When considering a particular plan of action for your business and its operations, you may be concerned about issues of the cost of implementing ERP solutions and related integrations. While the return on your investment is an important component in your decision-making process, other factors can be just as important. In some cases, failure to act could cost you far more than the expenses involved in putting your business plans into action. Chortek LLP’s Technology Consulting Group can provide you with a clear picture of the costs of implementing or failing to implement strategies for your business enterprises.
Failing to Invest in the Future
During a recent meeting with a client, we were reminded once again that we often focus on the cost of an ERP project and its ROI yet forget the cost of doing nothing at all. The client was interested in providing customers with the ability to place online orders (eCommerce/shopping cart) and integrate that system with their back-end ERP solution along with checking inventory availability and access current pricing. We determined the cost to be approximately $20,000, in this instance, to implement the technology to allow their customers to have this “self service” capability. This may initially sound like a lot of money to spend on this type of project. But is it? They didn’t feel the ROI in increased sales could justify it. However, what is the cost of doing nothing?
If a customer that does $250,000 in business with them at a margin of 20% leaves them for a competitor who has online sales and integrated ERP capability, the cost of doing nothing is $50,000. Instead of four customer service personnel needed to handle the incoming calls from customers and manually entering the data in the ERP system, they could reduce that to three. The cost of doing nothing in this case may be $30k to $40k or more plus benefits.
The client was unwilling to make the financial leap to offer these options for their customers because of of the initial expense verses looking at the cost of doing nothing
The Cost of Doing Nothing
What the client failed to realize, unfortunately, is that doing nothing also comes with a very high price tag. The cost of not offering online sales with integration to ERP could add up to significant financial losses for this client that might include the following:
- The loss of customers and sales to other companies that do offer these convenient online options (ie eCommerce and Shopping Carts) could add up to far more than the initial cost of implementation.
- eCommerce and Shopping Cart tools can provide potential customers with access to detailed product information and the ability to place orders at any time of the night or day.
- Company reputation could also be affected by the failure to modernize and to provide easier access for customers.
- The business might also fail to attract the new customers needed to survive and thrive because of antiquated business methods that leave it farther behind its competitors.
- Additional staff might be required to handle phone orders and to provide customer service, increasing the labor costs for the organization.
As you can see, the added costs of doing nothing can may be more than doing nothing. By working with Chortek LLP, you can determine the actual cost of a proposed project and the potential costs of inaction for your company. This can help you make the best possible moves to ensure profitability and long-term success within your industry.
Whenever you determine the cost of doing any project in your company, be sure to consider the cost of doing nothing in your ROI. Many times it’s a forgotten and significant portion of the equation.
How Can We Help?
The experts at Chortek LLP can provide your company with professional accounting, business and technology advising services designed to help you make the most effective use of your time and resources. We are committed to helping your company avoid mistakes that could cut into your financial bottom line. Give our Waukesha office a call today at 262-522-8227 to learn more about how we can help you achieve your full potential in the competitive marketplace. We look forward to working with you.