By Russ Kahn

Although it can be difficult to directly measure the return-on-investment of an ERP software purchase, these seven principles will ensure that you get more for your money.

1. Step Up
As a business owner/president/CEO, you must take personal responsibility for the outcome of an enterprise software implementation. ERP will only pay back if it is a part of your overall business strategy. Establish clear business objectives for the project and hold yourself accountable for the results. Your team will follow your lead. Give them measurable goals and be their biggest cheerleader. The primary reason that most ERP implementations fail is that company leadership either loses sight of the original objective or loses interest in the project.

2. Brush Up
Educate yourself and your team on what business problems you want to solve with an ERP system and what solutions exist in the marketplace. Don’t just look at the functionality of the software, but at the experience and reliability of the solution provider. It is especially important to look at companies that specialize in your industry. Many of the big-name ERP’s don’t fit well with the woodworking industry. Once you go through the selection process, don’t skimp on training your employees. Would you fly with an airline that didn’t train its pilots?

3. Partner Up
The average lifespan of an ERP system is from 10 to 15 years. Find a supplier that will work as a partner in making your business successful. If you do, you both win in the long run.

4. Staff Up
Make sure that you allocate the necessary personnel to ensure completion of the job. Your supplier/partner should be able to help you define the necessary skill sets. If you don’t have them on staff, hire them, contract them, or get them from your partner. You will do better to hire or train personnel for key roles such as system administration, reporting and data setup, as this gives your company the independence to make necessary changes more quickly than if you are dependent on a third party. Allocating and training the appropriate resources will also ensure that you take advantage of more of the features that the software has to offer, meaning a higher return.

5. Pay Up
ERP is not cheap, so be prepared for both the up-front cost, annual maintenance and “care and feeding.” ERP solutions, properly implemented and leveraged, will give back more than they take in, but they are expensive to implement and will affect your ongoing annual budget. It’s no different than maintaining a CNC machine or your personal transportation. It is always cheaper to pay to maintain it than it is to pay to fix it. Your supplier/partner should be able to give you a reasonable idea of the cost of implementation and ongoing support, in addition to the initial purchase price.

6. Own Up
During and after the implementation, take ownership of the solution. Make it your own and you will get more out of it. When you buy a new CNC machine, it’s your machine; you are proud of it, and you see it as an asset that makes your company money.

You should treat your ERP solution the same way. Properly selected, implemented and employed, your ERP will make you a lot more money over time than your CNC machines because it will optimize your entire business, not just your machining department.

7. Cycle Up
The journey doesn’t end when the system goes “live.” It really is just beginning. Just like any business process or system, you should strive for continuous improvement. That will come through refining how you use certain features, adding on new modules or functions, improving the use of the information that the system generates, upgrades to new versions and so on.

And don’t stop the training either. As your staff builds knowledge and expertise, they should train new employees. As new modules are purchased, send your key users to training to keep their skills up to date. Keep the cycle of continuous improvement going and you will have many years of return on that important investment.

Russ Kahn is a product manager at 20-20 Technologies. For more information visit 20-20Technologies.com, call (888) 216-1844 or email [email protected]