The experts at FindAccountingSoftware.com have helped thousands of businesses evaluate and purchase ERP software solutions. Their blogger-in-residence, Adam Bluemner, recently posted a great list of tips for making that evaluation and purchase successful. They're all important, but our favorite:
7. Do the math to price like a pro.
If you can’t answer the question of how much a software program is going to save you, you’re probably not ready to purchase it. An ROI study should be part of any software decision that’s as involved as purchasing ERP. Commodities can be bought on cost considerations alone, but investments require a careful study of value; and that means taking on the somewhat daunting exercise of tallying up costs and returns for each solution under consideration.
Tip: To calculate the investment, make sure to consider all licensing, support, implementation, set-up, hardware, support, and training costs. Estimating the return can be trickier, but it’s worth pursuing. For each individual process the software addresses, create an estimate for savings generated from reduced labor costs, impact on customer acquisition and retention, and opportunities for lowered overhead costs. Here’s a simplified example: improved inventory control with stronger automation features might save a couple hundred hours in labor, reasonably be expected to prevent the loss of a key account or two via improved turn times, and require less warehouse space based on better optimization. Applying the dollar figures to each of these improvement provides a basis to compare a more robuts to one with a more attractive pricepoint, but weaker features. The bottomline is you won’t know which makes sense for you if you don’t do the math.