ROI

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Mr. Prakash had a start-up law firm established in Bangalore. He began litigation practice for which he had to print reams of papers to be submitted to the court and to the opposite parties. He had a tie-up with a local shop to print and take photocopies for filing purposes. Some cases required 1000s of papers to be printed and photocopied for submissions. When he took stock of the expenses of the office he realized he was spending a lot of money towards printing and photocopying. On an average he was spending about Rs. 5000- Rs. 7000 a month but some months his printing and photocopying charges skyrocketed upto Rs.20000. He was looking at options and alternatives, this shop gave him the best deal in the locality but he wanted to try something that worked better. After a bit of research, he found that a multi modal photocopier cum printer could be a solution. It came at a grand price though, but Prakash was convinced that going further, that could be the best option for him. He went ahead and bought the machine at a price of Rs. 95000, the machine could print 10000 copies per cartridge. The price of the cartridge was Rs. 1800 and that could be refilled for Rs. 600. He found a wholesaler to provide him with sheets of paper. Sure enough, the amount of money he spent on printing and photocopying became Rs. 2000 a month and in about 8 months he realised that he was saving a good amount of money that he would have been spending on printing and photocopying.

Prakash’s story is a classic example of how analyzing a situation can help identify problem areas and guide on the path to finding strong solutions. Likewise, ERP Software Development Company In Chennai also gives you the best solutions to all your problems. Here, let’s observe Prakash’s problem, the solution he found and most importantly, did it help him get back returns on the investment made.

  • Prakash’s expenses on printing and photocopying were skyrocketing
  • Prakash invested on a Printer-photocopier machine that was efficient
  • Prakash’s expenses came down considerably
  • He began saving money after a few months of the investment on the machine

Most often, in businesses, investment decisions are made for better prospects in the business or to make the system function more effectively. Every company’s decision to embrace crm software in Chennai based on a very calculated set of analyses and parameters. Reasons for that makeover and change could be to upscale the functioning, to address gaps in the system or to set a system on a path to betterment. When such a decision is made, the business house is bound to face numerous challenges on its path to success. Therefore a clear needs analysis is necessary to provide the correct direction to a decision. This analysis forms the basis for any decision to change. When companies opt to automate and adopt an ERP Software in Chennai it is a big decision and the change is bound to impact the company in many ways positively. An integral part of the needs analysis is to check when the decision to invest will begin to show returns. The Return of Investment (ROI) is an important component of the needs analysis. Let us understand that calculation of the ROI is part of the early steps into transitioning to automation and ERP implementation.

Research shows that it takes about 2.5- 3 years for an ERP to start paying back (data from Panorama Consulting Group). A thorough Cost Benefit analysis implementation will help one arrive at a decision and project guiding points to arrive at the ROI. While implementation of the ERP itself may take a couple of months to a few years depending on the extent of automation implemented, it would be sensible to expect returns after the completion of the process.

There is numerous data to show different formulae for calculating ROI that the industry experts have provided. Here is one that is popular, ROI is calculated by adding the anticipated returns from ERP and then dividing the resulting amount by the TCO of ERP, the resulting quotient is ERP ROI. The larger quotient, the better it is for business.”

Let us look closer to crack the code of this formula, all returns from the ERP are added and that number is divided by the actual cost of the ERP, that is the amount the company spends on the entire ERP design, training and implementation. Here the TCO is the Total Cost of Ownership which is nothing but the total amount for the ERP. That number is a projected cost of the Return of Investment. While this is one of the popular formulae, there are other ways to determine the ROI. This aspect becomes an advantage and at the same time a disadvantage too.

The flexibility of how one calculates the ROI is the advantage and that is the disadvantage too. The disadvantage is that the ROI is more of a projected cost that assumes that the ERP will reap returns and the numerous ‘if and buts’ in the system make it quite untrustworthy.

We may want to understand that there are many ways and formulas that provide projected costs of ERP implementation but one needs to understand that there are a lot more hidden benefits that may not be part of the calculation at all. ERP is a system that seeks to integrate departments and automate a lot of tasks that are either laborious or record maximum human error. When a process like that is automated it removes errors there by providing error free data, in some other cases the benefit may be an intangible time saving that cannot be put in terms of money.

A company that decides to automate answering queries using a chatbot may be saving a lot of employee time and effort, that may not translate into a cost saving per se but it is more in terms of productive time of the employee that is available to focus on tasks that are more important or the Core responsibilities. Similarly, implementing a bio-metric system to track attendance of employees can have a different kind of positive impact that need not necessarily translate in terms of money.

GWAY’s approach to providing cost effective automation solutions focus more on accuracy of the application and personalisation of that application to the needs of the client. GWAY’s approach to plugging all the gaps in the system has a great impact on the non-tangible outcomes in the ERP. Our complete need analysis projects areas that need attention and change and has helped our clients get rid of hidden expenses that were possibly more draining on the resources. Our approach to looking at the Return of Investment is from the point of view of providing a completely fool-proof system that by itself is rewarding and brings returns in the form of savings and better opportunities for the business. With GWAY your ROI is guaranteed and will result in the upward curve that you dream of for the progress of your business.

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