What are the Intangible Benefits of ERP?

Any company which has remodeled their headquarters, invested in employee education, or contributed time or money to local charities understands fully the concept of intangible benefits. The implicit notion with an intangible benefit is that, given time and patience, it will eventually turn into a tangible benefit. A prospect suitably impressed with headquarters might choose to become a customer; a well trained employee should become a more productive employee; a good relationship with the community provides a better pool of job applicants. So how does this apply to ERP?

One of the greatest intangible benefits from ERP is a stair step increase in the amount, accuracy, and timeliness of information. This does not apply to the standard information that came out of legacy, like daily revenue reports, or the monthly income statement, but new things that were always wished for but technically impossible. When business units begin to learn how to ask ERP-intelligent business questions (“What is each work center’s contribution to our total margin?”), then rapid learning occurs, better business decisions are made, and benefits do, in fact, become tangible.

Benefits of Standardization

Another intangible benefit from a successful ERP implementation is standardization. Standardization brings the company culture together, it makes upgrades and changes more efficient, and it ensures a global consistency in process and service. Standardization is not always an easy sell as a benefit, for the paradoxical reason that everyone believes that they possess the better process/system. So to your audience, “standardization” can be synonymous with “mediocrity”. The gain is that everyone can leverage enhancements made after day one, and improve together.

Still another intangible of ERP is making explicit the interdependency that jobs in an organization have. When information is generated and remains within functional silos, it is very easy for a job function to evolve into a role that could not be defined as a “team player”. If you hear someone described as (or describe themselves as) a “traffic cop”, an “enforcer”, “a fixer”, or the like, you should feel uneasy. ERP demonstrates forcefully is that everything interrelates, and the only way to become highly effective at operating ERP is to become highly effective as a team.

A final benefit is a general improvement in total financial controls, as indicated by outside financial audits. Improved security, standard segregation of duties controls, and internal approval rules all contribute to greater control. Closing the books globally with the same process, on the same time sequence, reduces inconsistency between entities.

These are but a few examples of intangible benefits of ERP – you will recognize many more. The objective is for you to be able to articulate your intangible benefits in such a manner that when you begin selling ERP internally an executive committee understands how life after ERP will be better. Intangible benefits cannot replace tangible benefits in a financial analysis. They should instead complement and enhance the monetary calculations, so that even though the financial payback might be close to the point of indifference, the intangibles are so compelling that the ERP decision is easy.

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Phil Marshall

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Phil Marshall

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