ERP and Return on Investment (ROI)

by   |  2 min read
Published :
ERP and Return on Investment (ROI)

The big question that comes up during the discussion on company wide ERP implementation is, when and how the return on investment can be realized. ERP vendors usually have a tough time convincing the senior management while answering the above questions.

While going for ERP implementation, it is very essential that the return on investment does not just imply in terms of financial gain. Of course yes, there are financial gains in the long run. But, let us see, what the other ways of realizing a significant return on investments are.

  1. Streamlined processes - Existing processes are streamlined properly due to proper flow in data across departments.
  2. Data Consistency - Streamlined processes result in consistency of data across the organization as it is centralized. There is no need for every department to store data separately.
  3. Improvements in productivity - Data consistency removes the burden of impertinent work from staff and managers. This helps them concentrate in their core duties and hence results in improved productivity.
  4. Reduction in redundancy - Centralized database ensures that the customer order need not be stored in separate departments redundantly. One unique id generated per customer or per order, helps various departments access the same data.
  5. Increased transparency - As told before, a unique id for every order helps departments know the status of the order well in advance. This results in transparency across the organization and helps individual process managers plan in advance.

All the above-mentioned points ensure smooth processes across the organization. Smoother processes improve productivity, which in turn results in timely and consistent delivery. Consistency in operations and delivery will improve the credibility of the organization in the market and help become profitable in the long run. Therefore, implementation of ERP indirectly impacts the profitability and hence the return on investment can be significantly realized.