Your ERP solution is likely one of the most significant IT investments your organization will make. As such, it’s important to ensure you’re getting maximum value from the solution. Most organizations undertake some sort of cost-benefit analysis and cost-of-ownership calculation before the deployment. But it’s equally important to monitor the performance of the solution after go-live. Establishing meaningful KPIs will help you determine if your expectations for the new system are being met. These metrics will also provide the direction necessary to fine-tune the software or refine your processes if the benefits initially fall short of expectations.
What metrics are most important to your business?
A fully integrated ERP solution can deliver positive impacts across the entire organization. General benefits range from increasing employee productivity, to driving more efficient manufacturing processes, to implementing financial controls that directly impact your bottom line. The metrics most meaningful to your business may include some or all of these areas. Consider the business challenges that led you to implement the new solution in the first place. And consider the opportunities created by the new solution: What can you see, measure, and understand about your business that you couldn’t before? How does the solution empower employees to work faster, work smarter, and innovate?
Your ERP deployment partner can help you identify the benefits that are most meaningful to your organization—and put in place the reports and metrics that will help you measure those benefits. Below we list a few common benefit areas to consider:
Improved financial controls and accounting processes. Many organizations cite improved financial management as their main driver for upgrading or deploying a new ERP solution. With powerful accounting and advanced finance functionality, benefits of an integrated ERP solution to the Finance department might include:
- Faster closing cycles and reconciliations. Aggregating financial information from the entire enterprise and normalizing data from multiple transactional systems can shave hours or even days off period closes.
- Shorter order-to-cash cycles. ERP can potentially streamline all your revenue-side accounting processes: order input, invoicing, accounts receivable, and reconciliation. By making these processes faster and more accurate, you reduce the number of days from order to payment.
- Improved auditability and control. ERP provides internal controls including review and approval workflows, transactional integrity, role-based security, and other features. These internal controls can reduce the risk of fraud, improve audit response times and accuracy. They can also help your organization demonstrate compliance with regulatory controls or industry standards.
Improved business insight. Fully integrated ERP solutions frequently replace numerous disparate applications, consolidating data and processes on a single platform. This creates the “single version of the truth” that allows your organization to act as a unified whole, rather than a set of disconnected departments and functions.
- Better, faster reporting. A single, centrally managed database for business information can dramatically streamline reporting. Analysts no longer need to aggregate data from multiple systems to generate complex reports. Users have the ability to generate simple reports or answer ad hoc queries on their own—without involvement from analysts or IT. Add easy-to-use BI or visualization tools, such as dashboards and alerts, and your entire organization is armed with real-time data on business performance. This results in better, faster decision-making that can help you respond to new or changing market conditions with increased confidence and agility.
- Application consolidation. Consolidating business applications reduces the risk and cost associated with maintaining multiple disparate applications and databases. Integrated ERP solutions frequently eliminate the need to license dozens of line-of-business applications across multiple functional areas. But more importantly, a centralized ERP solution can capture the data and intelligence stored across countless spreadsheets and user-maintained databases.
Industry-specific benefits. Depending on your industry and your organization’s unique business model, you can look at many more specific metrics. Mapping your KPIs to ERP modules and processes can help you determine the impacts of the new systems and workflows.
- Retail organizations can improve cash flow and reduce operational overhead through increased transaction volume, faster inventory turns, and centralized store management. Further, drive customer satisfaction and loyalty by integrating the web, phone, and point-of-sale systems on a single ERP platform to offer omnichannel customer experiences.
- In the Industry, ERP helps reduce inventory costs, control inventory, and improve inventory visibility. Advanced features, such as mobility and RFID integration, can also speed delivery and help track movements of goods.
- Companies engaged in might benefit from material requirements planning, support for lean manufacturing, and mixed-mode manufacturing. Typical metrics influenced by ERP include cycle times, demand forecasting and planning, schedule attainment, and inventory turns.
Find the metrics that work for you
Obviously, every organization has unique goals and operating philosophy. Identifying the metrics and KPIs you use to define success is the first step toward measuring the effectiveness of your ERP. When you’ve identified the metrics most important to your organization, Western Computer can help you explore the ways an ERP solution can drive improvements and cost savings in those areas. We’ll help you put in place the measures to be sure you’re achieving those benefits.
by Western Computer
