Cindy Jutras: What gets measured does get managed.

Cindy Jutras

The primary business drivers impacting ERP strategies have been--and probably always will be--growth, customer service, and cost reduction. In the past, growth and customer service jockeyed for position at the top of the list, with the need to reduce costs playing an important role, but taking a back seat to a more outward-facing, revenue-driven focus.

Not so anymore. Over the past year the need to reduce costs clearly has emerged as the primary driver behind all technology investments.

The struggling economy is causing many to look to their ERP implementations to help them cut costs. A well-managed ERP implementation can significantly reduce cost while improving other aspects of the business. Aberdeen's annual benchmark of ERP in Manufacturing found Best-in-Class (top 20 percent in terms of aggregate performance) reduced inventory levels by 20 percent, operational costs by 14 percent, and administrative costs by 15 percent. In fact, even Laggards (the bottom 30 percent) reduced these same costs by 4 percent to 6 percent.

But sometimes you need to spend money to save money, and as companies brace themselves in this down economy, ERP projects--e.g., upgrades, extensions, new implementations--run the risk of being delayed just when they are needed the most.

The focus for the past decade by both ERP solution providers and their customers has been on reducing the total cost of ownership (TCO) of ERP. But focusing exclusively on TCO is no longer enough. The focal point must now expand to include the return-on-investment (ROI) of ERP projects to justify continued investment and maximize business benefits.

As belts tighten, it will be hard--and perhaps even foolish--for companies to lay out cash without a quantified expected return.