Go-live is a big moment. You and your team have spent months planning and implementing a shiny new ERP system. A system that goes live without any major issues is an achievement worth celebrating, but the system hasn’t really proved itself yet. It’s what happens after that reveals if value is being created.
An issue-free go-live doesn’t tell you anything about whether people are using the system properly, whether processes have improved or whether the investment is paying for itself.
So how do you actually know if your ERP is meeting the objectives you set? You track the right ERP metrics across the main areas the system was designed to improve: your people, processes and profit.
In this article, we cover the specific KPIs that matter, why the metric is worth watching and how to track it.
Set ERP baselines before go-live
Measuring the success of your ERP begins well before go-live. Without a documented ‘before’ picture, any claim of improvements down the line is based on impressions, not hard evidence.
Record the baselines while your old system and ways of working are still in place:
• Capture how long your core workflows currently take.
• Measure the state of your data, including duplication, missing fields and the volume of manual corrections.
• Outline where you stand on the financial and customer-related measures the ERP is meant to address.
• Set clear adoption targets – common targets include user engagement, active user rates, login frequency to specific departmental functions (such as HR and Finance).
Key metrics to measure ERP success
Time to Value (TTV)
Time to Value measures how long it takes after go-live for the system to start delivering clear benefits. A long TTV erodes the whole business case of implementing a new ERP system, particularly in fast-moving sectors where the gap between a six-month and an 18-month TTV has huge implications.
Three factors tend to shorten TTV: ease of use (the system is adopted faster and requires less training time), integration (straightforward connection processes to existing tools reduce the manual work and errors) and quality of support during and after the ERP implementation process.
How to measure Time to Value
Define a specific benefit before go-live, such as “cutting manual order entry by half.” Then record the elapsed time in weeks from go-live until that target is met. It’s important to note that tracking two or three more benefits gives a clearer picture of progress than relying on a single milestone.
Return on investment (ROI)
Return on investment sets the value the system generates against what it costs to run, which makes it the main verdict on whether ERP investment was justified.
How to measure ROI
Add the direct and indirect cost savings, subtract the total implementation costs, and divide by the total costs. Redo this calculation at the 12- and 24-month mark and then again at the five-year mark to get a clear indication of ROI.
Total cost of ownership (TCO)
Total cost of ownership is the full lifetime cost of the system. It matters because the license is typically only a quarter of the total, with the remaining 75% coming from other costs.
How to measure TCO
Add all initial and recurring costs across a set timeline (typically between three and five years). Divide the total by your expected user count and the total months to get a standardized cost-per-user-per-month.
Financial close cycle time
Sometimes referred to as Days to Close, financial close cycle time measures the number of days it takes the finance department to complete the financial close process at the end of an accounting period. The goal should be between five to seven days, but the average is somewhere between 10 to 15 days. A shorter close is evidence that automation efforts are paying off.
How to measure financial close cycle time
Take the number of days to close for the six most recent months and divide the number of days by six.
Cost per transaction (CPT)
CPT is the overall cost to process a transaction, such as an invoice or customer order. Organizations track this metric to understand how much it costs to complete routine activities, such as procurement requests and invoices – this allows them to identify areas that need improvement.
How to measure the cost per transaction
Calculate the total costs (including software, labor and overhead) of a specific business process and divide by the total volume of transactions over a defined period.
Process cycle times
Process cycle time is how long a workflow takes from start to finish, such as order-to-cash or procure-to-pay. It shows how quickly things happen in the business. However, consistency matters just as much as speed – a process that completes reliably every time is worth more than one that is fast, but stalls frequently.
How to measure process cycle times
Measure the elapsed time from the first step to the last and average it over a run of cycles.
Inventory turnover
If you’re in retail, you’re going to want to keep an eye on inventory turnover. Inventory turnover is the number of times you sell and replace your stock over a given period. It demonstrates how efficiently working capital is deployed and whether the ERP is improving demand planning.
How to measure inventory turnover
Divide your Cost of Goods Sold (COGS) by your average inventory value within a specific timeframe. It is most useful paired with your stockout rate, which shows whether a high turnover reflects actual efficiency or thin stock that is at risk of shortages.
Forecast accuracy
Forecast accuracy is how closely your demand forecasts match what actually sold. Better accuracy results in less capital being tied up in stock and reduces financial shortfalls that ultimately damage the service you offer.
How to measure forecast accuracy
Choose the time horizon (e.g. weekly or monthly) and the level of measurement (total sales or product category), pull historical forecasts and actual recorded demand from your ERP system, and subtract your forecast from the actual figure, take the absolute value of that difference, then divide it by the actual figure. Subtract the result from 100% to get your accuracy.
User adoption rate
User adoption rate is the share of employees who use the system meaningfully, rather than just logging in. It’s one of the most important measures to monitor, as low adoption significantly reduces an ERP’s expected efficiency gains.
How to measure user adoption rate
You can measure user adoption rate by dividing the number of active users by the total licensed users. However, to get a clearer picture of your ERP system’s health, evaluate the user adoption rate alongside login frequency and transaction completion time. Even better if you can supplement these quantitative methods with qualitative user surveys.
Get more from your ERP with the right partner
Measuring all of these KPIs is quite the task, especially if your team is busy on other projects. Yet it’s often what separates a system that’s simply live from one that is proving its worth.
Measuring ERP success with intention takes more than a list of KPIs (although an informative list is a good place to start if you’re not sure which KPIs to focus your attention on). It takes a partner who stays involved in the process long after go-live to manage and monitor measurement and, crucially, act on the findings.
At ERP Mechanics, we work with organizations at various stages of their ERP projects, including the post go-live stage, where so much value is made or lost. Unlike traditional consultancies, we are built as a flat, modern team, so you get speed, flexibility and a focus on results rather than layers of hierarchy.
If you’re keen to carefully track post-go-live metrics, we can help you set a clear definition of success and build the measurement and optimization to get you there. Get in touch with the ERP Mechanics team today, and we’ll talk more about how we can make your ERP implementation a success.