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Similar to other horizontally overlapping categories transcending industries, the Enterprise Asset Management (EAM) category is broad, covering a range of solutions, some integrated with hardware vendors while others deeply buried inside ERP systems. The range of use cases might differ based on the industries – and the asset types tracked. For example, in real estate industries, non-profit, or public sector, the assets include buildings requiring compliance with buildings (and city codes). Other industries, such as food and logistics, might have their own fleets – and integrate with vehicle manufacturers. Yet another industry could be large equipment manufacturing, requiring integration with OEM manufacturers and their processes – making the EAM category especially challenging.
In terms of the solution size, the smaller solutions might be highly prescriptive – and relevant for point use cases. Prioritizing ease of use for smaller organizations, their data models might not be as coded as with larger solutions, making them easier to use – but increasing risks of data integrity. The larger solutions, on the other hand, might be too verbose, covering use cases from many different industries and asset types, making them complex – yet increasing implementation and training time.
The overlap with other solution categories is another layer that differentiates these solutions. The solutions tightly intertwined with ERP layers might be friendlier for industries where cost tracking of assets and inventory is critical. The other overlap of EAM systems is with CAD, MES, and engineering systems. This is highly relevant for engineering-heavy manufacturing industries. The final overlap could also be with CRM-centric systems, especially the field service and after-market companies. This makes the EAM category extremely nuanced, making it highly challenging for buyers. Don’t panic – and dive into this list to have a basic understanding of these layers.
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Definition of an EAM system. The companies in this market segment would include companies of all sizes needing an EAM system as a pure-play category that can be deployed without requiring other dependencies.
Overall market share/# of customers. The higher market share among EAM companies drives higher rankings on this list.
Ownership/funding. The superior financial position of the EAM vendor leads to higher rankings on this list.
Quality of development. How modern is the tech stack? How aggressively is the EAM vendor pushing cloud-native functionality for this product? Is the roadmap officially announced? Or uncertain?
Community/Ecosystem. How vibrant is the community? Social media groups? In-person user groups? Forums?
Depth of native functionality. Last-mile functionality for specific industries natively built into the product?
Quality of publicly available product documentation. How well-documented is the product? Is the documentation available publicly? How updated is the demo content available on YouTube?
Product share and documented commitment. Is the product share reported separately in financial statements if the EAM vendor is public?
Ability to natively support diversified business models. How diverse is the product in supporting multiple business models in the same product?
Acquisition strategy aligned with the product: Any recent acquisitions to fill a specific hole for EAM industries? Any official announcements to integrate recently acquired capabilities?
User Reviews: How specific are the reviews about this product’s capabilities? How recent and frequent are the reviews?
Must be a best-of-breed EAM product: Only products that can be deployed independently without requiring other dependencies such as ERP, CRM, CAD, or MES.
10. Assetworks
Assetworks is ideal for companies seeking a smaller solution in North America with traceability and maintenance requirements of buildings and fleets. Despite supporting diverse asset types compared to smaller solutions, it might not be the best for large, global companies seeking a centralized solution covering many geographic areas and layers with asset types, which would be available with more enterprise-grade solutions such as IFS or IBM Maximo. They might also not be suitable for companies where inventory and cost tracking is a higher priority than mobile and user experience, securing its place at #10 spot on our list of top EAM systems.
Strengths
SMB-friendly. Assetworks offers a more affordable implementation and is well-suited for small to medium-sized businesses.
Can cover both properties and fleets. It can manage both properties and fleets. Typically, the workflows for facilities and fleets differ significantly because fleet management systems often have deep integrations with OEMs, while building-centric solutions might require integration with cities and emergency communication systems.
Polling features. It supports polling features, which is helpful for companies requiring real-time monitoring and predictive maintenance.
Weaknesses
Limited to a few geographies. One limitation you may encounter with Assetworks is its restricted coverage in certain regions. If your operations span multiple locations, it may not support all of them.
It is not as cross-functionally integrated as adding inventory manually. Handling inventory costing or serialization scenarios would be a challenge because of text-based inventory on its business objects and form.
Enterprise search for complex scenarios like inventory items. Typically, enterprise search requires inventory items to be coded. If your inventory is text-based, it becomes difficult for the system to support those search capabilities that other more advanced systems offer.
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Aveva is ideal for OT-centric and industry 4.0 industries seeking a pure-play platform – without future expectations of supporting newer business models (or asset types). Providing the integration with hardware vendors, it’s an ideal fit for companies caring for tight embeddedness in their engineering and MES workflows embedded within the same suite. This architecture generally disconnects the operational and financial aspects but might be beneficial for companies prioritizing their plant operations over the needs of other departments at the corporate level, making its name at #9 spot on our list of top EAM systems.
Strengths
OT-friendly. Aveva is OT-friendly compared to other platforms on this list, supporting the relevant machine and edge integrations required in this industry compared to other platforms on this list.
MES and engineering workflows are part of the suite. Organizations prioritizing the embeddedness of EAM workflows with engineering and MES would find Aveva attractive.
Global footprint. Compared to smaller point solutions such as AssetWorks, Aveva can support relatively global organizations.
Weaknesses
Legacy UI. The technology is outdated and clunky, so the user interface won’t be as modern as that of other platforms.
Might not be fit for every industry. It may not be suitable for every industry as it’s primarily an industry-specific solution covering assets and integration relevant to equipment manufacturers and industry 4.0 industries.
It is not as easy to learn and implement as other smaller solutions. It could be more challenging to learn and implement as its layers designed for mid-market organizations might be overwhelming for smaller organizations.
8. UpKeep Maintenance Management
Similar to smaller-sized systems such as Assetworks, UpKeep maintenance management is a smaller point solution relevant for SMBs seeing a cloud-native, easier-to-use, and mobile-friendly solution. But these benefits come with compromises, which would be relevant for slightly larger organizations caring for slightly more detailed transactions and data integrity. It might not also be relevant for companies seeking global and diverse asset types, securing its spot at #8 spot on our list of top EAM systems.
Strengths
SMB-friendly. SMB companies that are limited in budget and technical skill sets would find it relatively easier to implement and use. Affordable.The solution targets smaller companies and does not layer for mid-sized and enterprise companies, making it super affordable and lightweight for the smaller customer segment it serves.
Mobile-friendly. Since the underlying technology is cloud-native and the data models are not as connected to prioritize user experience, the solution will be user-friendly compared to other larger solutions.
Weaknesses
Limited asset and location hierarchies. This would be a challenge for companies maintaining complex asset types and locations where hierarchies would be critical.
Glitches reported by users. Some users have reported experiencing glitches with the system. With smaller systems that may not be as well-funded, you might encounter similar issues.
Scalability issues with complex scenarios such as re-occurring work orders. Intricate billing scenarios and subscription billing might be challenging to manage with this solution.
7. Brightly (Siemens) Asset Essentials
Brightly Asset Essentials, now owned by Siemens, would primarily be software for companies using Siemens machines without the need for additional workflows or an appetite for other software. Due to Siemens’ focus primarily on selling their machines, and this being an add-on feature, it might not receive the same amount of R&D (or attention) as software providers whose core business is to sell software. Also, the competing machine providers would not be as integrated with their software because the goal of the software is to have vendor lock-in. If you are looking for an agnostic option covering more than what this offers, this might not be the best option. But if you can’t afford another software (or have limited use cases just to track and maintain Siemens machines), this would be a great option, securing its spot at #7 on our list of top EAM systems.
Strengths
SMB-friendly. Primarily a very similar software as AssetWorks for Siemens to differentiate with other machines and have control over their customer’s installations.
Ease of use. Just like AssetWorks or UpKeep, this would be fairly easy to use due to limited process and data layers, with the primary use being Siemens able to control and report about their machines.
Limited reporting. Substantially limited reporting with the use cases limited to what matters to Siemens.
Limited scalability for enterprise use cases and asset types. You will face limited scalability for enterprise use cases if you’re searching for a true enterprise asset management platform that can effectively manage technician workflows and preventive maintenance across various asset types. This may not be the most suitable option.
6. MaintainX
MaintainX is comparable to UpKeep Maintenance and Assetworks, but it is slightly larger and more mid-market friendly than Assetworks. From a technology standpoint, it is cloud-native, mobile-friendly, and offers more layers than Assetworks. Its key strengths are that it’s mid-market friendly, easy to learn and configure, and designed with mobile accessibility in mind. Hence, MaintainX secures the #6 spot on our list of top EAM systems.
Easy to learn and configure. MaintainX boasts a user-friendly interface, making it easy to learn and configure for new users.
Mobile-friendly. It is designed with mobile accessibility in mind, allowing users to manage assets and maintenance tasks.
Weaknesses
More suitable for facility management than fleet. Another limitation of MaintainX is that it is better suited for facility management than for fleet management. While it can handle complex facility management scenarios with multiple layers, it may not be the ideal choice for transportation companies with in-house fleets.
Scalability issues with complex datasets such as nested locations. There are scalability issues with complex data sets, like nested locations, as the layers are generally limited. Overall, this product is not designed for enterprise use. It is focused on the mid-market segment, resulting in those limitations.
Limited security layers. Due to its focus on mid-market, it doesn’t support as detailed security layers as required by enterprises.
5. Fiix
Fiix is also a mid-market-friendly system, with MaintainX being a suitable comparison. It is a cloud-native, mobile-friendly platform that is easy to learn and configure, offering a user-friendly experience similar to MaintainX. In terms of size, it’s larger than smaller systems such as AssetWorks or UpKeep maintenance but smaller than other enterprise-grade systems that may have many detailed security and data layers, securing its spot at #5 on our list of top EAM systems.
Easy to learn and configure. Fiix boasts a user-friendly interface, making it easy to learn and configure for new users.
Mobile-friendly. It is designed with mobile accessibility in mind, allowing users to manage assets and maintenance tasks.
Weaknesses
Limited auditability and controls on work orders. The workflow controls for companies seeking audibility, especially around asset availability or inventory, are likely to be limited, causing issues for companies that care for tighter scheduling and costing processes – along with the collaboration aspect of the system.
Limited scalability for enterprise use cases and asset types. There is limited scalability for enterprise use cases and asset types, which means it may not support all the hierarchies found in systems like IFS or IBM Maximo. These systems offer richer asset types with more detailed hierarchies (and use cases) to accommodate enterprise-grade scenarios.
Data integrity issues are caused by the loose data model. The data model is not as coded as the larger peers – as the system prioritizes user experience over data integrity and control. So, you are likely to have data integrity issues, requiring manual maintenance and governance.
4. Oracle EAM
Oracle EAM is an enterprise-grade asset management product particularly suited for companies using Oracle Cloud ERP. Offering more advanced data models compared to smaller SMB-focused systems, it handles complex asset hierarchies and diverse asset types. However, it lacks the pre-built integrations often found in smaller solutions, leading to a more challenging and resource-intensive implementation. The learning curve is steeper, and using the system generally requires more internal and external expertise, making it harder to use overall. Therefore, Oracle EAM secures the #4 spot on our list of top EAM systems.
Strengths
Enterprise-grade capabilities. From a data model perspective, this products offer much more, but they may lack the numerous pre-built integrations found in smaller systems targeting the SMB sector.
Supports complex assets to support reliability analysis. Supporting complex assets for reliability is essential, especially in sectors like IT, media, and telecom. When aiming to meet reliability metrics and SLAs, particularly when managing customer assets.
Weaknesses
Expensive. Oracle EAM will be expensive from the implementation perspective as it requires a lot of consulting help.
Steep learning curve. The learning curve will be steeper, as is typical with enterprise products, and you will likely need extensive customization during the implementation process.
Might require add-ons for integrated capabilities. The integrated capabilities that might be available with smaller systems might be vanilla with larger systems – as they serve a diverse set of industries, missing specific capabilities for micro-verticals (and asset types).
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IBM Maximo is one of the most widely adopted asset management products, particularly for enterprises, excelling in sectors like public services and non-profits. Its key strength lies in its deep enterprise-grade capabilities to handle complex scenarios, hierarchies, and diverse asset types. Architecturally, it’s similar to Oracle EAM, offering strong data and process models but lacking pre-built integrations. Like Oracle EAM, Maximo can be difficult to use, requiring extensive training, change management, and a significant investment in implementation. However, its high customizability allows for extensive support of unique data models and processes. Therefore, IBM Maximo has secured the #3 spot on our list of top EAM systems.
Strengths
Enterprise-grade capabilities. It possesses robust enterprise-grade capabilities designed to handle all of those complex scenarios.
Hierarchies and attributes. From the IBM Maximo perspective, hierarchies and attributes are crucial, as each asset may require tracking thousands of attributes for effective reporting and planning.
Complex scheduling rules and workflows. Complex scheduling rules and workflows are necessary when managing numerous assets for both yourself and your clients. In this context, IBM Maximo is likely to be an excellent fit due to its enterprise-grade capabilities.
Weaknesses
Limited mobile capabilities. They are going to be fairly limited compared to other EAM systems mentioned in this list because of their legacy technology and tight data model.
Might require add-on for BIM integration. The smaller products are likely to support pre-baked integrations, more in the plug-and-play form, because of the fluidity of their data model, which might not be possible with enterprise products such as IBM Maximo.
2.HxGN EAM
HxGN EAM is also an enterprise-grade asset management solution. Previously owned by Infor, Hexagon now maintains a close alignment with existing Infor installations. However, as a machine provider, Hexagon’s primary focus is on selling its machinery, which leads to tighter integration with its asset management product. While HxGN EAM offers slightly more advanced enterprise capabilities, its incentive is to integrate closely with its own assets to drive sales. It is comparable to IBM Maximo and Oracle EAM but is generally more friendly towards OT applications. In contrast, it may not provide as many layers or detailed capabilities for property management or transportation management scenarios. Therefore, HxGN EAM has secure the #2 spot on our list of top EAM systems.
Strengths
Detailed user privileges. The user privileges in HxGN EAM are quite detailed compared to other smaller point solutions.
Ability to support complex asset installations. Like other Infor products, it excels in workflow, security, user-controlled processes, and customization. This makes it particularly useful for managing and supporting complex asset installations.
Enterprise-grade capabilities to support most asset types. If you’re a manufacturer with a wide variety of assets to track and maintain, HxGN EAM could be an excellent fit. Similar to IBM Maximo, it offers enterprise-grade capabilities to support various asset types, making it a strong choice for enterprise environments.
Weaknesses
Legacy UI. The limitations of HxGN EAM are similar to IBM Maximo, particularly with its legacy user interface, as it’s built on older technology. While IBM Maximo has made some advancements in cloud and data technology, making it slightly faster, HxGN EAM still operates with a more dated UI.
