If you have not ventured into the mid-market ERP procurement arena in the past few years, then you will notice there has been a quantum shift in what is driving today’s ERP investment. And this shift has ushered-in a new set of expectations and criteria by which you make a sound ERP investment.
Not long ago, accounting software was the primary focus of mid-market business applications expenditure. As a narrow silo of business automation, accounting software served as a repository of business function and data, disconnected from the operations of the company at-large. What warranted expenditure for new accounting software was obsolescence – when your company’s needs had outgrown your existing system’s functionality or capacity. And although technological advancement frequently necessitated capital investment in new hardware and systems, the expectation of business solutions software more closely resembled that of a business expense, instead of an investment – short-term and transitory.
Today’s integrated Enterprise Resource Planning (ERP) has ushered in a quantum shift in this reasoning. Current-generation business application software has moved beyond the accounting department to address most—if not all—of a mid-sized company’s functional requirements through an integrated software platform. Leading ERP solutions are now scalable to support corporate growth, designed to produce tangible business gains today and several years down the road. The expectation now is that ERP is a long-term investment and should be acquired with that perspective.
Obsolescence vs. ROI
Therefore, the fundamental question has shifted from, “Is this software outdated?” to “What is the business case to warrant this expenditure? What return-on-investment (ROI) can we reasonably expect?” Narrow arguments of accounting solution obsolescence alone are no longer compelling – or even relevant – in today’s ERP market. Instead, these are the business and economic justifications now driving business solutions expenditure:
- Cost savings of increased business process (and data throughput) efficiencies
- Sales revenue growth due to enhanced sales and customer service experience
- Cash position advantages of improved supply chain operations
- Critical data support for management decision-making, from single-source reporting to Key Performance Indicator (KPI) and digital dashboard views, needed to competitively succeed.
These are the benchmarks for capital investment, not short-term business expense. In other words, the expectations of a manufacturer contemplating a capital machinery purchase should be little different to those placed upon ERP purchase determinations. The focus should be long-term, on adding tangible value to the company, on producing real-world ROI. That is the new criteria to judge today’s ERP investment.
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Enterprise Resources Technology Group, Inc. (ERT Group) is a technology consulting firm that empowers companies to grow and succeed with business solutions that streamline processes, improve productivity, and squeeze more profit from operations. ERT Group is a