Your #1 source for best news and interesting links on the web

The Basis of ROI Calculation for Your ERP Consultant

Setting precise ROI (Return On Investment) metrics with regard to hiring an ERP consultant is a bit difficult course to take. Finally, it all boils down to a question of whether the money paid to your ERP Consultant takes the project onward positively, or was it a dibrach success.

An ROI breakdown can normally be analyzed into essential and highly-evaluated project price elements, like:

Project price savings

Project price savings is actually ‘what one was paying, against what one is paying now’ rule; and the subsidiary elements can be defined as:

  • Cost savings between previous and present enhanced dependability
  • Cost measure of previous production throughput speed, and the speed of enhanced processes
  • Cost measure between earlier direct support hours versus present decreased direct support hours
  • Cost measure between earlier FTE costs versus decreased admin staff values
  • Cost measure between earlier direct expendable values against enhanced processing resulting in decreased consumable values

With the help of these calculated elements it can be directly linked to rupee value, in the end settling up to a set of ‘before consultant’ plus ‘after consultant’ overalls.

Project expenses

This component is a greater amount of an ad-hoc or soft cost; despite the fact that to totally comprehend the effect of a final ROI one has to incorporate ‘everything and anything’ related to an ERP consulting venture.

Again the objective is to characterize the last delta amongst previous and present, nonetheless; this specific component will commonly characterize itself as an unadulterated cost. By the by, the cost will be cost, and applies straightforwardly to the last ROI related with an ERP counseling venture; so don’t wrongly believe that this component speaks to an apple v. orange problem because at the end of the day it does not.

Selection costs

This component can now and again be related to Project Expenditures, however, to unmistakably comprehend where the cash went, one needs to represent why one pulled the cost trigger amid an ERP consultant selection procedure. Subordinate expenses include:

  • Extra consultant resources
  • Extra consultant software acquisition
  • Consultant research as well as systems selection prices
  • Consultancy-precise administrative prices

Execution Costs

This pure cost element may appear to be obvious and the sub-categories typically include:

  • Purchase plus installation of Software
  • Purchase plus installation of database
  • Network extension
  • Additional licensing
  • System arrangement, design, and launch
  • Hardware expansion
  • Intermediary labor costs
  • Development and delivery of internal plus enterprise training plan
  • Other incident costs

Continuing expenditure requisites

Finally, the continuing cost requirements which are critical elements in any precise project ROI and its price backdrop linked with ERP (ERP Software for Sales) has to be found and these components include:

  • Continued licensing
  • Reliant seat ownership
  • Buy comprehensive bandwidth plus/or data rate
  • Extended support plus maintenance
  • Extended failure recovery programs, licensing, plus systems

After one has calculated all the above, calculating and estimating the final all-in ROI becomes very easy.

Leave a Comment

Menu Title