The Justification for Making Improvement

If something important on your car needs fixing, you do it.  You don’t really have a choice because you need your car.  It’s the same with your ERP platform, but often senior management don’t look at the details of how you do it, the internal cost of doing it or the fact that the process might be less than ideal with unnecessary risk of failure. It’s been a long time since I’ve done any car maintenance and whilst it might be a lot cheaper for me to do somethings the risk is too great.

Persuading senior management to invest in technology to improve, reduce cost and de-risk should be easy, but in reality, it often takes a good deal of selling.

You need to be clear about which corporate goals and operational essentials will benefit when proposing using technology to assist with the process of validating change.  These business goals can then be aligned with the goals set for this project, the importance of each will vary according to the situation and the business.  In the end, all the goals will be obviously worthy but quantifying this worth is harder.

Improvement

Justification for Improvement

Appropriate technology will enable the team to implement changes more quickly, using less manpower and with a greater degree of protection from disruption caused by errors and misunderstandings.

It is possible to put a likely cost saving on the time to be saved from using technology, and it will certainly be possible retrospectively if you have the current data and measure the new. But rarely does this cost saving materialise in cash terms as the team is not reduced.  The efficiency turns into more projects being delivered, each of which having their own ROI which is also being achieved earlier.  This is a major component of ROI.

Avoidance of errors can also be a major component, but this depends on historic performance.  What has happened in the past and what was the cost of such errors?  What would be the impact of say halving this cost?

There is also the cost of the upgrade/implementation/roll-out/change project itself.  Has this be costed to include the man-hours of effort and if so, what would be the impact of reducing the man-hours by 30% to 40% initially and as much as 75% in the longer term?

Where are the real challenges and possible benefits to be found?

This is part 4 of a 5 part series; part 5 coming soon..