Can Your Business Afford Not To Invest In An ERP System?

by | May 8, 2014 | Blog

SAP ERP Solution

Do you have a small business? Are you trying to decide if your company can afford to implement an ERP system? A better question may be to ask yourself what are the cost for not having an ERP System in place.

Mint Jutras, an independent research-based consulting firm specializing in analyzing the business impact of enterprise applications, conducted a survey of 475 business owners on the results of their ERP implementation and the degree to which the implementation achieved key goals. The study also examines challenges of respondents, and benchmarks their ERP performances.

The study was designed to help small businesses identify the need and justify the cost of embarking on an ERP implementation, according to the research company. The study was published last May 2013 that yielded some very convincing results in favor of ERP solutions for small business. One of these was that cost savings alone produced 100% return on respondents’ investment (ROI) within the first 1-2 years of implementing an ERP product for 87% of respondents who chose an ERP solution. According to the study, the cost savings could be attributed to a number of factors including people, processes and technology – yet ERP was clearly seen as a catalyst, especially when combined with best practices and standardization of methodology.

Cost savings were not the only benefits noted in the study. Respondents with ERP systems also reported a 28% increase in profitability YoY and 23%-29% improvements in several other measures, specifically on complete and on-time delivery, customer retention, cycle times (in distribution and manufacturing) and production (in manufacturing.)

As mentioned in the study, the key to a company’s long-term viability is in efficiency and cost-effective operation. We share the view mentioned in the Mint Jutras study, that perhaps businesses have been asking the wrong question. When considering ERP solutions they should not be thinking “Can I afford it?”, but should ask instead: “Can I afford not to?”

Does your company have an integrated ERP system in place? If not – what improvements and competitive differentiation do you think such a system could help you achieve?

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