SAP shops should measure ROI now

Good ROI data has never been more important to holding software vendors accountable, but users are failing to conduct their own ROI analysis, according columnist Joshua Greenbaum.

A client recently asked me about best practices for migrating to their new SAP system, and was surprised when I suggested that a comprehensive "pre-mortem" of the soon-to-be obsolete system should be a top priority. With so many things to do, why would anyone want to spend precious cycles figuring out what the value of the old system was just as it was heading for the digital trash heap?

How will you know the value of what you're doing if you don't know the value of what you're replacing? In other words, how will you understand the ROI of your new SAP system?
Joshua Greenbaum,
principal consultantEnterprise Applications Consulting

My answer was simple: How will you know the value of what you're doing if you don't know the value of what you're replacing? In other words, how will you understand the ROI of your new SAP system?

ROI is one of the great gotchas' of the enterprise software market. All too often, when I ask a vendor to come up with comprehensive ROI data on a given product, concept, or technology, the best they can come up with is some anecdotal data. Two or three customers, fingers in the wind and dart boards at the ready, give ballpark estimates about expected, anticipated, or hoped-for ROI.

Related information:

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But a hard-and-fast analysis? "It's coming." "We're working on it." "We hope to have some data later in the quarter."

If I were truly paranoid, I'd think this was part of a vast, industry-wide conspiracy to confuse and befuddle users. After all, if no one is really collecting good ROI data, then any vendor's ROI claims can largely go unchallenged: While no one can ever be truly right, at least this way no one can ever be truly wrong.

The problem with this theory is that, in truth, the users are also part of the problem. In user interview after user interview, I'm always struck by how often I hear some version of "we didn't really do an ROI analysis," even if the next sentence says something praiseworthy about the vendor and its software.

The flip side of being so flippant about ROI is that good ROI data has never been more important. There are some amazing trends out there – service architectures and composite applications, shop floor to ERP integration, on-demand, outsourced service models – that are poised to truly change how customers use enterprise software. But the dearth of good ROI data on these topics is almost blinding, and the risk that all this new innovation will become a faith-based undertaking is truly frightening.

So it's time for a call to action. This is one issue that transcends all the politics and posturing of the industry. Customers and vendors need ROI data because they both desperately need accountability at one of the most important inflection points in the history of software.

If you ain't part of the ROI solution, then you're part of the ROI problem. Which side would you rather be on?

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