Limited mobile capabilities. The legacy technology and tight data model prevent the same fluid experience that is generally found with smaller systems.
Poorly documented. Users report the software is not as well documented, requiring consulting help with ongoing maintenance and support.
1. IFS EAM
IFS EAM is an enterprise-grade asset management solution that is widely adopted in industries such as MRO, airlines, oil and gas, and telecom. With their workflows closely integrated with field service operations, these sectors typically require complex scheduling and management of intricate assets. A significant advantage of IFS is its two best-of-breed enterprise-grade products, field service management, and enterprise asset management, which work seamlessly together for these industries. Compared to other enterprise-grade solutions like IBM Maximo or Hexagon EAM, IFS offers superior technology, making it somewhat easier to use. Therefore, IFS has secured the #1 spot on our list of top EAM systems.
Strengths
Ease of use. When compared to other enterprise-grade products like IBM Maximo and Hexagon EAM, IFS technology stands out as superior.
Enterprise-grade capabilities. IFS EAM features an underlying data model that supports enterprise-grade scenarios, encompassing capabilities, customization, and workflow security. All these functionalities are integral to the IFS EAM system.
Strong predictive maintenance and facility maintenance capabilities.
Weaknesses
Limited language packs. The language packs are not as comprehensive as enterprise companies would expect for global deployments.
It would require consulting help. Since the product is highly complex and designed for enterprise use cases – with thousands of layers of dependencies within their data model, it requires substantial consulting help with implementation (and ongoing upkeep of the system).
Expensive. SMBs not caring for enterprise layers might feel that the product is relatively more expensive than other smaller point solutions.
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In summary, choosing the right EAM system is a complex decision influenced by various factors, including industry needs, company size, and the specific asset types involved. This list highlights the strengths and weaknesses of the top EAM systems, ranging from SMB-friendly, budget-conscious options to enterprise-grade solutions with advanced capabilities for larger organizations. Whether a company prioritizes mobile accessibility, ease of integration, or highly detailed functionality, each solution has unique advantages and limitations that make it suitable for specific applications. By understanding the nuances of each EAM system, buyers can make informed choices aligned with their asset management goals. While this list offers valuable insights, seeking advice from an independent ERP consultant can greatly enhance the implementation success.
FAQs
What is EAM, and why is it important?
Enterprise Asset Management (EAM) refers to the process of managing an organization’s physical assets throughout their lifecycle. EAM systems ensure efficient maintenance, compliance, and optimal utilization of assets, which vary by industry, such as buildings in real estate or fleets in logistics. A well-implemented EAM system helps reduce downtime, improve operational efficiency, and enhance cost management.
How do EAM systems differ for small and large organizations?
EAM systems for smaller organizations are typically easier to use, more affordable, and less complex, focusing on specific use cases. However, they may lack robust data integrity and scalability. In contrast, systems for large enterprises offer comprehensive functionality, support diverse asset types, and manage complex hierarchies, but they require more extensive implementation efforts and training.
What factors should be considered when selecting an EAM system?
Key factors include the company’s industry, asset types, and size. For smaller organizations, ease of use, affordability, and mobile-friendly features may be priorities. For enterprises, capabilities like advanced data models, predictive maintenance, integration with other systems (ERP, CAD, MES), and scalability are crucial. It’s also essential to assess user reviews, vendor financial stability, and the system’s ability to support specific business models.
In the realm of real-time transportation visibility platforms, apparent similarities abound, with each touting comparable capabilities. Yet, distinctions emerge; some specialize in specific modes, while others offer multi-modal prowess. Geographic coverage further diverges, with prevalence in North America for some and exclusive focus on Europe for others. While some function as standalone applications, their primary role lies in empowering supply chain control tower applications—integral solutions seeking to finalize the supply chain equation through carrier-centric data.
Though widely embraced, real-time transportation visibility platforms represent a relatively recent phenomenon. Previously, such capabilities were unattainable due to the absence of industry-wide traceability. Although, the advent of carrier networks and ELD regulations has now unlocked these datasets. These newly accessible datasets wield substantial power independently and, when correlated, amplify the insights furnished by these platforms. Real-time visibility platforms extend beyond supply chain traceability, delving particularly into advanced scenarios like transportation risk management across geopolitical boundaries facilitated by technologies like blockchain.
The deployment of RFID chips on containers facilitates detailed traceability, particularly encompassing international multi-party BOM tracking. Platforms enhanced with AI and ML showcase impressive KPIs, achieving a 99.99% accuracy in delivery ETA. Notwithstanding pre-established networks and datasets, challenges arise in onboarding current carriers, potentially leading to misleading insights and incomplete traceability. Thus, platforms offering a superior user experience and streamlined onboarding processes are likely to provide enhanced insights. While the suitability of these platforms varies, some are tailored for SMB customers, and others are designed as enterprise-grade solutions. Now, let’s delve into the top 10 real-time transportation visibility platforms in 2024.
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TruckerTools is perhaps the smallest solution on this list, targeting freight brokers to see load visibility. The number of modes is substantially limited, without the coverage for modes such as air or ocean. With the limitation of its network, it might not be the best fit for companies seeking a platform with international multi-modal traceability.
Pros
ELD integration. While the platform is relatively smaller, ELD integration allows data to be acquired in an autonomous fashion without relying on manual acquisition.
Detailed visibility. While not as comprehensive with the coverage, the visibility use cases are detailed.
Cons
Does not cover other modes of transportation, such as air or ocean. The visibility is primarily limited to trucking data, making it not a right fit for multi-modal traceability.
Clunky UI. The clunky UI might lead to poor adoption among carriers, making data collection harder and insights misleading.
IntelliTrans, compared to TruckerTools, is slightly richer with its capabilities, especially for multi-modal scenarios. While it covers several models, the network coverage is limited compared to other advanced tools such as Project44 or FourKites. It is a great option for SMBs looking for multi-modal capabilities with some level of TMS integration provided, but may not the best fit for large enterprises seeking comprehensive network coverage and end-to-end supply chain traceability.
Pros
SMB-friendly. While not as comprehensive a network for exhaustive multi-modal traceability, the costs and leaner layers of the software make it SMB-friendly.
Multimodal features. Compared to TruckerTools, it covers more modes such as road, rail, and ocean than being just limited to trucking data.
Integrated TMS. Integrated TMS would reduce consulting costs, but further vetting may be required to ensure the use cases supported by pre-integrated workflows would work for the datasets and the use cases that need to be supported.
Cons
Limited to road, rail, and ocean. Limited coverage might lead to misleading and incomplete insights but may be OK for companies on a budget.
Not designed for large enterprises. Large enterprises requiring mature capabilities such as AI and ML, with comprehensive coverage for networks, might find it limiting.
Ecosystem limited. The companies consulting on the tool might be limiting, making it harder to find talent relying on vendor-provided professional services.
8. Blume Global
Blume Global is another option for SMB companies needing global visibility with multimodal features. Post-acquisition with WiseTech, it can now offer broader capabilities, including pre-integrated TMS offerings, just like Trimble. Due to the limited AI and ML workflows and network coverage, it might not be the best fit for companies seeking mature capabilities.
Pros
Multimodal features. This is especially helpful for companies seeking global traceability across most modes.
Integrated TMS. The integrated TMS would reduce consulting costs, but further vetting is required to ensure the usability of pre-integrated workflows.
Now part of WiseTech Global group. Due to the integration with WiseTech Global Group, its financial sustainability would not be an issue.
Cons
Ecosystem limited. The limited ecosystem makes it challenging to find talent and a consulting base compared to larger peers.
Not as well adopted or funded as other options. While it is part of the WiseTech group, it’s not as adopted as other options such as Project44 or FourKites.
Not as comprehensive as other options on this list. The network is limiting, making the datasets potentially biased and misleading for companies seeking multi-modal traceability.
7. Overhaul
Overhaul is an enterprise-grade option for companies seeking global trade traceability and transparency. It has some unique capabilities, such as integrated RiskGPT, helping companies manage their risks. However, the platform might not be built as other solutions on this list, with limited options to mine relevant insights.
Pros
Great transportation visibility tool. This is especially useful for companies seeking global traceability, especially in areas such as insurance, theft, etc.
GSOC feed integrated along with visibility. The integration of GSOC data makes it unique for risks and security-centric workflows.
AI and RiskGPT capabilities integrated. Compared to smaller options limited with AI capabilities, it features richer AI and RiskGPT capabilities for risk forecasting and prevention.
Cons
Communication errors between the carrier and the platform. The communication between the carrier and the platform might not be as seamless, causing issues with communication and leaving datasets unreliable.
The limited network may require carriers to participate. Because of the limited network, companies would be required to invite their carriers that might not already be on the platform, making the adoption harder and insights potentially biased and misleading.
Not as well as designed and might be cluttered with GPS pings. While the system has tons of data, navigating through data might be a challenge because of the missing scalable layers to customize insights relevant to each user in the company.
6. Trimble Transporeon
Trimble Transporeon is a comprehensive solution, particularly strong with the carrier and trucking side of data, making it ideal for transportation companies or companies with internal fleets, such as agriculture or construction. It might not be the best fit for enterprises seeking mature capabilities with AI and ML workflows and multimodal traceability through the international supply chain.
Pros
Over 150K carriers are part of the network. One of the largest sample sizes of carriers, making carrier adoption easier.
Integrates with over 3000 ERP and TMS systems. The pre-integrated workflows help mine data and with integration without expensive consulting costs.
Power of Trimble’s powerful maps and telematics technology, timeslot, and retail timeslot management. Trimble’s unique offering includes powerful maps and telematics technology, augmenting ELD and carrier-centric data and providing more accurate metrics.
Cons
Mainly an European solution. While a comprehensive network, its geo exposure is limited, with Europe being the main focus, struggling in other geographies such as North America.
Relies on some datasets on other players, such as Roambee. Due to the limited datasets, they rely on other providers for some datasets, such as Roambee.
Not as comprehensive as other solutions on this list. While a great solution for several industries, it’s not as comprehensive as some of the other solutions on this list.
5. Shippeo
Shippeo is great for companies looking for road transportation visibility, mainly focused on Europe. It’s network is not as comprehensive as other solutions such as Project44 or FourKites, especially covering different geographies. While a great solution for Europe, it might not be the best fit for companies seeking global traceability across all modes.
Pros
Carbon emission tracking. One of the unique advantages of Shippeo is that it provides carbon emission data, especially useful for geographies such as Europe where carbon emissions tracking may be used as an input for planning and reporting.
Accurate truck positioning. Due to the rich datasets, it can provide far superior positioning of trucks, making ETAs far more reliable and helping with planning, generally difficult with other tools that might not be as accurate with truck positioning.
Machine learning to calculate ETA. Shippeo is packaged with machine-learning capabilities to complete the missing datasets.
Cons
Network not as strong as other platforms. The current network is not as strong as other solutions, such as Project44 or FourKites.
Mainly a European solution as well. Since it is focused on Europe, companies in other geographies might find it challenging.
Not integrated suite as other platforms. The other platforms on this list have more integrated capabilities, augmenting limited datasets and providing richer insights.
4. Descartes (MacroPoint)
Descartes MacroPoint is the best for global freight visibility and carrier capacity for logistics-intensive businesses such as freight brokers or logistics service providers. Unlike other solutions on this list with limited data and security models, Descartes MacroPoint offers enterprise layers that accommodate the needs of different personas, ensuring the right insights for the right user profiles. Descartes MacroPoint would not be a great fit for SMB companies seeking a simpler solution with a limited budget.
Pros
The ability to fine-tune alerts and accurately track the driver’s location all the time. The systems with limited data and security layers make gleaning insights overwhelming, impacting product adoption.
Global coverage. It’s not as limited as other SMB solutions on this list, with its coverage for various geographies.
Focus on logistics-centric businesses. Logistics-centric businesses have a very unique need, with a primary focus on international BOM data, where Descartes is extremely strong.
Cons
Expensive. While great from a coverage perspective, smaller companies might struggle to justify the price tag.
Carrier performance might not be as strong. Compared to other options on this list, carrier performance data might not be as strong, leaving a critical dataset for end-to-end traceability.
Designed from the perspective of logistics providers, limited carrier network. While great for logistics service providers as they have unique needs, it might be limiting for diverse business models.
3. e2open
e2open is the best for global companies looking for a complete suite, including network, planning, and execution. While it relies on other solutions, such as FourKites and Project44, for carrier-centric data, it could be a powerful for companies seeking real-time transportation visibility platforms because of other datasets, enriching the transportation data and completing the supply chain equation. It might not be the best fit for companies seeking simpler solutions.
Pros
Complete suite. The biggest advantage of e2open is that it’s a complete suite, combining all modes and geographies, making it one of the strongest platforms for end-to-end supply chain traceability.
Combined network channel and carrier. e2open has its own network, making the adoption far easier for companies onboarding their existing carriers.
Richer data and analytics. The AI and ML capabilities and the power of the network, along with the security and data layer, offer decision-grade data that might not be available through any other platforms.
Cons
Relies on Shippeo for transport visibility data. While e2open has some carriers and data, it relies on Shippeo for the datasets, posing sustainability issues if it loses its relationship with Shippeo or if Shippeo gets acquired by a competitor.
Expensive. With the amount of capabilities packed as part of the solution, it might be cost-prohibitive for SMBs.
It is not the best fit for companies looking for a standalone RTV platform. e2open is a suite and not necessarily an RTV platform if the cross-functional alignment might be a challenge, and this platform needs to be purchased at the departmental level.
2. FourKites
FourKites is perhaps the best platform for enterprises seeking standalone real-time transportation visibility platforms. It has global coverage across all modes. But might not be the best for companies seeking suite capabilities across the supply chain and not just transportation. Also, it might not be the best fit for SMBs seeking an affordable solution.
Pros
490K Carriers, ETAs 6x more accurate, 98% of global ocean traffic, and 17K airports. Compared to other solutions on this list, FourKites has one of the most comprehensive coverage and is more accurate because of its data coverage.
1.5M monthly parcel and last mile load. The inclusion of parcel and last mile load is an added advantage and a critical component for end-to-end transportation traceability.
Visibility past transportation to include yards, warehouses, and stores. While the purpose is to include just the transportation visibility, including yards, warehouses, and stores, it helps with end-to-end visibility of the entire transportation value chain.
Cons
Expensive. The comprehensive datasets and AI and ML capabilities to forecast decision-grade data make it expensive for SMBs.
