From a shareholder point of view, the risk-adjusted ROI on ERP projects can be anywhere from 100 to 400%, according to Tom Pisello, the guru of IT ROI (http://expertanswercenter.techtarget.com/eac/knowledgebaseAnswer/0,295199,sid63_gci983470,00.html).  Based on such numbers, the question for senior management is not whether they can afford to implement an ERP project as much as whether they can afford not to do so.  Also, as the opportunity cost of not doing such an implementation rises, the next question is not whether they should outsource to offshore entities as much as whether they can afford not to.

While this can be upsetting to a lot of people, our choice also is not whether we can afford to complain about the changing paradigms as whether we can afford NOT to adapt.  After all, the race is not to the strongest or the fastest but the ones most adaptable to change. As discussed in the previous blog, senior managers can help ensure that their returns are closer to the top end of the scale by quantifying the business rationale, communicating the strategy, obtaining buy-in from employees and implementing efficiently. 

Quantifying the rationale can be done by sharing and reiterating public information on the firm’s financial circumstances:  an ERP project can make the whole company more successful while the lack thereof can make the company lose ground very quickly.  Task for task, process for process, it can be easily shown how an end-to-end shipment can be done online in seconds rather than through a series of secured faxes or emails that can take hours or days.  Clearly, the company that processes its shipments more slowly will assuredly lose customers to a competitor who can ship more quickly.  Communicating and disseminating this strategy will need to be done by demonstrating how increased business will lead to a need for additional employees, not fewer.

If this is to be true, communicating such a strategy will also need to be followed up with legal assurances--no ifs ands or buts--for ongoing employment for at least 18 months after the implementation is complete as well as additional post-employment support if that should be needed.  Retrenched employees should also receive stock options so they continue to have a stake in the performance of the company.

Above all, there needs to be an assurance that offshore employees will be not be hired for a one-to-one replacement of current employees.  For a successfully executed project, there should be no problem with such an assurance since the profits generated by an ERP project can easily permit additional overseas employees to be hired.  After all, the problem is not with hiring employees overseas--just with losing jobs onshore while similarly or less-qualified personnel are hired off-shore.

This kind of quantification and transparency will be needed if ERP projects can reach their potential.