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Measuring ERP System Performance

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Successful ERP implementation is not the end of the process in fact companies going for software solution have to analyze the benefits of new implementation in the year - many times and in many ways to ensure that the new products is offering as expected. The key business features should be analyzed and the company should not fail to realize the benefits which are expected from the business.

Reasons Why ERP Fail After Implementation

1. Vendors fail to consider the new system as integral part of the business process.
2. The vendor fails to take appropriate training.
3. The end users are not aware of the concept and functionalities of ERP and it may lead to errors which are caused by ignorance.

There are a number of criteria which can be used to measure the performance of ERP and it has been found that more than 50% of the performance metrics are not very effective in telling if the software is providing better ROI or it enables the company to have the needed benefit realization. There are some measurement programs such as the Benchmarking and Six Sigma, which can provide the statistics to measure the performance.

Generally, the assessment should be done in third month, sixth month and one year of implementation, and it must be done on the basis of the set of standard criteria. The assessment also depends on the number of transactions which take place in a day, the change required and the features of software.

A number of companies fail to implement the performance management programs correctly because these methodologies are expensive and time consuming. These methods require data collection and the returns are not very encouraging.

Reasons Why Companies Fail to Analyze The Benefits

1. Benefit assessment is done by a person from the IT department or a functional consultant - in fact the process should be done by a senior level manager who is aware of the exact cost invested in the process and compare it to ROI generated by the new system.

2. The companies should analyze the benefits of change in business process and make changes in the organization as per the new conditions.

The software to measure the performance can be used to track errors in the various processes and proper implementation enables the company to fulfill the requirements of various business processes.

The companies that go for ERP to automate manufacturing can ensure the performance by measuring the balance of supply and demand, and the balance is taken out from the balance of the inventory and expense on inventory management. It also includes the interests, in case, the company borrows money for buying raw material and the ERP should be able to reduce the excess interest which is paid during the process.

There are few prebuilt software packages which can provide the inventory quality ratio and the company can see the impact of new system.

The performance should be analyzed by following methods

1. Conduct audits
2. Compare results and identify opportunities created by the change.
3. Use feedback processes.
4. Effect of software on the financial performance of organization should be studied.

 Read Related Articles

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