Understanding the ROI of ERP

If a companies wants to succeed with ERP, they must know how to properly implement it. However, this is only one of the things that a company must deal with if they want to succeed with this system. They must also have the resources to properly train their staff on using it.

The company as a whole must be determined to make use of this system. If this is not done, there is little point in setting up the system to begin with. If you wish to set up ERP, you must look at your return on investment. If you cannot see a reasonable return on your investment by using it, it may not be a good idea to spend money and time implementing it.

There are three things companies will want to pay attention to when they are deciding whether or not ERP will be a good return on their investment. When these three things are taken into consideration, the company will ensure that the system that is picked will allow them to achieve their goals. To do this, a company will first need to pay attention to the methods involved with implementing the system. Failing to do this will put them at a severe disadvantage. The biggest mistake made by most businesses is choosing can ERP system by placing an emphasis on the functionality and architecture. This is like purchasing a used car based on how it looks on the outside. When this is done, the results are always the same. The system is installed, the payment is made, but no one is happy with the results. The goals that the company originally set out to achieve by implementing the system are not realized. A tremendous amount of capital and time has been wasted. Because of the company wasted time and money on a system that didn't work, they now find themselves in a situation where they are losing the edge against their competitors. What is wrong with this situation? The answer is implementation. The vendor did not present a proven method of successfully implementing the system in a way that would allow it to be useful to the company.

It is important to realize that implementation and installation are two different concepts. Getting the two confused can lead to a number of complications. Installation can be defined as the process of moving from one software to another while keeping problems at a minimum. Implementation can be defined as a method that a company uses to achieve their goals by transforming the way they carry out operations. With implementation, the software is the tool that is used to achieve this objective. The process of implementation does not start while a company is looking for ERP vendors. It begins when the company present a goal that the ERP system will be used to achieve. The goal is the key. If there is no clear goal, selecting a vendor is a waste of time.

Once a company has come up with a clear goal they wish to achieve, the next step is to find a vendor that can help them achieve it. The only time a vendor should be chosen is if the company does not already have the necessary technology to achieve their objectives. Once a company begins the process of choosing an ERP vendor, they must look at more than the functionality of the system.

They must also look at the ability of the vendor to help them change their business processes in a way that can allow them to reach their goals. How can the company evaluate the vendor? There are three methods available.

The first method is to look at their sales efforts. Pay attention to how they want to assist their customers. The second strategy is to request the references of the vendor. If they are a quality company, they should have a solid reputation. The third thing companies will want to do is analyze the implementation methods of the vendor. Are they consistent in helping you achieve your goals? If they are, you will want to consider them. If they aren't, you will want to find another vendor. You must find a vendor that is able to help you based on work they've done with clients in the past.

Source: www.exforsys.com