Taking ERP to ROI How to Benefit from ERP Investments

Sammanfattning: Problem definition Even though a great deal of research have been done exploring the ERP field, companies still have a hard time determining and obtaining the full potential scope of benefits that comes with a fully working ERP system. Implementing an ERP system is like changing a heart while the patient still is running. It is therefore hard to measure the benefits and the improved efficiencies, since those don’t appear over night. The important questions asked in this master thesis are: How does a company identify their potential benefits of an ERP system, to make an investment analysis for a potential purchase? How does the company then realize those benefits and control costs through a successful ERP project? Which companies are in need of a new ERP system in the first place? Purpose The purpose of the master thesis is to construct a model for determining the company specific price for an ERP system, by measuring and validating the potential benefits and improved efficiencies, realized by implementing a new ERP system. In addition critical success factors and best practice when buying and implementing ERP systems will be identified. Method By conducting a number of case studies of ERP projects, mainly in production companies, and focusing on the cost drivers, we have identified the most common and important benefits and efficiencies from the acquisition of an ERP system. In addition, we have gathered information by interviewing seasoned officers within the business and compared our results with their wisdoms. This has given us an insight in how ERP projects are run, which in combination with a broad understanding of the ERP business has given us the knowledge to compare new findings with previous experience, and thereby reaching our goal of making a model for how to run a successful ERP project. Conclusions We have identified 24 cost drivers, which we believe to be the most important to take in concern when making an investment analysis for an ERP project. We have also found that there is a great difference between companies that already have an older ERP system installed and companies where no fully integrating business system exists. In the first case, benefits with the new ERP system are hard to realize and the investment analysis should instead be based on the alternative costs for keeping the old ERP system running. In the second case, possible benefits are easier to find and the investment analysis may rely on a summarization of the discounted future cash flows from those. In addition, an analysis of actual costs and learnings from the case studies has been conducted and a guideline with best practice for running an ERP project is presented.