You implement an ERP system to ultimately achieve returns and increase your profits. But: does that investment actually deliver what you hoped it would? Research shows that is far from always the case....

Purchasing, implementing and maintaining a new ERP system is not cheap, let's be straightforward about that. Whatever choice you make: implementation costs money and also a considerable amount of time.

If you compare the total investment in euros with the profit made after implementation, it turns out that 60-80% of the world's ERP implementations "fail": the investment is greater than the additional profit made.

The ultimate return on an ERP investment also depends on the choices you make up front. Be sure to read our article on ERP selection, where we explain how to objectively compare different ERP solutions and make a choice that fits your organization and objectives.

Research shows that many ERP implementations worldwide do not lead to profit growth.

Yet at Logres, we do see companies grow and prosper after implementation. How is that possible?

What is profit?

First, it is important to establish why you want an ERP package. An ERP package namely not necessarily a way to make more profit and not even a way to save on man-hours. So where does the profit lie?

1. What we often see is that an ERP package creates the conditions for continued growth as a company. For example, we see companies grow in revenue without having to hire additional people. The increased efficiency means that more orders can be handled per day and more shipments out the door.
2. Second, the implementation of an ERP package often means that at a stroke there is more overview and clarity for all employees and not least for management. There is more visibility of the whole process and less fragmentation. The 'island culture' is broken: there is better cooperation, which not only results in a more pleasant working atmosphere, less downtime and less turnover, but also in greater customer satisfaction. One of the first things you often see after implementing an ERP system is a sharp decline in the number of returns, and the number of complaints.
3. Gains can also be made when you look at "waste. By implementing an ERP package, you often see that stock differences become smaller, that purchasing becomes smarter and more efficient and that critical processes are less likely to come to a standstill.In the food sector, we see that fewer products are passing their best-before date (THT). And we see that less waste is produced at all our customers after implementation.
4. For many companies, the mere implementation of an ERP system means that the current process is re-examined. Things that have been going the same way for years are now suddenly looked at critically. The implementation of an ERP package is often the reason to organize various business processes differently, which is why our consultancy often goes further than just implementing the ERP package. This not infrequently produces profits, but in the ROI calculation you do not see this because the ERP package was only the instigator of new ways of producing or acting.
5. A greatly underestimated profit factor is also that management can make better and sharper decisions, thanks to the new insights gained.Wise management decisions are rarely attributed to a new ERP package, yet it is often the new insight which is the basis for new paths being taken, new markets being tapped into and new business processes being implemented.

Turn it around

It makes sense that you want an ERP implementation to actually bring you profit as an SME entrepreneur. But turn it around: could you choose not to have an ERP package implemented? Is further growth of your company possible without digitizing and automating processes?

Can your company actually take the next step without an ERP package?

Often the answer to that question is "no. There comes a time in every company when a professionalization step must be taken and the choice must be made to go digital. If only to stay ahead of the competition or because the customer demands it of you.

But are actual profits growing as well?

Fortunately: we at Logres often see companies actually start making more profit. That we see this is also logical: after all, we enter into a partnership for the long term....

Our goal is not to deliver an ERP package and then be gone as soon as possible. We believe in continuous development of your company and like to stay involved. In this way, we see in practice what your new ERP package means for your company and to what extent it changes your daily business.

We continue to advise you and assume that an ERP implementation is in a sense an ongoing process: if you keep investing in it, you will always get the most out of it in the long run.