The Cost of Doing Nothing

Software for inventory management

There is no arguing the fact that an ERP implementation is an investment. Not only is there an up-front capital investment for the software, but you need to also budget for training. There is also the time investment required. Needless to say, the mere idea of a project of this magnitude is enough to sway some organizations into sticking with existing systems, even if they are ill equipped to manage growth and changing business environments.

ERP software isn’t a luxury purchase. If a company is embarking on a major software project, there is a good reason behind it. After all, problems don’t go away on their own. They grow bigger and accrue interest over time. And the cost of doing nothing at all, can very quickly outgrow the cost of making a change.

The Business Process Assessment

As we hinted above, it is never a good idea to just dive into an ERP project head first before first checking to see if there’s any water in the pool. Before you can even begin the software selection process you need to understand what operations are running smoothly and which aren’t. You need to understand how your employees are currently performing day to day tasks. You need to understand how reports are compiled and if systems are communicating with one another. A business process assessment can help you do a full audit of you operations and answer all of those questions. It can provide you with a check list of what features and benefits you need in a new software system, as well as provide your implementation partner with a roadmap for which processes can be automated.

Understanding the Cost of Doing Nothing

The business process assessment is also a great way to actually be able to sit down and do the math with regards to what it’s costing you to stick with the status quo. Perhaps you run a daily report that requires an hour to put together. Now add that up times 5 days a week, times 50 weeks out of the year. How much is the person who compiles that report getting paid? How many similar reports are you running? The costs ad up quickly.

What about product recalls. You can run a mock recall and see how good your traceability is using current systems. Calculate how much a recall would cost your company. How much is excess inventory costing you? Worse yet, how much business are you losing by not having certain items in stock during peak seasons?

Some losses are easy to calculate, and others are opportunity costs that need to be considered. In either event, there is a cost to doing nothing. The most important question is whether or not the cost of sticking with an outdated system is greater than the cost of upgrading your existing software. For more information on how to do a business process assessment and determine whether new software is a good fit for your organization you can call The Attivo Group at 877-428-8486 or contact us here.