How To Calculate The Cost Of Delaying An ERP Implementation

words by Finlease

It’s time to implement – disruptions, risks, conflicting priorities aside, how do you calculate the cost of delaying an ERP implementation? And ensure that the ERP project is back on the priority list?

While there are several ways to calculate the cost of delay, a simple calculation that you can use is to apply projected improvements to your own financials such as;

  • Revenue improvements of 2% – 10%
  • Gross Margin 1% – 5%*

For example, with a revenue of $100M you have the Annual Improvement Opportunity of between $2M and $10M. Read more

Implementing a New System

The implementation of new ERP software costs money, takes time, resources and the concept of change can be off-putting. However, the positives almost always outweigh the negatives, with businesses moving to the cloud in favour of a scalable, accessible and collaborative platform. It’s important to take the following into consideration and take the plunge.

Downsides to Putting off System Upgrades

  • Your competitors could have implemented a new system first, immediately giving them a huge advantage.
  • You’ll be left with no choice but to also upgrade your systems due to falling behind, which can lead to rushed decision making, stress and mistakes.
  • The longer you wait, the longer it takes to see a return. You’ll see savings the sooner you start upgrading your systems as implementation costs are minimal.

With speculation that as many as 90% of businesses could be moving to the cloud by 2018, take the time now to evaluate your the right system for your business. The cloud has become a mature product, with businesses of all sizes making the move in favour of a supportive, efficient platform.

Frost & Sullivan reports strong Infrastructure as a Service (IaaS) growth in Australia in the Australian IaaS Market Report 2014. The market grew 42% in 2014, and they predict the market will hit $439 million by 2018.

The Cost of Delaying an ERP Implementation

Often, the longer the delay, the longer it takes to replace inefficient business processes with more efficient ones – or resolve them altogether. An ERP system can fall behind as a priority in busy businesses, however operations only become more complex with growth. This can lead to all kinds of inefficiencies within a business; duplicated data entry, delays, inaccurate data and more. With the competitive nature within the industry, you can’t afford to risk making these avoidable mistakes or compromise customer satisfaction when an affordable ERP software solution is within closer reach than you may think.

Richard Kloé, Managing Director at Headland Machinery explains “we implemented NetSuite and saw a return on investment of $320k in our first year. NetSuite has really helped us use our engineers and field service team more efficiently as they have the ability to know where all resources are at any given time.” Read the Headland Machinery case study here.

Are you considering upgrading your business management platform?

Upgrading business software can be an incredibly economical decision when considering how much it costs to maintain outdated software and it is means that employees time is used much more efficiently.

Many companies report that initial investment is the main obstacle in the process of investing in new software.

Klugo and Finlease have partnered to introduce a low cost finance option that spreads the upfront cost of licences and implementation into easy-to-manage monthly payments. NetSuite provides an outstanding opportunity for businesses to future-proof their IT strategy and make the move to cloud.

Klugo and Finlease Partnership

Finlease make it easy for businesses to obtain software finance and ensure the transition to the cloud is seamless, effective and affordable. In most cases, 100% software finance is approved using no financials and requires no upfront capital outlay. Each finance solution is tailored to align with the Klugo package to ensure the highest return on investment.

For more information, please get in touch with a member of our team today.

*statistics supplied by NetSuite.

This article first appeared on Klugo.

4.9/5 from 954 reviews