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Apr 30, 2007

Key expected business benefits from an ERP implementation

"ERP in manufacturing benchmark report" published by Abardeen Group has thrown up many interesting insights into superior ERP implementations. According to the report, one of the key success factors in ERP implementation is the clear identification of expected business benefits post ERP. Some of the benefits that an organization can expect post ERP implementation are:

1. Streamline business processes
2. Automation of manual processes
3. Visibility provided to the business
4. Cost of software and services
5. Length of time to initial 'Go Live'
6. ROI
7. Length of time for full implementation
8. Process cost savings
9. Ability to meet compliance requirements
10.Ability to connect with customers and suppliers

In addition to the above, in my opinion, the organizaition should also look at the following matrics.
1. Length of time to stabilize: I have seen complex implementations stabilizing in 3 months and simple implementations stabilizing in anywhere between 2-3 years. 3-6 months is a reasonable benchmark I think.
2. Time to close period: I have implemented solutions which brought down the period closing time from 15 days to 3 days. 3 days is a good benchmark, I feel. However this will also depend on the complexity of transactions esp. inventory transactions.
3. Reduction in customer / supplier disputes: Though it is difficult to put a definite number on this matric, ERP implementation should progressively reduce the disputes to 20-25% of the current figures in a span of 6 months approximately.
4. Increase in inventory turns
5. Decrease in ACP: Directly related to reduction in customer disputes.
6. Visibility and accuracy of inventory and consumption figures: In one of the implementations, the consumption figure accuracy increased from 70% to 98% thereby enabling more accurate profitability figures.

These are some of the matrices that can be used to assess the benefits of ERP implementation. Are there any other matrices that you are using in your implementations?

Please let me have your comments.

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