Measuring the expected value of your ERP implementation: Don’t sell yourself short

Authored by:

• Jeff Botsch | Value Engineering, Process Manufacturing and Distribution
• John Grier | Business Architecture, Process Manufacturing and Distribution 

Implementing an enterprise resource planning (ERP) system is a transformative journey for any organization. It is not merely a technology upgrade; it's a strategic move that should fundamentally alter business operations to yield significant value. While many companies implement ERP to enhance information technology (IT) systems, the real value lies in achieving business transformation through increased effectiveness and efficiency. While risk avoidance and reduced IT costs are benefits, the primary focus should be on these broader enterprise goals.

In this blog, we will break down the value of an ERP implementation into three core categories: productivity, cost savings, and growth opportunities. While productivity enhancements are often top-of-mind, cost savings and growth potential are equally critical—though sometimes less immediately apparent. Let us delve into these areas to understand how an ERP can create substantial value for your organization.

Productivity

An ERP system significantly boosts productivity by automating processes, reducing manual workloads, and providing real-time insights. This leads to enhanced efficiency across the organization, allowing staff to focus on strategic tasks that drive business growth. Areas of productivity gain include:

• Back office efficiency: ERP systems streamline administrative processes, dramatically reducing manual workloads. This automation allows staff to focus on higher-value tasks, enhancing overall organizational productivity. From human resources (HR) to finance, the back office can operate more smoothly, with fewer errors and faster processing times.
• Direct production improvement: By automating routine tasks within production lines, ERPs free up time for strategic activities. This not only boosts labor productivity but also enhances the quality of output. Production teams can focus on innovation and efficiency rather than being bogged down by monotonous tasks.
• Management and administration simplification: Real-time data insights provided by ERPs simplify reporting and decision-making processes. Managers can access up-to-date information, enabling them to make informed decisions quickly. This agility is crucial in today's fast-paced business environment.
• Sales and supply chain optimization: ERPs improve sales operations and supply chain logistics, leading to faster response times and enhanced customer service. By integrating sales and supply chain data, organizations can better respond to market demands, adjust inventory levels in real time, and improve delivery times.

Cost savings

ERP systems drive cost savings by optimizing resource utilization, operational efficiency, and financial processes. By reducing waste and improving compliance, organizations can achieve significant financial benefits and invest in future growth. Let’s evaluate some key opportunities for cost savings.

• Enhanced resource utilization: Maximizing asset use and optimizing logistics are key to lowering freight and material costs. An ERP system provides visibility into resource usage, helping to eliminate bottlenecks and reduce waste. This optimization leads to significant cost savings and improved service delivery.
• Operational efficiency gains: Organizations can streamline operations, improve margins, and reduce overhead with an ERP. By automating processes and reducing redundancies, ERPs help minimize inventory and waste, ultimately lowering operational costs.
• Financial optimization: Better management of receivables and payables, enabled by an ERP, improves cash flow. Organizations can capitalize on payment discounts and rebates, enhancing financial health and stability. This financial agility allows companies to invest in growth and innovation.
• Compliance and risk management: Improved regulatory compliance through an ERP helps organizations avoid penalties and fines. Companies can mitigate risks and focus on core business activities by ensuring that processes and data management align with regulatory requirements.
• Data-driven decision-making: Leveraging advanced analytics through an ERP enables organizations to improve sales margins and reduce purchasing costs. Data-driven strategies empower companies to make informed decisions that enhance profitability and market competitiveness.

Growth opportunities

ERP systems position organizations for growth by enhancing production capabilities, improving order fulfillment, and increasing profitability. These improvements lead to better customer satisfaction and a stronger market position. These are powerful opportunities driving real margin and revenue through:

• Improved capacity and throughput: Enhancing production capabilities is crucial for handling increased demand efficiently. An ERP system allows organizations to scale up operations without a proportional cost increase, providing a solid foundation for growth.
• Improved order fulfillment: Timely and accurate order delivery boosts customer satisfaction and loyalty. ERPs help streamline order processing and tracking, ensuring customers receive their products when promised. This reliability is a significant competitive advantage.
• Improved margins and profitability: Strategic pricing and cost reduction measures, supported by an ERP, increase profit margins. Organizations can optimize pricing strategies and reduce unnecessary expenses by gaining insights into cost structures and market dynamics.
  
  

Quantifying the benefits

Quantifying the benefits of an ERP implementation depends on how your organization defines and measures success. The extent of change implemented with the new ERP also plays a crucial role. For organizations seeking guidance on quantifying the value of their ERP implementation, consulting experts, such as the Infor™ Value Engineer team, can provide valuable insights and methodologies.

Conclusion

Embarking on an ERP implementation journey is a significant decision that can transform your organization's operations and enhance its strategic capabilities. By focusing on productivity, cost savings, and growth opportunities, you can ensure that your ERP system delivers substantial value. If you're considering an ERP and need help quantifying its potential benefits, don't hesitate to contact experts like Infor for a structured value engagement. They can help you qualify and quantify ERP transformation's advantages, ensuring your investment leads to meaningful business outcomes. Still contemplating ERP? Expert guidance can illuminate the path forward and help you harness the full potential of this transformative technology.

Infor ERP solutions

Over 60,000 businesses worldwide trust Infor’s cloud-based, industry-specific ERP solutions to run their mission-critical processes. Recognized as a leader by top analysts and premier global partners, our software constantly evolves to incorporate the latest technologies and advance everything from the user experience and decision support to built-in industry processes.

The transformative power of Infor Platform Technology

Our ERP solutions are powered by the Infor OS Platform—a cloud technology platform built to help you act, adapt, and innovate faster. Take advantage of artificial intelligence (AI), integration, data and insights, application development capabilities, and prebuilt ERP solution add-ons. Based on Amazon Web Services® (AWS) infrastructure, the Infor OS Platform offers the scalability, security, and reliability you need today and tomorrow.

Learn how to unlock value in your enterprise software here.

Authored by:

Jeff Botsch

Value Engineering, Process Manufacturing and Distribution, Infor
Jeff Botsch is a digital consulting leader with over 25 years of experience developing and executing global programs using enterprise software and predictive analytics to boost profitability and productivity for distributors and manufacturers.

John Grier

Business Architecture, Process Manufacturing and Distribution, Infor
John Grier has over 29 years of expertise leveraging the Infor CloudSuite Food & Beverage ERP engine for enterprise innovation and efficiency. At Infor, he has served in strategic roles, spearheading transformative solutions that optimize operations and drive strategic growth.