Selecting an ERP system for your organization can lead to some unpleasant surprises if you're not prepared. Paying more than anticipated over time, failing to realize the benefits of the system, and not having a clear picture of the overall financial value of an ERP implementation can lead to significant issues in your organization. Use these three tips to gain a full understanding of your ERP investment.
How Much Does It Actually Cost
The initial purchase price is not the same as the total cost of ownership. You have to factor in the direct and indirect pricing factors that influence how much you end up paying for the ERP over its lifecycle. Other expenses to keep in mind when you're evaluating ERP solutions include monthly costs for cloud-based systems, expenses related to supporting the system, opportunity costs for trainers and other employees who are pulled off other projects, and the requirements to scale the system up over time.
Get Specific With Benefits
It's important to understand the benefits that your organization gains with the new ERP solution. What problems is it solving and how is it improving operations? If one of the systems you're evaluating doesn't have well-defined benefits for your company, it's a poor fit. Some examples of what to look for include improving collaboration by removing data silos between departments, moving everyone in the organization onto the same shared system, boosting productivity through automation and streamline workflows, and offering built-in features that support your business goals.
Calculate the Financial Benefit of the ERP Solution
You can determine the ROI of the ERP solution with the help of the total cost of ownership that you established in the first section of this article. Once you do the math, you have hard data backing up whether you should move ahead with an implementation of that particular ERP solution, or if you should continue evaluating other options.
By following these three tips, you greatly increase the chances of having a successful ERP roll-out that brings immediate and long-term value to your company.
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