Soft Dollar Savings of ERP

By Robin Wilding
Updated: September 08, 2011

ERP systems and software benefits are often thought of as an enterprise-class centralization system that brings your business resources, information and functions of a business together. But, there are additional benefits to ERP, including the savings that it can bring.

Certain benefits are immediately visible, a cut down on redundancy, business intelligence through centralization, and the like. These hard-dollar savings are what generally comes to mind when thinking of ERP savings, as they are tangible and quantifiable savings that can be taken into account when figuring out the ROI of your ERP system.

There is however another side to ERP savings, soft-dollar savings. Soft-dollar savings are intangible benefits of ERP systems that cannot be as easily measured through quantifiable means but still hold value for your business. Soft-dollar savings help contribute to overall ROI from your system and should be included in any proposals or measurements on the effectiveness of employing your ERP solution. Soft-dollar benefits and savings traditionally include things like: higher employee morale, decreased employee turnover, enhanced collaboration and communication of employees, assurance of regulatory compliance, enhanced information flow, and improved customer support and satisfaction.

The following soft-dollar benefits and savings can be found when leveraging an ERP solution:

Departmental Budgeting

Leveraging an ERP solution in your departmental budgeting will ensure that you can properly compare cost savings with revenue gains—helping your departmental budgeting be bang-on. This is especially helpful for IT department budgets, to help them decrease the amount of overlap of programs that leads to increased licensing and maintenance costs, freeing up resources for more creative technology. ERP will also help them cut down on inefficiencies, giving them time to work on the value-add business intelligence IT projects.

Also by identifying the least-productive areas of your business you can properly allocate staff to areas that need it the most, ensuring you have the highest productivity.

Reduced Duplication and Time Waste

By uniting multiple departments of your business you can ensure that there is no duplication of work being done, thereby decreasing your waste of employee time. The increased communication between departments ensures greater collaboration; collaboration however cannot be quantified even though most upper-management types agree it is critical.

Flow of Information

Another difficult to quantify benefit of ERP is the increased flow of information. When leveraging an ERP solution you increase the fluidity of information, in both retrieval and input. Having business-wide information available at your fingertips is an undeniable benefit, but proving the ROI from it is near impossible.

Improved Customer Service, Retention and Experience 

The organizational benefits of ERP helps ensure that customer orders are processed and delivered on-time or early for quicker delivery times. When combined with a CRM solution added benefits include better tracking, ensured high-quality service, and more. Quicker orders and better service lead to higher levels of customer retention and more referrals. 

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