Understanding the Real ROI of Adopting an ERP

by Navcube Business Intelligence Business Intelligence Solution Provider

This is neither an article to drive you towards an ERP purchase, nor an industry wise analysis of the plethora of ERP products in the market. And it is definitely not a historical look at the evolution of ERP. However, what this article tries to achieve is bring out the core essence of even having an ERP paradigm in the first place.

Irrespective of the trade you are in, your organization is defined first and foremost by processes. There is a process for employee induction. There definitely is a process for purchase requisition, for transfer of goods/ allocation of resources, for keeping tab on cash flow, for measuring target vs. achievement, and so on. The degree to which you have minutely defined and implemented them within the DNA of your structure is best judged through your eyes, and you cannot deny that as the captain of the ship; a major chunk of your energy goes into both identifying and streamlining them.

So, what is ERP? Some people say it is just software. Indeed it is, but that is a highly superficial understanding. If you ask me; an ERP is a technology enabler that codifies and ultimately strives to engrain the processes of your organization in the day to day transactional activities happening at every level and in every department; with the slightest deviation in non conformance immediately visible hence enabling you to make agile business decisions.

There are best practices for every segment of business that exist today. You survive because of this knowledge you have carried and engrained within the people who, while executing their specific roles are the key to keeping the rudder of your ship on course. When an ERP is adopted, it is not the software but the hard coding of your organizational framework that makes you feel secure of having built a machine that has transitioned towards a higher level of automated functioning, thus giving the liberty and flexibility to work towards bigger goals.

Some of the typical objections to this philosophy go like “We are accustomed to 20 years of working like this” or “Everything gets managed, there is no issue”. Such organizations are working in their little cosmos and not looking at scalability. While there is no harm in that, but ultimately these are single hand driven vehicles; which essentially means that any newcomer to the organization finds it harder to understand things and move on with his or her role. For them, every day is spent in implementing.

The real ROI of an ERP is when people are better able to understand their roles as a part of the entire machine, and are better equipped with resources and information for both internal and external communication. If you still think ERP is software, good luck with incessantly implementing your processes!