Not as strong with service parts. The intent of the platform is not to provide the supplier-side of traceability. So it would not be a great fit for the supply chain visibility needed for supplier collaboration in business units such as spare parts businesses.
Limited integration with other TMS systems. Some of the TMS systems might not be as integrated, requiring companies to spend on consulting efforts.
1. Project44
Project44 is the best for SMBs seeking standalone real-time transportation visibility platforms. Compared to FourKites, Project44 is relatively friendlier for SMBs. It also provides a guarantee for carrier compliance, a huge risk for companies struggling to get their carriers on the platform, leading to misleading insights and unreliable data. Project44 is also GDPR-compliant, making it friendlier for geographies such as Europe.
Pros
Carrier compliance guarantee. One of the biggest challenges in being successful with real-time transportation visibility platforms is carrier onboarding. Project44 not only has one of the largest carrier onboarding, minimizing the need to onboard as many carriers. But they also offer a guarantee because of how streamlined the process is.
230K+ carriers, 760 ELD providers over more than 48 countries, 4.33 million drivers, 3.55 M trucks, 800K fleets. These data points make them one of the largest global networks.
GDPR compliant. Project44 is perhaps one of the few systems that are GDPR-compliant, highly relevant for companies with a presence in the European market.
Cons
Steep learning curve. The enterprise and scalable layers might require change management and training budget, which also might be out of reach for some SMBs.
Not an open platform. The open platform makes it easier and creates trust for carriers to join. While they are not open, they are one of the largest networks. Not being open might lead to mistrust among carriers and, as a result, their resistance to joining the network.
Requires carriers to agree on connecting. Carriers might not agree to join the network, thus leading to misleading insights and incomplete data, which is where their guarantee might be helpful.
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Choosing real-time transportation visibility platforms necessitates insight into the underlying network, particularly data sources. Without this awareness, platforms may seem indistinguishable, potentially resulting in misguided choices. While some aspects, like platform vetting, maybe within your control, poor user experience could hinder adoption within your carrier network, impacting desired outcomes. If you’re exploring the top 10 real-time visibility platforms, consider leveraging the expertise of independent supply chain consultants for a successful selection.
FAQs
What are real-time transportation visibility platforms?
Real-time transportation visibility platforms are advanced software solutions for tracking shipments and vehicles in real time. They use GPS, RFID, and carrier networks to optimize logistics and enhance supply chain visibility.
How do real-time transportation visibility platforms differ?
These platforms vary in capabilities, coverage, and target users. Some specialize in specific modes or regions, while others offer global multi-modal solutions. Differences also exist in integration, user interface, and pricing structures.
What should I consider when selecting a platform?
Consider coverage, integration with existing systems, user experience, cost, and support reliability. Choose a platform that meets your needs in terms of functionalities, usability, and overall value for your budget.
Suite roles in architecture hinge on cross-functional embeddedness. Supply chain suites restrict ERP suites to financial reporting, while retail-focused suites demand collaboration with WMS, TMS, and OMS for mature capabilities like inventory management and allocation. These were traditionally considered to naturally reside particularly inside the ERP, sparking debates if hosted elsewhere. In retail, procurement aligns closely with merchandising and planning engines. Conversely, in manufacturing and industrial settings, procurement collaborates more directly with production and accounting, illustrating the diverse nature of suite roles.
In the past, distinctions were blurred, and organizations either didn’t prioritize external supply chain tracking or built custom ERP-based systems for traceability. The evolving landscape of supply chain suites, particularly driven by private equity, has changed this dynamic. Today, previously unattainable possibilities are realized through marketplaces and networks, fostering global insights and collaboration. Technologies like blockchain facilitate seamless global data exchange, transcending international interests. While ESG and e-invoicing are in their infancy, their impact on future architecture remains uncertain. However, it’s likely that a portion of these models will be embedded within the supply chain suite, leveraging networks for collaborative documentation exchange.
As supply chain suites continue to broaden their scope, determining the optimal placement particularly for specific processes within an architecture becomes increasingly complex. While straightforward for pure-play retail or manufacturing models, challenges intensify for businesses with overlapping models, like aftermarket operations blending aspects of both retail and manufacturing. This scenario is particularly applicable to softline and hardline retailers with significant manufacturing exposure. If you’re navigating supply chain suite choices, this list can assist in streamlining your options.
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Dassault Systèmes employs a distinctive approach in its suite, positioned at the crossroads of ERP, CAD, and S&OP. Although tailored for supply chain industries overlapping with process manufacturing and retail, it caters to automotive- and aerospace-centric sectors, necessitating robust supplier collaboration. The suite’s roots lie in plastics, offering integrated tools for plastic-like operations across diverse industries. In contrast, other suites like Blue Yonder may face challenges in these specialized sectors, making Dassault stand out and securing its spot at #10 on our list.
Pros
Integrated with the ERP solution. The biggest plus with Dassault systems is its close alignment with ERP and CAD-centric systems,thus making it ideal for industries heavier on cost tracking, requiring ERP-centric processes, and limiting the role of S&OP to just planning.
Comprehensive suite with PLM/PDM, SCM, and ERP. Integration with PLM and PDM would be friendlier for companies particularly heavier with S&OP processes in their NPD and R&D phases, a critical requirement for process-centric manufacturers.
Compliance pre-baked for automotive and plastic verticals. Compliance processes heavily embedded with supply chain workflows, such as supplier collaboration, would require tight embeddedness of Dassault SCM.
Cons
Technology is not modern. The technology might not be as modern as some of the newer options on this list, such as e2open.
Limited ecosystem. The consulting ecosystem is highly limited, with their reseller channel being heavily crowded with CAD resellers without deeper supply chain expertise.
The network is not part of the suite. They don’t have access to the proprietary network, a critical limitation for demand forecasting, primarily relying on customers’ internal and industry data sources, which are generally substantially off because of inadequacies of their source channels.
9. Trimble
Navigating supply chain planning, particularly in sectors like transportation, construction, and agriculture brings unique hurdles. Transportation prioritizes dispatch and preventive maintenance, influenced by distinctive driver-side compliance processes. Also, agriculture adds seasonal and crop quality factors to the planning mix. In construction, quoting processes wield substantial influence over supply chain planning. Thus, securing the 9th spot on our list, its suite’s specialized approach caters to the demands of these industries.
Pros
A most comprehensive suite containing telematics and fleet management. Most other manufacturing-focused suites might struggle with business models particularly with internal fleets and transportation operations, positioning Trimble uniquely.
Strong in transportation visibility. Their traceability and supply chain equation would be limited to transportation visibility, a strength for transportation-centric industries but a huge limitation for other industries.
3PL-specific planning and data. 3PL-specific planning and data are unique, a limitation with other solutions on this list.
Cons
Not ideal for manufacturing or retail-centric industries. It is not an ideal fit for manufacturing and retail-centric industries, even if they might be using it for the transportation side of the processes.
Primarily focused on transportation execution and compliance. The other execution processes, such as retail, manufacturing, and production, would be highly limiting.
8. QAD
QAD adopts a strategy similar to Dassault’s by integrating CAD/PLM, S&OP, WMS, TMS, and ERP capabilities. Tailored for retail and supply chain-centric industries, it leans towards particularly discrete manufacturing and is less focused on process manufacturing for several industries like automotive and life sciences. QAD’s suite is structured around unique product categories, thus influencing supply chain and production processes across diverse industries. It mirrors the strategies of many supply chain suites, which exclusively focus on the supply chain function, omitting the ERP aspect, therefore making the QAD suite unique. Thus with its distinct attributes, QAD secures the 8th spot on our list.
Pros
Integrated with the ERP solution. The biggest advantage of QAD’s suite is its alignment with ERP-centric processes for cost-focused industries where processes such as cost accounting and production scheduling are critical.
Comprehensive suite with SCM and ERP. It combines the best of both worlds, including most components from the SCM suite, such as WMS and TMS, embedded with ERP processes, as well as CAD and PLM.
Compliance pre-baked for automotive and F&B industries. Compliance processes that require tighter embeddedness with the S&OP processes would find QAD’s suite extremely compelling.
Cons
Backend technology is not modern. The backend technology is not as modern as some of the newer platforms on this list.
Network not part of the suite. QAD would rely on internal and customer-provided external data for its analysis, a substantial limitation compared to other systems owning and maintaining their networks as part of the suite.
7. Manhattan Associates
Manhattan specializes in retail and warehouse execution, tailored for industries tightly integrating physical store planning with warehousing and merchandising processes. These industries, less cost-focused with stable pricing models, don’t demand meticulous cost tracking, as seen in complex industrial sectors. The industries that Manhattan targets adopt a distinctive approach to intricate functions like inventory management, allocation, and omnichannel fulfillment. Its specific applicability to certain industries positions it at the 7th spot on our list.
Pros
Tailored flow for retail merchandisers and planners. Retail merchandising and planning are foundational processes for retailers, collaborating tightly with procurement, new product development, and design teams, requiring unique suites like Manhattan.
Integrated suite, including POS and distributed order management. The POS and DSD-centric business processes require unique architecture, only possible through suites like Manhattan.
Cons
External supply chain planning is limited. The limited focus of Manhattan on retail execution leaves the external supply chain planning outside of the scope of Manhattan.
Network not included. Without a network, the planning components would be dependent upon internal and customer-provided external data, a huge limitation for companies seeking decision-grade data for the entire supply chain.
Körber, akin to Manhattan, adopts a distinct approach with a focus on warehouse and execution components. It caters to 3PL-centric business models, crucial for distribution-focused companies often incorporating 3PL elements. Unlike Manhattan, Körber targets the mid and upper-mid markets, integrating processes like WMS, TMS, and freight claims management. While comprehensive, it lacks certain critical components found in other suites. Its unique approach and more limited applicability position it at the 6th spot on this list.
Pros
Strong warehouse management capabilities. It is one of the strongest cloud-native WMS systems for mid-market companies, covering most aspects of warehouse management relevant to mid-market companies.
TMS capabilities integrated. Industries where the embeddedness of TMS and WMS processes matter, especially for supply chain companies, would find Korber highly attractive.
Strong last mile and parcel capabilities. The last-mile capabilities are uniquely complex because of the scheduling and compliance processes of various industries, making Korber unique for DSD-centric operations.
Network not included. The missing network would not provide the decision-grade data included with other supply chain suites.
No supply chain planning or collaboration. The missing planning or collaboration component might not be the best fit for companies requiring tighter embeddedness of WMS and TMS processes with S&OP.
5. Infor CloudSuite SCM
Similar to Dassault and QAD, Infor CloudSuite SCM adopts a distinctive approach, integrating diverse processes like CAD/PLM, WMS, ERM, and HCM with S&OP processes. It proves ideal for companies with manufacturing-heavy business models where supply chain processes tightly intertwine with new product development and ERP. Pure-play retailers might find other suites more suitable, as S&OP processes may not align with their needs. Given its unique market position, Infor CloudSuite SCM secures the 5th spot on this list.
Great visibility platform with planning. Includes a visibility platform for supplier collaboration and procurement without carrier-focused visibility, generally included in 3PL and retail-centric suites.
Global trade workflows and compliance capabilities. Global trade compliance requires country and geopolitical restrictions that need to be integrated with business processes.
Cons
Weak transportation execution component. Due to the nature of industries Infor CloudSuite SCM targets, the transportation execution component is not as critical for the suite but might be a limitation for diverse operations.
Not proven with enterprise workloads. The enterprises requiring millions of transactions per hour for planning cycles might struggle with it.
Oracle Supply Chain Suite proves ideal for global enterprises with diverse operations and various business models, effectively accommodating the planning cycles of multiple industries. In comparison, industry-specific suites like Infor, QAD, or Trimble may face challenges in handling such diverse operations. Mid-market-focused suites may struggle with the high workload of enterprise-level planning cycles, especially those involving millions of transactions per hour. While limited by its proprietary network, Oracle Supply Chain Suite excels in providing operational capabilities for global enterprises that demand seamless integration across systems such as HCM, ERP, WMS, and TMS with S&OP. Its unique position for large enterprises secures its rank at #4 on our list.
Pros
Comprehensive supply management suite, including global trade management capabilities. The supply chain suite would cover the need for the most diverse operations for global enterprises.
Strong planning platform integrated with execution suite. The planning platform is not industry- or function-specific, providing end-to-end traceability of all planning datasets, including S&OP, human resources, and FP&A.
Pre-integrated with ERP. Embedded processes with ERP, along with a disconnected supply chain suite, can cover both architectures equally well, covering the needs of diverse operations.
Cons
Network not part of the suite. Missing a network would require additional components, and the processes that need to be tightly embedded with the network might struggle.
Not SMB friendly. The enterprise data and process model might be overwhelming for SMBs leaner on their process overhead.
Expensive. Ultra expensive for SMBs looking for cheaper options with learner process and data models.
3. SAP
Like Oracle, SAP Supply Chain Suite is tailored for global enterprises with diverse operations, accommodating planning cycles across various business models. Unlike Oracle, SAP offers friendliness for product-centric industries deeply involved in cost accounting and MRP-driven processes. Mid-market-focused suites may struggle with the high workload of enterprise-level planning cycles, dealing with millions of transactions per hour. Despite its proprietary network limitations, SAP Supply Chain Suite excels in providing operational capabilities for global enterprises, seamlessly integrating systems such as ERP, WMS, HCM, and TMS with S&OP. This unique position earns it the #3 rank on our list.
Pros
Comprehensive supply management suite, including global trade management capabilities. The supply chain suite is comprehensive for highly regulated organizations requiring process tightness and control across systems such as ERP, WMS, TMS, and S&OP.
Strong planning platform integrated with execution suite. The tight integration of the planning suite with execution components allows cross-pollination of business rules, which is highly critical for publicly traded organizations.
Pre-integrated with ERP. The pre-integration with ERP allows exploring diverse warehouse architectures – decoupled or embedded, catering to different business models, being especially friendly for 3PL-centric operations.
Cons
Network not part of the suite. The missing network would struggle with the cross-pollination of business rules, requiring a network.
Not SMB friendly. The overbloated enterprise data and process layers would be overwhelming for SMB companies.
Blue Yonder stands out as a unique suite, akin to Manhattan, offering retail-centric capabilities enriched with robust external supply chain processes and control tower capabilities. In contrast to industry-specific suites like QAD, Infor Nexus, and Dassault, Blue Yonder may not excel in industries requiring seamless integration of business rules from WMS, TMS, and OMS with ERP, particularly those emphasizing cost accounting and MRP-centric processes. Unlike SAP and Oracle, which may lack depth in external supply chain capabilities, Blue Yonder proves more suitable for industries necessitating the decoupling of cost-centric overhead. Differing from e2open, Blue Yonder lacks its proprietary network. Its versatile application across various industries earns it the #2 spot on our list.
