May 29, 2023

Maximizing Returns On ERP Investment

Investing in an ERP solution can help take your business to the next level. A modern ERP solution reduces operating costs and increases productivity through standard features that automate business tasks. The Total Cost of Ownership for implementing an ERP solution is a vast investment, with training costs and maintenance factored into the equation. After all, it’s crucial to justify expenditure like this by calculating an ROI (return on investment).

The 2 major components of ERP ROI are:-

a) Total Project Investment

b) Total Return on Project

Total Return on ERP Investment = Total Return on Project/ Total Return on Project Investment

Things to Consider to Help Figure Out ERP ROI

  • Focus on People & Processes, Not Technology- However, the cost of an ERP system is rapidly dropping. At the same time, you can achieve increased ROI by not getting into the technical aspects of your ERP system. You should first understand how it will improve your processes and what savings those improvements will provide over time. The more well-invested business process changes you make now, the greater your potential to realise cost savings.
  • Consider the Time & Effort Required – The more time and effort you put into the project, the better chance it will be successful. If you don’t give yourself enough time and effort, then you may not get a good ROI from your investment.
  • Forecasting ERP Cost- When deciding if it’s worth purchasing an ERP system, you should consider the time spent to determine or calculate the real costs of ERP. Besides the licensing and hardware costs, other expenses need to be considered and calculated. They include a SaaS subscription, consultancy, maintenance, and user costs.
  • Organising Data for Better ROI- The ability to connect the dots and bring together every piece of information is a mind-boggling task. People from every department should give input and act objectively to help counter any bias and ensure consistency.

Tangible & Intangible Returns to Expect From ERP Investment

Tangible Benefits:-

  • Cost Savings & Greater Efficiency- With process automation within the system, your company can reduce time, effort, and resources spent on daily, repetitive tasks to boost productivity and unify business software to cut down on IT-related expenses.
  • Better Supply Chain Management–  The best way to optimize your supply chain is to adopt an ERP system and use it to generate accurate demand forecasts, as well as track your inventory levels so that you can make more informed purchasing decisions, upgrade equipment at key locations, and close gaps in delivery times.
  • Increased Data Quality & Accessibility- ERP systems improve data accuracy and reliability. From creating a role to set access permissions — ERP gives you control over data accessibility so information is accessed only by those who need it.

Intangible Benefits:-

  • Easier Reporting & Planning- With cloud ERP systems, you can generate reports automatically for any part of your business, including financial, sales, operational, inventory, and administrative. Analytics engines within these cloud ERP systems also can analyze operational data and deliver predictions for improved planning and forecasting.
  • Enterprise-Wide Integration – A cloud ERP is a solution to integrate various functions and business processes across an organization and store them in a single database. It enables employees in different divisions to use the same data for different needs.
  • Standardized & Simplified Business Processes- Cloud ERP systems make it more efficient at everything from managing inventory and expenses to sales tracking, customer relations, and human resources. Businesses also benefit from best practices that are built into the system, focusing on differentiating elements instead of reinventing standard processes that are uniform across an industry.


Cloud ERP systems are becoming increasingly popular as business processes improve and marketplaces expand. With cloud ERP systems, businesses can simplify their processes, standardize data and processes, and increase productivity. But implementing an ERP system is just not enough. Calculating the ROI of the system is equally important to evaluate if the implementation of the system has been successful or not.