Is it worth investing in an ERP system?

Is it worth investing money installing a new ERP system for my business?

How much should I be spending for investing in such a system?

What are the possible tangible gains ?

How much can I save every year?

How much increase in profit can I expect for the new few years?

Is there any other factor to consider other than profit gains?

These are questions that a business owner has to consider when a business peer & golf buddy throws the idea while on a 9 - hole sojourn.

Factors to considerSize of the problemBenefit FactorSavingsReasonable spend
My company looks like an audit firm with so many accountants.Need 3 accountants for reconciling all payments from Bank, cash, card and mobile money transactionsAutomatic reconciliation of pdf statements1.6 Million KSH per year
= 3 accountants * 50,000 salary per month

160,000 KSH
Collection team is overstaffed.Need a three member collection team for following up on paymentsAutomated SMS & emailing of customer statements. One member can handle the task.
1.2 Million KSH savings per year.120,000 KSH 

Is there any other factor to consider other than profit growth?

When a question like this arises from a client, I often ask them to consider factors like governance, risk and compliance. Every company in Kenya pays a huge monthly bill for hiring security guards and buying general insurance.

Is there any gain for the company by paying for these services. Aren't these just additional expenses but why do companies spend.?

There's a risk of theft due to a unexpected event like theft or damage from natural or human disasters.

What if there's no means to monitor your daily sales and stock without depending on your accountant. How reliable is the information provided by him. That can give sleepless nights for a business owner.

How much does your client owe and is there clear statements and ledgers to prove your claims when a dispute arises.

Is your MIS reliable and do you have supporting documents to provide when the Tax authorities knock your door to conduct an audit.