ROI of ERP – Part 1 of a 4 Part Series

Form must follow function

Taking Ownership of Your ROI

In a previous blog I referred to the unpredictability of measuring the ROI of your ERP investment. One key issue relating to this is the understanding of the core functions of your business now and in the future – before you consider an ERP system, take ownership of your Return on Investment (ROI).

There is a lot of debate about who coined the phrase, “form must follow function” (or words to that effect). It is commonly attributed to the American architect, Louis Sullivan, for whom it was the rule that “shall permit of no exception”. Sullivan was talking about aesthetics, but he might as well have been talking about ERP projects. When considering whether to install an ERP system the same rule applies, and similarly “permits no exception.”

An ERP system does not have a common function across all businesses. It is usually described as “the provision of an integrated real-time view of core business processes.” That may sound good enough, but what are the “core business processes” in your company? And, are these your current core functions or your future core functions?

To paraphrase the exchange between Alice and the Cheshire cat in Alice in Wonderland, “If you don’t know where you’re going, any road will get you there.” In the IT world, an unplanned “there” is hardly ever a pleasant surprise; it is more commonly a shocking waste of time, effort, and money.

The time spent upfront to think through the functions you require from an ERP system, and the business needs you need solutions to, will be time well spent. It will help you get a grip on the company’s current potential and future possibilities.

How you will benefit now or in the future, will be a useful pre-purchase guide to whether the acquisition and implementation of ERP software will be another operating cost, or a worthwhile investment.

This kind of strategic thinking always yields a more satisfactory outcome for ERP implementations. Having identified and quantified the benefits not only enables you to purchase exactly what you need, but it also provides the motivation to implement well, and fast.

NEXT: Before Selecting a System

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