We have stressed time and time again the importance of measuring cost vs. benefit when moving to a new ERP platform. It’s no secret that these systems are expensive and difficult to implement. At the same time, the cost of doing nothing can be even greater than the cost of implementing a new ERP system.
A solid business case can give leadership the evidence needed to make the move and the confidence they are making a good business decision. But what if the business case is questionable, there are uncertainties around the efficiency measures that were taken, or leaders don’t agree on the functionality that is included in the business case?
This is quite common, and sometime a little extra boost is needed to finalize a decision to initiate and ERP implementation. A solid business case can be the difference between ERP failure or reaching the third stage of ERP success.
Following are a few ideas that stand apart from the traditional “hard dollar” benefits and might help swing a vote:
Support of Strategic Vision: Most companies have some version of longer-term visions and corporate strategy. Things like global consolidation and standardization, new market entry, changing to an acquisition structure, etc. While it is hard to tie dollars to technology investment on a future vision that may still be in the making, an appropriate technology platform could help to pave the way. One example would be a beverage company considering future vertical integration of its supply chain. Many points to consider and many ways this could look, but having a system that can handle a variation of manufacturing processes could turn to be a huge advantage.
Cultural Alignment: One of the greatest overlooked aspects of software during an evaluation is the cultural alignment of the company with the software. If you are a company that succeeds by quickly adapting to meet a customer demand, you thrive on implementing rigid changes that hold across your global locations or you allow localized departments to set their own processes, these are cultural specifications that are difficult to measure in terms of benefit. You may have a system that you have manipulated to work as needed, but there could be benefit in acquiring a system that accepts the level of adaptability that fits your culture.
Market Image: If you are a publicly-traded company it goes without saying that others are watching your technology investments and some moves can even sway stock pricing. But evenly privately-held firms may see benefit in the image that a new system creates. A few scenarios to consider:
- When vendors and customers get word that a technology investment is underway, it may help provide validation that you are profitable company and taking steps to better your business relationships.
- If you are in position to be acquired, your ERP technology in place will be a very significant factor in valuation. You will need to consider the value increase of newer, more robust software versus the cost savings of a smaller, more limited solution. It is important to understand what private equity firms want from digital transformation. We strongly recommend bringing in experts to help evaluate this decision and the long vs. short-term benefits of both directions.
- You are looking at making an acquisition and are in a competitive bid situation. The technology you have in place may help sway a decision pending impact on the acquired firm.
User Satisfaction: Users cannot be overlooked as they will ultimately be the ones that drive the benefit from a new system. Even if you are not able to show significant ROI on a new system from efficiency savings, if you will be replacing an old system that is hated by all with one that has better UI or provides an easier work environment then this could define a win. It may also help HR with hiring younger workers and ultimately will drive actual, measurable benefit.
Business cases are never set in stone and there are many ways to view and value and technology implementation. If you need guidance on creating justification for change, look for help from an independent ERP consulting firm that does not have benefit of their own to gain from your purchase decision.