Pros
Strongest supply chain suite with planning and execution components. One of the strongest pure-play supply chain suites for retail-centric industries.
Ability to handle a large number of SKUs for enterprise retailers. Enterprise retail workloads require processing millions of transactions per hour for planning loads containing millions of SKUs and location planning.
External supply chain capabilities. One of the strongest supply chain suites for end-to-end supply chain traceability, internal or external.
Cons
ERP is not included as part of the suite. In the processes and business models where cross-pollinations of business rules with ERP is critical, Blue Yonder might not be the best fit.
Network is not part of the suite. With Blue Yonder not owning its own network, it might not have as much control over the third parties providing them network.
Not SMB friendly. The enterprise process and data layers might be overwhelming for SMBs.
1. e2open
e2open takes a unique approach to its suite, straddling the realms of retail and manufacturing and integrating transactional CRM processes. Diverging from Blue Yonder, e2open prides itself on its proprietary network, ensuring precise decision-grade data, a valuable asset for companies contending with demand forecasting challenges and data dependencies on external factors. While exhibiting similarities with QAD or Infor Nexus in various capacities, e2open encounters constraints in architectures necessitating ERP cross-pollination for specific industries. In such contexts, e2open may not be the optimal choice. Nonetheless, its robust enterprise-grade capabilities and deep supply chain processes catapult it to the forefront, securing the coveted #1 rank on our list.
Channel marketing planning and collaboration. One of the unique aspects of e2open is that it has a process for channel-driven organizations with trade rebate planning and several other processes that are relevant for collaborative channels.
Global compliance and e-invoicing support. Along with the capabilities that most suites offer, it also has capabilities for global compliance and e-invoicing support, requiring only one platform for all collaboration and joint planning needs.
Cons
ERP is not included as part of the suite. For industries where planning processes might require cross-pollination with ERP processes, e2open might not be the best fit.
Limited ecosystem. The consulting ecosystem is not as prevalent as some of the other solutions on this list, so finding talent might be harder with e2open.
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Supply chain suites have diverse origins, evolving from various perspectives—some rooted in execution systems, others in planning. Over time, they’ve developed significant overlaps with each other and other enterprise software categories, intensifying architectural challenges. In your quest for a supply chain suite, delineate your business process boundaries and determine their natural placement based on required process embeddedness. This list aims to streamline your options, yet identifying the right suite demands expertise, often provided by independent ERP consultants.
FAQs
What distinguishes supply chain suites from traditional ERP suites?
Supply chain suites are tailored to manage complex supply chain operations, including procurement, production planning, inventory management, logistics, and distribution. Unlike traditional ERP suites, supply chain suites focus on cross-functional embeddedness, restricting ERP suites primarily to financial reporting. Additionally, supply chain suites often demand collaboration with various systems like WMS, TMS, and OMS for mature capabilities such as inventory management and allocation.
How do supply chain suites cater to different industries?
The roles of supply chain suites vary across industries. For example, in retail, procurement closely aligns with merchandising and planning engines, while in manufacturing and industrial settings, procurement collaborates more directly with production and accounting. These differences illustrate the diverse nature of suite roles, highlighting the need for tailored solutions to meet industry-specific requirements.
How do supply chain suites incorporate emerging technologies like blockchain and ESG considerations?
Supply chain suites are evolving to incorporate emerging technologies like blockchain for seamless global data exchange and ESG (Environmental, Social, and Governance) considerations. While the impact of these technologies on future architecture remains uncertain, it’s likely that a portion of these models will be embedded within the supply chain suite, leveraging networks for collaborative documentation exchange. As the landscape continues to evolve, supply chain suites will adapt to integrate these technologies to meet industry demands and regulatory requirements.
Enterprises undertake a myriad of projects, each presenting distinctive characteristics—internal or external, short or long-term, billable or cost-centric, and varying across industries with specific scheduling and reporting needs. Construction projects diverge substantially from software development endeavors. Each falls under the umbrella of project management, necessitating diverse processes and unique capabilities from project management systems. How do you navigate this complexity effectively?
The architecture of project management systems is also intricately shaped by their capabilities overlapping with other adjacent systems. Being part of an ERP system requires alignment with accounting and procurement, driven by workflow needs and the balance of front-end and back-end processes. Additionally, potential overlaps with CRM processes may arise, particularly when sales and project management are closely linked, necessitating smooth data exchange. In certain industries, where project management systems integrate billing, scheduling, invoicing, and finance extensively, it is termed a PSA, prevalent in professional services. PSA shares design principles similar to project management but encompass broader capabilities than standard project management systems.
Project management systems exhibit diversity, yet common elements prevail, reflecting the fundamental components of any project. Projects inherently involve start and end dates, tasks, activities, and the allocation of resources and materials. Correspondingly, project management systems incorporate these essentials, providing features like task scheduling for designated resources to facilitate capacity planning and service delivery. Analyzing your project scope and conducting a gap analysis with a project management software data model will guide you to a fitting solution. Ready to discover the top 10 project management software options for 2024? Let’s explore the details.
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Definition of a project management system. A siloed system that can be acquired and implemented without dependencies on cross-functional workflows.
Overall market share/# of customers. The higher the market share, the higher it ranks on our list.
Ownership/funding. Superior financial standing and funding by private equity or corporate investors rank higher on our list.
Quality of development. The more cloud-native capabilities, the higher it ranks on our list.
Community/Ecosystem. The larger the community, the higher it ranks on our list.
Depth of native functionality for specific industries. The deeper the publisher-owned out-of-the-box functionality, the higher it ranks on our list.
Quality of publicly available product documentation. The poorer the product documentation, the lower it ranks on our list.
Project management system market share. The higher the marketshare as a project management solution, the higher it ranks on our list.
Ability to natively support diversified business models. The more diverse the product, the higher it ranks on our list.
Acquisition strategy aligned with this product. The more aligned the acquisitions are with the product, the higher it ranks on our list.
User Reviews. The deeper the reviews with pros and cons, the higher the score for a specific product.
It must be a project management system: it can’t be a project management module of an ERP. It must be a standalone project management software that can be acquired by the line of business or department without aligning with other departments.
10. Workzone
Initially crafted with ad agencies and marketing firms in mind, Workzone shares similarities with software designed for software development companies. Primarily adept at handling internal projects and workflow components, it encompasses technical and operational features but may lack robust financial capabilities for aspects like invoicing, billing, resource budget planning, and project finance. Another potential drawback is its technology, which may not be as modern as the alternatives on the list. Despite these limitations, Workzone holds a significant market share in its industry verticals, earning it a spot as the 10th choice on our list of project management options.
Set permission levels by project and document. The permission level could be another area, generally leaner in smaller packages, relatively detailed with Workzone.
Project templates. Most project management software might have template capabilities but fewer pre-built, which is not a limitation with Workzone.
Cons
UX is not as modern as other options on this list, such as Wrike. Their technology might not be as modern as other leading options, making the UX slightly inferior to other products.
Batch features such as editing multiple tasks at once might be limiting. Limited batch features might require additional clicks, driving operational inefficiencies.
Limited workflow capabilities for each individual user. The limited workflow capabilities may lead to overbloated screens and features for users, causing adoption issues.
9. ClickUp
Much like Workzone, ClickUp was initially tailored for remote work and agile development teams. While there are some similarities, the unique requirements of Agile and remote teams set them apart significantly from traditional project management, making ClickUp less suitable for other industries. While an excellent choice for software development or marketing firms, it may not be the ideal fit for professional services or construction-centric companies. Considering its strengths and limitations, ClickUp secures the 9th position on our list.
Pros
Designed for software development and agile teams and primarily for internal projects. Companies caring for agile-centric capabilities might struggle to relate to the product.
Responsive customer support. The other products in this segment will have limited support from external consulting firms, and because of their missing channel, having good support from the provider is a huge advantage.
Automation of administrative tasks. Automation of tasks will help maintain data integrity, offering analytical workflows without manual inputs.
Cons
Billing and project costing could be a challenge. Companies seeking PSA capabilities or client-centric workflows might struggle with the product, requiring manual overhead for billing and invoicing.
Using nested formulas may be a challenge. The flexibility offered by other project management tools, through their formula capabilities, to track dependencies for complex projects, such as Microsoft projects, might not be as detailed.
Batch tasks such as bulk user management and CSV capabilities. The limited bulk user management and CSV capabilities might be operationally inefficient for larger teams and complex projects.
8. Jira
Jira stands out as a popular choice among software development firms, largely due to its parent company’s suite offering bug tracking and integration with version management software. However, these capabilities may not be as relevant for other professional companies that prioritize critical functions like billing and invoicing. Despite its widespread use, Jira’s strengths lie primarily in the software development and technology sectors, supported by a dynamic marketplace. Its applicability beyond these domains is limited, leading it to secure the 8th position on our list.
Pros
Requirements management and bug tracking are integrated in one place. The tight integration of project management with requirements management and the intertwined nature of bug tracking with Kanban processes is a huge plus for software development companies.
Perhaps the best tool for Agile software development and internal project tracking. Due to the unique process of agile development, even the tools designed for marketing agencies might fall short.
Requirements, QA, and project management teams can all work together with complete traceability from release, sprint, epics, and user stories. This traceability is a unique requirement for software development because of the unique requirements of diverse teams.
Cons
Time tracking may require an add-on. Time tracking is not out-of-the-box, a key input for companies caring for project costing and financials.
Might not be the best fit for client-focused project management where the hours need to be billed, and the costs of the projects need to be measured. Industries such as professional services such as accounting legal practices.
Airtable belongs to the emerging category of project management tools alongside Monday.com and SmartSheet. These tools, essentially workflow management software, serve diverse needs and function as technical frameworks for various use cases, including project management and CRM. Their flexibility proves advantageous for industries with custom and evolving workflows, like financial services, non-profit organizations, or membership-based entities. However, deploying these tools may necessitate extensive consulting and custom development, potentially leading to over-engineering processes. Tight business rules and data integrity, common in more mature software, may be lacking. Despite their adaptability, these tools secure the 7th position on our list.
Pros
Graphic design, integration with 3D models, etc for engineering teams. Airtable’s unique capabilities and integration with graphic design and 3D engineering software make them uniquely suitable for marketing agencies, event management, and architectural and engineering firms.
Integration and ecosystem. The biggest advantage of Airtable is the number of integrations available and companies consulting in its ecosystem, augmenting core capabilities.
Designed for custom workflows. Companies with custom workflows require substantial flexibility with the data model and the ability to create data-gathering forms for ongoing needs.
Cons
Workflow and notifications might not be as advanced as Monday.com. The workflows and notifications are far more developed with other options, such as Monday.com.
The interface is not as intuitive as Monday.com. The richer layers providing advanced capabilities might require consulting and training help for users to effectively use the software.
Project costing and billing may require consulting hours to get it right. Mature capabilities such as project costing and billing might require expert consulting help, driving implementation budget, and cheaper with other pre-baked platforms.
6. Monday.com
Monday.com presents a comparable alternative to Airtable, differing subtly in its pricing model and industry alignment. Like Airtable, Monday.com is exceptionally well-suited for industries relying on custom workflows, particularly in workflow management scenarios where external collaboration holds equal importance to internal collaboration, resembling use cases found in surveys or customer experience software. However, similar to Airtable, the main drawback of Monday.com lies in its need for consulting assistance to implement more advanced business capabilities, which are pre-built in other options on this list. Despite this limitation, it secures the 6th position on our list.
Pros
Best for industries with custom workflows. The industries with custom workflows would find other smaller packages, flavored for specific business models and industries, constraining.
Industry-specific variations and templates. While the core packages might not provide core capabilities, the marketplace offers industry-specific templates and variations, augmenting core capabilities.
Clean user interface. The user interface is one of the cleanest, providing a nice balance of spreadsheet-like views and forms, along with the flexibility to switch to different perspectives.
Cons
Project costing and billing might require significant expertise and consulting efforts. Companies needing critical financial capabilities embedded with projects would struggle the most, requiring consulting help to be successful.
Gantt charts are exported as PDFs, which may be difficult to use in other applications. Complex projects are likely to require compatibility with external software, especially if external teams might collaborate on the projects, making PDF-centric exports restricting.
Tasks cannot be linked across boards. The data model is not as linked, creating issues while linking different boards where dependencies might be across the projects among projects or across portfolios.
5. SmartSheet
SmartSheet, similar to Monday.com and Airtable, despite UX not being as compelling as its rivals, is likely to have friendlier capabilities for traditional project managers, similar to Microsoft Project. It combines features similar to Monday.com and Airtable with the ability to create quick boards and Kanban queues along with the calendar view for easy scheduling. It also allows features such as easier workflow management for users, enabling them to enter their time, which will be recorded and accounted for on projects without much operational overhead. However, mature capabilities such as billing and invoicing, etc., would require substantial consulting help or an add-on on top of SmartSheet.
Pros
Spreadsheet look, loved by project managers. The biggest plus of SmartSheet is the familiar spreadsheet and MS project look, providing an easier transition for users.
Customizable automation is easy to use. Customizable automation does not require as much technical expertise, making it easier for business users to easily customize the workflows for their use.
Users can instantly toggle between various project views. The ability to switch between different views increases adoption among users with different preferences.
Cons
Billing. Implementing mature features available with a PSA, such as billing, would require substantial consulting help while still causing scalability issues.
Performance with larger sheets. Complex projects with larger sheets might experience performance bottlenecks, slowing them down.
4. Asana
Asana stands out as the market leader, boasting a data and process model that is particularly accommodating for marketing agencies. While it delivers fundamental project management capabilities, especially for non-billable operations, it may not offer the same seamless experience found in workflow management platforms like Monday.com or Airtable, which are designed for companies with customized project management workflows. Despite its rich ecosystem, professional services firms in areas such as accounting or legal may find it less relatable. Nevertheless, its market strength earns it the 4th position on our list.
Integrations and ecosystem. The integration and ecosystem are likely to be friendly for marketing and creative agencies, with the possibility of pre-baked integrations working as is without increasing the consulting budget with custom integration.
Track bugs, manage sprints, and plan and run campaigns, events, and product launches. Similar to Jira, it has several features that are uniquely applicable to software development firms and marketing agencies, which is where it is predominantly used.
