Customer Perspective #4: ERP-software: cost or investment?

Majority of customers see the purchase of an ERP system through cost perspective. It turns out that changing that to investment perspective can lead to making a lot better system selection…

Today is the fourth and final part of the “Customer Perspective” series where Guus Krabbenborg explores two different perspectives (cost vs. investment) while purchasing an ERP system.

ERP-software: cost or investment?
Traditionally, ERP software is regarded as a cost. And though the conviction that the quality of available information influences the results of the company is spreading, cost-oriented thinking is still influencing companies greatly. Which is certainly not always beneficial!

Many companies are plainly unhappy with their current software. Too much complexity in usage, shortcomings in innovation and insufficient flexibility are widespread complaints. Forced by necessity, end users are taking refuge in Excel or Access, with all the predictable consequences. It is surprising that these companies still persist in keeping the system. “The investment has not yet been depreciated” proves to be a more important argument than a decreasing reliability of delivery, customer loss and increasing costs of failure. Often the cup of poison is emptied to the bottom before a better solution is sought.

For the choice of a new system, too, the element of cost still plays a substantial role. Without hesitation a provider is discarded on the basis of an initial price difference of 3%, even though he offers a 30% more advantageous prospect in terms of innovation and continuity.

Do you belong to this category of unhappy companies? In that case it is interesting to think back to the moment you chose for your current solution. Do you still remember which systems and providers were on your shortlist?

Imagine where you might have ended up with these solutions. Maybe you would conclude that with a different choice, today there would not be the necessity to replace. That there would be successive versions with a functionality that you now need urgently. That the other implementation partner did make good on his promise to invest actively in knowledge of your sector of business.

By no longer seeing software as a cost but rather as an investment you create another perspective on the problem of choosing. The yield of your new system, the number of years you will be able to use – and hence depreciate the system, and the possibility of growing to successive generations of the system suddenly become more important.

In this way, there is a good chance that you choose for a more effective solution!