24 Oct Assessing the ROI of your ERP Implementation
The process of an ERP implementation is not an easy one, especially given the costs associated with these efforts. Executive management will want to see great return on investment (ROI) results for any ERP implementation—whether it’s a complete rollout or adding modules or functionality such as GRC or GTS—in a short period of time. This key question will have to be answered before you can move forward with your project: How exactly will our ERP implementation produce the return on investment we need while meeting expected business productivity gains?
This question is one that makes many executives waver in moving forward with an ERP implementation, yet quantifying the expense of an SAP ERP solution is going to make or break your project. You must have this product in order to grow the business, maintain regulatory compliance, and realize productivity gains… but how do you justify the needed budget?
In our ERP implementation experiences, we have identified two key items that give executives an effective blueprint for determining your ROI and understanding the necessity of such a powerful enterprise solution.
Key ROI Gain #1. Maximized Employee Efficiency
When you achieve a focused view of your business process controls, you immediately will start to see some process efficiency gains come into play. This positive impact on your employee productivity will decrease your ERP project payback period, impacting ROI gains in a couple of key areas. Some of the primary gains we see are due to the removal of manual processes and a more efficient use of transactional and archived data.
This is a vital area in which to ensure you are getting the most optimized solution from both a productivity and financial standpoint, by engaging an experienced implementation partner. Your partner must understand and have knowledge of not only how you do business, but also have expertise in the exact solutions you are looking to put into place. A partner must go beyond this by keeping your project on track to hit timeline targets and providing effective training for your staff so that they are ready to use your new ERP products most effectively and without a steep learning curve.
Your key gain here will be in staff performance, seen first in the form of reduced tasks. For example, all primary SAP GTS functionalities provide business solutions that, even when used right out of the box, will automate and remove redundant or manual tasks for global trade management (as much as 95% of the work can be automated), increasing your trade compliance levels while elevating productivity to new heights. Now, your staff will spend less time on administration and be free to devote more time to growing the business and focusing on larger projects. No more digging for data or correcting a multitude of manual, human-induced mistakes.
Key ROI Gain #2. Minimized Damages Due to Noncompliance
Regulatory noncompliance is something all global businesses want to avoid. What we see in global businesses, in either a pre- or incomplete implementation state is often a regulatory quagmire. Many businesses are running compliance processes that are on manual-based systems that are not flexible (or stable) enough to keep track of the ever-changing international trade regulatory landscape. When calculating the costs of maintaining outdated, error-prone processes, executives have to ask themselves this question: “What damages might we incur as a result of noncompliance?”
In this key item, the setbacks and penalties associated with regulatory noncompliance will quickly make sense when factored in as part of the ROI of your ERP implementation. It is here that you see in black and white what the cost of not implementing an ERP solution will be [link to “Why Global Logistics Management Should…” when live] to your business, a cost that goes far beyond simple dollars and cents. When a global business falls out of compliance, they can face:
- Fines and penalties. The monetary loss is perhaps the most visible one—and can easily be prevented by putting SAP GTS in place that’s customized to meet your business requirements.
- Negative publicity. Negative publicity, while often not a measurable metric, can have an untold impact on your business. But you can avoid a PR nightmare such as eBay’s being used as an ISIS terrorist cash funnel in 2017 with the correct ERP solution. SAP GTS automatically runs your trade partners through the Sanctioned Party List, ensuring you’re not working with denied parties.
- Corporate and personal liability. Not only can your business be held accountable, but your person can as well. In fact, you can find both yourself and your business making the OFAC’s naughty list if the violation is severe enough.
- Confiscated shipments. Your company spends time and resources to create, secure, and ship your goods to or from the corners of the world. An incident of noncompliance can cause your valuable goods to be held indefinitely, or be auctioned off at the port of call by a national government.
- Revoked licenses. You all know that without appropriate licensing, you will not be able to conduct business. When you fall out of compliance, your shipping and trade licenses can be suspended or even revoked, adding red numbers to your ledger and possibly closing off an entire market from your business.
And these are just the start of the problems a company involved in global trade will face when found to be noncompliant. The constant threat of audits can quickly become a regular occurrence after just a single violation. It’s not only about preventing the incidents that lead to an audit situation, though—a solid ERP solution will also allow you to easily handle any audits (internal or otherwise) that do come your way.
All the above benefits brought about by a properly implemented ERP solution are best gained when you partner with an expert third-party implementor. Selecting the right partner will help you achieve an outstanding ROI from your ERP implementation.
Engage A Successful Third Party Partner for Maximum ROI of Your ERP Implementation
When you partner with a team of specialized experts that can keep your ERP implementation project meeting its deliverables on-time and within your budgetary limits, your ERP solution will be one that will easily hit your ROI requirements. Your ideal implementation partner will only recommend and help you implement the solutions that you actually need, each customized for your specific business processes and requirements and will provide concise andcomprehensive training to your business users. These are the hallmarks of a successful implementation—one that will allow your company to enjoy gains in efficiencies while avoiding the detrimental costs of noncompliance. Though any ERP implementation may seem a daunting undertaking, partnering with an experienced outside third party will help you achieve the greatest return on investment on this vital yet complicated system.