As with any long term, valuable goal or project (such as personal health), immediate need and desire often trumps long term pay off even though focusing on the future is beneficial. Investing in new ERP is much the same, since cost is immediate and benefits pay out over the long term.
However, just like with personal health, favoring short term appeasement, remaining reactive and making decisions which favor the here and now can have long lasting, potentially detrimental consequences.
So how do you motivate the leaders within an organization to think about long term benefit?
One very clear way is to proactively highlight the immediate detriments of short-term thinking. Quantifiably measuring the inefficiency caused, day to day, by not having an ERP system or system update will speak volumes to those who need to listen.
Here are three top considerations of the immediate lost benefits of not implementing ERP:
You know ERP will save you time, but you’re not sure how or where. Investing in ERP, anywhere down the road, will require this analysis, so why not start it now? Do your best to calculate time spent in current data activities and then understand the streamlined automation opportunities allowed by implementing ERP.
Now take the time difference and apply a value. The cash value is ultimately defined by labor cost savings, the value of time now able to be spent in revenue generating areas, decreased inventory cost and other specific benefits to your industry.
Making business decisions without the accurate or complete information is unwise. Often those without ERP, or with legacy systems, have trouble compiling and accessing data. This is a lesser noticed, but very problematic circumstance. Accessing information is critical to your company’s success.
ERP software will ensure siloed departments can readily share and compile the necessary metrics for long term business projections and planning. In the more short term, inventory data will be accurate which saves money immediately and often boosts customer service satisfaction.
It’s hard to assign value to better information, but expressing it in monetary terms -- cost associated with inventory overstock, customer order mistakes, and the high price of bad business planning -- is a wise approach.
And in a final push to assess the cost of inefficiency, don’t forget the actual purse strings. Errors and slide backs in an inefficient AR environment can lead to money lost monthly and annually. Consider money owed and not collected, unreconciled bank statements and lines of credit, accounting fees at tax time for cleaning up messes and even capital expenditures that might be mitigated by combining legacy systems and maintenance into one predictable monthly fee.
Curious about other approaches for measuring the benefits of ERP or the inefficiencies of business without ERP? We can be your ERP partner to help with these and other essential ERP tasks. If you’re considering a vendor, or have more questions about cost projections, ROI calculations, Business Process Modelling or other imperative planning, give call Parallel Solutions a call at (440) 498-9920. We are a full service provider and our experienced staff can help assess all your needs from software to training and support.
Mary Jo O'Neill