Estimating the ROI on an ERP for Naval aviation operations using market comparables

Abstract

U.S. Navy aviation squadrons conduct a variety of flight operations in peace and wartime environments. At the heart of these operations is the flight scheduling that occurs to command and control the squadron's assets to ensure the actors and processes carry out the squadron's operations seamlessly and meet the squadron's mission requirements. This research and case study demonstrates how the Knowledge Value Added Methodology (KVA) and Business Process Reengineering (BPR) can be applied to these processes to analyze the performance and effectiveness of a Navy squadron's operations and maintenance departments. By analyzing the outputs of the sub processes involved at the squadron level in common units of change, a price per unit of output can be generated to allocate both cost and revenue at the sub process level. With this level of financial detail, a return on investment (ROI) analysis can be conducted for each process and the changes that occur to the processes when reengineering. A determination can then be made as to what level of reengineering if any should occur to the system to maximize ROI and what types of reengineering such as reducing costs, increasing value or implementing IT resources into the processes.