The choice to upgrade or adopt an ERP solution could prove beneficial for growing your company. In addition to providing standard features that simplify company processes and save time, a contemporary ERP solution lowers operational expenses and boosts productivity.
Here are some procedures to assist you in calculating the ROI of your ERP solution:
Determine the Costs: Making Decision
Get started by calculating the total cost of implementing and maintaining the ERP system. Software licensing, hardware, implementation services, training, data migration, continuing maintenance, and support are all part of this.
Two more criteria that can definitely influence ERP investment decisions. Time and risk are two aspects that definitely have an impact on ERP investment considerations but are not considered in the ROI calculation. You can have two ERP investment options with the same ROI, for example. One has a higher upfront cost with a longer payback period, whilst the other has costs spread out over time with a payback period that begins practically immediately.
ERP estimation of costs accuracy
There are numerous major areas to consider when determining the price of an ERP solution.
- Software licenses: The cost of an ERP software license is an important component of the total cost. License fees may vary based on factors such as the number of users, required modules, and the vendor’s pricing model (perpetual license or subscription).
- Implementation Services: Implementing an ERP solution often requires professional services from a vendor or implementation partner. These services include system configuration, customization, data migration, integration with other systems, and overall project management. The price of deployment services varies depending on the complexity of your requirements and the level of customization necessary.
- Hardware and infrastructure: If you choose to deploy your ERP on-premises, you’ll need to invest in the hardware and infrastructure needed to support the system. This includes servers, network equipment, storage devices, and backup solutions. Hardware and infrastructure costs will depend on your organization’s existing infrastructure and scalability requirements.
- User Training and Acquisition: To ensure successful user adoption and maximize the benefits of an ERP solution, it is essential to invest in training programs for your employees. Training costs may include instructor-led training, online courses, training materials, and ongoing support. Consider both initial trainings during implementation and ongoing training needs for new employees or system updates.
Generating the meaning of the data
Choosing and evaluating an ERP system creates a large amount of data. To successfully calculate your ERP ROI, you must connect the dots and appropriately analyze all of the data. This entails assembling a team comprised of representatives from all departments who will be dealing with the ERP system to ensure that any input relating to their area is relevant and accurate. Analysts from your finance department must coordinate all cost and return estimations and operate objectively to maintain uniformity and help counteract any potential departmental biases.
Analyzing the final figures
When you get to this point, you’ve thoroughly estimated all of your ERP system expenses and returns. Your new ERP team has thoroughly examined the data and determined that everything is correct. You entered the figures into the ROI formula and calculated a percentage quotient. If it’s positive, you’ll profit from your ERP investment; if it’s negative, you’ll lose money.
To understand how you can get the returns on an ERP investment and how it can help your organization expand, get in touch with AxolonERP, one of the finest ERP software in UAE that can aid your company in the ways described above and more. To learn more about how our ERP solution can benefit your company, please visit www.axolonerp.com or request a free demo below.
