Dell saved $50M - Where will you find ROI with Microsoft Dynamics ERP?

A recent advertorial headline in Forbes boasted about How Dell Saved $50 Million A Year Through Software Rationalization, and credited a Microsoft Dynamics AX implementation with creating those savings. The article, written by Matt Griffiths, Dell's executive director of manufacturing, said the implementation kicked off in 2008 and was rooted in the manufacturer's desire to rationalize the systems in its manufacturing and supply chain facilities.

Since then, Griffiths says that Microsoft Dynamics AX has been implemented across seven of Dell's facilities. During that time, the company reduced manufacturing IT costs by $96 million a year, "with the Microsoft solution contributing to around $50 million of those savings."

Rebecca Wettemann, vice president at Nucleus Research  in Boston, spends a lot of time examining the ROI opportunities behind major ERP implementations. Looking at Dell's claimed savings, Wettemann says, "It is obviously a huge company and not every firm that consolidates its ERP systems is going to get $50 million in return."

Wettemann points out that ROI itself is a measure of the changes that you make within your organization. A company that's operating with a very complex environment comprised of multiple systems, customized code, and a high number of support staff, for example, "will gain cost savings and be able to leverage value over time when it moves away from that setup," says Wettemann.

Companies that are using older versions of their vendor's ERP software, and that choose to modernize and consolidate their systems, can also expect reasonable ROI from their efforts. "Fewer than 10 percent of companies are running the latest versions of their ERPs right now," says ...