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SoftwareMedia Blog | April 18, 2014

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Thinking Of Using SAP? Here's Exactly How To Calculate ROI

Thinking Of Using SAP? Here’s Exactly How To Calculate ROI

When you are choosing an enterprise software platform you will want to consider all the factors into your return on investment (ROI) – not only the cost of implementing it and of training and support for your stakeholders, but also all of its other financial and organizational consequences.

Calculating your ROI from using SAP requires you to compare the sizable investment you made in your organization’s information technology infrastructure with the net effect on your enterprise financials of the costs it creates and the expenses it prevents, as well as any revenues it increases and or waste it eliminates.

Getting Started With a Cost-Benefit Analysis

Doing a complete cost-benefit analysis means that in calculating your ROI from using SAP, you’ll need to include the purchase and implementation expenses, and also the benefits of implementation. These cost savings and process improvements may not be your primary reason for the technology project, but they are affected by it.

Therefore, you should also take into account:

  • The customers you didn’t lose because you correctly filled their order,
  • The equipment that did not break down because of asset management solutions
  • Lower inventory storage
  • Less lost revenue due to chargebacks and incorrect orders
  • Compliance documentation problems that never happened because your financial solution prompted you to run the necessary reports or even automate their creation altogether.

But you should ask about hardware and software costs for your proposed solution, licenses, licensing compliance costs, and warranties and maintenance issues.

  • What about footprint and physical plant needs?
  • Is your server room adequate?
  • Does SAP technology affect your power consumption or server room temperature requirements?
  • Are backup and recovery easier and less time consuming?
  • Are business continuity measures more reliable?
  • Is employee training required?
  • Are upgrades and patches available and are there known unpatched vulnerabilities?
  • What is the anticipated down time and what are the failover options?
  • How expensive is a security incident in terms of lost of reputation and business opportunities? employee overtime?
  • If user access to the site is impeded by an unforeseen outage, does the organization lose revenue? Customers?

Other Questions to Ask

Each of these factors should be considered, and also the potential costs of doing nothing, such as:

  • Staffing for tasks the adopted solution would automate
  • Ongoing materials wastage
  • Repeated equipment maintenance.

SAP has superb manufacturing support and modular offerings with incomparable integration capability. SAP’s scalability allows it to handle enterprise scenarios of essentially any size.

Concerns about implementation cost can be mitigated with careful definition of project scope to minimize expense associated with customization and staff training. When you need the best and most robust solution available, SAP is the way to go.

This article is by Craig Shaneck, Director of Sales and Marketing at GROM, an SAP solutions provider, which he’s been a part of since 1998.  He writes and publishes new articles regularly on the GROM website.

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