Work out how long an ERP takes to pay back its one-time cost from yearly savings in staff time, inventory, write-offs and compliance work.
Enter the one-time cost of the project, any grant you have actually been sanctioned, and the net yearly saving: the measurable savings you expect (fewer data-entry hours, lower stock holding, fewer write-offs, less spent on outside compliance work) minus the yearly subscription and support. The tool adds the savings year by year, growing them by the percentage you enter, and shows when they cover the net one-time cost and the net benefit over the period.
Worked example (illustrative). One-time cost ₹15,00,000, no grant, net saving ₹6,00,000 in year 1 growing 5% a year. Cumulative savings: ₹6,00,000 after year 1, ₹12,30,000 after year 2, ₹18,91,500 after year 3. Payback falls in year 3: 2 + (₹15,00,000 − ₹12,30,000) ÷ ₹6,61,500 ≈ 2.4 years. Over five years the savings add up to about ₹33,15,000, a net benefit of about ₹18,15,000.
Be conservative. Count only savings you can measure and attribute. Do not count a grant until it is sanctioned. Many projects take longer to stabilise than planned, so savings in year 1 are often lower; see the ERP ROI and payback guide.
Limits. No discounting, tax effects or depreciation are modelled. For large projects, ask your CA to run a discounted cash-flow version.
TCO Worked Examples and Selection Checklists
How to estimate measurable ERP savings in staff time, inventory, write-offs and compliance work, calculate payback and ROI, and avoid inflated business cases.
