When you make the decision to implement an Enterprise Resource Planning (ERP) software strategy, you’re likely doing it for a multitude of reasons. Perhaps your current system is outdated and in desperate need of replacement. Or maybe you have an employee driving the change.
One of the most compelling reasons companies decide to select a new ERP platform, however, is because they want to drive enterprise value.
An ERP system is a big investment
Implementing an ERP platform is a big investment of time, resources, and money. There are many people in and outside your company that are involved in such a project, including both your own employees and outside consultants (read: expensive). Then there is the financial investment in the software and the technical resources behind it as well as the amount of time it will take to implement and go live.
When does ERP pay off?
It’s a legitimate question that you absolutely should be asking. Here are the typical phases we see with the ERP implementation process:
- Phase 1: The software is running on the new ERP software.
- Phase 2: The “burn in” period, wherein everyone company-wide is really using the system extensively.
- Phase 3: Post-burn-in (run) period, during which technical teams operate the core business operations systems in the ERP system.
The real magic begins when businesses can use application data. And the real value of an ERP system comes when you’ve gathered data and can utilize and leverage it to improve your business. If you’re in manufacturing, for example, your ERP software will allow you to automate the shop floor, collect data on how things are working, and engage in advanced planning and scheduling. Later, you can manage performance, forecast, do better analytics, and even build out some business process automation solutions.
You could give up company value
There’s another way to look at the value that an ERP system provides for an organization. If you were to sell the organization today, a dilapidated ERP system would likely require that you discount your sale price. That means less in your pocket when you sell. And the opposite could be true as well: if you implemented an ERP system, you might enjoy a much higher sales price.
Think about enterprise value when you consider a new ERP system
Implementing an ERP system might seem like something that has immeasurable benefits, but the truth is, you can absolutely see the tangible enterprise value. If you’re not taking the time to map your ERP implementation back to something that creates value for your organization, you’re doing it for the wrong reasons.
We know that the decision to implement a new ERP system isn’t an easy one, and we also know that it isn’t as easy as it sounds to build enterprise value with a new ERP system. Questions? Contact the team at ERP Advisors Group today for a free consultation. We’re here to guide you through it!