How to Do Cost-Benefit Analysis for ERP Implementation

 

The acquisition and deployment of ERP tools is associated with certain costs and benefits. But these costs and benefits are not always very clear, which may force organizations to delay implementation of technology that portends well for business profitability and efficiency of processes. Rather than wait until you have no option but to embrace Procurement Research and Analysis software, it helps to conduct a cost-benefit analysis and start deploying ERP solutions before circumstances beyond your control push you to a tight corner.

 

Put a Value on Inefficiency

 

Start by working out an accurate value for the cost of inefficiency. There's a high chance you'll spot inefficiency, loopholes, and flaws in your current processes. Costs associated with such shortcomings are real and quantifiable. These are costs that are currently being experienced by customers, staff, and even executives.

 

For a clearer picture, look at costs in terms of time wasted on your current way of doing things, and how much you could save by digitizing. You'll start seeing the difference if you also consider labor costs associated with current processes against potential savings if automation begins right now.

 

Develop a Clear Vision of Possible Achievements With ERP Implementation

 

It helps to have a clear picture of the direction your organization is taking as well as the benefits you think ERP implementation will bring. New ERP tools are certainly better than your legacy system, but you need to think about it in terms what real value the transformation brings. If you're engaging an ERP Consulting firm for accurate insights, they'll of course insist in quantifying the outcomes you're getting from the new ERP system. Will the deployment result in a reduction of process cycle times and labor costs? What increment in sales and inventory turns do you anticipate with the upgrade?

 

Have a Plan for Achieving Benefits

 

After computing cost benefits, devise a plan on how to achieve them. For example, identify the exact application modules and business processes that will require updating to achieve intended ERP benefits. If you're eyeing reduce process life cycle times, how specifically will you alter relevant processes to achieve that? In a nutshell, have a plan on what exactly to do and how to do it to optimize ERP automation benefits.

 

As such, make a smart move now and carry out a thorough cost-benefit analysis of ERP software/tools implementation. Know what you can achieve with an ERP upgrade, and how to pull if off!