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Determining ROI for ERP solutions

Find out how interviewing ERP users can help determine if your new solution will achieve ROI.

Customers who deployed an ERP or CRM system in the last 12-18 months are ideal sources of information for determining ROI. These customers are references since they have implemented their systems long enough to realize the vast majority of benefits but not too long that they have forgotten how things were done before the new system was installed.

In interviewing these type of customers you should follow these guidelines:

* Talk with a variety of different users to understand what tasks are impacted by the system; how much time per day those tasks used to take; and what amount of time is now saved. Not all time saved will be used productively, so you should deflate time saved by a factor of 0.6.

* For IT improvements, look for a reduction in Help Desk resources; less work linking disparate systems together; fewer people required for system monitoring; fewer patches; and perhaps even less system downtime.

* For operational savings look for a reduction in such expenditures as Express Mail, telecom costs and travel costs for meetings.

* For revenue-related benefits look for faster time to market, better management decision-making, improved inventory control and churn.

In conclusion, there are four general categories for savings: user productivity, IT staffing, operational efficiencies and revenue improvements. The best way to get data is to interview real users. Other sources for ROI analysis would be vendor case studies, trade associations and magazine articles.

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