Companies that implement ERP do so for a variety of reasons. Many share overlapping results but in almost every case there are both short term and long term justifications and benefits.

Enterprise Value with ERP

(In my previous posts, we talked about the value of working together under a common vision when implementing an ERP system, implementation best practices, and operational benefits that can be realized with an ERP system. Now we'll conclude with a look at the overall value for a business, with a few real-world examples.) Demonstrated Value Companies that implement ERP do so for a variety of reasons. Many share overlapping results but in almost every case there are both short term and long term justifications and benefits. Brenda Jameson of Richart Distributors, a manufacturer of the Flomore line of pumps and accessories for the oil industry, explains it this way. “We realized immediate benefits in individual areas such as an improvement in our ability to manage accounts receivables and to be proactive in planning for purchasing and manufacturing. But, our implementation also positioned us for the long term and the tremendous growth we are now experiencing.” Mark Lindberg, Operations Manager for Admotec, Inc., manufacturer of advanced technology motion and positioning sensors, echoes these ideas in his approach to ERP and its benefits. “The biggest short term benefit for a small firm is discipline.” Like Richart, Admotec’s outstanding customer service and unique product capabilities have combined to fuel rapid growth. Mark’s long term view has also guided his approach. “Implementing ERP in a small company forces you to do things in ways that will eventually be required as the firm grows and workflows must be integrated across departments. Growth means that individuals can no longer wear so many hats. Having a system in place that accommodates this makes the transition much easier.” Both firms have demonstrated a proactive approach to implementing business systems that provide immediate and tangible benefits while positioning them well for the future. ERP is the cornerstone to that approach. Tying it All Together When evaluating ERP and the value it represents, whether your perspective is that of a firm that is already implemented and planning to roll out additional capabilities, or, it is that of a firm that is embarking on an initial implementation, it is important to keep in mind that the benefits accrue both tangibly in the short term and through enhanced enterprise value realized over the long term. For the latter put yourself in the position of an outsider, perhaps a customer or potential acquirer, who is visiting your firm on a site visit several years from now. Will they be impressed by the tight procedures you have in place to handle day-to-day operations in a fast and accurate manner? Will they see tight integration and information sharing within and between departments? Will they note that you have a solid information systems platform that enables process and functional integration and through which you can embrace future growth opportunities? If the vision you articul ate includes a successful ERP implementation that will enable you to shine during this future site visit, then you are on your way to increasing the underlying value of your firm. by Michael D. Atherton Mike Atherton is the Director of Product Training for xTuple (www.xtuple.com), a leading provider of open source ERP software.