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How to determine ROI (Return on Investment) of an ERP Solution?

How to determine ROI (Return on Investment) of an ERP Solution?

With the ROI we are able to know if the implementation of the system gave the expected result.
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 ROI of an ERP Solutions

The ROI ( Return on Investment ) is a way for the company to determine the relationship between the amount invested in an investment — in this case, an ERP solution — and the financial gains obtained with it. In other words, with the ROI we are able to know if the implementation of the system gave the expected result.

However, this is a subjective measurement as it is based on estimates. The company must consider a number of factors to make the most appropriate assessment. One of them is time.

As you already know, in some cases ERP solutions take months to implement. Accompanied by the costs of this phase are expenses inherent to maintenance, support, training, among others. Therefore, expecting the ROI to happen within a short time span is often a misnomer. Not rarely, the benefits of using the system will only appear after a considerable period of use.

To assess ROI, the company needs to determine all the cost estimates for the system and, in essence, compare that information with the savings it already delivers. For example, ERP made the company’s service more agile, attracting more customers? Has internal communication improved, making processes faster? Is inventory management more accurate, avoiding waste or production delays due to lack of items? Are employees spending less time performing certain tasks, improving productivity? And so on.

There are several ways to calculate the ROI of an ERP system. If the company does not have a team capable of carrying out this assessment, it can hire specialized consultants to obtain assistance in this task.

When it comes to ERP, the concept is often associated with other types of software for the corporate segment, including CRM ( Customer Relationship Management ), BI ( Business Intelligence ) and SCM ( Supply Chain Management ). Everyone can act together with the ERP, including as modules of it.

Like ERP, these systems exist because they can help the company to be more competitive: CRM systems act in customer relationship processes; BI software can help with data analysis and decision making; SCM solutions help in efficient supply chain management.

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