Learn how to measure ERP process governance with tips and best practices. Define your goals and metrics, establish a governance framework, and more.

After establishing the Governance Team, their primary responsibility is to develop a thorough governance framework. This involves creating specific approval processes for each design and devising an extensive decision tree for every RICEFW. The framework must be in line with the clean core paradigm and crafted in partnership with relevant stakeholders. It's critical to measure this framework against industry benchmarks and view it as an evolving entity, consistently enhancing both its content and procedures based on stakeholder feedback.

How can you effectively measure ERP process governance?

Enterprise resource planning (ERP) is a system that integrates various business functions and processes, such as accounting, inventory, sales, human resources, and more. ERP process governance is the set of rules, roles, and responsibilities that ensure the effective and efficient use of ERP resources and capabilities. But how can you measure the performance and outcomes of your ERP process governance? Here are some tips and best practices to help you.

1 Define your goals and metrics

The first step to measure ERP process governance is to define your goals and metrics. What are the objectives and benefits that you expect from your ERP system? How will you align them with your business strategy and priorities? What are the key performance indicators (KPIs) that will reflect your progress and success? You should have clear and specific goals and metrics that are relevant, measurable, achievable, realistic, and time-bound (SMART).

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Shereen Fleming
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Monitor compliance with policies/procedures by reviewing documents and audit logs. Survey users for feedback on ease of use, understandability and effectiveness of controls. Track KPIs like turnaround time, error rates, approval cycles against targets. Perform process walkthroughs to verify designs are followed and required approvals happen. Audit access privileges and segregation of duties to ensure appropriate roles. Conduct periodic risk assessments and strengthen controls as needed. Measure training levels and understanding of roles. Track frequency of documentation updates versus workarounds. Gather insights from ERP reporting tools into bottlenecks or other issues.

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2 Establish a governance framework

The second step to measure ERP process governance is to establish a governance framework. This structure and mechanism should incorporate a governance team or committee to oversee and coordinate ERP process governance activities and decisions, a governance charter or policy defining the scope, roles, responsibilities, authority, and accountability of the governance team or committee and other stakeholders, a governance process outlining the steps, methods, tools, and standards for planning, executing, monitoring, and evaluating the ERP process governance, and a communication plan ensuring timely and transparent sharing of information among the governance team or committee and other stakeholders.

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Sudip Ghosh

SAP S/4HANA | SAP BTP | Clean Core
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After establishing the Governance Team, their primary responsibility is to develop a thorough governance framework. This involves creating specific approval processes for each design and devising an extensive decision tree for every RICEFW. The framework must be in line with the clean core paradigm and crafted in partnership with relevant stakeholders. It's critical to measure this framework against industry benchmarks and view it as an evolving entity, consistently enhancing both its content and procedures based on stakeholder feedback.

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Sudip Ghosh

SAP S/4HANA | SAP BTP | Clean Core
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From personal experience, the first step is forming a governance team with the right people. These individuals must be highly knowledgeable and up-to-date with best practices across various scenarios. Without the right team, the governance framework developed may be subpar, leading to issues down the line.

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3 Monitor and evaluate your performance

The third step to measure ERP process governance is to monitor and evaluate your performance. This is the process of collecting, analyzing, and reporting the data and information related to your goals and metrics. You should use various sources and methods to gather and validate your data, such as surveys, interviews, observations, audits, reports, dashboards, and more. You should also use appropriate tools and techniques to analyze and visualize your data, such as charts, graphs, tables, scorecards, and more. You should report your findings and insights to the relevant stakeholders and audiences, such as the governance team or committee, the management, the users, and the customers.

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Victor Pang Kin Lan, MBA, MEng

Retired Manager & Lecturer
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ERP modules must be properly integrated and configured with compliant business rules to ensure accurate, consistent, reliable and real-time data which are analyzed and visualized as key performance indicators in dashboards or storytelling. Strategic decisions by top management, operational decisions by other employees, performance monitoring and identification of improvement opportunities are thus based on trustworthy, precise and timely KPIs to enable the achievement of goals. For accountability purposes, an ERP audit trail stores every transaction's details about the user who processed it and when this was done.

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4 Identify and implement improvements

The fourth step to measure ERP process governance is to identify and implement improvements. This is the process of using the results and feedback from your monitoring and evaluation to identify the gaps, issues, and opportunities for improvement in your ERP process governance. You should prioritize and select the most critical and feasible improvement actions, such as revising your goals and metrics, updating your governance framework, enhancing your governance process, or changing your governance communication plan. You should also plan and execute your improvement actions, such as assigning resources, defining tasks, setting deadlines, and tracking progress.

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5 Review and revise your approach

The fifth step to measure ERP process governance is to review and revise your approach. This involves assessing the effectiveness and efficiency of your measurement approach and making adjustments as necessary. You should regularly review your approach, such as annually or quarterly, or whenever there are major changes in your business environment or ERP system. When doing so, consider whether your goals and metrics are still relevant and aligned with your business strategy and priorities, if the governance framework is still suitable for ERP process governance, if the governance process is still consistent and compliant with standards and best practices, if the governance communication plan is still effective and engaging for stakeholders, and if improvement actions are delivering the expected results and benefits. Based on your answers and feedback, you should revise your approach and communicate the changes to stakeholders.

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Saleh Towfiq

Supply Chain
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Review periodically to evaluate ERP effectiveness and identify area where improvements and modifications needs to be done and then approach for changes accordingly

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6 Learn and share best practices

The sixth and final step to measure ERP process governance is to learn and share best practices. This is the process of capturing and disseminating the knowledge and lessons learned from your measurement experience and results. You should document and store your measurement data, information, findings, insights, and recommendations in a central and accessible repository, such as a database, a wiki, or a cloud service. You should also share and promote your measurement best practices and success stories with your internal and external peers and partners, such as other ERP users, vendors, consultants, or industry associations. You should seek and provide feedback and suggestions to improve your measurement practices and outcomes.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How can you effectively measure ERP process governance?

1

2

3

4

5

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1 Define your goals and metrics

2 Establish a governance framework

3 Monitor and evaluate your performance

4 Identify and implement improvements

5 Review and revise your approach

6 Learn and share best practices

7 Here’s what else to consider

Enterprise Resource Planning (ERP)

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How can you effectively measure ERP process governance?

1

2

3

4

5

6

7

1 Define your goals and metrics

2 Establish a governance framework

3 Monitor and evaluate your performance

4 Identify and implement improvements

5 Review and revise your approach

6 Learn and share best practices

7 Here’s what else to consider

Enterprise Resource Planning (ERP)

Rate this article

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