We’ve been reporting the past few posts on the 2012 survey findings of Panorama Consulting, a firm specializing in ERP implementations for larger companies. Many of the lessons they’ve learned we’ve found applicable to the small to midsize (or SMB) market, based on our own 25 years of experience in the arena. Today, we’ll look at their comments about the benefits realized from ERP, and how to make sure you get them.
Achieving ERP benefit requires time and expense – lots of it, if you’re going to do it right, do it (only) once, and be satisfied with the results. Thus, it’s important to identify costs and potential savings early on. These enable you to capture and recognize the benefits later.
Panorama recommends putting together a Business Case which captures the potential cost savings over time. It’s a baseline against which you can measure your results. You can even timeline the costs and benefits, to get at least a rough sense of when the breakeven point will be reached. Savings beyond the ‘timelined’ breakeven represent pure ERP profit (less associated costs) from that day forward.
According to Panorama’s survey results, following are the proportions of key benefits their clients claim to have realized:
- 75% reported improvements in “availability of information”
- 60% reported “increased interaction”
- Between 30% and 40% reported… “improved lead time”, “improved customer interaction”, “reduced operating expense” and “reduced IT costs”
- And finally, only 6% reported “no benefits achieved” – thus reinforcing the case for doing a business case first, and identifying and quantifying costs and improvements across the course of the project.
When asked about percent of benefits realized, one-third of companies reported that they had received 50% to 80% of the project’s projected benefits. Another 27% reported achieving 30% to 50%. About one in five companies reported receiving 80% to 100% of projected benefits.
The key takeaway is this: you need to plan your projects… build the business case… then track results along your implementation timeline, with an eye toward identifying key project objectives and their associated costs, and identifying ROI benchmarks along the way.
And speaking of ERP “costs”… we’ll look at survey results on that topic in our next post. Stay tuned…