So you’ve gone through the pain of an ERP implementation and you can see a lot of changes in the way the business is operating now. Some staff are overjoyed with their new software and others are moaning much like they did with the old system.
But how do you know if the changes, in aggregate, are providing a net benefit to the business?
It would nice to think you could just look at the P&L and Balance Sheet after it’s finished and compare to before you started and the difference is the net annual benefit.
Except, there has been much else going on at the same time as the implementation. Sales have been upping their game, product have launched some new models, purchasing have been on a major exercise to get supply costs down and manufacturing have bought some new, more efficient machines. So how do you pull the ERP needle out of the operational haystack?
Well, if you have truly just gone live and you are, only now, starting to think about payback then I’m afraid you’re too late. To make any form of comparison you need a before and after picture which means assessing your business processes before you start and comparing them with what you end up with.
That assessment of processes can take many forms: measuring the man-hours taken to execute a process (e.g. daily sales invoice generation), measuring the cost of a process (e.g. stationery cost if you are going to email everything in future), measuring opportunity costs (e.g. re-deployed staff can now work on generating more sales).
But in order to compare “before” with “after”, it is vital you measure the “before”. The good news is that you can do this whilst you are running the implementation, before you go-live. So at the point you have completed the process mapping phase, those processes you’ve identified can then be measured.
But the final point to make here is, just like a golf swing or cricket shot, the importance of the follow-through. Just because you have streamlined a process, that doesn’t mean you get the benefit. As the management team you must ensure those of your staff who can operate their procedures quicker, make full use of the additional time they will benefit from. This may mean people need to be re-deployed. If you had two people operating a specific process which now only needs one then what is the second person going to do?
So the 3 point plan should be:
1. Measure the current processes before go-live
2. Measure the new processes after go-live
3. Re-organise your staff/departments to encapsulate the time and cost benefits
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