Cons
Primarily for internal project management. Without the PSA capabilities pre-built, it’s meant to be for internal project management, primarily focusing on the operational aspect of project management and not financial.
Other industries that are not software or marketing might not be able to relate to it. The industries with substantial divergence from software development or marketing agencies might not be able to relate to it.
Kantata, a market leader, caters to companies requiring mature PSA capabilities. Its offerings include workflows like skill-based scheduling, capacity planning, and intricate milestones and billing processes. Kantata boasts two products—one tailored for a native Salesforce experience and the other for an external cloud-native experience akin to Wrike. However, it’s worth noting that Kantata may not be the best fit for smaller companies due to user limits and its higher cost. Nevertheless, for Salesforce users seeking comprehensive capabilities, it secures the 3rd position on our list.
Pros
Milestone tracking, billing, and skill-based resource scheduling. Companies with complex project milestones, especially contingent on client billing, would find Kantata especially friendly.
Native Salesforce and non-native experience are available through SX and OX platforms. Different options for native salesforce experience or non-native makes provide flexibility with users’ preferences for the right interface.
Enterprise-grade PSA functionality for companies that don’t prefer integrated accounting and GL bloatedness of ERP systems. The integrated features of ERP would require corporate alignment with accounting and procurement functions.
Cons
Minimum 30 users requirement. The user requirement makes it unfriendly for companies with smaller teams with fewer billable resources.
Might be difficult to use for smaller companies. Smaller companies with resources that are not as digitally savvy and not versed in business transactions with milestone billing might find it overwhelming.
It would require expensive consulting services to set it up. The complex data model and workflows would require substantial consulting help to be successful with the product.
2. Wrike
Wrike, positioned in the prescriptive cloud-native category and primarily crafted for internal project management, stands out as an ideal choice for companies seeking versatile project management capabilities. In contrast to Jira and Asana which might have better integration for requirement management or bug tracking, Wrike exhibits superior integration and ecosystem, particularly in time management. Its robust data model surpasses that of smaller project management software, offering detailed capabilities for project portfolio management and sub-projects. Drawing the closest comparison to Asana in terms of strategy and design, Wrike secures the 2nd position on our list.
Pros
Comprehensive project management with a focus on transparency and tracking. Ideal for companies seeking pre-baked project management capabilities without much consulting help.
Project and team organization can be easily customized to meet teams’ needs. The project structure is fluid enough to accommodate the needs of most projects.
Security and granular permission needs. Unlike smaller packages, which might not have as detailed security and workflow capabilities such as enabling task administration for specific users or having multiple moderators, Wrike’s security architecture is not as limited.
Cons
Designed for internal project management. The external project management capabilities often found in a fully-baked PSA would be limited, making it less relevant for professional services companies.
Client billing and invoicing would be a disconnected experience. The layers required for client billing and invoicing would require ad-hoc arrangements or manual processes.
Positioned as the most balanced choice, Teamwork caters to client-centric professional services seamlessly integrating project delivery capabilities. Diverging from slightly flexible alternatives like Monday.com or Airtable, Teamwork adopts a prescriptive strategy akin to Wrike. Its advantageous alignment with the HubSpot ecosystem enhances its appeal. Notably, Teamwork excels in PSA capabilities, mirroring those of Kantana, and remains accessible for smaller businesses, earning it the top spot on our list.
Pros
Client invoicing, project, and timesheet management in one place. This is highly beneficial for companies with billable processes and projects, with operational workflows intertwined with financial such as billing and invoicing.
Easier to track project costs and track utilization. Very few options on this list combine both operational and financial aspects of project management. Teamwork is one of them.
Unlimited client collaboration users with paid plans. While the data and process model is not as flexible, it would allow client collaboration just as with Monday.com or Airtable.
Cons
It might have a steeper learning curve for teams not familiar with the setup. The prescriptive data and process model might have a steep learning curve for skillsets not familiar with the upkeep of relational data models.
The integration options and ecosystem might not be as developed as some other options on this list. The integration and ecosystem might not be as developed as other options on this list, such as Asana or Monday.com etc.
It might be more expensive per user than the other options. The pre-baked functionality provided as part of the software would require a higher licensing fee compared to other options on this list.
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The project management category may appear entwined with ERP or CRM, yet companies emphasizing internal project management workflows may find integrated solutions overly complex. The inclusion of accounting and procurement workflows could prove cumbersome, especially for companies not caring for cross-functional processes like cost accounting.
Deciding between standalone project management systems and integrated solutions hinges on corporate strategy and enterprise alignment. If you’re seeking standalone options, this list offers potential choices. However, extracting maximum business value from project management software demands expertise—an area where an independent ERP consultant can provide invaluable guidance.
FAQs
How can project management systems enhance collaboration within teams?
Project management systems enhance collaboration by providing centralized communication, task assignment, and tracking, file sharing with version control, calendar integration, and visibility into project progress.
How do I determine which project management system is best suited for my industry?
Determining the best project management system for your industry involves analyzing the specific requirements and workflows prevalent in your sector. Consider factors such as whether the system offers industry-specific functionalities, integrates seamlessly with other tools commonly used in your industry, and has a track record of successful implementations in similar organizations. Additionally, look for user reviews and case studies from companies within your industry to gauge the system’s effectiveness.
What are the main differences between standalone project management software and integrated solutions like ERP or CRM systems?
Standalone project management software is designed solely to manage projects and typically offers a more focused set of features tailored to project planning, execution, and monitoring. On the other hand, integrated solutions like ERP or CRM systems combine project management functionalities with other business processes such as accounting, procurement, customer relationship management, and resource planning. While integrated solutions offer a comprehensive approach to managing various aspects of business operations, standalone project management software provides greater flexibility and simplicity for organizations primarily focused on project management workflows.
Operations managers are often responsible for all operational business processes from start to finish. From employees to suppliers, projects, jobs, and meetings, they strive to increase productivity, lower costs, and improve the quality of work. Their job is to empower their team of material planners, schedulers, estimators, warehouse workers, field service technicians, consultants, quality managers, maintenance staff, and laborers with relatable information.
The KPIs for operations managers would always differ based on their responsibilities, the size of the organization, and the industry. Operations management could be as diverse as managing tactical roles such as logistics to strategic roles such as procurement or marketing. Despite being so diverse, weak operations management can lead to weak sales and operations planning, which might, in turn, lead to operational disruptions and inferior customer experience. So, which KPIs for operations managers are the most relevant to ensure streamlined operations?
Operations managers are often tasked with harmonizing diverse functions spanning marketing, retail, human resources, sales, distribution, IT, finance, manufacturing, construction, and professional services. Here is the examination of the top 10 KPIs for operations managers based on each company department. This discusses ten departmental KPIs for operations managers: retail, marketing, human resources, sales, IT operations, distribution, finance, manufacturing, construction, and professional service operations KPIs, respectively. These KPIs serve as instruments, finely tuned to provide chaotic insights into the efficient, effective, and overall healthy operational facets.
Retail KPIs For Operations Managers
1. Gross Margins
Gross margins are critical components of retail KPIs for operations managers. It represents the percentage difference between the revenue generated from sales and the cost of goods sold (COGS). This means it measures the profitability of each product or service.
A high gross margin indicates that a significant portion of revenue is retained after covering the production or acquisition costs. Thus, signaling healthy financial performance. On the contrary, a low gross margin suggests that a substantial portion of revenue is consumed by the cost of goods sold, potentially impacting overall profitability.
Formula: Gross Margin Percentage=[(Total Revenue−Cost of Goods Sold)/Total Revenue]×100.
2. Average Order Value
Average order value provides insights into the average amount customers spend per transaction. AOV is calculated by dividing the total revenue generated by the number of orders. This metric is a valuable indicator of consumer purchasing behavior, reflecting the effectiveness of a company’s sales and marketing strategies.
A high AOV suggests that customers are making more valuable transactions, indicating a successful upselling or cross-selling approach. Conversely, a low AOV may signal the need for strategic adjustments to encourage customers to add more items to their carts. Operations managers keen on maximizing revenue and profitability should closely monitor AOV. They can utilize the insights gained to refine sales tactics, enhance customer experience, and optimize pricing strategies.
Formula: AOV= Total Revenue/Number of Orders
3. Customer Retention
Customer retention measures the ability of a business to retain its existing customers over a specific period. This metric is a testament to the loyalty and satisfaction of customers. It reflects the effectiveness of a company’s products, services, and overall customer experience.
A high customer retention rate indicates a strong and loyal customer base, highlighting successful customer relationship management strategies. Conversely, a low retention rate may signal dissatisfaction or a lack of engagement, prompting operations managers to investigate and implement strategies to improve customer satisfaction and loyalty. Armed with this metric, operations managers can proactively shape strategies to enhance customer engagement, foster brand loyalty, and drive sustained business growth.
Formula: Customer Retention Rate = (Number of Customers at End of Period - Number of New Customers Acquired During Period)/ Numbers of Customers at Start of Period
4. Conversion Rate
Conversion rate measures the percentage of website visitors or potential customers who take a desired action, such as making a purchase. It serves as a critical indicator of the effectiveness of a company’s sales and marketing strategies in turning potential customers into actual buyers.
A high conversion rate suggests that a significant portion of visitors is engaged and motivated to complete a transaction, reflecting the success of the company’s efforts in driving customer actions. Conversely, a low conversion rate may indicate inefficiencies or barriers in the customer journey, prompting operations managers to assess and refine the online shopping experience or marketing tactics.
Formula: Conversion Rate = (Number of Conversion/Number of Website Visitors or Potential Customers)×100
5. Foot Traffic and Digital Traffic
These two are essential retail KPIs for operations managers that provide insights into customer engagement across physical and online channels, respectively. Foot traffic refers to the number of visitors to a physical retail store, while digital traffic encompasses the online presence, measuring the number of visitors to a company’s digital platforms. These metrics indicate the level of interest and interaction customers have with the brand in different spaces.
High foot traffic signifies a bustling physical store, indicating popularity and potential sales opportunities. Similarly, high digital traffic suggests a robust online presence, which can translate into increased digital sales and brand visibility. On the flip side, low foot traffic or digital traffic may signal a need for improved marketing strategies, enhanced customer experiences, or adjustments to product offerings.
6. Inventory Turnover
Inventory turnover measures how efficiently a company manages its inventory by evaluating the number of times inventory is sold and replaced within a specific period. It is defined as the ratio of the cost of goods sold (COGS) to the average inventory during that period. This metric serves as a key indicator of inventory management effectiveness, providing insights into how quickly products are moving off the shelves.
A high inventory turnover ratio typically indicates efficient inventory management, swift sales, and minimized holding costs. Conversely, a low inventory turnover suggests slow-moving stock, potential overstocking issues, and increased holding costs. Operations managers can leverage this metric to fine-tune inventory strategies, optimize stock levels, and ensure a healthy balance between product availability and financial efficiency.
Formula: Inventory Turnover = Cost of Goods Sold (COGS)/Average Inventory
7. Returns and Exchanges
Returns and exchanges are integral components of retail KPIs for operations managers. It includes the volume of products customers bring back or exchange within a specified timeframe. This metric is a crucial measure of customer satisfaction, product quality, and overall operational efficiency.
A high rate of returns and exchanges may indicate potential issues such as dissatisfaction, product defects, or discrepancies between customer expectations and delivered goods. Operations managers must scrutinize the reasons behind high return rates to address underlying concerns, optimize product quality, and enhance customer experiences. Conversely, a low rate of returns and exchanges generally signifies customer contentment and operational effectiveness, indicating that products meet or exceed customer expectations.
Formula: Return and Exchange Rate = (Number of Returns and Exchanges/Total Number of Items Sold)×100
8. Stock Turnover Rate
Stock turnover rate is a metric that assesses how efficiently a company manages its inventory by measuring the number of times stock is sold and replaced within a specific period. This KPI is a key indicator of inventory management efficiency, providing insights into how quickly a company can sell and restock its products.
A high stock turnover rate generally indicates efficient inventory management, where products move briskly, reducing holding costs and potential obsolescence. Conversely, a low turnover rate may suggest overstocking or slow-moving inventory, leading to increased holding costs and the risk of product obsolescence. Operations managers can leverage this KPI to make informed decisions about inventory levels, ensuring a balance between meeting customer demand and optimizing operational costs.
Formula: Stock Turnover rate = Cost of Goods Sold (COGS)/Average Inventory Value
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Sell-through rate quantifies the efficiency of a company in selling its inventory over a specific period. Essentially, it gauges how well a business is managing its stock levels and meeting consumer demand.
A high sell-through rate indicates that products are moving off the shelves swiftly, signifying strong consumer interest and effective inventory management. Conversely, a low sell-through rate may suggest that products are lingering in stock, potentially indicating overstocking, pricing issues, or a lack of demand. Operations managers, by closely monitoring sell-through rate, gain valuable insights into inventory performance, enabling them to make data-driven decisions on pricing strategies, product assortment, and overall inventory management for optimal business outcomes.
Formula: Sell-Through Rate = (Number of Units Sold/Beginning Inventory) ×100
10. Sales Year-Over-Year
Sales year-over-year (YoY) is one of the crucial retail KPIs for operation managers that assesses the percentage change in a company’s sales performance for a specific period compared to the same period in the previous year. It provides a longitudinal perspective on sales trends, allowing operations managers to gauge the overall growth or decline in revenue.
A positive YoY indicates sales growth, showcasing the effectiveness of business strategies and market demand. Conversely, a negative YoY suggests a decline in sales, prompting operations managers to investigate the root causes, adapt strategies, and make informed decisions to reverse the trend.
Formula: Sales Year-Over-Year = [(Current Year Sales - Previous Year Sales)/Previous Year Sales] ×100
Marketing KPIs For Operations Managers
11. Cost Per Click
Cost per click measures the average cost incurred by advertisers each time a user clicks on their online ad. CPC serves as a key metric for evaluating the efficiency and cost-effectiveness of online advertising campaigns.
A high CPC may indicate that the cost of acquiring each click is relatively expensive, possibly requiring a reassessment of the advertising strategy or targeting parameters. Conversely, a low CPC suggests that the advertising campaign is cost-efficient, allowing the company to reach a broader audience for a lower investment. Operations managers can leverage this metric to optimize advertising budgets, refine targeting strategies, and ensure that marketing initiatives generate valuable user engagement at an optimal cost.
Formula: CPC = Total Advertising Cost/Number of Clicks
12. Cost Per Acquisition
Cost per acquisition is one of the fundamental marketing KPIs for operations managers, serving as a metric to evaluate the average expense incurred in acquiring a new customer. CPA is a vital indicator of the efficiency and cost-effectiveness of a company’s marketing campaigns and strategies.
