Not all technology implementations go swimmingly. In fact, many fail or fall short of expectations. The reasons vary, from choosing the wrong ERP partner, to implementing an insufficient technology that doesn’t solve your issues or meet your customers’ needs, to failing to properly engage your employees so you have sufficient buy-in.
These shortcomings can easily tank your success when you’re implementing an enterprise resource planning (ERP) system. But how can you tell whether you’ve succeeded or fallen short? And how can you safeguard your implementation against failure?
The key is to measure your ERP implementation twice: before and after implementation.
When you commit to measuring your success, it forces you to set clear goals. Setting goals strengthens the odds of success.
When you have clear goals, it gets everyone on the same page. That keeps individuals accountable to their objectives.
And with defined business objectives, you can make better choices about your technology. That helps you build a more detailed, focused map for ERP implementation success.
Top ERP Performance Metrics are Linked to Business Goals
How do you measure success toward your newly defined business goals? The best practice is to identify a series of key performance indicators (KPIs) against which you can gauge your progress and outcomes.
Some examples of goals and associated KPIs for an ERP implementation include:
Improve Customer Experience
Customer experience is critical to your ongoing success. Set specific objectives to leverage your ERP to improve the customer experience where you tend to have issues. For instance, if you have low satisfaction ratings, what percentage of lift do you expect to gain in satisfaction after implementation? And how will your implementation and technology support that?
KPIs to track include:
- Customer ratings
- Repeat customers
- Call response time
- Customer complaints
- Customer churn
You can collect such data in your systems, but it’s also helpful to conduct customer surveys for more comprehensive feedback on their experience.
You can be confident you’re on the right track if customers are expressing appreciation and coming back for more. If this is a major improvement over the previous experience, you can count that toward ERP implementation success.
If you’re scoring poorly on these KPIs, there’s room for improvement. You may have missed something critical in your implementation, such as proper change management to ensure adoption among your employees.
Enhance Sales Performance
Many businesses pursue an ERP implementation to optimize their capabilities and opportunities in sales.
Set KPIs that measure specific sales metrics which will clearly indicate progress, such as:
- Average order size
- Average profit margin per sale
- Percent of lost sales
Use these KPIs to determine how new capabilities will contribute to improvements, and how your processes might need to change to ensure success.
If your sales and profit margins are increasing and your percent of lost sales are decreasing, this counts toward implementation success. If you’re having the opposite experience, you must analyze the situation to identify possible points of failure in how you’re using your ERP and its functionality.
Also search for inefficiencies in your processes or training. For instance, you may need to design a more intuitive process for salespeople to use the system and data.
Increase Productivity
Streamlining business processes to increase productivity is a common goal for companies implementing an ERP system. What productivity means to your business will depend on your industry and goals. For instance, in manufacturing, productivity ties to actual physical production. In professional services, it ties to clients served and proper resource management.
Some of the most telling KPIs for measuring productivity as a result of an ERP implementation are those related to employees, such as:
- Transactions processed and orders completed per employee
- Number of sales calls made per employee
- Average task completion rate
After implementation, employees shouldn’t have to rely on complicated workarounds in their systems. They’ll be able to perform tasks more efficiently, reduce repetitive and complex work such as pulling data and rebuilding reports, and have real-time data available to make better decisions each day. Their ability to be productive ties directly into all other components of your business, no matter what type of operation you run.
Be sure to offer adequate training and support as your employees get acquainted with the new system. Also, clearly outline their specific goals and updated evaluation criteria. And consider surveying employees before and after implementation to understand their experience and satisfaction rates.
Regardless of your industry, it’s also helpful to evaluate the following factors that lead to greater productivity:
- Have you simplified critical processes?
- Are your employees using the new technology?
- Do you have better visibility and access to your data?
- Do you and your employees understand how to leverage the data, capabilities and functionality your ERP provides?
- Have you helped employees collaborate more effectively?
- Have you improved mobility for your employees?
Improve Profits
Ideally, a new ERP helps businesses grow, capture greater ROI and realize revenue growth and tangible profits. This is because an ERP implementation should help you:
- Make more informed business decisions based on real-time data
- More easily identify inefficiencies across your operations to remedy them
- Save on costs related to inefficiencies
- Save on IT spending compared to previous technology setup
- Analyze profitability closely to identify less profitable activity, products or services
- Reduce downtime using greater visibility over your resources
- Improve forecasting
Before implementation, measure your bottom line. Then, assess the change afterward. KPIs for measuring profits include:
- Average margin per product or service
- Cost per employee per location
- Inventory turnover
- Gross profit margin
- Average invoice processing cost
Define Your KPIs for ERP Implementation
The best KPIs to measure the success of your ERP system implementation depend on your business goals, and many of these will be industry specific. For instance, you might prioritize improving project margins, resource management, order management, various timelines or employee satisfaction. Work with your ERP implementation partner to establish the metrics that are most important for your business.
Implementing a new ERP system is no small feat. Ensuring that it’s done correctly with measurable success overwhelms even the most tech-savvy companies at times. The best thing you can do to lead your company to success is to find the right partner who will help guide you through the process: from establishing KPIs and how to measure them to seeing the system go live and scale with your business.
If you are considering a new ERP project, download our free eBook on what to look for in an ERP partner, including a bonus section with 9 warning signs that should send you running in the other direction.
Download now: 9 Questions Nobody Asks Their ERP Partner … But Should
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