Surprising TCO Insight from Aberdeen Group

When evaluating ERP systems, most companies analyze the TCO (Total Cost of Ownership) as part of the decision process. TCO includes the full cost of implementation and maintenance over a period of time, often 3-5 years. Factors incorporated into the analysis generally include software license, implementation, and software maintenance costs.

Well managed implementation will deliver results quickly

In the Analyst Insight “ERP: Is High ROI with Low TCO Possible?” released by Aberdeen Group, researchers found that the actual TCO realized by companies is more dependent on the Best-In-Class use of the ERP systems than TCO alone. Return on Investment (ROI) derived from the ERP system will offset costs when companies implement ERP efficiently to quickly achieve cost savings through productivity gains.

For their research, Aberdeen Group measured those benefits on the following criteria:

  • Number of days to close the month
  • Days sales outstanding
  • Percent of orders delivered complete and on-time
  • Growth in operating margins year over year

These basic factors are indicators of the operational efficiency and productivity gains that a company is typically trying to achieve with the implementation of an ERP system.

Key recommendations from the Aberdeen Group report include:

  • Establish specific ERP implementation benefit goals, and measure results.
  • Initial implementation should focus on achieving results in critical areas.
  • Continued measurement of ERP results leads to increased business value.

Find out more about the Aberdeen Group’s research on the benefits of ERP implementation. Download the report here.

Contact us today to find out how your organization can realize productivity improvements of a Best-In-Class ERP implementation. Dynamics ERP delivers high ROI with a low TCO.

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