Developing and building an ERP business case is the first step on the road of ERP change. Building a robust business case is crucial to ensure that your ERP project gains sufficient internal support from your business executives as well as funding and to build a sense of urgency.
But how do you build a killer ERP business case that will convince your Board or leadership to take on an enterprise resource planning project? This includes considering the risks, costs, benefits and more and in this article, we'll show you how.
You can download our free ERP Business Case template below:
The first step in building an effective ERP business case proposal is to gather data points and issues around your existing ERP system or IT landscape.
We recommend engaging with the different stakeholders in your business, ranging from the C-level to your finance department, operational & IT teams as well as customers and business partners and suppliers.
All of these stakeholders can be positively or negatively impacted by the performance of your ERP system, therefore can form the basis of your ERP business case.
Questions you should ask yourself, your teams and external parties can include:
There are many more questions you can ask your stakeholders to help you build an ERP business case, however in most cases, they will tell you more than you bargained for.
As well as asking your stakeholders qualitative questions, it is key to also ask quantitative questions to get close to determining the numerical cost of doing nothing.
This enables you to begin to form the basis of a return on investment case, which is ultimately going to be more compelling to your business executives, board and owners.
It's impossible to determine the return on investment of implementing a new ERP software without considering both the potential benefits and the costs. It's therefore crucial that during the process of building your ERP business case, that you also benchmark and receive estimates for ERP software & implementation.
There are dozens of ERP vendors and even more ERP implementation partners. ERP vendors include the likes of Oracle, SAP, Microsoft, Infor, Sage and more. Each of these vendors provides ERP software aimed at different sizes.
Every business case needs to demonstrate a return on investment and the same is true for an ERP business case.
To determine the return on investment of your ERP solution, the first place to start is with the current bottlenecks associated with using your legacy ERP system - or lack of.
From here, you can start to calculate the wasted man-hours of inefficient processes and administrative tasks.
Not all benefits can be easily quantified when building an ERP business case. For example, poor systems and processes can cause employee satisfaction issues, leading your talent to go elsewhere.
When building your business case for ERP implementation, you should also consider metrics such as: employee satisfaction, customer satisfaction, investor confidence, resiliency and more.
Many ERP projects take longer to complete than first anticipated and as a result are more expensive. Therefore its crucial to present a balanced view of an ERP project and potential risks when trying to convince your business executives to invest in an ERP implementation.
Risks of implementing an ERP system can include: business downtime, employee bandwidth, integration issues, implementation issues and more.
ERP software can often solve problems within a business, ranging from data validity issues, compliance risks, inefficiencies and more. However, ERP software is not always the answer.
It's therefore critical to evaluate the alternatives of implementing a new ERP software which can include: doing nothing, implementing point solutions and improving internal processes.