Under the conditions of fierce competition characterizing the modern market, economic actors are constantly forced to search for ways to improve the efficiency of their business. At the same time, one of the priority tasks of the market participant is the task not to lag behind competitors regarding applied business technologies.
For these reasons automation systems, including ERP systems and design, are gradually becoming a standard for enterprises. There is a natural question about economic efficiency of ERP-systems application.
How Efficiency is Measured
Today there are many approaches to measurement of efficiency of ERP-system application. It is explained by the relative novelty of the question, by the variety of life situations. The main thing is specificity of the subject of evaluation itself. ERP-system application cannot be considered as an independent project with isolated resources, cash flows and effects. This project is integrated into the customer’s core business and affects the key performance indicators of this business. That’s why erp software development has become so relevant.
The subtlety is how to separate the effects of implementing an ERP system from other factors affecting key business metrics. No one doubts today that these effects are positive. But their quantitative measurements are still the subject of scientific debate.
- In any case, the effects of the ERP-system can be divided into two main groups:
- economic (measurable) indicators of implementation efficiency;
- Organizational (quantitative) changes that are not quantifiable.
What is the economic benefit of implementing an ERP system? This is getting real economic benefits from the use of the whole package of modules or individual functional blocks. When calculating the monetary expression, they are all based on the ratio of costs and revenues. They must be obtained under the conditions of the implemented software.
The return on investment in an ERP system comes not from the system itself. But from the increased efficiency of the business processes it supports. The enterprise resource management system itself, no matter how good it is, has little impact on increasing a company’s productivity.
If you continue to follow your old business processes after implementing a new system, you can expect only the same, or likely worse, performance. An ERP system can provide and support many new kinds of processes. But it’s up to the company itself to decide what those business processes should be. Decide whether to use them afterwards.
It is impossible to talk about the correct. Effective implementation of information technologies, designed to fundamentally improve the market position of the company, without considering achieving a particular level of key performance indicators of the company. The system should be set up to achieve the strategic and tactical goals of the organization.
If companies, while implementing an ERP-system, ignore corporate strategy. Consider its use as a technology for implementing only tactical tasks, then, despite the undeniable benefits received, the fundamental improvements in the company’s business may not come. Take this into account when contacting xamarin development company.
Defining your business strategy and reflecting that strategy on the goals. Objectives that the selected ERP system is designed to solve is the most important thing in deciding to implement.