Independent consulting firm finds that Sage Business Cloud Enterprise Management delivers circa 200% ROI within six months for Manufacturing, Distribution and Service companies

Key findings include:

• For Distribution industries study finds 237% ROI with payback within 4 months
• For Manufacturing industries study finds 218% ROI with payback also within 4 months
• For Service industries study finds 197% ROI with payback within 5 months

Richmond, B.C. (March 8, 2018)—Sage (FTSE: SGE), the market leader in cloud business management today launched an independent study that has revealed the significant savings made by businesses in three major industries after they implemented Sage Business Cloud Enterprise Management. Sage commissioned Forrester Consulting to conduct a series of Total Economic Impact™ (TEI) studies¹ and objectively examine the potential return on investment (ROI) that organizations may realize by deploying Sage Business Cloud Enterprise Management (formerly Sage X3).

The research found that as well as receiving significant ROI within a short amount of time, businesses found savings in labour, inventory levels, and improved productivity resulting in thousands of hours saved globally. The quantifiable benefits and costs of investing in Sage Business Cloud Enterprise Management² are as follows:

Enterprise Management — Distribution in detail

The Distribution Organization experienced the following benefits totalling $1,590,128:

• Financial management — labour savings for reporting: $149,211
  • This is the equivalent of 1.25 FTE’s annually
• Inventory management — reduced inventory levels: $348,159
  • This equates to a 10% reduction in inventory level and 1.0 FTE saved annually
• Customer service — productivity improvements: $125,870,
  • This results in 2600 hours saved annually
• Purchasing — materials and productivity savings: $355,122.
• Sales management — sales discount savings: $492,397
• New features — supply chain and financial management productivity savings: $119,369.

Forrester’s interviews and subsequent financial analysis found that the Distribution Organization experienced benefits of $1,590,128 over three years versus costs of $471,264, adding up to a net present value (NPV) of $1,118,865, with a payback period of four months and an ROI of 237%.

Enterprise Management — Manufacturing in detail

The Manufacturing Organization experienced the following benefits totalling $1,971,860 (see the Financial Analysis section for more details):

• Financial management — labour savings for reporting: $149,211
  • This is the equivalent of 1.25 FTE’s annually
• Inventory management — reduced inventory levels: $348,159
  • This equates to a 10% reduction in inventory level and 1.0 FTEs annually
• Sales management — sales discount savings: $492,397 (present value)
  • Totalling $198,000 of savings annually
• Purchasing — materials and productivity savings: $355,122
• Customer service — productivity improvements: $125,870
• Manufacturing management — production cost reductions: $302,153
• New features — production, supply chain, and financial management productivity savings: $198,948

Forrester’s interviews and subsequent financial analysis found that the Manufacturing Organization experienced benefits of $1,971,860 over three years versus costs of $620,870, adding up to a net present value (NPV) of $1,350,990, with a payback period of 4 months and an ROI of 218%.

Enterprise Management — Services in detail

The Services Organization experienced the following benefits totalling $1,590,128 (see the Financial Analysis section for more details):

• Accounting and financial management — labour savings for reporting: $149,211
  • The equivalent of 1.25 FTE’s annually
• Inventory management — reduced inventory levels: $348,159
  • This equates to a 10% reduction in inventory level and 1.0 FTE saved annually
• Customer service — productivity improvements: $125,870
  • This results in 2600 hours saved annually
• Purchasing — materials and productivity savings: $355,122.
• Sales management — sales discount savings: $492,397
• New features — supply chain and financial management productivity savings: $119,369

Forrester’s interviews and subsequent financial analysis found that the Services Organization experienced benefits of $1,590,128 over three years versus costs of $535,494, adding up to a net present value (NPV) of $1,054,634, with a payback period of five months and an ROI of 197%.³

Paul Struthers, EVP and managing director, Canada, Sage said: "We believe that the findings from this study underscore the importance of return on investment for companies considering an enterprise management solution. Companies not only expect, but often also rely on their expenditure to produce a visible return. Working with Forrester, we have set out to support smart companies and recognize that identifying benefits is a prerequisite for assessing an investment’s value. This has been central to the development of Sage Business Cloud Enterprise Management, and we are proud to be able to demonstrate this as well as our dedication to helping customers grow their business and drive a competitive advantage."

Customer feedback on Enterprise Management

To better understand the benefits, costs, and risks associated with customer investment in Enterprise Management, Forrester conducted in-depth interviews with four customers for each of the core verticals. Forrester interviewed customers from Manufacturing, Distribution and Service Industry, each with at least two to three years of experience using the solution.

Interviewed customers reported that the workflow automation and alerts functionality within Enterprise Management encourages users to adhere to policies and speeds up processes. In the past, an employee would have to chase approval of a purchase order. With Enterprise Management, the automated workflow alerts notify the appropriate staff, and approvals are done in a more reasonable amount of time.

With documentation and office collaboration functionality in Enterprise Management, every vendor invoice is scanned into a document management system, and PDFs are uploaded into Enterprise Management and attached to the records. Invoices are now accessible by anyone who needs to see them, including business units and purchasing, receiving dock, and accounts payable employees. With Enterprise Management, employees don’t have to search physical file cabinets anymore; they just access them via Enterprise Management on their computers.

1. The Total Economic Impact™ Of Sage’s Enterprise Management For Distribution, Manufacturing, and Services Organizations, commissioned studies conducted by Forrester Consulting on behalf of Sage in February 2018.
2. For the purposes of the three Sage TEI studies, Forrester has created composite Organizations to illustrate the quantifiable benefits and costs of investing in Enterprise Management for Manufacturing, Distribution and Services organizations. Based on characteristics of the interviewed customers, the Organizations are global, midsize enterprises that have major operations in North America, Europe, and Africa, with minor multisite operations globally. The composite organisation have been using Enterprise Management for three years to enable their business process activities.
3. Note: For an on-premises deployment of Enterprise Management, the Organization will incur an additional $24,000 in hardware, database, and operating system fees, and additional license fees of $63,000 over three years. In this on-premise scenario, the present value of costs is calculated to be $697,094, or an additional $76,224 over three years, with an expected ROI of 183%.

About Sage Business Cloud Enterprise Management

Enterprise management is available in 7 countries globally, supporting customers in manufacturing, distribution and service industries with multi-language, multi-legislation and multi-currency enterprise resource planning. For more information please click here.

About Sage

Sage (FTSE: SGE) is the global market leader for technology that helps businesses of all sizes manage everything from money to people – whether they’re a start-up, scale-up or enterprise. We do this through Sage Business Cloud - the one and only business management solution that customers will ever need, comprising Accounting, Financials, Enterprise Management, People & Payroll and Payments & Banking.

Our mission is to free business builders from the burden of admin, so they can spend more time doing what they love – and we do that every day for three million customers across 23 countries, through our 13,000 colleagues and a network of accountants and partners. We are committed to doing business the right way and giving back to our communities through the Sage Foundation.

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Betty Tian
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