Dissecting ERP KPI for Better Understanding

ERP KPI or Enterprise Resource Planning Key Performance Indicators are what makes or breaks a business. These are high level measurement systems to find out if the business is performing or not and whether this performance is at par with its specified targets. Before discussing further what ERP is, let us first try to understand what a KPI is and how it is developed.A Key Performance Indicators is a predefined measurement. In a normal set-up, a KPI for high level management is no more than bar charts and pie charts that show if the process or business earned or not. This shows sales figures or attrition in the company, etc. Sometimes, these are charts displayed on a yearly basis. However, it is more common to see quarterly comparison of these during the Quarterly Business Review or QBR.When a Key Performance Indicator is developed, it is first necessary to identify what significance the metric has in the business performance and how it impacts the financial status of the company. When this is identified, one needs to know if this should be measured on a daily, weekly, monthly, quarterly, or yearly basis. Once this is determined, then a software must be used to make data generation accurate and real time. The reason a KPI result or metric should be seen real time is so that managers can develop action plans right away if the business is not performing well.Now that Key Performance Indicator was reviewed, we will move on to ERP and see what it is all about. As mentioned earlier, ERP is an acronym for Enterprise Resource Planning. Many people contest that this acronym does not really live up to what Enterprise Resource Planning has become or what Enterprise Resource Planning is doing. Accordingly, Enterprise Resource Planning is a software that does not really do much planning or resource. However, people find substance in what enterprise really works for ERP.Simply put, ERP is a means of building a software that will integrate all units into one tool that is accessible anytime and anywhere by anyone. The most common ERP built is a database that everyone in a big company that can share so the transmission of communication is faster and more accurate.One common example of an ERP software program is a time keeping tool used by employees in recording their time in and time out for work. This will help managers easily spot who is late and who is not. On the other hand, the payroll department does not need to ask the manager if anyone from his team was late. This is because the payroll department can access the same tool and view who is late and who is not. Yet on another hand, the Human Resources Department does not need to ask for the same information. They just have to look into the tool and update the file of the employee.In summation, an ERP KPI should be based on what is really needed to measure the efficiency of an Enterprise Resource Planning software program. And these are only a few—accessibility, real-time update, and accuracy.