Do you remember the “Where’s Waldo?” series of books? Each page was filled with an illustration of a crowd of people. Hidden inside the crowd was a tall, skinny man (Waldo) who wore blue jeans, a striped sweater with a matching hat and scarf set, and glasses. Trying to pick him out of a crowd of hundreds of characters led to frustration and eye strain, yet there was ultimately a sense of triumph when you located Waldo.
In a way, finding the ROI on an ERP system is a little like trying to find Waldo: you’re looking for something that can be difficult to identify amongst a sea of other factors. However, there are a few sources of ROI that pop out more readily, such as reducing errors. Read on to learn why this is important and how it helps your business.
Reducing errors might seem like a nice side benefit of an ERP system, but it’s actually a source of return on your investment in this technology.
How so? Ask yourself this question: how many errors do you notice currently when you’re running the vital processes that power your business? Those errors are costing you money, though you might not realize it. Let’s say your employees make a mistake filling an order for a customer. The customer will be dissatisfied and demand that you correct the order. Fixing that mistake costs time and money.
An ERP system eliminates those errors because it virtually eradicates the need for manual data entry (a significant source of errors). When you eliminate errors, you improve certain aspects of your operations. An Aberdeen Group study found that businesses that implemented an ERP system saw a 17% improvement in complete and on-time shipments.
There are some other, more subtle benefits related to implementing an ERP system and the reduction in errors it causes.
When you develop a reputation for delivering complete, on-time shipments, your customers find you more trustworthy. As a result, they’re more likely to do business with you. And that means greater profits.
Satisfied customers share how they feel with others. Everyone wants to do business with someone they trust, so you’ll find more customers coming your way. And, again, that’s good for the bottom line.
Finding the ROI in ERP implementations isn’t an exact science. It’s not just about numbers and figures, or how much you’ll save or earn. While those things are important, you can’t overlook some of the other benefits of an ERP implementation.
Reducing errors boosts your reputation, and a positive reputation is priceless. You can’t attach a dollar value to it, though you can see a clear correlation between lost profits and errors (especially when it comes to filling orders). It’s a crucial consideration to take into account when you’re calculating ERP ROI.