The Importance of Aligning Business Needs with the Benefits of Your New ERP

At a high level, the benefits of upgrading to a modern ERP solution seem pretty obvious: more functionality, more efficient workflows, better security. But for most business stakeholders, it’s not enough to just point to the general qualitative appeal of new software. You need to be able to show how it will address your company’s specific pain points and deliver measurable value. Otherwise, key stakeholders such as CFOs will be skeptical and question the need.

To ensure buy-in on a new, cloud-based ERP solution, you’ll need to first align its features with your organization’s business needs and demonstrate, using hard numbers, how it will meet those needs.

What are your pain points?

The pain points that ERPs are designed to address generally fall under three categories: productivity, information, and asset management.

• Productivity: Are your employees producing enough quality work? Or are they overwhelmed and burning out?  A modern ERP solution can offer automation and streamlined processes that cut or simplify many tedious, time-consuming tasks that weigh on workers. If they can instead focus on a smaller number of more important tasks, you’ll be able to get more value out of them while avoiding exhaustion.
• Information: Are your forecasting efforts frequently falling short? With the right ERP system, you can quickly get more accurate real-time information and use it to improve forecasts and make better, more informed decisions. With better data and analytical tools, your team could generate accurate quotes more quickly, optimize pricing and product mix, and create more effective promotions. Many ERP platforms like Microsoft Dynamics 365 Finance and Supply Chain Management also offer AI-powered tools that can use machine learning to sift through the large amounts of data at a distributor’s disposal to identify market trends.
• Asset Management: Are you struggling to stay on top of inventory? Are you regularly hitting unexpected snags in the supply chain? Is your equipment breaking down? The right technology can help you improve inventory management processes and gain real-time insight into product levels, anticipate and plan around supply chain delays, and shift to predictive maintenance to reduce downtime and rework. It can also streamline the ordering process, increasing customer satisfaction.

How do you benefit from addressing those pain points?

Once you’ve identified the business needs you want your ERP solution to meet, ask yourself the following questions about each anticipated benefit:

1. Will it increase revenue?
2. Will it reduce costs?
3. Will it mitigate any specific business risks?

Answering these questions will help you define specific metrics by which you’ll measure the financial impact of your new ERP solution.

Stakeholders will likely want to know about these two metrics in particular:

• Payback Period: How much time it takes to make back the initial investment. It can be calculated by either dividing the annualized expected cash inflows into the expected initial expenditure for the asset or subtracting each individual annual cash inflow from the initial cash outflow, until the payback period has been achieved.
• Return on Investment (ROI): The overall return on the investment. It can be calculated by either dividing the net return by the cost of the investment and multiplying by 100%, or by subtracting the initial value of the investment from the final value, dividing the new number by the cost of the investment, and multiplying it by 100%.

You’ll want to project how much revenue the ERP will help generate, how much cost reduction it will enable, and how much value the risk mitigation features, such as increased data security and uptime, will create. Taken together, these can help you estimate a payback period and ROI that will help make the financial benefits of a new system more tangible.

Who is the right technology partner?

Doing all the legwork necessary to align pain points and business needs with ERP benefits can take up a lot of your time and energy. A technology partner like Sikich can do more than just help you implement your chosen solution; we can also guide you through the process, from searching for a solution to getting stakeholder buy-in to gaining widespread adoption. To learn more about how we can help, contact our team of experts today.