From the Community: Is the ROI from ERP Software Worth the Costs?
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Before purchasing and implementing an ERP system, one must first convince senior executives that the ROI from ERP solutions is worth the expensive purchase. We decided to dig deeper into this issue by answering a Community question from Keith S., who asks, “Do users expect an ROI from ERP, or do they just assume it’s a software that must be adopted?“ To answer this question, we’ll look at the changing landscape of ERP software, the ROI users can expect and whether or not the ROI from ERP solutions is truly worthwhile.
While cloud and mobile trends have undoubtedly transformed the software industry, the effects have been varied depending on the segment in question. For enterprise resource planning software, which was usually offered as bulky albeit robust solutions, the cloud has made users question the need for such large, often static systems. Now, as the ERP segment transforms, and the ease of picking and choosing best-of-breed solutions increases, many businesses wonder whether the ROI from ERP software is worth the investment.
4 Ways You’ll See ROI from ERP Solutions
Companies gain numerous benefits by correctly utilizing a top-rated ERP software solution. Here, we’ve chosen to look at ROI in terms of more than just financial gain, since there are many factors that will, over time, increase a business’s revenue.
- Long-term financial gains. Of course, increasing profits is the end-all goal for many business owners. While ERP implementation is expensive in the short term (it costs a lot to purchase a solution and then train employees), you’re likely to see long-term financial gain.
- Streamlined processes. ERP software can act as a single, centralized system to streamline once-disparate business processes. By utilizing one system across departments and locations, businesses can expect significant process optimization.
- Full scalability throughout growth. One of the main benefits of an ERP solution is this software’s ability to scale with your company. If your business is growing quickly, ERP software can facilitate that growth and prevent you from outgrowing solutions as your business expands. Sticking with a single solution will net financial and productivity gains during important growth stages.
- More transparency. By using one centralized ERP solution to manage finances, supply chain, warehouses, customer relationships and other operations, companies will see reduced data redundancy and increased connectivity and transparency. Instead of manually combining reports from various tools and solutions, an ERP solution provides an interconnected snapshot of where your company stands.
With So Many Benefits, Why Aren’t More People Adopting ERP Solutions?
Like many business owners, Keith worries that some companies only choose to implement an ERP solution because it’s what they are supposed to do. Yet if businesses all stand to gain the ROI benefits listed above, then why have many people left the traditional ERP software model in favor of a patchwork of best-of-breed solutions?
Failure to properly implement an ERP solution will result in your company gaining little to no ROI from ERP solutions. And since more than 90 percent of businesses suffer a failed ERP implementation the first time around, most companies aren’t actually seeing any of the potential ROI from their enterprise resource planning software.
While the lack of successful ERP implementations is disappointing to say the least, these statistics do provide hope for companies who seek to gain significant ROI from ERP software. Undeniably, the potential for high return on investment is within reach; businesses simply need to follow ERP usage and implementation best practices to ensure that their experiences with ERP software are both beneficial and profit-making.
Hopefully, I have convinced you that when used correctly an ERP software solution can net serious benefits. To help you choose the best ERP solution for your business, download our free ERP software report, where we compare the leading enterprise resource planning solutions by pricing and key features.