What Is a New ERP Actually Worth? [ROI Analysis Tool]

Get Your Questions Answered with This ROI Analysis Tool for ERP

Have you been tasked with preparing your company’s ERP analysis report? If you haven’t calculated a Return on Investment (ROI) analysis for an ERP before, you may be daunted by the task. That’s okay. At ISM, our mission is to make you dauntless. (Okay, that’s not our actual company mission, but it certainly is something we strive for.)

Today’s blog will help you identify three important background items for your ROI analysis, and will also guide you to a white paper that offers in-depth explanations of each and will help you quantify the value of your ERP. Let’s dive in.

1. Compare Apples to Apples

In your ROI analysis for ERP, you’ll need to provide clear, straightforward cost comparisons that the higher ups can take in at a glance, but since you’ve been researching various ERP systems, you already know that it’s hard to clearly compare anything between the many options because they’re all so different.

As you’re preparing the numbers for your report, make sure that you not only compare subtle things to each other (like the hosting costs of cloud vs. on-premises), but also that you compare clear costs to clear costs, and hidden costs to hidden costs.

A clear cost can be quantified with ease (like those hosting charges we just mentioned). A hidden cost is harder to quantify because it takes some guesswork. Employee satisfaction and lowered turnover resulting from greater work efficiency due to optimized ERP would be an example of a hidden cost.

Think quantifying hidden costs is hard to do? We hear you. The attached white paper offers additional tips for figuring these numbers.

2. Know What Costs to Expect When

We don’t know why, but some ERP resellers are strangely cagey when it comes to talking about specific costs. Here at ISM, we’re the first to admit that ERP is expensive and that’s it’s not going to meet all of your needs right out of the box. And that honesty is what’s led us through countless successful ERP implementations over the past 17 years.

The attached white paper gives a detailed breakdown of the many costs you can expect with on-premises and cloud (SaaS) ERP, in terms of initial capital, ongoing charges, and other probable expenditure requirements.

3. Explain the Benefits

Sure, an ROI analysis for ERP is meant to focus heavily on the numbers, but math without reasons is dull – and pointless. If your company execs see a list of costs with no compelling arguments as to why they should approve these costs, they’ll pretty much have no choice but to refuse the budget. Then those long hours you spent researching, demoing, analyzing, and deciding on a great ERP will have come to nothing. Ouch.

Again, the white paper gives more details about this, but, in your report, you’ll want to address value drivers for your chosen ERP(s). These show how the company will better meet its goals with the selected ERP(s).

Get Your ROI Calculations Blueprint

Even if you’ve prepared ROI analysis reports for ERP selections before (go you!), it’s probably still worth it to download this helpful white paper. It offers a few detailed math breakdowns for calculating ROI in various ways and it further expands on value drivers, hidden costs, and expected short- and long-term costs for your ERP. Why not at least check it out? After all, it’s free.

Instantly download your white paper “ROI Analysis of ERP Investment”.