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Return on investment from ERPDetermining the return on investment (ROI) of enterprise software is never easy. The sheer number of parts of the organization ERP software touches mean that measuring ROI requires a heavy investment in time, a certain amount of intellectual rigor and extensive cooperation from the end user company. In determining ROI, Forrester relies on its own Total Economic Impact™ (TEI) methodology.

The daunting complexity of measuring economic impact of ERP is why this IFS Applications ROI study from Forrester, available on this handy analyst report download page, is so valuable. It is understandable that the customer wanted to remain anonymous as the study discloses extensive detail on their internal operations. However, the scale and scope of this international customer is fairly typical of many of IFS customers. This company has multiple locations and multiple divisions operating in multiple countries. It had been operating almost a dozen legacy ERP products.

Most everything that is easily quantifiable is accounted for in Forrester’s ROI study, including the license and support savings stemming from migrating away from multiple legacy solutions. How did IFS Applications perform in this objective ROI analysis? You will have to read the study to find out. My personal opinion is that IFS did pretty well. But again, read the study and share your own thoughts here in the comments thread.

With an analysis like this one, I often think, however, of the old joke about the woman who lost her glasses. She was looking around in the garden, under the rhubarb plants, along the fence. Her neighbors saw her rummaging about, and asked her what she was doing. Once she explained about the lost glasses, they immediately joined in the search.

But after several unsuccessful hours of looking, one neighbor became exasperated and asked her where she last saw the glasses.

“Why, inside, in the parlor,” she said. “But I prefer looking out here because the light is much better.”

I wonder to what extent ERP ROI is much the same way. There are some metrics we intuitively understand, that are easy to tie back to the software investment. Reduced inventory. Improved supplier payment terms. End user productivity gains. These are the hard numbers that are irrefutable and belong in an ERP ROI study like this one, from Forrester. But what more ephemeral or unheralded metrics do you think are harder to measure? Improved visibility and insight enabled by a single enterprise solution? Tribal knowledge capture that retains the wisdom of experienced managers before they retire? Increased engagement with the application and the business stemming from mobile ERP access?

What do you think? What are the under-appreciated areas of ERP ROI? What benefits would we find if we diverged from the well-lit path?

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