ERP vs ROI – Driving Implementation Success

Phil Lewis, Infor VP Solution Consulting, EMEA

By Phil Lewis, Infor VP Solution Consulting, EMEA

In today’s fast-changing commercial environment, modernisation can have a strategic impact on any business. Without access to a modern Enterprise Resource Planning (ERP) system, it can be difficult or even impossible to support new business models and keep up with evolving customer demands. Additionally, the technology struggles to shake off statistics such as 67% of ERP implementations resulting in negative ROI.

Regardless if a business is planning to upgrade a current ERP system or implement a brand new one, getting the system up and running quickly is the key to obtaining a fast return on any technology investment. And the first step is senior sponsorship of the project.

Securing ERP buy-in from business leaders is crucial to any implementation initiative. Before approaching the executive team, strategic priorities must be clearly articulated to both internal and external team members. The clarity of goals, objectives, and the return on investment (ROI) are vital. 

ROI is derived not only from a savings and efficiencies gained perspective, but also the value of identifying new and additional revenue opportunities. Implementing a modern ERP system presents new opportunities to increase service levels and improve customer satisfaction that can be monetised. With a combination of revenue and cost efficiencies, ROI will prove a compelling reason for the C-suite to invest in a modern ERP system.

When planning an ERP implementation, one of the key elements comes before any money is spent or infrastructure is put in place. Creating an implementation plan – including a budget, project team, change management strategy, and clearly defined metrics for success – is a crucial first step to driving agility throughout the entire implementation process and beyond.

Many organisations fail to create a strategic plan before implementation, which is one of the reasons so many ERP implementations result in negative ROI. That doesn’t have to happen. There are four key areas that can help when creating an ERP implementation plan.

The first is to set an ERP budget plan. Like any major purchase, organisations must have a budget in mind for their ERP implementation. Many IT leaders compare an ERP implementation to building a house – assuming it will take twice as long as planned and cost twice as much as originally budgeted. The truth is, with the right technology partner and implementation strategy in place, an ERP implementation can stay on-time and on budget. Many factors should be considered when setting an ERP budget including deployment model, number of users, infrastructure investments, integration, training, and more.

The second step is to assign the project team. Implementation success relies heavily on the individuals driving the process. When creating a dedicated project team, businesses need professionals who (together) understand the full scope of the business. An internal product owner should be assigned to lead the project and make key decisions, while cross-functional teams should be created to focus on more precise program goals.

The third step is to create a change management strategy. It’s inevitable that an ERP implementation or upgrade will create some disruption within an organisation, but with a change management strategy in place, employees will be more receptive to it. While much of the change is driven by management, enlisting change agents from all levels of the company can give employees a sense of ownership toward the changes they’re about to undertake. Organisations that embrace change management are more likely to achieve project objectives, stay on or ahead of schedule, and stay on or under budget.

The fourth step is to establish clear metrics to measure implementation success. As part of the initial planning stage, it’s important to determine how a business will measure the success of the ERP implementation. Establishing the metrics and criteria that will be measured post go-live and creating a baseline measurement gives a clear before and after picture.

It’s a common misconception that once a business is live on a new ERP system, agility and progress halt. The truth is modernisation means a business can always keep the ERP application and ecosystem capabilities current with business needs. As the ERP system is increasingly working in real-time, on-going management must adopt an agile approach. Continuous cloud upgrades deliver new capabilities every 30 days, making constant innovation possible. The benefits here are clear – agile organisations are 70% more likely to be in the top 25% of organisational health – the best indicator of long-term performance.

Soon after implementing an ERP system, any executive team will want tangible results. The metrics established in the implementation planning phase define success in proving ROI; but they need not be static. In the first few months after go-live, success may be measured by more abstract results such as improved business efficiency and productivity. As time goes on, ROI metrics will become quantitative results such as decreasing order entry time or increasing the number of orders shipped by a certain percentage. A modern ERP, paired with agile implementation, ensures that a business will see ROI soon after go-live and for years to come.