Vendors and buyers of Enterprise Resource Planning (ERP) software tend to discuss its financial impact in terms of Return on Investment (ROI) and Total Cost of Ownership (TCO). These are useful metrics, but a more detailed and comprehensive assessment can show the true business value of ERP. Forrester Research calls this Total Economic Impact™ (TEI), a multi-faceted examination of the full effect of a software investment on a business.
Acumatica cloud ERP recently commissioned Forester to perform a TEI study. It is based on the experiences of multiple Acumatica customers, each of whom had a different operational software setup prior to migrating to Acumatica. Some had on-premises legacy ERP systems, some with literally dozens of different instances. Other had no ERP at all. The report offers insights into the benefits, costs, and risks associated with the investment.
Top Financial Benefits of ERP
The TEI report revealed financial benefits from Acumatica that cut across the entire sphere of business activity. Users saw increases in revenue, productivity and gross margin coupled with cuts in software licensing costs. They were also able to improve the efficacy of digital marketing and realize intangible benefits like improved employee satisfaction. Highlights of the report include the following:
- Increased gross margin—Organizations switching to Acumatica increased their gross profits by using the software to improve inventory management, increase the accuracy of price quotes and reduce manufacturing labor costs through the use of higher quality data. Overall, gross profits increased 15% with the introduction of Acumatica.
- Reallocated IT department time—The move to cloud ERP saved the companies interviewed by Forrester an average of 50% of their IT time, equivalent to $614,300 each. The savings came from no longer having to manage on-premises infrastructures. There was also little need for the kind of extensive customizations or support for dozens of ERP instances. Upgrades, which had previously been major projects, now occurred out of sight and required almost no staff time.
- Increased revenue—By shortening project timelines and increasing production volumes using Acumatica ERP, companies surveyed were able to increase revenue by 15%, over $400,000 per company. The gains also came from the software’s ability to generate better quality leads and higher conversion rates.
- Cut legacy licensing costs—Companies saved an average of $464,300 each by avoiding licensing legacy ERP software and moving to the cloud. Acumatica’s usage-based licensing was lower than what had previously been required for ERP.
- Improved digital marketing spend—The companies Forrester spoke with were able to save 10% in digital marketing spend, or $361,500 each on average, by being better able to measure the effectiveness of digital marketing campaigns and channels.
- Enhanced operational efficiency—This 45%/ $309,600 savings in labor cost resulted from Acumatica’s ability to automate time-consuming and error-prone tasks.
The companies interviewed by Forrester described benefits from the move to cloud ERP that they could not quantify, but which were significant in any event. For example, Acumatica’s reporting capabilities gave senior managers insights into potential acquisitions. As a result, the companies were able to grow through acquisition. Employee satisfaction increased as well, with people being better utilized and thus able to focus on career development and other positive areas of work. On a related front, system users found their experiences improving versus what they had with legacy ERP. Internal training costs also dropped.
The Forrester TEI report highlights the many varied ways that cloud-based ERP can be economically transformative. It shows how the right software can have a beneficial impact on almost every financially relevant area of a business. Get the full report here or try out the interactive tool.
We have extensive experience working with companies on comparable economic impact assessments for a move to cloud ERP software. If you would like to learn more about how Acumatica cloud ERP can help your business, in economic terms, contact us for a free consultation and product demonstration.