ERP ROI is real and measurable — but only if you measure the right things. This CFO's framework builds the honest business case.
Direct Cost Savings: The Obvious Benefits
Labor savings from automation (payroll processing, invoicing, reconciliation), inventory reduction, and error correction costs are the most directly measurable benefits. Quantify each with actual headcount and time data.
Indirect Benefits: The Harder Calculation
Faster cash collection, fewer stock-outs, better supplier terms from payment discipline, and improved customer retention are real benefits but require assumptions to quantify. Be conservative — aggressive assumptions undermine credibility.
Total Implementation Cost
License cost, implementation fees, training time, internal staff time, and 6 months of parallel running are the full cost picture. Most CFOs undercount internal staff time — add it at loaded cost.
Payback Period and NPV
A typical SME ERP investment pays back in 18-24 months. For financial approval, present the payback period, 3-year NPV, and sensitivity analysis showing ROI under conservative and realistic assumptions.
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