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Justifying the Cost of an ERP implementation

MH900382633Do you want to impress your boss? How about making your organization more effective and profitable? You could put in 100 hours a week and sleep in your office but I recommend working smarter rather than harder. One way to work smarter is by improving your organization’s business processes. You can increase your organization’s effectiveness by improving processes, sharing insights and accelerating data accessibility. You know what needs to be done so take the initiative, cowboy up and explore an ERP solution. Unfortunately, uncovering the need for ERP software and finding the right solution is the easy part. Now you have to justify the expense to your boss and the CFO.

Choose the right time to ask for funding. If you have recently lost a major account or the SEC shows up unannounced at your office, I recommend holding off on asking for money. Wait until the company is in reasonable financial shape then pounce Tiger! Ask “the man” to invest in the company’s future and explore an ERP system for your company.

Try to see things from your boss’s point of view. Frame the request in such a way that he or she cannot say no, rather than trying to get them to say yes. Itemize the benefits as well as the costs of an ERP implementation. Make the case for investing in the future, lay out the long term benefits and detail the short term costs. Finally, show them why your ERP solution will fit the organization like a tailored shirt with a good pocket. Here are some ideas to get you started:

  • Are you using multiple software solutions for different business processes and none of them can talk to each other? You might be the Veterans Administration or a company that needs an ERP solution.
  • How difficult is it to get the information you need to run your business? Harder than getting a raise from your boss?
  • Is your IT department swamped trying to maintain several disparate software systems? Help them work smarter by rolling all those systems under one overarching solution. Meanwhile, tell them to lay off the Mountain Dew, go home and get some sleep and don’t forget to shower.
  • Are your current systems capable of handling all your business processes and important operations under your software system or is it a multi-ring circus with several ringmasters with uncoordinated efforts?
  • Do you have one overarching system to manage pricing, cash, demand, inventory and other critical items that lead to profit or are you chasing multiple untamed spreadsheets around like a band of feral cats?
  • Do your current systems have built-in efficiency? Do you have tools that can seamlessly share data and insights that inform and influence other business units?
  • Customer service is increasingly important to every business and the public sector entity. A recent example is the Affordable Care Act and its website woes. Do your processes and systems enhance customer fulfillment and lead to a desirable cycle of sales, operations, delivery and satisfaction?

If you answered no to most if not all of the above questions, you are on the right track in justifying the costs of an ERP system.

Now that you have the tactics down, think strategically. Envision an ERP dashboard that is like a pilot’s instrument panel. It should provide complete, timely and accurate reporting across all cost centers in a single scan. Paint a future worth pursuing to your boss. Share case studies of successful and unsuccessful ERP implementations and show them the road to success. Make the case that an ERP system is the accelerator pedal for improving operations, higher customer satisfaction and yes, (drum roll please) profitability.

Choose the right ERP system for your company. There are several fantastic systems that cater to almost every organization and all sizes. You need to balance price, implementation scope and schedule. Remember, an ERP system is like a custom-made suit. Choose wisely and you will prosper. Choose poorly and it is like the Chris Farley bit, “fat man in a tight suit.” Fortunately, there is help in this area and do not be afraid to seek out experts that know all the benefits and pitfalls of implementing an ERP solution.

Have a contingency plan for the time it will take to train end-users. Your leadership will say they cannot afford to take people out of production to implement the ERP system. Have a counter proposal and hard financial data on why they cannot afford to continue business as usual. It is a documented fact (hint: see the Panorama Resource Center) that correctly implemented ERP systems will pay for themselves after just a few years.

You do not have to go down this path alone. Panorama Consulting Solutions can walk with you through the tall cotton and help you convince your leaders why an ERP solution makes sense. We will help your business tune up its current state, choose the best ERP system and help you with all phases of implementation. Our PERFECT Fit™ selection methodology enables us to reveal your company potential and generate profits, as well as rehabilitate your reputation. Finally, don’t make me say it again . . . Put down the Mountain Dew, take a shower and change your socks. We all noticed.

Written by Rich Farrell, Senior Manager of Client Services at Panorama Consulting Solutions.

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Justifying the Cost of an ERP implementation, 7.8 out of 10 based on 4 ratings

Written by The Consultants' Corner

The Consultants' Corner features blog entries direct from our ERP consultants. These blog entries provide real-world examples and advice related to ERP software selection projects, ERP implementations, business process reengineering and optimization, IT strategy initiatives and organizational change management.

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