How Much Should You Spend Integrating E-Commerce Into Microsoft Dynamics AX, GP, or CRM?
Our clients often ask us whether they should integrate an e-commerce solution into their Microsoft Dynamics GP, AX, or CRM system. When we tell them it has become easier than ever, their next question is this: how much they should spend?
This last question requires a more involved answer. With all the many choices in the marketplace ranging from a few thousand dollars to a couple of million for a large enterprise solution, it is hard to know just how much you should be investing.
COST IS NOT THE ISSUE. THE RETURN ON INVESTMENT IS.
Think about it this way: if I charged you $500,000 for an integrated e-commerce solution that could generate $2,000,000 in additional gross margin each year and save you another $1,000,000 in operating costs, then would the $500,000 investment be A LOT? The answer, of course, is no.
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Positive Cash Flow: $2,000,000 + $1,000,000 - $500,000 = $2,500,000 |
The point is simple: you've got to figure out how much money an e-commerce solution will make you before you draw a conclusion of whether or not the cost is too much. So how do you do that? It's actually pretty easy.
Here is a simple process for determining the Return on Investment (or ROI) of an e-commerce storefront. First, you've got to know how much profit you make on each sale. For instance, if you buy whatever it is you sell for $50 and you sell it for $80, your gross profit is $30. That's easy enough. Now take that calculation up a level and do the same thing for all of your products together. Hint: start with the Income Statement.
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