How to look at the return on an ERP system in financial terms that suit executives.
An ERP subscription appears in the budget as an expense, which is why the question keeps coming up. The useful way to answer it is to list what the system changes and put a value on each item.
Where the return comes from
- Hours saved on re-entering data and preparing reports.
- Fewer errors in invoices, stock and payroll.
- Less cash tied up in stock, because reordering follows real consumption.
- Faster collection, because invoices go out on time and dues are visible.
- Avoided penalties, because tax and labour requirements are handled inside the system.
Compare that yearly value with the annual subscription and the one-off setup. With a cloud system there are no servers to buy, so the cost is known in advance and the comparison is straightforward.