Enterprise resource planning (ERP) software solutions help businesses manage their day-to-day operations and streamline business processes, increasing efficiency and reducing costs. ERP implementation can be a significant investment for any organization, so it’s important to gauge your baseline performance and continually measure the success of the implementation project.
Why “Before Metrics” Are Key to a Successful ERP Implementation
First things first—what are Before Metrics?
Before Metrics refer to the performance indicators that you track before ERP implementation. Use them to establish a baseline or starting point against which you can measure progress after the implementation.
It’s crucial to collect Before Metrics before transitioning from a legacy ERP to a cloud-based system like Dynamics 365 Finance and Supply Chain Management for several reasons, including:
- Understanding current state
- Identifying gaps or areas for improvement
- Providing a baseline for setting goals and objectives
- Expediting realized business value
To put it simply: By collecting Before Metrics, organizations can track and determine whether they are achieving their desired outcomes.
5 Best Practices for ERP Implementation Measurement
- Set Goals and Objectives
Define what a successful ERP implementation would look like for your organization.
Your goals should align with your business objectives and be measurable and achievable. For example, if you have a business objective to reduce the time spent on inventory management by 50%, the ERP implementation project’s goal could be to implement a new inventory management system that saves time and reduces errors.
With clear goals and objectives, you can accurately measure the success of the implementation project.
- Identify Key Performance Indicators
Key performance indicators (KPIs) best practice should be specific, measurable, and relevant to the goals and objectives of the implementation project.
Some examples of KPIs for ERP implementation for a distributor include:
- Finance and accounting: Gross margin, net profit, days to close, budget variance rate, and payment error rate
- Order processing: Quote preparation times, quote conversion rates, order-entry error rates, and pricing and discounting accuracy
- Shipping order preparation time: On-time delivery, on-time shipment, picking error rates, packing error rates, and shipping error rates
- Warehouse and inventory performance: Inventory variances by reason code, locations counted and accurate, and sales order shipping lines per hour
- Customer service: Customer complaints by reason, average age of customer service case, and average percentage of customers retained
- Other: Kit assembly time, time spent per return, number of returns dealt with per month, and time spent on manual quotes
Tracking these KPIs can help you determine whether the ERP implementation project is achieving the desired outcomes.
- Collect Data
To measure the success of an ERP implementation project, not only should you collect baseline data, but you also need to collect data throughout a project’s lifecycle. This data can come from various sources, such as surveys, interviews, and system logs. Software tools can help to collect and analyze data, making it easier to identify trends and patterns.
Collecting data also helps in identifying any areas that need further attention or modifications to the implementation plan. After your ERP implementation, data allows for the evaluation of its success and the identification of areas that require further improvement.
- Analyze and Report
Once you have collected data, it’s essential to analyze and report on the data. Data analysis can identify trends, patterns, and outliers, making it easier to determine whether the implementation project is on track to meet its goals and objectives.
Reports and dashboards assist with translating ambiguity and presenting useful information to stakeholders, making it easier to see progress and make data-driven decisions.
- Continuously Improve
After the implementation is complete, it’s important to monitor the system’s performance with prioritized vigilance, as KPIs and data analysis can help identify areas for improvement and efficient exception handling.
Documenting Your ERP Baseline Metrics
It’s crucial to document these key pieces of information to refer to when needed. Choose a central location.
Some options for documenting ERP baseline metrics include a spreadsheet, project management tool or the ERP system itself. For example, you could document them in SharePoint or make them a part of your internal project structure where you keep all your organization’s documentation.
Regardless of the tool, make sure that you keep the documentation organized, easy to read and accessible to all relevant stakeholders.
You Can’t Manage What You Can’t Measure
When it comes to ERP implementation, remember this: You can’t manage what you can’t measure. Measuring the success of an ERP implementation is critical to ensuring that the project meets your organization’s goals and objectives.
To learn how Sikich can help you improve your “after” metrics, contact our team today.