ERP Justification: The Unknown Milestone

ERP justification to management

People often overlook ERP justification. Now, don’t get us wrong. If you’re reading this, you know why it’s useful. However, the need to justify the investment is another story. Most times, you’ll need to convince higher management.

We already covered the subject in this article. Today, we’ll focus on what’s the best strategy. Also, remember that we’re here to help you. Don’t forget to grab your free consultation over here!

Why do you need ERP justification?

Implementing new technology always needs justification. After all, it’s still an investment. Moreover, it can be costly and risky. Thus, higher management needs to understand why it’s a worthy investment.

Unfortunately, many justification methods are outdated. As you’ll read below, you have many options. However, there’s only one optimal approach.

How to carry out ERP justification

This study has a great breakdown of the three main methods. It’s also an amazing look into proper technology selection. Each one offers different advantages and disadvantages. Thus, the right one will vary depending on your goals.

Economic analysis

Firstly, we have the most common approach. Economic analyses focus on returns, payback periods, and costs. It allows you to assess an investment’s value. Unfortunately, it ignores time value and other variables. As such, it only offers approximates.

Analytical approach

Analytical procedures don’t focus solely on monetary benefits. Analytic justification includes showcasing risk, distributions, and estimations. It’s better for subjective estimations. Yet, it often ignores inside changes that your investment may cause.

Strategic justification

Finally, strategic justification touches on what ERP software can do for your procedures. That includes improving or hindering operations. Moreover, it showcases how tech can change your goals and competitive edge. The main issue is that it neglects outside factors, like the other two.

What’s the best ERP justification approach?

Most success comes from using hybrid strategies. For instance, you think of economic and strategic aspects. That’s because you can compare company growth with the market’s impact. In other words, it paints a full picture.

As such, make sure to showcase every benefit and disadvantage. That means returns, process efficiency, competitive advantages, and more. Tailor the best strategy for your investment’s goals.

What’s the next step?

After justification, you should be good to go. However, the road isn’t clear yet. You’ll have to deal with selection, installation, maintenance, and more. Thus, it can be intimidating. But, you don’t have to do it alone.

In Zero Point, we’re here to help you. We work with ERP selection, implementation, support, and more. If you need aid, you can book a free consultation today!

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Zero Point ERP Solutions

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