Five signs your ERP selection project has been a big success
As the old saying goes; ‘you can’t prove you’re winning unless you can measure it.’ This axiom is particularly true in the case of validating the operational value of an ERP platform, and how those metrics apply to your enterprise overall.
While there are all kinds of subjective performance indicators of ERP selection success, depending on the specific company, there are some general metrics that should apply regardless. Here are five of them.
1. Increasing enterprise revenues
ERP platforms are built to do one thing – make more money for the enterprise. Consequently, if you’ve launched a resources system effort, you should expect that overall revenue volumes will rise over time. This doesn’t mean that you’ll necessarily see immediate Quarter-over-Quarter increases; but on balance, when it comes time to close your books at the end of your first Fiscal year, you’ll ought to be pleasantly surprised, or the inverse. If the latter case exists, then you’re likely to be doing the wrong things, at the wrong times requiring quick remedial action.
2. Decreasing enterprise costs
This metric represents an inverse corollary to the first point. The faster and more efficient an enterprise performs after launching an ERP platform, the more your costs should decrease. This is largely due to a host of time/motion issues, supported by more accurate workforce processes. But in the end of the day, all of these elements should end up rolling into a nice negative number, when compared with previous cost-year totals.
3. Production efficiencies increase
This assertion applies directly to an issue of workforce/process accuracy, and how quickly and effective a company’s production operations are executed. Again, if an ERP-driven workforce understands, and quickly responds to production challenges by taking advantage of a resource system’s increasing levels of information, those people will in-turn resolve issues more accurately, in shorter timeframes.
4. Support costs decrease
In parallel with Items 2 and 3 as the enterprise experiences overall decreases in cost and increases in production efficiency, support costs should also experience decreases in cost at a support level. This reduction largely applies directly to eliminations in process failures on top of human error, but affiliated yet non-specific costs accrue as well. Once again, a dollar not spent on support, means that that dollar can either go into the total revenue bag, or applied to some other money-making element within the company’s value envelope.
5. Enhanced enterprise ROI
This is the big gamilla of corporate value metrics setting since senior enterprise managers and its supervisory boards typically look to ROI before they look at any other line item. This usually means that if your ERP platform cost X dollars to buy, integrate, launch and operate for its first year, it is usually expected that all of those costs will have been recovered within 3 business years. If not, they will tend to look askance, leading to long meetings, beating or worse.
Of course all of these metrics are subjective of course, and every company is different. But these five indices should give you a solid basis from which you can build out your rationale kit when the time comes.
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