Three key steps for an ERP performance review
Like annual employee performance reviews, an enterprise resource planning (ERP) system needs one, too. When it comes to ERP performance, many enterprises think it is a one-and-done proposition to implement an ERP solution, especially given the time and resources devoted to its deployment.
However, if an ERP has fallen into the category of a "legacy" system—one that is outdated and/or has not been updated—it’s time for a performance review. Are users increasingly not using it to its fullest or finding manual ways to accomplish what the ERP is supposed to be doing? Are users enthusiastic about using it, especially younger staff members? How old is it?
It’s crucial to measure how well the ERP is currently performing to decide if a new ERP would better serve the enterprise or if the company can continue to depend on it. A business process review will provide the necessary answers.
In an ERP performance review, two overarching questions stand out:
- Is it time to begin the process of upgrading the company’s ERP?
- By staying put, is the company missing out on other benefits?
There are three major factors to consider if an ERP is providing the best possible performance or if it’s time to update it. An ERP selection project is a major undertaking and one that deserves serious analysis of the value and risks associated with it.
1. Consider the value of the current ERP
The best first step in an ERP performance review process is an unbiased assessment of the value of the current ERP. Determine whether it is keeping its promises in terms of value. Assess whether or not it performs as it did on Day One.
Think about these five areas of value:
- Does the ERP still support all current business features and functions?
- How well is the ERP integrated with all external systems, applications, customers and suppliers?
- How is the end-user technology operating?
- Look and feel: Is it intuitive?
- Workflow: Does it synchronize with our current process?
- Is it fully integrated with Windows?
- Does it provide the company with real-time information and business intelligence, with these must-haves:
- Data cubes
- Report publishing
- Culture: Does the ERP fit with how the company does business today?
2. Examine potential risk
Oftentimes, risk is only discussed when the business is in the middle of a meltdown following an unexpected development. However, it’s vital to look at risks that threaten the health of the system on a routine basis. Consider these questions about risk:
- How is the integrity and day-to-day performance of the hardware/software? Has it been updated on schedule? Are all modules working as initially designed?
- How well is the vendor supporting the system? Is that support in line with the initial contract? How expensive is it?
- How secure is the ERP? Cybercrimes are increasing every day; is the system protected?
- Does the information technology (IT) staff have too much to handle in the way of support and maintenance?
- How well has the system kept up with industry standards/government regulations and compliance issues?
3. Analyze business processes
Business process analysis is where the heavy lifting really comes in. It’s an important step and one that many enterprises are unwilling or unable to take. It’s an assessment of areas of the business that might need transformation to become more efficient and cost conscious. Such an analysis forms the structure and identifies the information needed to develop new and improved business processes. Review the current state of operations, implement process improvements and deliver a confident business case that justifies the ERP decision.