Tom, I am in the process of planning for an ROI upgrade project. We have two objectives: to learn the targeted version (mySAP ERP) and to be able to calculate the ROI for each module. Could you suggest the key steps/tasks in the project to get to a calculated ROI for each potential process improvement? Thanks in advance for your help.
Your strategy to define project goals at the outset puts your organization on the right track. Determining ROI starts with measuring the right data; after all, you can't calculate what you don't quantify. Be sure the ROI measurements are aligned with corporate success, and that this IT project, like all others, drives bottom-line business value.
Going into the project, understand that ERP projects typically:
- Take 6 to 18 months to implement.
- Deliver payback in 12 to 24 months after project start. Deployments and user adoption take time, and business change needs to occur around the technology platform.
- Have risk adjusted returns range from 100 to 400%, making them some of the best projects in a company's portfolio.
To maximize returns:
- Stay on course with current decisions until the dust settles. Don't consider radical changes or platform switches as a knee-jerk reaction.
- Demand quick payback from any project and be sure to do financial due diligence that takes transition risks and costs into account.
- Continue with upgrade plans, as long as the business case is still sound and risk of transition is factored.
Continue plans to improve specific business processes, but select the lowest-TCO, highest-ROI solutions to ensure quick payback and reduce risks.
This was first published in October 2004