Three Ways to Tell if Your ERP Implementation Has Been Successful
Three Ways to Tell if Your ERP Implementation Has Been a Success
When you set out at the beginning of your ERP implementation project, you will have set out your primary goals and objectives. Now that your ERP system has been up and running for a while, it is time to check in on performance.
What are the best ways to see whether your new ERP is making the difference you thought it would? Here are a couple of good places to start.
1. A Positive ROI
Any major business investment should be able to provide a return, so this should be your main success metric for an ERP system implementation.
Some investments may take longer to bear fruit than others and the larger the project, the more time it can take to prove an ROI. That doesn’t mean you can’t detect trends in the meantime. The payback period for an ERP system ranges from 1.7 to 3.2 years, with 2.7 years being the average. That might seem like a long time to wait but the payback itself should be significant enough to make the daunting outlay much easier to digest.
Planning when you expect to see a return (and how to calculate it) should have been a major part of your implementation planning process. It is unlikely you would have had sign-off to invest without it. (If you are reading this article prior to selecting a vendor and setting out your requirements, take a look at this ERP Selection Survival Guide for an overview of the entire process).
For help with forecasting, analysis and calculation, try this easy-to-follow ERP ROI template and tips from industry experts.
2. A Visible Increase in Productivity
Seeing improvements in productivity will be an earlier indicator of success than the ROI. Look back at the objectives you set out around productivity and reducing human error. Are you hitting those goals? Are you seeing positive trends? With all the automated processing that ERP brings, you should start to see the benefits once your users have been trained and are making use of the features you chose.
Here are some of the ways that a successful ERP implementation improves productivity:
- Improved communications
- Reduced manual work
- Slicker business process workflows
- Better forecasting and data-driven decision making
If your users have been well trained and supported, then you should be able to see where your productivity improvements are paying off.
3. Increased Client Satisfaction
Are you getting orders to your customers quicker? Are your clients enjoying better communication with you? Is there a reduction in dispatch issues and other customer pain-points? All of these things are measurable and an easy way to find out whether your ERP implementation is having a positive effect.
You can track and optimize customer service metrics as well as organise communication with both the demand and supply side of your chain. Look back at the customer service KPIs you set out to hit when you went through your ERP selection process and look for signs of improvement. Again, this can be an early indicator to ERP success than the more overt ROI goal.
Helen Peatfield is a writer, editor, and regular contributor to ERP Focus. She has a wealth of experience in ad tech, supply chain management and SaaS. When she is not typing away at her desk, she can be found scuba diving or wakeboarding in the sunny Gulf of Thailand.
The ROI of Cloud ERP Implementation
The ROI of Cloud ERP Implementation
ROI is the key determiner in deciding which investments give the greatest return. In other words, ROI is a comparison of the expected benefit of a particular investment measured in monetary units, compared to the cost of that investment in the same monetary units.
The lack of efficiency and the great limitations of spreadsheets, basic accounting software, and even paper make running a business at optimum performance a little difficult. Without a proper ERP solution, businesses are struggling to get a greater ROI.
The ROI Benefits of the Various Aspects of ERP Are Greater Than You Might Think
The reduction of costs for IT is massive. There’s an anonymous technology company using a cloud-based ERP software that saved more than $100,000 in hardware and software purchases and avoided hiring at least three full time employees for its IT department.
Cloud ERP allowed companies to replace outdated accounting packages like QuickBooks, which, while inexpensive to purchase, were costly in maintenance, integration, and manual data entry.
There’s A More-Than Noticeable Increase in Productivity.
Sales and marketing teams are better able to serve customers. If you have a sales call and want to update the customer database, you don’t have to write a note and remember to do it when you get back to the office; that is very inefficient. You actually can just make the direct changes right then and there, adding notes within the ERP for everyone to see!
Moving from paper, spreadsheets, and accounting packages to cloud ERP solutions helps companies speed up collections, reduce the quote to cash time, and increase the accuracy of their billing. Monthly or yearly financial close has been simplified as well, due to financial consolidation and the ability to more easily access and manage financial data.
Decreasing inventory levels through better inventory planning reduces costs. Inventory management systems improve the tracking for movements. This is not only an important factor, invoice accuracy can reduce collection cycles, which in turn improves cash flow.
The Statistics of ROI for Cloud-Based ERP Solutions
Even though cloud ERP only represents 2 to7 percent of the total ERP market at present, the revenues it generates are expected to double by 2015 compared to 2010. Nucleus calculated the ROI achieved by using cloud ERP, and noticed most companies reported a higher than 150% ROI. One client of Netsuite’s said, “There is information about the customer and what they ordered. They can see history without tracking people down and see a complete picture of sales, ordering, and fulfillment. That has made us 20 to 30 percent more profitable.” Can you imagine how much this benefits customer service? The answer, according to this company, is 20 to 30 percent more profit.
Conclusion
The ROI for a cloud-based ERP system heavily outweighs what a cluster of non-integrated, lacking software offers. Not to mention, the returns are far better on a cloud-base than an on-premise ERP software. With the right ERP system, businesses are able to properly track and measure all of the various benefits of a proper ERP system to see their returns grow continually.