A high CPA suggests that acquiring new customers is relatively expensive, possibly indicating inefficiencies in the marketing approach or the need for optimization. Conversely, a low CPA reflects a more cost-effective strategy for attracting new customers. Monitoring CPA allows operations managers to assess marketing efforts’ return on investment (ROI), guiding strategic decisions and resource allocations to optimize customer acquisition processes effectively.
Formula: CPA = Total Cost of Acquisition/Number of New Customers Acquired
13. Return on Advertising Spend
Return on advertising spend is one of the critical marketing KPIs for operations managers, serving as a quantitative measure of the revenue generated for every dollar spent on advertising. It is a powerful indicator of the effectiveness and efficiency of a company’s advertising campaigns.
A high ROAS implies that the revenue generated significantly exceeds the advertising costs, suggesting a profitable and successful campaign. On the other hand, a low ROAS may indicate that the return on investment from advertising is not meeting expectations, prompting operations managers to reevaluate and refine their marketing strategies. Operations managers can utilize ROAS to optimize marketing budget allocation, identify successful channels, and make data-driven decisions to maximize the impact of advertising efforts on overall business profitability.
Formula: ROAS = Revenue Generated From Advertising/ Cost of Advertising
14. Time to Payback
Time to payback in marketing operations refers to the duration it takes for a company to recover the costs associated with acquiring a new customer. It is essentially a measure of the efficiency of marketing campaigns in terms of cost recovery.
A low time to payback is favorable, signifying a swift recovery of customer acquisition costs and a quicker return on investment. Conversely, a high time to payback suggests a longer period for cost recovery, which may raise concerns about the effectiveness and sustainability of marketing initiatives. Operations managers can use this metric to assess the efficiency of marketing efforts, optimize campaign strategies, and ensure a more rapid and cost-effective return on investment.
Formula: Time to Payback = Customer Acquisition Costs/ Average Monthly Gross Margin per Customer
15. Marketing-Originated Customer Percentage
Marketing-originated customer percentage is a key performance indicator in marketing operations, providing insights into the percentage of customers that can be attributed to marketing efforts within a specific period. It serves as a valuable measure of the effectiveness of marketing campaigns in driving customer acquisition.
A high marketing-originated customer percentage indicates that a significant proportion of new customers were influenced by marketing strategies, showcasing the success of marketing campaigns in attracting and converting leads. On the other hand, a low percentage suggests a need for adjustments in marketing strategies to enhance their impact on customer acquisition. Operations managers can leverage this KPI to gauge the return on marketing investments, refine campaign strategies, and optimize resource allocation to bolster customer acquisition through effective marketing initiatives.
Formula: Marketing-Originated Customer Percentage = (Number of Customers Acquired Through Marketing/Total Number of New Customers) ×100
Human Resource KPIs For Operations Managers
16. Absenteeism rate
The absenteeism rate is a metric that quantifies the frequency and extent of employee absences. It is defined as the percentage of scheduled work hours that employees are absent due to various reasons, such as illness, personal issues, or other unforeseen circumstances. The absenteeism rate provides valuable insights into workforce attendance patterns and employee engagement.
A high absenteeism rate may indicate potential issues within the workplace, such as low morale, dissatisfaction, or health concerns, which can negatively impact overall productivity. Conversely, a low absenteeism rate is generally associated with a motivated and engaged workforce. Operations managers can utilize this KPI to identify trends, address underlying concerns, and implement strategies to promote a healthier and more productive work environment.
Formula: Absenteeism Rate = (Total Scheduled Hours of Absence/Total Scheduled Work Hours) ×100
17. Overtime Hours
Overtime hours refer to the additional hours employees work beyond their regular scheduled work hours. This metric is crucial in understanding human resource utilization and indicates the workload demands on a workforce.
When overtime hours are high, it may signify increased workloads, tight deadlines, or understaffing, potentially leading to concerns about employee burnout, decreased morale, and increased labor costs. On the other hand, low overtime hours suggest efficient workforce management or a period of reduced demand. Operations managers utilize this metric to strike a balance between meeting operational demands and ensuring the well-being and productivity of the workforce.
Formula: Overtime Hours = Total Hours Worked - Scheduled Work Hours
18. Employee Turnover Rate
Employee turnover rate quantifies the percentage of employees who leave a company within a specific timeframe. This metric serves as a key indicator of workforce stability and organizational health.
A high turnover rate may suggest issues such as dissatisfaction, lack of engagement, or inadequate workplace conditions, potentially impacting overall productivity and morale. On the other hand, a low turnover rate typically signifies a stable and content workforce, reflecting positive workplace culture and effective talent management. Operations managers, armed with insights from this metric, can implement targeted strategies to reduce turnover, enhance employee satisfaction, and foster a more resilient and engaged workforce.
Formula: Employee Turnover Rate = (Number of Employees Departed/Average Number of Employees) ×100
19. Employee Efficiency Metrics
Employee efficiency serves as an invaluable KPI for operations managers, providing a comprehensive understanding of workforce productivity. These metrics include:
A high number of deals closed YTD signals a robust and proactive sales effort, showcasing the team’s ability to navigate the sales pipeline and capitalize on opportunities. Conversely, a low number may suggest potential challenges or inefficiencies in the sales process, prompting operations managers to assess and refine sales strategies. Operations managers leverage this KPI to gauge the overall health of the sales function, set realistic targets, and implement targeted improvements to optimize deal conversion rates and, ultimately, drive revenue growth.
21. Customer Churn Rate
Customer churn rate is a critical sales operations KPI that quantifies the percentage of customers who discontinue their relationship with a business within a given period. This metric serves as a key indicator of customer attrition and the overall health of a customer base.
A high churn rate typically suggests issues with customer satisfaction, service quality, or competitive pressures, signaling potential revenue loss. Conversely, a low churn rate indicates a stable and satisfied customer base, reflecting successful customer retention strategies. Operations managers can utilize the churn rate to identify patterns, understand the reasons behind customer departures, and implement targeted measures to enhance customer satisfaction and loyalty.
Formula: Customer Churn Rate = Number of Customers Lost During a Period/Number of Customers at the Start of the Period) ×100
22. Lead-to-Opportunity Ratio
The lead-to-opportunity ratio is a key performance indicator in sales operations to assess the efficiency of converting leads into qualified opportunities. A high lead-to-opportunity ratio suggests a successful lead generation and qualification process, indicating that a substantial percentage of leads are translating into potential revenue-generating opportunities.
Conversely, a low ratio may imply inefficiencies in lead nurturing or qualification, signaling the need for improvements in the sales process to enhance conversion rates. Operations managers in sales can leverage this KPI to refine lead management strategies, optimize marketing efforts, and ensure a streamlined conversion pipeline, ultimately contributing to increased revenue and business success.
Formula: Lear-to-Opportunity Ratio = (Number of Opportunities Created/Number of Leads Generated) ×100
A high lead conversion rate suggests a streamlined and effective sales process, indicating that a significant proportion of leads are progressing through the sales funnel to become valuable customers. On the contrary, a low lead conversion rate may signify inefficiencies or gaps in the sales strategy, prompting operations managers to reassess and optimize their lead management practices. Operations managers can leverage this metric to refine sales strategies, identify areas for improvement, and enhance overall sales performance, ultimately contributing to the company’s bottom line.
Formula: Lead Conversion Rate = (Number of Converted Leads/Total Number of Leads) ×100
IT KPIs For Operations Managers
24. Total Tickets vs Open Tickets
The number of total tickets vs open tickets provides insights into the efficiency of an IT support system. Total tickets represent the overall number of requests or issues raised by users, while open tickets are the subset that remains unresolved or in-progress. In essence, this KPI measures the ratio of resolved or closed tickets to the total number of tickets, offering a snapshot of the IT team’s responsiveness and effectiveness.
A high ratio indicates a swift resolution of issues, suggesting a proficient and agile IT support system. Conversely, a low ratio may signify a backlog of unresolved issues, potential inefficiencies, or challenges in meeting user demands promptly. Operations managers can utilize this KPI to gauge the health of their IT support services, make informed decisions on resource allocation, and ensure that user concerns are addressed in a timely manner, ultimately contributing to enhanced operational efficiency and user satisfaction.
25. Ticket Response Time
The duration it takes for a support team to respond to user-reported issues or service requests is called ticket response time. It serves as a key indicator of the efficiency and effectiveness of an IT support system.
A low response time is generally desirable, as it signifies a prompt acknowledgment of user concerns and a swift initiation of troubleshooting or problem resolution. Conversely, a high response time may indicate delays in addressing user issues, potentially leading to increased user frustration and a negative impact on overall service quality. Operations managers can leverage insights from this KPI to optimize IT support workflows, allocate resources efficiently, and enhance the overall user experience with IT services.
Formula: Ticket Response Time = [(Time of First Response - Time of Ticket Creation)/Number of Tickets]
26. Resolution Rate
Resolution rate is a critical IT operations KPI for operations managers that quantifies the effectiveness of resolving issues or incidents within a specified timeframe. This metric serves as a key performance indicator for IT support teams, measuring their efficiency in addressing and resolving technical challenges.
A high resolution rate signifies a swift and effective response to issues, indicating operational excellence and customer satisfaction. On the other hand, a low resolution rate may suggest inefficiencies in the IT support process. This can potentially lead to prolonged system downtimes and dissatisfied end-users. Operations managers can utilize this metric to gauge the performance of their IT support teams and identify areas for improvement. They can also ensure the smooth functioning of IT operations in alignment with organizational goals.
Formula: Resolution Rate = (Number of Incidents Resolved/Total Number of Incidents Reported) ×100
27. Mean Time to Recover
Mean time to recover quantifies the average time taken to restore a system/service to normal functioning after an incident or outage. It serves as a key performance indicator for operations managers in the IT industry. It also offers valuable insights into the efficiency of incident resolution processes.
A low MTTR indicates a swift and effective response to incidents, minimizing downtime and disruptions to IT services. Conversely, a high MTTR suggests a prolonged recovery process, potentially leading to increased downtime and adverse impacts on productivity. Operations managers use MTTR to assess the effectiveness of incident management, refine response strategies, and ensure timely service restoration. Ultimately, contributing to the resilience and reliability of IT systems within an organization.
Formula: MTTR = Total downtime/Number of Incidents
28. Technology Downtime
Technology downtime is when a system, network, or technology infrastructure is unavailable or not functioning as intended. It is the time when IT services or systems are offline, disrupting normal business operations. This metric is a key indicator of the reliability and resilience of an organization’s technological infrastructure.
A high technology downtime indicates a greater frequency or duration of disruptions. It can potentially lead to decreased productivity, customer dissatisfaction, and financial losses. Conversely, a low technology downtime suggests a more stable and robust IT environment, ensuring seamless business operations. Operations managers can utilize this KPI to pinpoint areas for improvement in IT systems and implement preventive measures. It can also ensure the uninterrupted flow of technology-dependent processes, safeguarding the overall efficiency and reliability of the organization.
Supplier and carrier costs quantify the expenses associated with sourcing materials from suppliers and transporting them through various carriers. It reflects the financial efficiency of the supply chain.
A high score indicates a dependable network, ensuring timely and quality deliveries. On the contrary, a low score may signal disruptions or inconsistencies, prompting operations managers to reassess and potentially diversify their supplier and carrier base. Operations managers can utilize this KPI to identify underperforming partners, negotiate improvements, and ensure a smooth and reliable flow of goods.
31. Inventory Turns and Carrying Costs
Inventory turns and carrying costs represent the number of times inventory is sold or used in a given period and the associated costs of holding that inventory. A high inventory turns value implies efficient inventory management, with goods swiftly transitioning from shelves to customers.
On the flip side, a low value may indicate overstocking, leading to increased carrying costs. Operations managers can utilize these KPIs to refine inventory strategies, minimize holding costs, and enhance overall supply chain efficiency.
Formula: Inventory Turns = Cost of Goods Sold/Average Inventory Value
32. Order Fill and Back Order Rates
Order fill rate measures the percentage of customer orders that are fulfilled completely on the first attempt, while the back order rate tracks the orders that cannot be filled immediately and are delayed.
High order fill rates signify efficiency and customer satisfaction, while high back order rates may indicate inventory shortages or inefficient order processing systems. Operations managers can utilize these KPIs to optimize inventory levels, improve order processing, and enhance customer service.
Formula: Order Fill Rate = Number of Order Filled/ Total Number of Orders
Conversely, a low accuracy rate may lead to order discrepancies and additional costs for corrections. Operations managers can utilize this KPI to identify areas for improvement in warehouse processes, implement training programs, and enhance overall order accuracy.
34. Order Lead Time
Order lead time measures the time it takes from order placement to delivery, encompassing various stages. Short lead times indicate operational efficiency and customer responsiveness, while extended lead times may result in customer dissatisfaction and increased operational costs. Operations managers can utilize this KPIs to streamline processes, optimize workflows, and improve overall supply chain agility.
35. Receiving and Put-Away Cycle Times
Receiving and put-away cycle times evaluate the efficiency of receiving and storing goods upon arrival. Short cycle times indicate streamlined processes, reducing delays in inventory availability.
Prolonged cycle times, on the other hand, may result in operational bottlenecks and increased storage costs. Operations managers can utilize these KPIs to streamline receiving and storage processes, reducing bottlenecks and improving overall warehouse efficiency.
36. Transportation Costs
Transportation costs quantify the expenses associated with moving goods from suppliers to the distribution center and, eventually, to customers. High transportation costs may suggest inefficiencies or suboptimal route planning, impacting overall supply chain profitability. Operations managers can utilize this KPI to optimize transportation routes, negotiate favorable agreements with carriers, and reduce overall distribution expenses.
Formula: Transportation Costs = Cost per Mile x Total Miles Travelled
37. Transportation Delivery(SLA)
Transportation delivery (Service Level Agreement) measures the adherence to agreed-upon delivery timelines. High SLA compliance ensures reliability and customer satisfaction, while low compliance rates may lead to service disruptions and potential damage to customer relationships. Operations managers can utilize this KPI to monitor carrier performance, negotiate improved delivery terms, and ensure the timely arrival of goods.
38. Quote to Cash Cycle Time
Quote to cash cycle time calculates the duration from the initial customer quote to receiving payment. A shorter cycle time indicates a streamlined order-to-payment process, contributing to improved cash flow. Conversely, a prolonged cycle time may result in delayed revenue recognition and increased working capital requirements. Operations managers can utilize this KPI to streamline sales and billing processes, reducing cycle times and improving overall financial performance.
