ROI Measures One Thing. Success Is Many Things.
Ask an organisation how it knows its ERP worked, and the answer usually arrives as a number. Return on investment. It’s a fair place to start. But it’s only a place to start, and it’s worth walking through, one step at a time, why it can’t be the place we finish.
Step 1: See what ROI actually does. An organisation holds capital. It invests some of that capital in an ERP. The cost of that investment, counted properly across the life of the system, is the total cost of ownership. Then the ERP is expected to send returns back to the organisation. ROI is simply the comparison: what went in, and what came back. Simple, useful, and easy to explain to a board.
Step 2: See what ROI can actually measure. Only some of the returns can be counted. Efficiency: how much faster or cheaper the work gets done. Transparency: how much more of the organisation can be seen. Capability: what the organisation can now do that it couldn’t before. Capacity: how much more it can handle with the same people. These can be pointed at, tracked and reported. But look at the size of that list. It is a very narrow view of measurement.
Step 3: See what ROI leaves out. There is a second group of returns sitting outside that narrow view. Culture uplift. New opportunities. The experience of stakeholders: staff, customers, the community you serve. Ask any executive whether these matter and they will say yes. Ask them for the number and the conversation goes quiet. They are real returns. They are just difficult to put a figure against.
Step 4: See that every one of these can go either way. Efficiency, transparency, culture, opportunity, experience: none of them is automatically improved by having an ERP. They improve if the ERP is done right. They get worse if it is done wrong. So the full picture of success is much wider than the part ROI can see, and it can move up or down across all of it.
Step 5: Now add time. This is where measurement gets genuinely hard. An ERP is not switched on in a week. It takes two to four years to implement. Over those years, the business does not stand still. Employees join and leave. Products and services change. The organisational structure gets redrawn. Each of these is a variable, and each one shifts while the ERP is still being built.
Think about what that does to a measurement. You set a baseline at the start. Two, three, four years later you compare against it. But the organisation you’re now measuring is not the organisation you started with. Different people, different offerings, a different structure. You are comparing two things that are no longer the same thing.
Step 6: Put it together. ROI is a tool of measurement with a narrow dimension of measure. Success is multi-faceted, but it is difficult and impractical to measure, mainly because the variables keep changing over time. These are two different things, and one is frequently used as a stand-in for the other.
None of this makes ROI wrong. It makes ROI partial. It tells you something true about one slice of success, and says nothing about the rest.
So if success has this many faces, and the ground keeps moving underneath it for years, what exactly are we measuring when we say the ERP delivered?
