Seeing your ROI with company accounting and management software is often a murky business, but it shouldn’t be. In fact based on 22 years of experience, I would say that when using ERP software and there is a solid ROI, it’s never unclear where it’s coming from.
Over the years, we have learned a lot about small business accounting software for both Mac and PC and the relationship with ROI. Based on our experience, we’ve broken down for you some of the most common sources of ROI from ERP software. We’ve also divulged the ugly truth about which hold water, and which do not.
In “order of credibility” here are the top sources of ROI from ERP use:
1) Headcount Reduction – Credible – This is the king of all ROI indicators: if you can do the same volume with fewer people, you’re getting a measurable return.
Example: We have a mid-west auto accessories distributor who was able to reduce his shipping staff from five people to two people because of the shipping integration in AcctVantage ERP.
2) Higher Volume, Same Staff – Credible – Kind of the correlary to headcount reduction, if you can sell more without adding staff, you’re getting a measurable return.
Example: A west-coast distributor of educational materials saw a 400% increase in their top line without adding administrative staff because they manage their orders and inventory with AcctVantage ERP.
3) Stop Losing Orders – Mostly Credible – If you are losing business because you can’t provide the level of service your competitors can with their ERP systems, you are losing money. If you can stop losing that business, you have a measurable return.
This one is “mostly credible” because it comes down to whether you *really are* losing deals over lack of quick, reliable, pertinent data (customer touch-point history, order history, historical pricing, real-time stock status, etc.). You will get a measurable return if you trust that your sales people can deliver more sales given better/faster info. (Meaning, they are saying they can, and what they are saying makes sense to you.)
4) Increased Efficiencies – Not Credible – “Efficiencies” aren’t ROI. Period. There may be many great examples of how a new ERP solution will “make things easier,” but that’s just oiling the machine. In my experience, if you don’t have a compelling case that rests solidly on #1 and/or #2 above, you don’t have a compelling case for ROI.
5) Better Tools – Not Credible – If all you have is along the lines of this statement, you don’t have anything: “If you had our software you could run this report each month that would give you insight into your operation you don’t have now so you could make it more efficient and you could save money.” This is even one step removed from #4 above, and is all the weaker.
6) You Will Sell More – Not Credible – Software never sold anything and never will. A solid value proposition and good sales people generate sales. Software is neither.
Of course, your ERP’s implementation or the real cost of getting up and running successfully on small business ERP software has it’s very own truths, myths and pitfalls.