Finance KPIs For Operations Managers
39. Account Receivables Turnover
Accounts receivables turnover is a finance operations KPI that gauges the efficiency of a company in collecting payments from customers. A high turnover indicates a swift conversion of receivables into cash, reflecting strong cash flow and effective credit management.
Formula: Account Receivable Turnover = Net Credit Sales/ Average Accounts Receivable
40. Days Sales Outstanding
Days sales outstanding is a metric that quantifies the average number of days it takes for a company to collect payments after a sale has been made. It serves as a critical finance operations KPI, representing the efficiency of a company’s credit and collection processes.
Formula: Days Sales Outstanding = (Accounts Receivable/ Net Credit Sales) × Number of Days in Period
41. Operating Cash Flow
Operating cash flow is a finance operations KPI that measures the cash generated or used by a company’s core operating activities. It provides insights into a company’s ability to generate cash from its regular business operations. A positive operating cash flow indicates financial health, liquidity, and the capacity to cover operating expenses.
Conversely, a negative operating cash flow may signify liquidity challenges. Operations managers can utilize this KPI to ensure there is sufficient cash to fund ongoing operations, invest in growth opportunities, and meet financial obligations.
Formula: Operating Cash Flow=Net Income+Non-Cash Expenses+Changes in Working Capital
42. Quick Ratio
The quick ratio also known as the acid-test Ratio, is a finance operations KPI that measures a company’s ability to meet its short-term obligations using its most liquid assets. It is a more stringent measure than the current ratio as it excludes inventory from current assets.
A high quick ratio suggests strong liquidity and an ability to cover short-term liabilities promptly. Conversely, a low quick ratio may indicate potential difficulties in meeting short-term obligations. Operations managers can utilize this KPI to assess short-term liquidity and make informed decisions about managing current liabilities.
Formula: Quick Ratio = (Cash + Marketable Securities + Receivables)/ Current Liabilities
43. Accounts Payable Turnover
Accounts payable turnover assesses how efficiently a company manages its accounts payable by measuring the number of times a company pays its average accounts payable during a specific period.
A high turnover suggests effective management of payables and efficient cash flow, while a low turnover may indicate potential liquidity challenges or delayed payments. Operations managers can utilize this KPI to optimize payment processes, negotiate favorable credit terms, and enhance overall financial efficiency.
Formula: Accounts Payable Turnover = Net Credit Purchases/ Average Accounts Payable
44. Cash Conversion Cycle
The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flow from sales. It reflects the efficiency of a company’s working capital management.
Operating profit margin is a finance operations KPI that measures the profitability of a company’s core operating activities. It is expressed as a percentage and indicates the proportion of revenue that remains as operating profit after deducting operating expenses.
A high operating profit margin suggests operational efficiency and effective cost management, while a low margin may indicate potential challenges in controlling expenses. Operations managers can utilize this KPI to assess the efficiency of core operations, identify cost-saving opportunities, and enhance overall financial performance.
Net profit margin measures the overall profitability of a company by expressing net profit as a percentage of total revenue. It provides insights into a company’s ability to generate profit after all expenses, including taxes and interest.
Formula: Net Profit Margin = (Net Profit/Net Sales) ×100
Manufacturing KPIs For Operations Managers
47. Product Development Costs and Time-to-Market
Product development costs and time-to-market in manufacturing operations KPIs refer to the expenditures incurred and the time taken to bring a new product from conceptualization to market availability. This KPI indicates the efficiency of the product development process, reflecting a company’s innovation speed and cost-effectiveness.
A high value may suggest prolonged development cycles and increased costs, potentially impacting competitiveness. Conversely, a low value signifies swift development and cost control, enhancing market responsiveness. Operations managers can utilize this KPI to streamline innovation processes, optimize resource allocation, and align product releases with market demands.
48. Job Cost and WIP Reporting
Job cost and work-in-progress (WIP) reporting represent the total cost incurred for completing a specific manufacturing job and the ongoing value of work in progress. This KPI indicates the financial efficiency and progress of manufacturing processes, with a high value signaling potential cost overruns or delays.
A low value implies effective cost control and timely job completion. Operations managers can leverage this KPI to manage production costs, improve resource utilization, and optimize workflow.
49. Scrap and Yield Quantities and Costs
Scrap and yield quantities and costs measure the volume of defective or wasted products in comparison to the total produced, along with associated costs. This KPI reflects the efficiency of production processes and product quality.
A high value indicates a high level of waste, which can result in increased costs and reduced profitability. Conversely, a low value signifies efficient production with minimal waste. Operations managers can utilize this KPI to identify areas for quality improvement, optimize production processes, and reduce costs.
50. Manufacturing Labor Efficiency
Manufacturing labor efficiency is a KPI that gauges the productivity of labor in the manufacturing process. This KPI indicates how effectively labor resources are utilized in manufacturing. A high value suggests efficient use of labor, minimizing costs per unit.
Conversely, a low value may indicate inefficiencies, leading to increased labor costs. Operations managers can leverage this KPI to optimize workforce management, identify training needs, and enhance overall production efficiency.
Formula: Manufacturing Labor Efficiency = (Actual Production Output/Standard Production Output) x 100
51. Machine and Resource Throughput
Machine and resource throughput in manufacturing operations KPIs measure the rate at which machines or resources complete tasks within a given time period. This KPI reflects the operational efficiency of machinery and resources.
A high value indicates optimal throughput and resource utilization, contributing to increased productivity. On the contrary, a low value may signal bottlenecks or underutilized resources. Operations managers can use this KPI to identify areas for improvement, allocate resources effectively, and enhance overall production capacity.
52. Production Schedule Attainment
Production schedule attainment is a KPI that assesses the extent to which actual production matches the planned production schedule. This KPI provides insights into operational reliability and adherence to timelines.
A high value suggests a consistent and reliable production schedule, contributing to customer satisfaction. Conversely, a low value may indicate challenges in meeting production targets, potentially affecting customer relationships and order fulfillment. Operations managers can utilize this KPI to optimize production planning, improve resource allocation, and enhance on-time delivery performance.
Formula: Production Schedule Attainment = (Actual Production Output/Planned Production Output) x 100
53. Resource Capacity Utilization
Resource capacity utilization measures the extent to which available resources are utilized in production. This KPI indicates the efficiency of resource allocation and utilization.
A high value suggests optimal utilization, contributing to cost-effectiveness. On the other hand, a low value may indicate underutilized resources, leading to increased per-unit costs. Operations managers can use this KPI to optimize resource allocation, identify areas for improvement, and enhance overall operational efficiency.
Formula: Resource Capacity Utilization = (Actual production Output/Maximum Possible Production Output) x 100
54. Changeover Time
Changeover time is a critical manufacturing operations KPI that measures the time taken to transition from producing one product to another. This KPI indicates the efficiency of changeover processes and the ability to adapt to different production requirements swiftly.
A high value suggests prolonged changeover times, potentially causing production delays and impacting overall efficiency. Conversely, a low value signifies quick and efficient changeovers, enhancing production flexibility. Operations managers can utilize this KPI to optimize production schedules, reduce downtime, and enhance overall operational agility.
55. Overall Equipment Efficiency (OEE)
Overall equipment efficiency is a comprehensive manufacturing operations KPI that assesses the performance, availability, and quality of equipment in the production process. OEE provides a holistic view of equipment effectiveness, with a high value indicating optimal equipment performance.
Conversely, a low value suggests potential areas for improvement, such as increased downtime or reduced production speed. Operations managers can use OEE to identify and address equipment-related inefficiencies, improve maintenance strategies, and enhance overall production effectiveness.
56. Sub-Contractor Performance
Sub-contractor performance is a KPI that evaluates the effectiveness and reliability of subcontractors engaged in the manufacturing process. This KPI indicates the impact of external contributors on overall operational success. A high value signifies dependable subcontractors contributing positively to production.
In contrast, a low value may indicate challenges such as delays or quality issues introduced by subcontractors. Operations managers can utilize this KPI to make informed decisions about subcontractor relationships, optimize supply chain partnerships, and ensure consistent production quality.
57. Capable-to-Promise (CTP)%
Capable-to-promise is a manufacturing operations KPI that evaluates a company’s ability to commit to fulfilling customer orders based on current production capabilities. This KPI indicates how effectively a company can meet customer expectations regarding order fulfillment.
A high CTP% value suggests a robust production system capable of accommodating customer demands. Conversely, a low value may indicate challenges in meeting order commitments, potentially affecting customer satisfaction. Operations managers can leverage this KPI to enhance production planning, optimize inventory levels, and improve customer order fulfillment.
Formula: CTP% = (Available-to-Promise/Total Demand) x 100
Construction KPIs For Operations Managers
58. Safety/Incident Rate
Safety/Incident rate is a crucial construction operations KPI that measures the frequency of safety incidents or accidents on a construction site. This metric is defined as the number of incidents (injuries, accidents, or near misses) per a specific unit of measurement. It is often expressed per 100,000 work hours.
A low safety/incident rate is indicative of a safe work environment, emphasizing the success of safety protocols and measures. Conversely, a high rate may signal potential hazards, prompting operations managers to reassess safety procedures. Operations managers can utilize this KPI to prioritize and enhance safety measures. Also, ensuring the well-being of the workforce and compliance with safety regulations.
59. Request for Information Win Rates
Request for information(RFI) win rates assesses the success of winning contracts or projects after responding to requests for information. A high win rate indicates effective bidding strategies and a competitive edge in the market. While a low rate may signify areas that require improvement. Operations managers can utilize this KPI to refine bidding approaches, better understand market dynamics, and optimize resource allocation.
Formula: Request for Information(RFI) Win Rates = (Number of Projects Won/Total Number of RFIs Submitted) x 100
60. Job Cost, Revenue, and Profitability
Job cost, revenue, and profitability are vital construction operations KPIs that gauge the financial performance of construction projects. The total expenses incurred during a project are job costs, the income generated is the revenue, and profitability is the net profit derived from subtracting costs from revenue.
High job costs relative to revenue can indicate financial inefficiency, while low profitability may signal unsuccessful project management. Operations managers can utilize these metrics to assess project financial health, and identify areas for cost optimization.
61. Quality Defects, Rework Costs and Time, Number of Inspections
Quality defects, rework costs and time, and number of inspections are interconnected construction operations KPIs. They measure the quality and efficiency of construction projects. On one hand quality defects represent deviations from project specifications. While rework costs and time quantify the resources spent on correcting defects. The number of inspections measures how frequently quality checks are conducted.
Low quality defects, rework costs, and inspection frequency indicate efficient project execution. While high values may suggest the need for improved quality control. Operations managers can utilize these KPIs to streamline project processes, enhance quality control, and minimize unnecessary expenditures.
62. Employee Retention
Employee retention measures the percentage of employees who remain with the construction company over a specific period. High employee retention signifies a positive work environment, skilled workforce, and effective management.
Conversely, low retention rates may signal issues with workplace satisfaction or leadership. Operations managers can utilize this KPI to implement strategies for talent retention. They can also foster a positive workplace culture, and address any underlying concerns.
Formula: Employee Retention Rate = (Number of Employee Retained/Total Number of Employees at Start of Period) x 100
63. Labor Efficiency/Utilization
Labor efficiency assesses how effectively labor resources are utilized on a construction project. High labor efficiency indicates optimal resource utilization, while low efficiency may suggest underutilization or inefficiencies in project planning. Operations managers can utilize this KPI to optimize workforce allocation, improve project scheduling, and enhance overall labor productivity.
Subcontractor inventory is a construction operations KPI that evaluates the availability and efficiency of subcontractors for construction projects. It is defined as the number of qualified subcontractors available for hire at any given time.
High subcontractor inventory indicates a robust network of qualified subcontractors, facilitating flexibility in project staffing. On the other hand, a low inventory may lead to delays and increased costs. Operations managers can utilize this KPI to ensure a reliable pool of subcontractors, manage project timelines effectively, and mitigate risks associated with subcontractor availability.
Professional Service KPIs For Operations Managers
65. Average and Realized Bill Rates
Average bill rate represents the average price charged for professional services, while realized bill rate is the actual revenue generated per billable hour. These metrics provide insights into the pricing structure’s effectiveness and how well it aligns with the market. High rates indicate value perception, but if too high, it may lead to client dissatisfaction. Low rates may attract clients, but it could impact profitability.
66. Employee Utilization/Billable Rate
Employee utilization/billable rate gauges the percentage of an employee’s time spent on billable client work. High utilization rates signify efficient resource allocation, but excessive rates may lead to burnout. Low rates suggest underutilization, potentially impacting revenue. Operations managers can optimize team productivity by balancing utilization rates.
67. Billable Revenue Per Resource
Billable revenue per resource measures the average revenue generated per service professional. A high figure indicates efficient resource utilization, while low figures may signify inefficiencies. Operations managers can use this metric to assess team productivity and adjust staffing levels to meet demand.
68. Project Estimate Accuracy
Project estimate accuracy reflects how closely initial project estimates align with the actual effort and cost. High accuracy signifies effective project planning, leading to client satisfaction and profitability. Low accuracy may result in cost overruns and strained client relationships.
69. Project/Service Revenue, Profitability, Deal Size, and Bid-to-Win Ratios
These encompass a suite of metrics evaluating project or service success. Revenue and profitability showcase financial performance, deal size indicates project scale, and bid-to-win ratios highlight the effectiveness of securing new projects. High values across these metrics indicate successful project management and business development.
70. SaaS Contract Metrics (ARR, ACV, and Churn)
Annual recurring revenue (ARR), Annual contract value (ACV), and churn rate are very important metrics for SaaS contracts. ARR and ACV showcase subscription revenue, while Churn measures customer retention. High ARR and ACV are favorable, while low Churn indicates satisfied customers. Operations managers can use these metrics to refine subscription pricing, improve service, and ensure long-term customer relationships.
Formula:
ARR = Monthly Recurring Revenue (MRR) x 12
ACV = Average Monthly Contract Value (MCV) x 12
Churn Rate = (Number of Customers Lost/Total Customers at Start of Period) x 100
From the intricate details of retail operations, such as gross margins and inventory turnover, to the intricacies of human resources, including absenteeism rate and employee turnover, and extending to the critical domains of sales, IT operations, manufacturing, finance, construction and distribution, each KPI paints a distinct picture of efficiency, effectiveness, and overall operational health. These KPIs for operations managers act as instruments, finely tuned to provide insights into the complex landscape of operational facets.
