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   Kaytek IT - ERP Consulting Perspectives |
Consulting
Software
ERP
SAP
Missing ROI's ?
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Kaytek IT - ERP Consulting Perspectives |
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Return on Investments (ROI) Estimation is very tricky in the case of IT Projects. More so in the case when an ERP system becomes the entire Foundational Backbone of an organization's functioning. As it happens in the case of SAP where investments have traditionally been gigantic. Seriously Seeking (Silent ??) SAP Success Stories.... The above was the tantalising title of my earlier weblog published on the world's top platform for discussion of IT issues. This was in response to one battle-scarred 20 years ERP implementation experienced US veteran who had issued a clear challenge. He wanted documented examples of companies which have implemented multiple SAP modules and have got positive ROI (Return on Investment) figures. On my part as my humble bit, I did send across one or two documented third-party references to this gentleman to check out.  These were as follows : Fortune Magazine July 7th 2003 Issue Page 25 talks of
a Connecticut based Consulting Firm hired by SAP to
churn out a series of reports analyzing returns on SAP
Software. Brother International's Mr. Sugiura has been quoted as
mentioning a 129 % return on a SAP CRM project, highlighting
a 40 % reduction in customer contact call time, and a
savings of US $ 1.80 per customer contact call. |
Googling revealed the name of the consulting company and another
Customer Reference - CJ Corporation with an IRR (Internal Rate Of Return) of 15% . Thomas Cook UK
revealed that
based on an investment of " £1.7m implementation ",
They got... " a savings of £140m " ," £80m turnaround in net revenue " Why is SAP the issue ? Any software like SAP which works at the core of large organizations (38 % in the US and 60% in India) has to deliver measurable results. SAP skillset projects have been the ones which have also got frequently offshored (since most of the skillsets required are quite widely available.) (Here, it becomes Simple Simon SAP). Also, perhaps if a SAP project is a Dollar-Drainer, (in the absence of positive metrics), perhaps Management thinks it is a fit case for Offshoring. Then, it becomes Scary-SAP from the perspective of the employees. Coming back to the gentleman's challenge, "Why are SAP ROI (Return on Investment) difficult to get ? " After all, an ERP software implementation is not really a walk in the garden. (It is probably akin to skipping the landmines underground). But, any software either has to  Raise Revenues, ..... Cut Costs,
Eliminate
Expenses and / or  Raise Internal / External Stakeholder Satisfaction. |
Especially SAP, the Market Leader. If it does not do that, it only adds value in the User's Minds (and yes, a line (or a paragraph) in an Updated Resume, please do not forget that.) To be fair to SAP, getting ROI figures for other non-SAP ERP implementations is also equally tough. Perhaps, it gets targetted since it is the Market Leader. So where are the Missing (ROI) Metrics ? Are the SAP R's (R/2, R/3, etc) ripping you off ? I seriously hope and think not. First, In their marketing literature on their website, SAP has provided several case studies and examples of companies (large and SME's) who have publicly mentioned about their SAP investments being successful in achieving the financial and other business goals. I have not personally verified these claims, but these are respected companies in India. Secondly, beyond financial return on investment, many ERP projects help in the increase of other forms of Intangible Capital both at the Individual and Organisational level. SAP projects do help in the increase in these non-traditional types of capital, many times much more than the measurable financial returns. Average life of an ERP ? |
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