Business analysis: before and after ERP

Implementing an ERP system involves a significant investment and substantial changes within your business. However, it also provides a valuable opportunity to review your strategies, goals, and processes. It is crucial to perform a business analysis before implementing the ERP system to realign strategies and set new goals, and to determine if the system will deliver a Return on Investment (RoI).

In this article, we look at how business analysis will help you not only get the most value out of your ERP system but also demonstrate its value to leaders and stakeholders.

What is business analysis?

Business analysis is like solving a puzzle for your business, helping you to figure out how to reach your business goals in the short and long term. This could mean implementing a new enterprise resource planning system or other business-critical software, improving processes, or making changes to the organisation. It involves a lot of planning and analysis to come up with the best solutions.

What’s the next step?

There are many reasons why a business analysis might identify an ERP system as a solution, such as consolidating multiple systems into one reliable source of information or ensuring that current systems can support the future business strategy. Once the need for an ERP system is recognised as a solution, it is crucial to develop an ERP business case.

Implementing an ERP system will bring about significant changes in how tasks are carried out, so it is essential to get all stakeholders on board (including executives, department heads, and the IT department), especially since some individuals may be hesitant to embrace the changes. An ERP business case effectively tackles this challenge by presenting various ERP use cases, clearly explaining why the organisation needs an ERP system and the specific business benefits that can be anticipated. Additionally, the business case facilitates internal discussions with stakeholders and employees regarding the need for changes and the advantages of implementing them.

Download our ERP business case template guide and simplify the process of creating a detailed ERP business case.

Return on Investment (ROI) and ERP selection

Calculating the expected ROI before making any investment is a smart move, as the ERP system you choose should deliver tangible benefits to your business. An ERP business case is a powerful tool for outlining the business benefits that need to be achieved. This will greatly assist in determining ROI. It’s crucial to have a comprehensive understanding of both costs and benefits, both now and in the future, for both the current system and the new system being considered. Failing to define the expected ERP business benefits can lead to a lack of benefits realisation.

ROI plays a vital role in the ERP selection process, clarifying where your company will be in 5 or 10 years and how it can enhance your business in the short and long term.

What is ROI?

ROI, or Return on Investment, is a ratio that shows how profitable an investment is by comparing the gain or loss to its cost. Typically shown as a percentage, ROI can be calculated using a specific formula.

To accurately assess the total expenses of the ERP investment, it’s important to consider more than just the software and vendor implementation costs. The expenses typically fall into four main categories:

  • Infrastructure costs – even with cloud ERP, there may still be some infrastructure costs involved.
  • Software costs – are you solely paying for the ERP software, or are there additional software expenses to consider?
  • Implementation costs – it’s not just about vendor expenses; our own staff and user training are also essential factors.
  • Ongoing personnel costs – an ERP system is dynamic, so having staff to maintain, upgrade, and protect it is crucial.

Determining the gain will depend on the business benefits you’ve pinpointed. Typically, these benefits can be categorised into five main groups:

  • Finance and accounting
  • Decision-making
  • People productivity
  • Operations
  • Business technology

Once you have pinpointed the estimated costs and returns, you can easily calculate the ROI. It’s a straightforward formula: ROI = (gains minus costs) divided by costs. Present the result as a percentage. If it is positive, you can expect a return on investment.

Total Economic Impact for Sage X3

Sage X3 is an innovative ERP System that revolutionises how you manage operations, processes, projects, services, and supply chains. It empowers you to enhance your business resilience and adapt quickly to evolving customer needs. With its versatile capabilities – supporting multiple sites, companies, languages, currencies, and legislations – Sage X3 offers unparalleled flexibility. Whether you prefer an on-premises or cloud-based solution, it provides you with the control and agility to align with your IT strategy and business requirements.

Forrester offers a Total Economic Impacttm (TEI) study, providing an objective analysis of the benefits – including the economic advantages – costs, risks, and flexibility that buyers experience when using an ERP system.

Sage partnered with Forrester to conduct a TEI study and explore the potential ROI that organisations could experience with the implementation of the Sage X3 ERP system. This study offers prospects a structured way to assess the financial benefits of Sage X3 for their manufacturing or distribution operations.

The study identified an incredible ROI of 213% for the organisations surveyed in the study.

If you would like to enjoy an ROI like that, then contact us to discuss your requirements.

We offer a range of guides that provide more insight into Sage X3. Here are three that might resonate with you:

ERP Business Case Template

ERP Selection Checklist

COO to COO Guide

If you would like to discuss your project with us, please contact our team or book a tailored Sage X3 demo

2024-03-28T12:08:27+00:00March 6, 2024|Blog|
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