,  a software license fee can be a considerable amount, not to mention the costs involved in configuring or customizing the software to fit your business.  Some ERP vendors may recommend that you hire expensive consultants to help you with this process.   The installation will likely require some amount of effort from your own staff to review your business needs and provide the requirements for how the ERP system should be configured to match your business.

Besides software and consulting costs, installing on-premise software will likely require that you purchase hardware to host the system.  The computers themselves can be quite expensive and may even require some refurbishments to your facility to make space for the computers and handle the additional electrical power required.  Cloud installations that provide the ERP software as a service through the cloud do not have any of these expenses and represent significant savings.

Finally, when you have decided on the type of deployment and configured the software, you need to migrate your existing data to the new software.  These include customer & vendor lists, bills-of-materials, purchase orders, accounts receivable, inventories, etc.  It is crucial to migrate your data correctly and quickly so that no transactions are lost, and any company downtime is minimal.

On-Going Operational Costs

The on-going operational costs can also vary significantly depending upon the type of deployment.  For an on-premise installation, there are other costs to consider, such as electricity, a proportion of the rent for space the hardware is using, and an on-going IT staff to maintain the system, including data backups and applying software updates.  The vendor may also require on-going payments for software updates and support to answer any questions that your staff may have.

Typically, the costs for a cloud installation are much simpler.  You will likely need to pay a monthly subscription fee for access to the software.  Most vendors offer backups and software updates included in the monthly subscription.  Plus, there are no additional expenses for electricity, rent, or IT staff to maintain the hardware.­

Benefits of Increased Efficiency

A key reason for installing a new ERP system is to achieve increased efficiency in your company and reduce your business operations cost. By automating processes that used to be performed manually, your staff can be more efficient, and their time can be allocated to helping the company grow.  Also, inventory management processes can be improved to increase your inventory turnover and reduce waste. When it comes to manufacturing, scheduling will be done more efficiently, allowing you to reduce overtime and other operational expenditures.

Benefits of Improved Sales

A benefit of choosing the right ERP system that is often overlooked is that it will allow you to provide better customer service and increase your sales.  By having the needed information at their fingertips, your sales staff can provide quotes for prices and inform customers of available inventory and lead times faster than current manual methods. They may also increase each customer order’s size by suggesting additional products that can be purchased along with the main product (cross-selling and/or upselling).

Benefits of Increased Flexibility in Your Operations

A good ERP system will allow you to access information in real-time from anywhere, as long as you have a good internet connection.  This allows a warehouse manager to query inventory status on a tablet computer while walking through the warehouse.  You can have employees work from home and be as effective (if not more) than working in the office.  Employees can travel and visit customers face-to-face without worrying about missing out on updates back at the office. The company’s operations can be handled anywhere from the cloud.

Better Overall Management and More Confidence in Your Operations

Although this benefit may be hard to quantify, it can be very significant. Having the information in real-time on what is happening in your business will give you greater confidence and help you decide on your business’s direction.  Perhaps you have been thinking about adding a new product line or expanding a current sales strategy.  With a more capable management system, you will have greater visibility and streamline the needed steps to bring it on board and monitor the ROI.  Furthermore, you will have the information needed on costs, equipment utilization, vendor performance, etc., that will allow you to increase your bottom line and grow your business.

Summary

There are many things to consider when considering a potential investment in an ERP system and figuring out if you will get a good return on your investment. My Office Apps has business specialists available to help you evaluate your business and find ways to minimize the costs and maximize the benefits with our Kechie ERP system.  Folks on our team have been using ERP systems for many years under all sorts of different situations.  We have been in your shoes, and we can leverage our experience to show how much of a positive impact a reliable ERP system can make for your business.

 

For more information and advice on how to upgrade your management software without it being a major pain, visit www.kechie.com or www.myofficeapps.com. Or better yet, call us at (714)486-1487 and ask to schedule a demo to show how we can help solve the business issues you face, both today and tomorrow.