Calculating Return on Investment or ROI prior or after your SAP projects can be a formidable task. Formidable because it’s not always clear on HOW SAP will drive down costs, increase sales, increase customer satisfaction or make a Supply Chain more efficient.
Below is a check list to help estimate ROI on SAP projects.
Will the implementation reduce head count or FTE (Full time employe)? When we implemented a SAP driven weighing system at a Pharmaceutical company we were able to eliminate having two people verifying weighing. One person was essentially there to sign off on the documents. Estimating that was easy + the savings of $400,000 dollars a year in scrap due to human error.
Will you become more efficient? Implementing electronic batch management at a pharmaceutical company would have brought huge efficiencies across the company. A well done time and motion study would have shown that the manual process of batch management required an army of people and produced huge bottlenecks in the system.
Will users have better data at their fingertips for critical decisions? Better data means improved cross application data visibility. With SAP BW users can create their own reports. Users can be more proactive than reactive with good data at their fingertips. Good data starts at the S&OP plan and filters down and back up across the demand and supply plan – therefore improving the process as a whole. And even prior to the S&OP plan, do you have the data to really crunch number s and reconcile your product base? Analysed your customer base lately?
Will bottlenecks in a process be reduced? One of my favorite ROI subjects is bottleneck reduction. At a yogurt company we reduced the bottleneck of using excel for the budget by using SAP Long Term Planning. The budget calculation time went from 3 weeks to 3 days. It was almost fully automated. Another interesting ROI bottleneck area is in reducing time to market. Your engineering and R&D departments probably have significant bottlenecks in their processes. Think of project management, version management, reworking a design or meeting regulatory demands. These are all areas that can be standardized and are repeatable with an ERP system. Your biggest challenge may be to make sure your processes are adaptable to SAP. SAP Product Lifecycle Management can be an excellent tool if deployed well. Who doesn’t want a ROI of faster time to market?
There are a few examples where you can measure ROI with a SAP implementation.
The point here is that everyone wants a positive ROI ASAP. And once your SAP system matures you should continue to measure your ROI with all that fabulous data at your fingertips.