ERP implementation: What’s the cost of doing nothing?

Post By Charlie Heywood on September 2, 2016

ERP implementation: What’s the cost of doing nothing?

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Not long ago, we blogged about the cost of SAP Business One. Even with its small business focus, implementing SAP Business One can be a big investment – particularly if the user wants to get the best possible return on the project, and therefore spends the time and money to deliver an effective and future-proof rollout.

What we didn’t mention, however, was the cost of doing nothing. Most of the time, there’s a good reason for a small business to consider ERP implementation: it may have outgrown basic accounting tools, for example, or identified a growing bottleneck around manual data entry. This often translates into a clear and measurable cost associated with not having ERP in place.

With that in mind, we’ve put together the following list of factors that could contribute to higher costs as a result of holding back on an ERP implementation. Can you think of any others?

The admin burden grows

One of the most obvious benefits of ERP is that it eliminates a lot of low-value admin work. Manual data entry is both time-consuming and prone to error, particularly for a business with a number of different software packages for finances, project management, scheduling and so on. And this burden will only grow with the size of the business: the higher the number of staff, customers and projects, the more time spent finding and feeding information from one place to another, and the higher the rate of error.

For this reason, implementing ERP can dramatically reduce the man-hours involved in admin, as well as the headaches that can arise from the continued use of basic accounting tools and spreadsheets.

Legacy systems fall out of support

Another problem with the “if it ain’t broke, don’t fix it” mentality is that no software is built to last forever. Legacy systems will eventually fall out of support, leaving the business with no-one to call on should something go wrong. This presents a genuine risk that a small software issue could develop into a mountain of a problem.

Morale suffers

It’s more difficult to quantify, but the above can translate into a serious loss of morale. No-one wants to work in an environment where their day is taken up mostly by admin and fixing problems caused by out-of-date technology. Today’s workers are more digitally savvy than ever, so it’s not a stretch to say that a business’ software and systems can have a direct impact on their productivity and job satisfaction.

Decision-making is less effective

Finally, a lack of joined-up systems can make decision-making less effective. Without fast and accurate reporting, senior managers can’t easily get a 360-degree view of the business – making it difficult or even impossible for them to manage the budgets, costs, resources, challenges and opportunities under their control with any degree of visibility or efficiency.

The result? A failure to ensure the business takes the most effective and profitable path at every juncture, and adding incrementally to the cost of doing nothing when it comes to ERP.