3 Underutilized ERP Metrics to Measure Implementation Success

For leaders with hopes of both scaling and modernizing their business, implementing an Enterprise Resource Planning (ERP) system can be the key to streamlining core business processes. It can help drive business agility through automation. In addition, it has the potential to carve a path toward a new, insight-driven way of working that’s fueled by reliable, real-time data. But getting there can be costly and time-consuming if not done right—and today, a lack of proper planning causes as many as 75% of ERP projects to fail. 

Too often, organizations looking to invest in ERP technology mistakenly believe that there is a fail-proof blueprint or a single one-size-fits-all approach to a successful ERP implementation. In turn, they tend to follow generic best practices that are not tailored to their business strategy, often measuring success based on popular industry metrics. Still, the reality is that, depending on context, one organization’s ERP success may be another’s failure.

Even the most commonly used ERP metrics and key performance indicators (KPIs) won’t be a fit for every organization. So it’s vital to understand how you can most effectively define success for yourself. Here’s a look at how to get there. 

Making ERP Implementation a Success

Taking stock of where you’re starting and where you want to go can be a helpful place to start when it comes to ERP metrics. The better your KPIs are at the outset of an implementation, the more aligned you’ll be with your business objectives, and the more value the organization will draw from the new system. 

This means it’s essential to take into account:

• Department-level success metrics, like faster cycle time for production
• Organization-level success factors, like lower operating costs 
• Short-term success indicators, like improved user adoption
• Long-term success markers, including reduced downtime and improved resource utilization 

As a business, you cannot assess or optimize what you can’t measure. So take a comprehensive and well-rounded approach to sizing up your ERP project’s success now and in the long term. 

3 Underutilized ERP Metrics to Watch

Today, ERP metrics like inventory turnover, project margins, productivity, IT spending, and revenue growth are among the most important KPIs companies rely on to assess the true value of their ERP investment. But focusing too heavily on bottom line KPIs undermines the importance of more qualitative and less tangible measures of success.

Notably, there remains a troubling overreliance on ROI and dollar-centric measures of success. This sidelines the importance of success factors that enable transformational improvements for your business, like better predictions, improved demand forecasting, and smarter decision-making.

Here are the top 3 most overlooked ERP metrics to watch.

1. Employee Adoption and Satisfaction

Change management issues or organizational resistance to change is the cause of ERP failure for 82% of companies, according to Deloitte. These days, it’s as important for your employees to embrace your ERP system as it is that your customers do. 

To know if your ERP project is a success, one factor to watch is employee adoption and satisfaction (which you can assess based on the number of users logging in, the number of transactions processed, qualitative feedback from employees, or the number of incoming support requests). 

A high rate of adoption can tell you that employees are finding the system easy to use and valuable. Plus, employees who can rely on an ERP system are better equipped to support the customer experience and service needs, making it a win-win for your organization.

2. Less Tangible (But Meaningful) Customer Experience Metrics

Understanding the true, full scope of your ERP project’s success is about more than whether or not you’re able to stay on (or ahead of) production schedule, or even about whether you’re noticing an uptick in revenue. For every organization, business success should also be, in part, defined by how well you serve your customers.  

Do you find your teams fielding fewer questions from customers and vendors? Have you been fostering deeper customer relationships with your loyal client base? Have you heard positive feedback about customer satisfaction from client-facing teams? These wins can often be as representative of an ERP project win as a boost in efficiency.

3. Ease and Speed of Real-Time Decision Making

One of the key advantages of ERP implementation is that the system helps simplify the process of capturing data and making it available in real time. In turn, businesses running ERP systems benefit from having more accurate, reliable data to make decisions on. 

In a world where two-thirds of sales leads don’t close because of bad data quality, insight is key. With an ERP system, you’re able to make faster decisions and be more agile in the face of change. Finding a way to measure this speed is tantamount, so consider monitoring improvements like how quickly your organization is able to launch new product lines, adjust production to future demand, or collaborate across departments without the hindrance of siloed data.

ERP Systems Mean Big Wins for Modern Businesses 

Companies draw value from their ERP systems for many years. For that reason, it’s important to track both short- and long-term ERP metrics. This includes not just factors like the efficiency of key business processes, but also how effectively the company is getting closer to its larger strategic ambitions. Clearly defined KPIs can also help business leaders determine whether a new ERP is delivering value and quickly identify any potential issues over time.

Assessing the true power of your ERP system is about more than just proving ROI, and more than proving quick time to value. For any organization, business success factors of choice must paint a comprehensive and multifaceted picture of how ERP implementation can support your end-to-end business performance for a long time to come. You can take it a step further and see how Cavallo’s Order Intelligence platform can support your endeavors across many ERP options.