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Justifying the Investment made in an ERP Solution

Justifying the Investment made in an ERP Solution

Many businesses have realised the need to implement an Enterprise Resource Planning (ERP) system that integrates and consolidates management information that in turn empower key decision-makers throughout the organisation. Businesses, who successfully implemented an ERP initiative stated that it improved resource planning, drove efficiencies and boosted organisational growth.

However, businesses should assess the economic feasibility of such an investment with the help of a cost-benefit analysis. This analysis builds an economic case that measures the costs in terms of both capital and organisational expenditure which is then compared to the expected Return on Investment (ROI). Greater ROI against the total cost of ownership justifies an ERP purchase.

Tangible Benefits

Inventory Reduction

An ERP system improves forecasting of inventory procurement based on actual requirements and ensures that only useful items are stocked. This way prevention of obsolete materials and shortages can be well-planned leading to 20% reduction in inventory costs. This being a recurring benefit, business funds can be better utilised for other important needs.

Improved Sales and Customer Service

Better coordination and streamlined processes within a business improves and increases sales. Advanced ERP systems with optimised operations allow customers to directly interact with the system to specify their needs and determine delivery dates with flexible payment options. This can help business incur fewer lost sales and see an increase in overall sales with higher customer satisfaction.

Improved Cash Flow

Businesses with installed ERP systems have better control over accounting, billing and reconciliation procedures. With a centralised view of all accounting reports derived from a common database, employee efforts are directed towards a closer follow up on outstanding accounts leading to reduced receivables. Better utilisation of cash can be planned beforehand with the timely settlement of such accounts.

Read this to find out how a USA based wholesale distributor benefitted from an ERP solution.

Intangible Benefits

Streamlined Processes

Using disparate business applications impact staff’s ability to perform value adding activities whereas a centralised ERP system; brings all the business data together in one place and makes it accessible in real-time, lets the staff focus on business generation. Integrated, streamlined and automated business processes help reduce the cost spent on manual labour by 10%. Increased employee productivity leads to increased business productivity.

Greater Intelligence

Decision-makers can keep a constant eye on individual departments and across the organisation as a whole to measure performance and understand inter-dependence of vital areas. Intelligence enabled ERP systems provide detailed management reporting, using analytics tools giving a holistic view of the organisational data that facilitates an effective decision-making process, reducing the cost of downtime due to incorrect decisions.

Greater Reliability

ERP systems optimise entire business operations with no room for inaccuracies or errors that allow decisions to be based on more relevant data. This way, businesses can reach desirable outcomes more frequently with improved customer engagement.

Read this to find out how SAP Business One can improve your business’s performance.

It is an important business plan for growth to stay competitive both now and in the future. Deploying an ERP system does involve investment but the benefits it brings to your business will justify the investment. For a free SAP Business One demo, contact us on +44 – (0) 203-872-5140 or e-mail at info@silvertouch.com

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