{"id":8959,"date":"2014-11-27T12:28:21","date_gmt":"2014-11-27T12:28:21","guid":{"rendered":"https:\/\/ca.syspro.com\/blog\/is-erp-an-expense-or-an-investment\/"},"modified":"2025-03-19T10:38:17","modified_gmt":"2025-03-19T08:38:17","slug":"is-erp-an-expense-or-an-investment","status":"publish","type":"post","link":"https:\/\/ca.syspro.com\/blog\/planning-for-erp-or-purchasing-erp\/is-erp-an-expense-or-an-investment\/","title":{"rendered":"Is ERP an Expense, or an Investment"},"content":{"rendered":"
\n

Having been in the IT industry long enough to remember when the idea of “ERP” first started making the rounds<\/span><\/span>,<\/span><\/span>\u00a0I have watched with some fascination the struggle that organizations go through to decide how to justify an enterprise solution strategy.\u00a0 At the same time as a business owner or manager decides they\u00a0<\/span><\/span>must acquire the latest\u00a0<\/span><\/span>automated machinery<\/span><\/span>\u00a0with\u00a0<\/span><\/span>the <\/span><\/span>belief<\/span><\/span>\u00a0<\/span><\/span>that it will improve the business<\/span><\/span>;<\/span><\/span> often a decision about enterprise software is\u00a0<\/span><\/span>put on the back burner because the cost seems higher than anyone knows how to explain in the context of the overall business.\u00a0<\/span><\/span>A<\/span><\/span>lthough it is obvious that I’m biased on this discussion<\/span><\/span>,<\/span><\/span>\u00a0there is\u00a0<\/span><\/span>often a compelling case\u00a0<\/span><\/span>for understanding<\/span><\/span>\u00a0your business inputs, processes and outcomes more fully that is ignored, and opportunities to make the business<\/span><\/span>\u00a0function better are passed up.<\/span><\/span>\u00a0<\/span><\/p>\n<\/div>\n

\n

Perhaps we as ERP providers spend too much time describing the details of our solutions when we should be helping our prospective clients step back to see the key changes that will improve customer service and profits. If a decision<\/span><\/span>–<\/span><\/span>maker can see these improvements, the decisions become\u00a0<\/span><\/span>easier to make, and the commitments to assign\u00a0<\/span><\/span>resources to implement solutions\u00a0<\/span><\/span>become\u00a0<\/span><\/span>clearer and more specific.\u00a0 Once decision<\/span><\/span>–<\/span><\/span>makers understand the solution, they can properly recognize the people in the organization they can depend on to mak<\/span><\/span>e the business project happen.\u00a0<\/span><\/span>\u00a0<\/span><\/p>\n<\/div>\n

\n

T<\/span><\/span>hat is the context for considering any enterprise software solution in the light of an investment<\/span><\/span>,<\/span><\/span>\u00a0as opposed to an expense line-item.\u00a0 I have seen ERP firmly embraced as a set of tools to grow the business, and when th<\/span><\/span>is<\/span><\/span>\u00a0occurs business process improvements are often discovered along the way to reduce the time to get a positive return on investment.\u00a0<\/span><\/span>\u00a0<\/span><\/p>\n<\/div>\n

\n

We had an example in the recent past of a client who discovered a business process that reduced waste of raw materials and paid for the entire system in less than a year due to that single process change.\u00a0 If\u00a0<\/span><\/span>they hadn’t proceeded with the system th<\/span><\/span>is<\/span><\/span>\u00a0discovery would likely not have been made because the available tools would not have been there to ask the right questions as\u00a0<\/span><\/span>part of the systems investment.<\/span><\/span>\u00a0<\/span><\/p>\n<\/div>\n

\n

There is no doubt an organizational expense to proceeding with ERP (or Big Data, or CRM<\/span><\/span>,<\/span><\/span>\u00a0or\u00a0<\/span><\/span>other complex technology<\/span><\/span>)\u00a0<\/span><\/span>needs to be discussed as part of the decision<\/span><\/span>–<\/span><\/span>making process.\u00a0 This conversation should also include the upside, and the durat<\/span><\/span>ion of the system investment.\u00a0<\/span><\/span>\u00a0<\/span><\/p>\n<\/div>\n

\n

These are long-term decisions with long-term payback potential, but if the decision is questioned in terms of\u00a0<\/span><\/span>a\u00a0<\/span><\/span>short-term\u00a0<\/span><\/span>expense\u00a0<\/span><\/span>consideration only<\/span><\/span>,<\/span><\/span>\u00a0an organization can miss the opportunity to leverage these 21st century tools to grow to the next level (and to quote Buzz\u00a0<\/span>Lightyear<\/span>…to Infinity, and be<\/span><\/span>yond).\u00a0<\/span><\/span>\u00a0<\/span><\/p>\n<\/div>\n

\n

OK, perhaps a shorter term\u00a0<\/span><\/span>than Buzz\u2019s proposal\u00a0<\/span><\/span>should be considered<\/span><\/span>, but it can be a strategic advantage and should be approached from that perspective.<\/span><\/span><\/p>\n

\u00a0 <\/span><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Reading Time: <\/span> 2<\/span> minutes<\/span><\/span>Having been in the IT industry long enough to remember when the idea of “ERP” first started making the rounds,\u00a0I have watched with some fascination the struggle that organizations go through to decide how to justify an enterprise solution strategy.\u00a0 At the same time as a business owner or manager decides they\u00a0must acquire the latest\u00a0automated … Read more<\/a><\/p>\n","protected":false},"author":178,"featured_media":8960,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[272],"tags":[30],"class_list":["post-8959","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-planning-for-erp-or-purchasing-erp","tag-erp-systems"],"acf":[],"yoast_head":"\nIs ERP an Expense, or an Investment<\/title>\n<meta name=\"description\" content=\"Why businesses should consider an enterprise software solution as an investment rather than an expense item\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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