How do you know that your enterprise resource planning (ERP) system is achieving its desired results? In the modern business world, relying on ERP systems has become a necessity, thanks to their ability to connect various operational processes, making them more efficient and organized.

But how can you ensure that the system you are using is achieving its desired results? This is where ERP Key Performance Indicators (KPIs) come in. They provide business owners with a more comprehensive view of the ERP system's performance, helping you evaluate and continuously improve the system.

In this article, we'll learn about ERP system KPIs and how you can use them to evaluate the system more effectively.

Why are ERP KPIs important for your company?
The importance of ERP KPIs lies in their ability to link system performance to actual business results. They can achieve the following:

Provide a clear view: Performance indicators in ERP systems provide a comprehensive view of how the ERP impacts all operational processes across each department of the company. This helps you evaluate the system and ensure its effectiveness. Making Informed Decisions: Making informed decisions requires accurate, fully reliable data, which ERP KPIs provide through various reports on the system's performance and its impact on various tasks.
Improving Operational Efficiency: By monitoring performance indicators, you can identify shortcomings in operational processes and then develop appropriate plans to improve them.
Increasing Return on Investment (ROI): Relying on specific performance indicators to measure the efficiency of the system and the results achieved through its use helps determine whether the investment in these systems is achieving its expectations.
Key Performance Indicators for ERP Systems
ERP KPIs are divided into several main categories, each focusing on a different aspect of the business.

Operational Performance Indicators
These indicators measure the improvement in the efficiency of daily operations through the following:

Accuracy of Demand Forecasting: Has the data provided by the ERP system contributed to forecasting demand for your products or services? If the answer is yes, this is a good indicator for improving inventory management and avoiding shortages or surpluses.
Order Cycle Time: Has the time from the time an order is received to the time it is delivered to the customer been reduced? If yes, this indicates that ERP has contributed to faster operations.
Responding to Customer Inquiries: This performance indicator measures the time taken to respond to customer inquiries. The faster and more efficient responses are, the greater customer satisfaction is.
KPIs for Financial and Accounting Operations
Financial Data Accuracy: Has the ERP system provided electronic automation led to a reduction in errors in financial reports?
Operating Costs: Have operating and production costs been reduced while maintaining the quality of the products or services provided?
Profit Margin: Has the implementation of the system led to an increase in the gross or net profit margin?
Financial Period Closing Time: By measuring the time it takes to prepare monthly or quarterly financial reports, has this time decreased? If yes, this indicates increased efficiency in the finance department after adopting the ERP system.
Inventory Management Performance Indicators
Inventory Turnover: Using ERP KPIs to measure the number of times inventory is sold or replaced, a higher rate indicates inventory efficiency. Excess Inventory Levels: Did the system reduce excess inventory and minimize additional storage costs?
Inventory Accuracy: When tracking and counting, did the numbers in the system match the actual inventory? If yes, this indicates inventory accuracy and the validity of the recorded data.
Customer Satisfaction KPIs
Customer Retention Rate: Did implementing the ERP system improve customer service and increase customer loyalty and trust?
Number of Complaints: Did the number of customer complaints decrease after implementing the ERP system?
Customer Satisfaction Score: This measures customer satisfaction before and after implementing the system. This can be measured and compared through surveys. This allows you to evaluate the performance of the ERP system in the customer experience area and measure customer satisfaction.
How to Define Key Performance Indicators (KPIs) Within Your Organization
To effectively measure performance indicators in your ERP system and compare results before and after implementing the system, ensure the following elements are met:

Define Your Strategic Objectives: Before choosing an ERP KPI, answer the following questions: What do you want to achieve? Is it to increase sales? Or reduce costs? Or improving customer satisfaction? Answering these questions and others, depending on the nature of your business, will help you set the goals you want to achieve through your ERP system and measure them to track the results achieved.
Using the SMART methodology: Measuring performance indicators must follow the SMART methodology, meaning they must be specific, measurable, achievable, relevant, and finally, time-bound.
Start with the most important: When you first establish the performance indicators you want to measure, don't create too many. You can start with a few basic indicators first and then gradually add more.
How to evaluate the system using key performance indicators?
To effectively evaluate your ERP system after measuring ERP KPIs, you can do the following:

Establish a baseline plan: Before implementing the system, begin measuring the company's current performance using the indicators you have set for measurement.
Comparison and analysis: After implementing the ERP system, ensure you continue to monitor the indicators and compare them to previous results. This will help you identify areas for improvement.
Identifying areas for improvement: If the results of some performance indicators do not improve, this may indicate that there is a need for