Manufacturers Deserve ROI on Enterprise Software Systems
What is the ROI a manufacturing firm can expect to see on a big software implementation? Gantry Group, a strategic advisory and custom market intelligence firm, conducted a research study to find that out. In it, they took a look at the Total Cost of Ownership and ROI. They conducted in person interviews as well as online studies to get a better picture. In conjunction with Sage, they took a look at 10 manufacturing companies to see if their ERP systems really paid off.
While the results were specifically applicable to Sage, we found this study to be an excellent example of how other comparable ERP systems, like Epicor fare. In our experience, our clients see many of these same benefits on a daily basis.
When evaluating the success of an ERP system certain tangible benefits are:
- Seamless data flow due to system integration
- Reduction of staff or staff time on certain tasks
- Increase in sales and new sales
- Reduction in inventory or overstocked items
- Reduction in payments to third party accounting or IT firms
- Decreases in returns or reworks
When working with our clients, we have found that some manufacturers were relying heavily on manual processes. Switching to automated invoicing, or tracking or bill pay for instance saved hours from individual employees each week.
Inaccuracies in the manufacturing sector are a drag on business and morale. Manufacturers with integrated systems don’t have to spend hours manually entering data or worrying about quality control issues. A system that has accurate bill of materials, routing definitions and detailed production instructions will help reduce scrapped materials.
As your firm expands, make sure your software expands to accommodate new orders, new contractors and employees. Slow systems add up to losses in employee productivity over time.
Keep your customers happy. Having updated or disjointed business systems could be causing delays in order processing and shipment scheduling for instance. Keep pace with your business by integrating your customer information and shipping information in one place.
In the Gantry study, much of the ROI was seen in the first year of implementation. On average, the respondents experienced a $582,500 boost to their revenues in Year 1. Typically, average payback period for an enterprise implementation is around 24-36 months. This varied depending on the individual companies in the study.