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New Aberdeen Report Lays Out Road Map for Maximizing ROI on ERP

In a new report titled Measuring the ROI of ERP in SMB: Keeping ERP Projects Alive When You Need Them the Most, Aberdeen Group lays out a road map to help midsize businesses achieve greater cost savings and operational improvements—and maximize ROI during tough economic times.

Based on input from more than 920 midsize companies (annual revenues under $250 million), the report found that the most successful ERP projects include aggressive, clearly quantified business goals; well-established timelines; and an ongoing commitment to measure return on investment (ROI), including a clear baseline for measuring performance improvements.

Aggressive ERP Strategies Pay Off in Tough Economic Times
According to the survey, cutting costs has overtaken customer service improvement as the top goal of ERP implementations among midsize companies since 2008. Yet the report clearly finds that lower total cost of ownership (TCO) of ERP projects should not be the primary goal in determining investment levels.

“With the downturn in the economy, a knee-jerk reaction may be to stop any discretionary spending on ERP projects just when their cost-saving, operation-improving potential is needed the most,” the report concludes. “Given the current economic uncertainty, it is now more critical than ever to keep these ERP projects alive.”

In support of this argument, the report found that best-in-class companies—those in the top 20 percent in terms of aggregate performance—were 33 percent more aggressive in terms of ERP investment than the industry average.

Measuring ROI: Key to Success
The report also found a clear and persuasive correlation between ROI measurement and overall company performance.

A full 100 percent of best-in-class companies estimated ROI in the planning phase of ERP projects, according to the report, while only 71 percent of what the report calls “laggards”—those in the bottom 30 percent in terms of aggregate performance—did the same.

However, the real breakdown comes after implementation. The report finds that 94 percent of best-in-class companies measure ROI after project completion, while only 55 percent of laggards do so.

And once ROI has been achieved, the divergence continues to grow: best-in-class companies (42%) are six times more likely to keep measuring ROI than laggards (7%).

Learn what industry analysts have been saying about Oracle's products and services for midsize companies.

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