Take Control of Your Software Implementation and ROI for Greater Benefits
When times are tough and opportunities are scarce cutting costs becomes a necessity. The trick is to cut the right costs and ideally become more efficient and profitable simultaneously. Cutting costs associated with research and development or marketing can compromise growth and poorly position your company for the future when the economic conditions improve. Cutting costs and risks associated with duplication, errors, missed opportunities and non-ideal processes however can be highly beneficial with a measurable ROI. Plus slower times are often the ideal times to retain and utilise your key resources to get these systems in and running smoothly, which in turn positions your company to take off as soon as the industry begins to turn around.
End-to-end, industry specific ERP software systems can cut the unwanted costs mentioned, improve your profitability and make your company leaner, meaner and better positioned for success. Aberdeen research from 2009 and 2010 found that the top 20% of surveyed SMEs using ERP systems achieved 17% growth in operating margins, 19% reduction in operational costs and 22% reduction in administrative costs amongst other benefits such as increased company-wide accuracy and on-time delivery. Now, that is a convincing business case for looking into implementing an ERP system.
The issue is however that while the top 20% achieved amazing results, many do not achieve as impressive a return on investment (ROI) as this, plus implementations often go over time and over budget. In fact, according to Gartner research from 2008, 20-35% of all ERP implementations fail and up to 80% exceed time and budget estimates. So what can you do to ensure your company is one of the top 20% and not one of the unlucky ones with a larger than expected implementation invoice?
Experience has taught us that success comes from the following steps to implementation success and separate steps for ROI success.
The 5 steps to implementation success:
1. Gain buy-in from Senior Management
This sees effort all going in the same direction and sees the right messages communicated throughout the company.
2. Establish an empowered and qualified implementation team with a clear and unambiguous leader
The team will ensure that the perspectives of many of your company’s functions are considered when decisions are being made. The leader will be someone with seniority in the company who has the final say and takes full responsibility for the ERP implementation project.
3. Ensure that the ERP’s implementation is clearly a means to achieving your company’s determined strategic goals and objectives.
4. Choose your ERP vendor very carefully
Know your selection criteria before you start looking (this helps ensure that you end up with the software that best suits your needs, not just the software with the slickest sales team).
5. Work with your vendor to develop a clear and specific implementation plan with thorough training for your people.
Ensuring your people know how to use the software from the get go hugely increases its chances of success.
Ensuring the desired ROI is achieved however is its own beast.
Following the above steps does not automatically mean that your company will achieve the goals it set out to achieve – unless your goals were simply just to get an ERP system in and running. To truly achieve the results you are hoping for a few things need to happen:
1. Determine where the ROI will come from
Companies who specifically identify the areas in which they expect to see productivity improvements and cost savings, estimate these savings and use this to justify the purchase of their new system are on track to achieve a higher ROI from step 1. This is because they start with the mind-set of cost savings and ROI.
2. Utilising this information, measure the ROI achieved
3. Force your company to reach its ROI goals
The better software vendors will work with you on this and break down the process so that it becomes a streamlined, step-by-step process towards the achievement of your ROI goals.
So if you follow these steps and work closely with your chosen ERP software vendor, you will be well on the way to achieving the goals you set.