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How ERP Software System Improve Company's ROI

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Better ROI from ERP

The major driving factor for companies to move to advanced ERP systems is the Return on Investment (ROI) that has been accrued by enterprises in the past, by replacing conventional legacy systems with an ERP package implementation.

ERP systems ensure a smoother flow of information between business functions in a company.
This proves a huge improvement in terms of visibility and accessibility of information, aiding efficient planning of financial and management accounting functionality combined with business analytics and in effect a huge turnover in terms of profitability.

The Return on Investment (ROI) is ideally determined not only by counting on the tangible benefits with improved statistics, but also through business benefits.

Some tangible benefits reported by the industry, as researched and analyzed by business re-engineering expert and ERP corporate strategy expert are reduction of lead time of functions by 60 percent, 99 percent shipments being delivered on time, extent of business doubled, inventory turns increased to over 30 per cent, reduction of cycle time to 80 per cent and WIP items reduced to 70 per cent.

Apart from these some business or intangible benefits noted are far better customer satisfaction, better vendor performance and tracking, reduction of defects, increased flexibility, resource utility, increased reliability and accuracy of information and better decision making capability.

However in order to get best value of the investment in an ERP implementation, it is imperative to make sure the implementation is in itself smart and intuitive.

There has to be a well defined scope and objective of why the client is going for an ERP package in the first place. Unless the criterion to define the project as "successful" is well defined, it is pointless to believe that the client will be happy with the end result.

The client's notion of "successful implementation" may be entirely different. Thus it is also important that the tangible success factors are quantified at the very beginning and it is made sure that these criteria are taken as priority during the course of implementation.

Before start of implementation one must be assured of the managements support and commitment to the decision. The client must be convinced that its time they adopt an ERP package. That way you do not have to sell your implementation all along and eventually the implementation is scrapped because the client is still is not convinced.

The implementation plan has to be well chalked out in order to maximize the throughput, conserve effort and reduce rework. That way the client is assured that the implementation is smooth and without unnecessary bottlenecks.

Lastly the ERP implementation job has to be well done. The enterprise resource planning package has to show the considerable benefits that were portrayed to the customer when selling the ERP package.

 Read Related Articles

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