Measuring ROI on ERP Investments: What KPIs Matter Most?

Rather Listen?

We've got you, click our podcast player to play the podcast episode from this post.

Enhance Your ERP Journey Today!

Enterprise Resource Planning (ERP) systems are designed to streamline operations, improve decision-making, and support business growth. However, after the implementation phase, many organizations struggle to quantify the true impact of their ERP investment. That’s where KPIs come in.

By tracking the right key performance indicators (KPIs), you can measure whether your ERP is delivering on its promises—or if it’s time for a course correction. Here’s a deeper look at the most critical KPIs that will help you assess ERP success.

ROI on ERP: Key Indicators

Total Cost of Ownership (TCO) & Cost Savings

ERP ROI starts with understanding your Total Cost of Ownership (TCO). This includes all the direct and indirect costs tied to the system.

Key Metrics to Track:

• Initial investment vs. ongoing costs – Compare implementation costs to recurring expenses like licenses, maintenance, and training. 

• Reduction in IT maintenance costs – Cloud-based ERPs often reduce infrastructure costs compared to on-premises solutions. 

• Cost of manual processes vs. automated processes – Measure the savings from automation in functions like payroll, procurement, or inventory tracking. 

Why It Matters: A lower TCO with increasing efficiency means you’re maximizing your investment. If costs continue to climb without measurable benefits, it may be time to optimize your ERP strategy.

Process Automation & Operational Efficiency

One of the main reasons businesses implement ERPs is to streamline workflows and eliminate manual tasks. Efficiency gains are a key sign of ERP success.

Key Metrics to Track:

• Time saved per task – Measure how long tasks like order processing, reporting, and approvals take before and after ERP implementation. 

• Reduction in manual data entry errors – A well-integrated ERP should cut down human errors significantly. 

• Order-to-cash cycle time – Track how quickly your company moves from order placement to cash collection. 

Why It Matters: If processes are still slow or require excessive manual intervention, your ERP may not be configured optimally—or employees might not be using it effectively.

Revenue Growth & Profitability Impact

A high-performing ERP should help drive revenue and improve profitability through better decision-making and process efficiency.

Key Metrics to Track:

• Sales growth post-ERP implementation – Has your ability to process and fulfill orders improved? 

• Increase in gross margin – Measure whether your cost efficiencies translate to improved profitability. 

• Revenue per employee – A more efficient workforce should generate higher revenue per team member. 

• Faster billing cycles – Shorter invoice-to-payment times boost cash flow. 

Why It Matters: If your ERP isn’t supporting revenue growth, it may not be fully optimized—or you may be underutilizing key features.

Employee Productivity & ERP Adoption Rates

Even the most powerful ERP won’t deliver ROI if employees don’t use it effectively. Adoption rates and productivity levels are key indicators of success.

Key Metrics to Track:

• User adoption rate – The percentage of employees actively using ERP functions relevant to their roles. 

• Time spent on ERP-related training – Are employees investing time in learning the system, or struggling due to lack of training? 

• Reduction in IT support tickets related to ERP – Fewer help desk requests indicate better system usability. 

• Employee output per hour – Compare work efficiency before and after ERP implementation. 

Why It Matters: Low adoption rates and frequent system-related issues suggest the ERP isn’t intuitive or employees aren’t properly trained.

Customer Satisfaction & Service Levels

A well-implemented ERP should enhance the customer experience by improving order fulfillment, service responsiveness, and overall efficiency.

Key Metrics to Track:

• On-time delivery rate – Does your ERP help ensure timely fulfillment? 

• Order accuracy rate – A properly integrated ERP should reduce fulfillment errors. 

• Customer support resolution times – Faster access to customer data should improve service efficiency. 

• Net Promoter Score (NPS) – A rising NPS suggests your ERP is contributing to a better overall customer experience. 

Why It Matters: If customers are still facing delays, inaccuracies, or poor service, your ERP might not be fully optimized for front-end operations.

Compliance & Risk Management

ERP systems help businesses maintain regulatory compliance and minimize risk exposure. If your ERP isn’t helping here, it could become a liability rather than an asset.

Key Metrics to Track:

• Reduction in compliance violations – Does the ERP help track and enforce regulatory requirements? 

• Audit completion times – A well-organized ERP simplifies audits, reducing time and effort. 

• Cybersecurity & data breach incidents – Your ERP should enhance data protection, not create vulnerabilities. 

• Fraud detection & reporting improvements – ERPs with advanced security and financial controls help reduce fraud risks. 

Why It Matters: A good ERP keeps your business compliant and reduces the risk of financial or legal penalties.

Is Your ERP Driving Real ROI?

If your ERP investment isn’t translating into measurable efficiency, cost savings, and growth, it’s time for a reevaluation. Are your KPIs trending in the right direction? Are employees leveraging the ERP effectively? Are customer satisfaction and profitability improving? If not, your ERP might need better optimization, additional training, or even a new approach.

At BGSF, we help companies assess, optimize, and fully leverage their ERP investments for maximum ROI. Need an expert perspective? Let’s talk.