Is ERP worth the investment?
When beginning your quest to purchase an ERP solution, building a case for the cost benefit should be your priority. However, focusing on all of the bells and whistles of a new ERP often overshadows looking at an actual cost benefit and understanding the overall value you are getting with your ERP.
ERP enables you to automate the tasks involved in performing your business processes and gives you insight into all of the aspects of your plant. ERP is an expensive investment but it’s important to understand the cost benefits of a full solution.
Data collection: The case of the expensive Italian meat
The first week after a well-known Italian meat producer goes live with their ERP, a regular customer orders their usual type of meat. The user scans the same meat he had been pulling for years with the data collection application in their new ERP system. The ERP’s data collection system, however, fails and will not let him pull the ham.
Or did it actually fail? It turned out that the reason the meat wasn’t able to be pulled was because the user had been pulling a higher quality meat at a much higher cost for several years. Thanks to the ERP’s data collection, fixing this one instance alone actually paid for the entire ERP system.
While the instance of the Italian meat may be extreme, cases like this can and will happen. However, there are several other successful ROI opportunities that pay for the cost and help your business benefit from your ERP investment.
Traceability: Don’t let a recall ruin your brand
Food safety is all about prevention – including recall prevention and brand reputation – as well as response. Track and trace technology documents all of a product’s details in its lifecycle, from ingredients to customer shipment. In addition, track and trace solutions can include built-in controls to provide manufacturers with visibility into qualified suppliers and the ability to specify incoming inspection requirements.
It only takes one bad ingredient to force a food and beverage manufacturer into issuing a recall. Tracing the ingredient fast is the key to minimising consumer risk and protecting a company’s reputation and brand. Without an effective track and trace process, you could easily be the next brand making headlines for unintentionally causing consumer harm, thus losing more money for your business than the cost of an ERP investment itself.
Best-in-class: Set your business up to be the best
Overall, organisations need to be using as much of their ERP investment as possible. A best-in-class organisation may have detailed plans for what they hope to accomplish with their ERP. However, if a solution that employees cannot actually use is selected, those plans become useless. According to Aberdeen Research Group’s report, How ERP Can Make Your Job Better on a Day to Day Basis, top performers will select a solution that enables users to take advantage of functionality designed to improve their jobs on a day-to-day basis.
The same Aberdeen report states that as compared to all others, leading companies are:
- 2.1 times more likely to have an ERP solution that is easily tailored to support business change
- 61 per cent more likely to enable users to access reports in a self-service capacity
- 2.6 times as likely to have preconfigured dashboards and role-based homepages
- 14 per cent more likely to have context-sensitive help and training for ERP
- 59 per cent more likely to have the ability to drill down to individual transactions from summaries
The bottom line is that the best-in-class invest in an ERP solution that is easy to use. Even the most functional of ERP solutions can end up being a waste of money if employees can’t use it. A user-friendly ERP solution leads to a higher adoption rate among employees and the benefits of the solution will more quickly and profoundly exhibit themselves throughout the entire organisation.
Is ERP worth the cost?
One of the most common causes of delay in purchasing an ERP solution is trying to figure out which software to use. While having access to the trendiest features and functionality of an ERP solution sounds like the most obvious reason to invest, sometimes that doesn’t always make the most sense. It is up to each individual business to analyse the costs of purchase and implementation and compare it with the net annual benefits to calculate their ERP pay back opportunity. Finding the functionality that works best for your employees and empowers them to utilise all of the ERP features for better business is what’s going to pay for your system.
Posted on Monday, January 23, 2017