Business performance review

Three Ways Manufacturers Can Maximize ROI on an ERP/MES Investment

Nov. 13, 2018
Are you making the most of your investment?

If you are looking for a new enterprise resource planning (ERP)/manufacturing execution system (MES), you’ll need to do some research. Throughout your evaluation process, you’ll be looking carefully for a system that offers the features and functionality you need.

But what you really want is to know what your return on investment (ROI) will be. After all, streamlining processes or making employees’ jobs easier isn’t really that important unless it’s also enhancing your company’s bottom line.

How can you ensure your next implementation delivers an ROI that makes a difference to the bottom line? Here are three ways: 

Stay Focused on Outcomes

If you’ve read this far, you clearly agree that choosing a new ERP/MES is critically important to your business. You may be surprised to learn that in a recent study of technology buyers, CEB found that 39 percent of the time, buyers simply give up choosing a solution.

Why? Because it’s notoriously difficult to reach consensus on which solution to implement.

Choosing an ERP/MES will never be a quick or straightforward task. But it doesn’t have to be so frustrating that companies give up entirely.

Stay focused on your number-one outcome: driving connected manufacturing for your company. Although each department within your organization will have its own requirements and expectations for the new system, make sure these departmental goals support connected manufacturing in some way.

Consider also that moving to a new ERP/MES is a major change—one that may not be welcome among employees who have been with your company for 10 years, 20 years, or even longer. You’ll need to “sell” them on the idea of changing the way they do business. Doing an effective sales job with these peers will not only increase your chances of getting consensus on which system to implement, but also set the foundation for enthusiastic user adoption that will enhance the value you get from the new system.

Validate and Negotiate

Are you already deep into your selection process? If so, you’ve probably focused mostly on achieving the outcomes we mentioned above. But now it’s time to consider the negative: risk.

Every ERP/ MES comes with risk. Once you’ve identified your leading choice—or at least your short-list—take the time to do a risk assessment. Asking some tough questions around your potential solution will not only help you validate that you’ve made smart choices, but also give you angles for negotiating a better deal from your solution provider.

For each potential solution, ask questions such as:

  • How long will the implementation take, and how much will it cost?
  • What pricing model does your potential vendor offer?
  • What are other customers saying about this potential solution?
  • Could you get a greater ROI by deploying across multiple plants?
  • Will the vendor give you a discount for a multi-year commitment?

Crunch the Numbers

You can’t calculate your return on investment unless you know exactly how large that investment will be. Paying for software licenses is just the beginning. You’ll also need to consider what it will cost to maintain and upgrade the system, which new hardware you may have to purchase to run the system, and so on.

Of course, you’ll pay for any cloud system on a subscription basis, which makes these fees an operating expense. A traditional on-premises system, on the other hand, will go down on the books as a capital expense. Consider carefully which model would work best for your business.

Whatever you do, don’t “wing it” on your calculations. Instead, use a reliable tool to generate your own ROI estimates, and then refine these estimates as you continue to learn more about your company’s needs and the available solutions.

Get started now with the Connected Manufacturing ROI/TCO Calculator.

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