Assessing the Value of Investing in ERP Software

ERP software

Calculating the return value of an investment can be daunting, even for the experienced executive, but one which includes new ERP Software may be at the top of the list. Say the word “Enterprise” and it means the whole business will be involved and it’s sure to mean “change”- and some folks may not welcome changing from the old ways.

New enterprise software will not only affect the technology infrastructure, but also processes, roles, relationships, authority, company culture, simple day-to-day operations, and, well, pretty much everything else. Unfortunately, some companies don’t realize that, although they need the software, they are not ready for it. They are unaware of the real costs, unclear about the true value, and unprepared for the significant demands that a new system places on people and processes, not to mention the stress of actual implementation. Misjudging their readiness, some companies have mistakenly forged ahead with a ERP software implementation, while others have shied away from the investment by not understanding the real value to the company.

To assist in this dilemma, Navigate has developed a Value Assessment tool to help make informed decisions about investment in Enterprise Software. It’s designed to guide thinking about how such an investment can benefit your company in a simple, logical fashion and compare those benefits to the costs of acquiring and implementing the software.

Assessing Value

Value need not be measured only in monetary terms, although most measures include them. Value just needs to be explicit, clearly stated, and understandable. There are three main areas in which to identify value:

  1. Increasing revenue or reducing cost,
  2. Becoming more time efficient, and
  3. Producing valuable management information.

Our tool assists you in assessing this value. Performing a Value Assessment creates a lot of the data for building the business case for the investment. After completion, you will also have a list of non-economic, cultural, management values to weigh as well. We have used this tool to help clients conduct their own assessment – by applying discipline and objectivity. This is often the key to bringing “ah-ha” moments to those who may not want to embrace change.

Being Ready

The team at Navigate is here to assist you with this process. While we will help you get to a result, the decision will be your own. If you decide to proceed, you will feel confident in your decision due to the methodical process you followed.

However, your next step is just as critical as the decision. Many good value decisions go awry because the company was not prepared in understanding its current and future processes, did not clarify or manage its expectations, and tried to do things too quickly, before they were ready. Too often is the case that a company rushes to implement before understanding the discipline of proper execution, especially in the face of the inevitable struggle facing the whole company.

We encourage you to begin this first step, but Navigate is also here to help you with a further Readiness Analysis, if needed.

Download the Value Assessment Tool on our Resources page.

David McNutt

David McNutt

An experienced business, management, and consulting professional in the audiovisual and related industries. He has held management and ownership roles in small and large organizations, including a systems integrator. A life-long educator and former professor, David brings a disciplined administrative approach to business challenges and is a recognized authority on business management metrics. A widely published author, David has written about the AV business since 2000 and consulted with dozens of clients.

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