How to Justify ERP Investments When Asked “What about ERP ROI?”

ERP ROIIt can be tough to justify ERP investments, especially when the tough questions come up. Building a business case is impossible without touching on ERP ROI; one of the most important factors considered during ERP projects. If you are going to ask your top-level executives to invest in an ERP project, it is helpful to arm yourself with all the knowledge, statistics, and information you can. Below are a few facts to help you get started.You’ll want to make sure they are aware of the benefits they stand to see from this investment; a question that tends to be among the easier ones to answer since ERP brings with it so many attractive benefits. Here are a few figures from a recent Mint Jutras Survey on the matter. The survey reports that since implementing ERP in their companies, responders reported:

  • 19% savings in operating costs
  • 15% savings in Admin costs
  • 19% inventory costs savings for manufacturing and distribution companies
  • 18% savings on obsolete inventory for manufacturing and distribution companies
  • A 23% improvement on on-time delivery
  • 16% reduction in cycle time for manufacturing and distribution companies
  • 16% increase in total product output for manufacturing and distribution companies

Based on this, what kind of savings could you project after you implement ERP? Take your company’s figures and apply these percentages to them as a part of your report to management.

At this point your management team may be getting pretty excited about this project; but then the big question is going to come across the plate, “What about ERP ROI?” and this is one you will need to be prepared for if you want to hit it out of the park. Here are some numbers you may find helpful from the same survey.

Actual ROI reported in the study were:

  • 1-2 years: 46% gained their ROI
  • 2-3 years: 30% gained their ROI
  • 3-4 years: 14%gained their ROI
  • 4-5 years: 6%gained their ROI
  • 5+ years: 4%gained their ROI

Once you get make your awesome pitch and get the green light to move ahead with the project, be sure the project is a success. You’d be amazed at some of the silly mistakes that lead to serious consequences. You worked hard to get the go ahead, don’t let these common mistakes turn your project into a failure.

ERP Implementation


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