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4 Best Practices for Analyzing Your ERP Data

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Enterprise resource planning (ERP) generates a massive amount of data that organizations can use to improve processes, but analysis of those data can determine what real information is available to the organization. It’s the “garbage in, garbage out” concept that programmers use when creating apps: The quality of the output cannot exceed the quality of the input. Better put, you need to know what you’re looking for before you start looking.
That’s where best practices for analyzing ERP data come into play. Organizations that choose valuable analysis methods gain more from ERP data than those that give it only a passing thought. To help you decide which approach to take to your ERP data analysis, here are four suggestions for gaining insight from the data.
1. Choose Good Key Performance Indicators
A large part of gaining real value from ERP data is choosing the right key performance indicators (KPIs). It’s common knowledge in most industries that some KPIs can easily be doctored to make an organization or process look like it’s performing much better than it is. What’s the value in that?
A much better approach is to select KPIs of value. To do that, organizations must first define long-term goals, then choose KPIs that will help measure progress toward those goals over time. When chosen well, with long-term goals in mind, KPIs can be a valuable tool that aids in informed decision making. The key is to choose KPIs because they have value and meaning, not just because they can be easily manipulated to look good.
2. Create Organizational Scorecards
Scorecards are tools used to track progress within departments or for employees. When considering how to analyze your ERP data, scorecards can help achieve organizational goals. If one of your goals is to increase user training completion, then creating scorecards that track progress toward that goal is a good way to ensure that you’re analyzing the right ERP data to help move your organization in that direction.
A scorecard can also help tracking at a departmental level. It’s one way to ensure that each department is meeting its outlined goals. Knowing the data needed for those scorecards will help organizations create the right analysis to generate that information.
3. Create Alerts and Exceptions
Alerts and exceptions are another way to ensure that you’re analyzing the right data. You can use them to catch potential problems before they occur, but they’re effective only when you’re collecting the right data and analyzing them through your ERP system. For example, you could create an alert that’s triggered when shipping efficiency falls below a certain percentage of on-time shipments. It’s key to select alerts and exceptions that help the organization achieve business goals and objectives.
4. At-a-Glance Analysis with Dashboards
One last best practice that helps ensure that you’re nailing ERP data analysis is to create dashboards that allow you to see where your organization’s performance falls. The right ERP data analysis can allow you to illustrate in a few graphical points just how well or poorly specific metrics are being met. When creating dashboards, take the time to select metrics that are valuable at a glance and don’t require drilling into the data to learn how those illustrations translate into progress. Deeper metrics are valuable and should be tracked, but they belong in detailed reports, not on the dashboard.
Analyzing your ERP data is the key to whether you can use those data to move your organization forward. Looking at the wrong data will do little to help create forward motion, but choosing the right KPIs; setting up scorecards for departments and employees; and creating alerts, exceptions, and dashboards can help you to focus on the right analysis.

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