Maximizing ERP market value

Making the case for ERP investment

Enterprise Resource Planning (ERP) systems can accelerate innovation, data delivery, and business intelligence. They’re often the backbone of a modern enterprise, unifying the organization across the business, technology, innovation, and value. 

However, as price increases outpace budgets, many leaders are likely squeezing ERP funding and ready to take their foot off the gas on ERP investments. Sixty-nine percent of business leaders analyzed have a negative to neutral sentiment about ERP investments, according to Deloitte’s analysis of 400 companies’ mentions of the technology in 10-K filings over the last 10 years. Business and financial leaders tend to be focused on the risks, cost, and timelines. And it’s costing businesses in market cap returns. 

If C-suites allow negative market sentiment and prior poor experiences with large-scale investments to slow down their momentum on ERP implementations, that would likely be a mistake. Not only could that decision put them at risk of disruption, but it may do so at an important inflection point in digital and business transformation where enterprise-scale cloud, data, and automation and Generative AI is expected to dramatically impact the speed-to-value on ERP investments. 

Instead, leaders should be thinking about ERP value in relation to growth, stability, and market momentum. When they maintain their ERP investments while staying true to their business case, this new Deloitte research shows that they experience long-term shareholder returns above market averages. Our report shares data and insights based on ERP news mentions and financial modeling of more than 700 companies stock returns from 2015 to 2022, and based on that insight details five common roadblocks to ERP value and offer considerations for how leaders can get maximize ERP ROI.

A strong tech strategy aligned with ERP investments shows a long-term impact on share price returns​

Source: A Deloitte Center for Integrated Research and MKT MediaStats analysis as published in “A three-dimensional tech strategy,” June 2023.
Analysis based on analysis of largest 500 stocks in the market from 2015-2022. Given the list of companies changes each year, the analysis reflects 719 unique companies. Frequency analysis reflects percentage of overall media coverage for each technology relative to total articles available overall. Stock return correlation analysis reflects the stock sensitivity to an “attention factor” - ERP – regressing the future returns based on stock sensitivity to that factor. Results are reflective of under/over stock return performance over the subsequent three years.

Lifting the blockades to drive ERP value

Given these five roadblocks, C-suites should act accordingly when making and adjusting technology investment strategies. CEOs, CFOs, and CIOs should consider: 

• Holding ERP investments to their original strategic vision and intent. Leaders have an opportunity to make strategic, bold, and disruptive business investments. Once a business case is defined, hold to it with a roadmap that focuses on system rationalization and capability enhancement for future success. 
• Driving platform integration and next-gen processes. The end goal should be having one ERP do as much as possible versus deploying multiple different systems to create a future system that drives value across the organization and ecosystem. 
• Embracing a common data model. A modern data strategyis often both a pre-requisite and outcome of successful ERP programs. It’s both the “gas” fueling the engine and the “exhaust.” The people who get ERP value right typically spend longer on the data. They tend to go slow at the outset to go fast once they create a high-fidelity capability to run business processes with a higher level of data visibility. 
• Keeping cloud as a cornerstone to your ERP strategy. Cloud platforms and services can help accelerate the speed to innovation and integration of your platform strategy. Consider both dependences and economies of scale you can get from these investments. 
• Communicating roadblocks and innovation opportunitiesto shareholders. Some of the most effective companies use business filings to communicate and plan for issues. That type of foresight and communication to analysts may contribute to a premium on total shareholder return.

Download the full report to view additional data and insights based on Deloitte ERP sentiment analysis, market value analysis overall and by industry, as well as additional insights to help organizations maximize the value of their ERP investment.

Get in touch

Abdi Goodarzi Partner Consulting, Cross Industry agoodarzi@deloitte.com	Jodie Stahly Payette CS Managing Director, E&A Cross Industry jstahly@deloitte.com	Denise McGuigan Partner, Enterprise Performance Cross Industry demcguigan@deloitte.com
Dean Hobbs Principal, Consulting US Operations Leader for Finance & Performance dhobbs@deloitte.com	Ahmed Alibage Manager, CIR aalibage@deloitte.com	Diana Kearns-Manolatos Senior Manager, CIR dkearnsmanolatos@deloitte.com