Measuring ROI On ERP Implementations

Published on: 25.01.2015

When considering a new business system it’s often difficult to calculate a Return on Investment (ROI) number that you can believe in – which is why a replacement ERP application seems to become, more often than not, a grudge replacement rather than a new opportunity to improve your business.


Another complication is that your new ERP application will almost certainly cost you more than the running costs of your existing one (because it was paid for ten years ago and probably hasn’t been invested in since).


To keep things simple I think the most effective way to calculate the ROI is on staff hours, can you reduce by one FTE or with a new system can you avoid hiring an additional FTE in the future? If a FTE has a loaded cost of $40,000 per annum diverting that money into a Tier 2 or 3 system will pay for itself. And it will be easy to monitor with most software companies charging a monthly license fee the actual dollars spent are easy to see.


For example If you are in distribution and have five staff and it takes one staff member 15 minutes to process and despatch an order and this can be reduced to 12 minutes with new software then it’s likely you can achieve a head count reduction. Or in a more positive light you can grow sales 25% without adding new warehouse staff. Some of our customers have this time down to four minutes so big improvements are achievable.

Other News

Chesters Plumbing & Bathroom rollout n2 ERP

Chester's Plumbing & Bathroom are an ambitious family owned business with more than 50 years of experience, they supply quality plumbing products backed up by great services and a commitment to their customers.


Cold Storage And 3PL Logistics Companies Have A New Choice For Their Warehouse Software

First Software Ltd, the developer of n2 ERP the leading Cloud ERP and eCommerce solution for Retailers and Distributors announces the release of new functionality for Cold Storage and 3PL logistics Companies.