So you’re in the middle of an ERP selection, reviewing items such as functionality, technology, user interface, etc. and contemplating the expense and effort of a long implementation cycle. But, how do you or your management team, know that your ERP project will support and enhance your business strategy? After all, this is a major investment in money and time that may also incur opportunity costs resulting from potential business disruptions during implementation.
Did your team ask and answer the “why” question, as in “why do you think this ERP system will support your business strategy?” Or are you mired in the “how” questions, checking boxes in a rehashed RFP questionnaire that focuses on technology and functionality that supports old or vendor proposed processes? The key to success is to ensure that your ERP solution is aligned with your business strategy, and will support the inevitable adjustments to your goals resulting from today’s dynamic marketplace.
Metrics Must Align ERP with Business Strategy
How can you ensure that your ERP solution aligns and grows with your business strategy? It starts by identifying the critical factors that determine the success of your business strategy. Then, through a continuous improvement approach you define specific outcomes and how to measure them. We understand that improvements are the result of applying people, process and technology to solving problems. However, outcomes as a measurement of key metrics remains the means for assessing the alignment between your ERP system and your business strategy.
Metrics form the basis for defining your outcomes, assessing achievement, refining your processes and then applying those refinements to key processes in order to drive those outcomes. By embracing a continuous improvement mindset, supported by the right metrics, your ERP implementation takes on a business rather than feature focused approach. Your ERP is no longer a one-shot implementation, but rather your tool for ongoing business improvement.
Metrics not only define and measure outcomes, they provide a vital link between your company’s business strategy and the key operational processes that enable that strategy. Identifying these key processes and ensuring that they are aligned with your company’s business and strategic goals is an essential element of success.
The first step is to understand the likely source of the problem and relate it to the performance problem, or metric that you want to address. Then by using level two and three metrics as diagnostics you will be able to identify and optimize the related business processes. Metrics are the critical links between outcomes, key operational processes and the success of your business strategy.
Metrics, Outcomes And Your ERP System
You can be assured that over time your business environment will evolve and your company will face unforeseen challenges. The ability to adapt to those changes may depend upon using a KPI framework that links metrics to process, and process to the best practices and essential skills required. Your ERP system plays a critical role in tracking, managing and presenting the information you need accurately and in the proper business context. Therefore, it is important that the ERP vendor you choose embraces the philosophy of continuous improvement, delivering a product and service focused on helping you achieve your strategic goals.