Business organizations are set to achieve objectives, which are based on what is contemplated by the promoters. To realize these objectives, organizations develop policies, frameworks, processes, procedures and systems are implemented. Here policies to procedures act as enablers in systems implementation.
In medium and large organizations, ERP based systems implementation is taken up, with substantial commitments, in the form of financial investments and resources. Completion of the system development, as well as its success in terms of realizing the organizational objectives is a common point of debate, with success and failures highlighted and argued to unending deliberations.
In an ERP implementation, which is usually complex, for the management to assess, if the systems have appropriately helped in achieving the set organizational objectives, certain Process Goals and Related Metrics could be of significant help. Let us examine how this is feasible.
Organizations are structured into functions like marketing, materials, production, sales, and support functions like finance and HR. For supporting effective systems implementation, “processes” act as a backbone. Thus, if meaningful process goals are set and achieved, we could say that systems implementation is successful. How do we realize this in the maze of data and multiple goals which could be short term and long term, with which management is confronted with? Positive short-term results are adequate to conclude that systems implementation is successful? Or can we conclude that systems implementation is a failure because of poor economic performance?
How can we say whether a system has been a failure? It can be on one of the following counts:
- Some of the objectives set for the system may not have been realized,
- Time and Cost overruns have taken place in the system implementation, or
- Stake holder feedback on satisfaction levels is low or poor.
In a scenario of this nature, certain Process Goals and Related Metrics help top management in assessing the outcome of systems implementation and the health of the systems implemented. These metrics are over and above management reports which are a part of the system output. I am attempting to illustrate this through examples, which make a Process Purpose Statement that is self-explanatory, and certain Process Goals and Related Metrics under each function.
Process Goals are based on:
- What is desirable to achieve and
- What can go wrong (risk identification).
Related Metrics are a quantitative assessment of the goal outcome, which will help in monitoring improvements on a continuous basis. It assumes time / cost / compliance related norms for all transactions.
The organization chosen for this illustration is into Projects business, handling multiple projects and at multiple locations at the same time, bidding for, bagging and executing contracts on EPC (Engineer, Procure and Construct) basis. In response to an enquiry or a tender, the organization structures a solution, prepares an Estimate, bids for the job, and on bagging the order, firms up the estimate (which we could call Control Cost) and proceeds with detailed engineering, procurement, moving equipment to site, erection, and commissioning. Functions covered in this illustration are Marketing, Project Management, Purchase, HR and Finance & Accounts. Under each function, three representative process goals are chosen.
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Marketing |
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Process Purpose Statement |
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Respond to all relevant market opportunities, with quotes backed by proper estimates to realize business benefits and to protect organization from avoidable risks.to |
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Process Goal |
Related Metrics |
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1. All leads generated are responded to in time |
% of leads which have been responded beyond the stipulated time, where decision has been taken "to bid". |
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2.Ensuring proper margin while booking the order |
% of Orders booked with margins lower than stipulated. |
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3. Marketing efforts are focused on ensuring capacity utilization in all lines of business |
Lines of Business (LOBs) where order backlog does not last beyond six months |
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Project Management |
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Process Purpose Statement |
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Efficient and timely project execution to ensure that margins envisaged at the time of booking an order are realized. |
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Process Goal |
Related Metrics |
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1.Timely mobilization and commencement of work at projects |
Number and % of Projects in a period, where mobilization and commencement of work has been beyond stipulated time. |
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2. All milestones relating to a project, including customer approvals are achieved in stipulated time. |
Number and % of projects which are lagging behind at any given point of time. |
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3. Project Cost should remain within the Control Cost, right through the project execution, till completion |
Number and % of projects which have exceeded Control Cost, on actual cost incurred to date basis or on End Of Project Cost estimate basis. |
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Purchase |
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Process Purpose Statement |
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Ensure availability of Goods and Services in least possible time, at Optimal Cost and Quality, meeting all compliances |
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Process Goal |
Related Metrics |
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1. Purchases from unregistered vendors from GST perspective should be discouraged |
Number and % of vendors in the Vendor Master, who do not meet GST criteria |
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2. Timely release of Purchase Orders |
Number and % of Purchase Orders released after elapse of TAT |
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3. Timely receipt of Materials |
Number and % of Indents, where delivery of Materials has been beyond the stipulated time |
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HR |
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Process Purpose Statement |
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HR should play a proactive role in all facets of employee engagement to maximize benefit realization for the stakeholders |
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Process Goal |
Related Metrics |
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1. All recruitments should be against approved positions as reflected in the current Organization Chart. |
Number of employees recruited with no identification of vacant positions in the Organization Chart Number of employees on the rolls, who have no position, marked against their Employee ID |
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2. All employees should be covered by bio-metric attendance recording |
Number of employees whose attendance is recorded through manual attendance |
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3. All employees who go on travel should submit expense statement within the stipulated time |
Number of employees who are due to submit account statement at any given point of time. |
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Finance & Accounts |
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Process Purpose Statement |
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As an important support function, enabling smooth business operations, in a control environment, meeting all statutory compliances, financial reporting, and management reporting to support profitable growth |
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Process Goal |
Related Metrics |
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1. Ensuring that all direct and indirect tax compliances are met |
Number of compliance failures in any given period of time |
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2. Monthly Accounting is completed for in time, each month |
Number of days delay in completing monthly accounts according to approved checklist / calendar. |
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3. Financial Reporting meets requirements of Internal Financial Controls |
Number of Control deficiencies identified by Statutory or Internal Auditors requiring remediation. |
Thank you for your attention. For more articles from me, please read my book 'Translating Operations into Money' available for online purchase at Amazon.in, Flipkart or through www.operationstomoney.com .
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