Last week I got the opportunity to attend a seminar on new technology trends around enterprise applications hosted by one of the leading consultancy companies. The seminar was very informative and lot of participants like me were excited about the new options that are opening up in enterprise applications field to take leverage from and further improve the efficiencies and effectiveness of teams and operations, specially supply chain and financials. I got to meet few industry leaders also who shared their viewpoints about the successes and failures they had around deployment of erp solutions and whether their expectations were met or not after this initiative. As always, the views varied but a question that almost everyone had, was how to evaluate whether they have the best of the solutions as per their industry standards and organizational needs, is it dependent on the results alone or do we have some other parameters also to check if we were successful enough or say best in class in this intiative.
To answer this, let me share some results from so called "Best in Class" implementations that I have witnessed during my career. For an organization where supply chain was their major pain area with inflated but incorrect inventory, haywire manufacturing schedule compliance etc., the results they could finally achieve were:
- 23% reduction in inventory
- 98% accuracy in inventory
- 35% improvement in perfect orders
- 94% on time delivery (up from approximately 78% - this there was no trusted means to measure it earlier)
- 93% manufacturting schedule compliance - this was most difficult to achieve for them as lot of change management was involved
- 24% reduction in item obsolescence
Having given above example, it is not that all results of an ERP implementation
are tangible and if you do not get them, your initiative is a failure. NO, this is not at all the case. Process standardization, greater compliance towards regulators as well as putting controls in place to reduce revenue leakage in multiple ways and having a single source of truth are few of those non tangible benefits that you will get from a successful ERP implementation and they should also be given equal weightage while evaluating the success or failure of your project. For example, for a project based organization, one of the most important benefits will be to restrict buyers to their budgets as defined in the application so that the sanctity of budget is maintained and the management knows at all point of times, that what is the current status, how much they have to spend in the coming period etc. Also, this will ensure that people start giving accurate budgets so that they do not have to go to the route of getting it revised whenever they exceed it - and believe me getting your budget revised is not an easy task in any organization.
are tangible and if you do not get them, your initiative is a failure. NO, this is not at all the case. Process standardization, greater compliance towards regulators as well as putting controls in place to reduce revenue leakage in multiple ways and having a single source of truth are few of those non tangible benefits that you will get from a successful ERP implementation and they should also be given equal weightage while evaluating the success or failure of your project. For example, for a project based organization, one of the most important benefits will be to restrict buyers to their budgets as defined in the application so that the sanctity of budget is maintained and the management knows at all point of times, that what is the current status, how much they have to spend in the coming period etc. Also, this will ensure that people start giving accurate budgets so that they do not have to go to the route of getting it revised whenever they exceed it - and believe me getting your budget revised is not an easy task in any organization. Then, opportunities like scalability, easy reporting, manage growth, ability to do actual costing and better calculations of profit margins, collaboration with suppliers and customers etc. are equally priceless which we tend to miss while trying to measure the value that was brought by an ERP implementation.
The list is endless and depends on what do you expect from your project - while it is ideal to say that we need to define and detail out in advance about the parameters and objectives - but in real world, it is difficult to get this done at a granular level, specially if you are implementing ERP for a first time and not moving from one to another. So, it is better to start measuring the project success after 6-9 months of going live and after checking the improvements that you could see in your operations.