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KPIs (key performance indicators) for an operations manager may include a range of metrics across different areas such as retail, human resources, IT, finance, marketing, sales, distribution, manufacturing, construction, and professional services.
How do you measure operations manager performance?
Operations manager performance can be measured by assessing their effectiveness in achieving key objectives and targets related to the specific KPIs relevant to their role. This involves monitoring and evaluating their contributions to the success of the organization in areas such as cost management, efficiency, employee management, and overall operational excellence. Regular performance reviews, feedback sessions, and data-driven assessments based on KPIs can be used to gauge their effectiveness.
What are KPIs to improve operational performance?
To improve operational performance, organizations can focus on key performance indicators that highlight areas for enhancement and growth. Some overarching KPIs to consider for improving operational performance include retail, human resources, IT, finance, marketing, sales, distribution, manufacturing, construction, and professional services KPIs respectively.
In pursuing greater profitability and scalability, companies know the critical role production plays in transforming raw materials into finished products. However, production is not immune to challenges, ranging from delivery delays to defective units and product returns, which can significantly impact a company’s bottom line.
To tackle these challenges in the manufacturing industry, the role of a production manager is often pivotal, yet the roles and responsibilities can vary significantly across industries. Some companies might integrate this responsibility with an operations manager, while others in the manufacturing sector might have a dedicated position for a production manager. The roles of a production manager might also overlap with quality managers, with their primary responsibilities being managing production, managing schedules, and getting the maximum out of the production floor.
So, which KPIs for production managers are the most critical for the production manager role? To ensure they can keep track of production and maintain records of what is done correctly and incorrectly, a production manager should monitor these 5 specific KPIs for production managers.
Performance KPIs For Production Managers
Performance manufacturing KPIs for production managers include a set of key indicators designed to gauge and enhance the efficiency of the manufacturing process. These metrics serve as quantitative measures that reflect the effectiveness and productivity of the production floor. Within these metrics, three key performance indicators take center stage – production/schedule attainment, changeover time, and takt time. Let’s see what each of these KPIs means and what they indicate.
1. Production/Schedule Attainment
Production/Schedule attainment in manufacturing quantifies the extent to which actual production aligns with scheduled production targets. The manufacturing operation’s efficiency and its ability to meet predetermined production levels are measured by this metric.
Formula: Production attainment = (Actual production / scheduled production) x 100
A higher production attainment score signifies superior performance, indicating that the manufacturing process operates in sync with planned schedules. In practical terms, if a company aims to produce 100 units in a given time frame and achieves 95 units, the production attainment would be 95%, showcasing a commendable alignment with production goals. Conversely, a lower production attainment percentage suggests a divergence from scheduled targets, potentially indicating inefficiencies, delays, or challenges within the manufacturing process.
2. Changeover Time
Changeover time represents the duration required to transition a production line from manufacturing one product to another. This time interval encompasses the various tasks involved in the changeover process, such as equipment adjustments, line reconfigurations, and any necessary preparations to ensure optimal production of the new item.
Formula: Average changeover time = Total time to changeover production lines / # of changeovers
A lower average changeover time indicates a streamlined and efficient changeover process, allowing for increased flexibility in responding to shifts in production demands. For instance, if a manufacturing facility undergoes four changeovers with a total time investment of 240 minutes, the average changeover time would be 60 minutes. On the other hand, a high changeover time suggests inefficiencies in the transition process, potentially leading to production delays, increased downtime, and reduced overall operational agility.
3. Takt Time
Takt time is one of the fundamental performance manufacturing KPIs for production managers. It represents the pace at which a product must be completed to meet customer demand.
Formula: Takt time = Total available production time / average customer demand
A low takt time indicates a faster production pace, allowing the manufacturing process to keep up with or even exceed customer demand. This can signify a responsive and efficient production system, ensuring that products are delivered on time. Conversely, a high takt time suggests a slower pace relative to customer demand, potentially leading to production bottlenecks, delays, and an inability to meet market needs promptly.
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Lean manufacturing KPIs for production managers are designed to evaluate the efficiency, productivity, and overall effectiveness of manufacturing processes within the lean manufacturing philosophy. These metrics are instrumental in identifying areas for improvement, minimizing waste, and optimizing resource utilization. Several critical KPIs fall under the umbrella of lean manufacturing metrics, such as cycle time, first pass yield, capacity utilization, machine downtime rate, material yield variance, and overtime rate. Each of them offers unique insights into different aspects of the production system.
4. Cycle Time
Cycle time refers to the average duration it takes to fulfill a customer order, serving as a crucial metric to gauge operational efficiency and customer responsiveness.
Formula: Cycle time = (Time customer received order – time customer placed order) / # total shipped orders
A lower cycle time suggests that the business can rapidly and effectively meet customer demands, reflecting streamlined processes and efficient workflows. For instance, if a company receives an order on Monday at 10:00 AM and delivers the product to the customer on Wednesday at 2:00 PM, with a total of 50 orders shipped, the cycle time would be (Wednesday 2:00 PM – Monday 10:00 AM) / 50, indicating the average time it takes to process and fulfill an order. On the other hand, a high cycle time may signal inefficiencies, potential delays, and a decreased ability to promptly respond to customer requests, which could impact customer satisfaction and competitiveness in the market.
5. First Pass Yield
First pass yield quantifies the proportion of non-defective products successfully manufactured without rework or scrap.
Formula: First pass yield = # of non-defective products excluding rework and scrap / total # of products manufactured
A high first pass yield indicates a robust and reliable manufacturing process, where most products meet quality standards on the initial attempt. This suggests efficiency, cost-effectiveness, and a minimized need for additional resources to rectify defects. Conversely, a low first pass yield suggests potential issues in the manufacturing process, such as inadequate quality control or inconsistencies in production.
6. Capacity Utilization
Capacity utilization quantitatively measures how much of a plant’s production capacity is actively utilized within a specific timeframe.
Formula: Capacity utilization = (Total capacity used during specific timeframe / total available production capacity) X 100.
A high capacity utilization percentage indicates that the manufacturing facility is operating efficiently and using its resources optimally. For instance, if a factory with a production capacity of 10,000 units produces 9,000 units monthly, the capacity utilization would be 90%. This suggests that the facility is running close to its maximum potential, leaving little room for additional production without expansion. On the other hand, a low capacity utilization percentage may signal underutilization of resources, inefficient production planning, or excess capacity.
7. Machine Downtime Rate
Machine downtime rate is one of the critical KPIs for production managers in manufacturing that quantifies the proportion of time equipment is unavailable for production due to both planned and unplanned downtime. This metric serves as a key indicator of equipment reliability, operational efficiency, and the effectiveness of maintenance practices.
Formula: Machine downtime rate = Total uptime / total uptime + total downtime
A low machine downtime rate suggests that machinery is consistently available for production, minimizing disruptions and ensuring a smooth workflow. Conversely, a high machine downtime rate signals frequent disruptions, potentially leading to production delays, increased costs, and a compromised production schedule.
8. Material Yield Variance
Material yield variance assesses the difference between the actual amount of material used and the standard amount expected for a given production process. This variance provides insights into the efficiency of material utilization during production.
Formula: Material yield variance = (Actual unit usage – standard unit usage) x standard cost per unit
A high material yield variance indicates that more material is being consumed than the predetermined standard, potentially signaling inefficiencies, waste, or deviations in the manufacturing process. Conversely, a low or negative material yield variance suggests that less material is used than the standard, potentially signaling cost savings and raising questions about quality or adherence to specifications.
9. Overtime Rate
Overtime rate measures the proportion of excess hours employees work beyond their regularly scheduled working hours. This metric provides valuable insights into workforce management, labor efficiency, and operational costs.
Formula: Overtime rate = (Overtime hours / total hours worked, including overtime) X 100
A high overtime rate suggests that a significant portion of the workforce is working beyond standard hours, potentially indicating high demand, tight deadlines, or understaffing. While this might signify a committed and flexible workforce, it can also increase labor costs, fatigue, and potential burnout. Conversely, a low overtime rate may suggest effective workforce planning and a balanced workload, contributing to employee well-being and cost control.
Quality KPIs For Production Managers
Quality manufacturing KPIs for production managers are specifically designed to measure and evaluate manufacturing processes’ overall quality and effectiveness. These metrics provide insights into various aspects of the production system, highlighting areas for improvement and ensuring that the final output meets or exceeds quality standards. Several critical KPIs fall under the umbrella, each addressing different facets of the manufacturing quality such as yield, first-time yield, and scrap rate.
10. Yield
Yield in manufacturing quantifies the efficiency of the production process by measuring the overall volume of products manufactured compared to the input of raw materials.
Formula: Yield = (Actual # of products manufactured / theoretical number of maximum possible yield based on raw materials input) X 100
A high yield indicates that the manufacturing process utilizes raw materials effectively, minimizes waste, and maximizes production output. Conversely, a low Yield suggests inefficiencies, waste, or issues in the production process, potentially leading to increased costs and reduced overall productivity.
11. First Time Yield
First time yield is one of the critical quality KPIs for production managers in manufacturing, serving as a key indicator of product quality and the efficiency of production processes. This KPI measures the percentage of non-defective or good units that are released without wasteful rework.
Formula: First time yield = # of non-defective or good units / total # of products manufactured
A high first time yield indicates that most products meet quality standards on the initial attempt, signaling an efficient and reliable manufacturing process. Conversely, a low first time yield suggests that many products require rework or correction, potentially indicating issues with material quality, equipment, or production processes.
12. Scrap Rate
Scrap rate quantifies the proportion of discarded materials during the manufacturing process. This metric provides insights into the efficiency of the production process, waste reduction efforts, and the utilization of raw materials.
Formula: Scrap rate = Amount of scrap material produced during a manufacturing job / total materials intake or put into the process
A low scrap rate indicates effective material utilization, minimized waste, and potential cost savings through efficient resource management. Conversely, a high scrap rate suggests inefficiencies, potentially resulting from production errors, equipment malfunctions, or poor-quality materials.
Maintenance KPIs For Production Managers
Maintenance manufacturing KPIs for production managers are designed to evaluate the effectiveness, reliability, and efficiency of maintenance processes within manufacturing operations. These metrics are instrumental in gauging equipment performance, minimizing downtime, and optimizing the maintenance strategy for enhanced productivity. KPIs like mean time between failure, percentage maintenance planned, percentage planned or emergency work orders, unscheduled downtime, downtime analysis, and machine set-up time, collectively fall under the umbrella of maintenance manufacturing metrics.
13. Mean Time Between Failures(MTBF)
MTBF is a crucial metric that calculates the average time a piece of equipment operates between failures. It provides insights into the reliability of production assets and is particularly useful for predicting maintenance needs.
Formula: MTBF = Operating time in hours / # of failures
A high MTBF suggests a reliable and robust system, minimizing disruptions and ensuring continuous production. Conversely, a low MTBF indicates frequent breakdowns, potentially leading to increased maintenance costs and decreased productivity.
14. Percentage Maintenance Planned(PMP)
PMP compares the total hours spent on planned maintenance activities with the overall maintenance time. It indicates the effectiveness of proactive maintenance planning.
Formula: Percentage planned maintenance = (# of planned maintenance hours / # of total maintenance hours) × 100
A higher PMP signifies a well-organized maintenance strategy, reducing unexpected downtime. Conversely, a low PMP may suggest a reactive approach, leading to increased unplanned downtime and potential production disruptions.
15. Percentage Planned or Emergency Work Orders
This metric compares the percentage of planned maintenance work orders versus those that are emergency or unplanned.
Formula: Percentage planned vs. emergency maintenance work orders = (# of planned maintenance hours / # of unplanned maintenance hours) × 100
A higher percentage of planned work orders indicates effective maintenance planning, reducing disruptions and optimizing resources. Conversely, a higher percentage of emergency work orders suggests a reactive approach, potentially leading to increased downtime.
16. Unscheduled Downtime
Unscheduled downtime measures the duration equipment cannot perform as scheduled due to reliability or equipment issues. It reflects the effectiveness of maintenance plans and the impact on production schedules. High unscheduled downtime can result in lost revenue and customer dissatisfaction.
Formula: Unscheduled downtime = Sum of all unscheduled downtime during specified time frame
17. Downtime Analysis
Downtime analysis is expressed as a ratio, reflecting the time equipment is not operational in relation to its total operating time. This metric is crucial for understanding the overall efficiency of equipment. A higher ratio indicates more downtime, potentially leading to decreased productivity.
Formula: Downtime in proportion to operating time = Total time equipment is down: Total time equipment is in operation
Formula: Machine set-up time = Time required to prepare machine for next run
Efficiency KPIs For Production Managers
Efficiency manufacturing KPIs for production managers are designed to measure and evaluate the effectiveness and productivity of manufacturing processes. These metrics focus on the throughput, work in progress, schedule attainment, and overall equipment effectiveness to ensure optimal performance and resource utilization within a production environment. The KPIs included under efficiency manufacturing metrics are throughput rate, work in process, and overall equipment effectiveness.
19. Throughput Rate
Throughput rate is a key performance indicator measuring the product volume produced within a specified time frame. It provides insights into the efficiency and productivity of a manufacturing process, allowing for analysis and comparison of similar equipment, production lines, or entire manufacturing plants.
Formula: Throughput rate = Total number of good units produced / specified time frame
Work in process refers to goods in mid-production or awaiting completion and sale. This metric includes the raw materials, labor, and overhead costs associated with unfinished goods. WIP provides insights into the efficiency of material usage and the value of partially finished goods in production. A high WIP may indicate overproduction or inefficiencies in the production line, while a low WIP suggests efficient use of resources.
Formula: Work in process (WIP) = (Beginning WIP + manufacturing costs) – cost of goods manufactured
21. Overall Equipement Effectiveness(OEE)
OEE is a comprehensive metric that assesses the efficiency of equipment and machinery in the manufacturing process, considering factors such as availability, performance, and quality.
Formula: OEE = (Good Count × Ideal Cycle Time) / Planned Production Time
A high OEE indicates optimal equipment utilization and overall effectiveness in production. Conversely, a low OEE suggests potential issues in equipment efficiency, leading to increased downtime or reduced quality.
Conclusion
In conclusion, the role of a production manager is undeniably crucial in navigating the challenges of the manufacturing industry. It also ensures the transformation of raw materials into quality finished products. The multifaceted responsibilities of production managers can overlap with operations and quality managers. Thus, highlights the need for effective monitoring through KPIs. The top 5 KPIs for production managers discussed in this blog are performance, lean, quality, maintenance, and efficiency KPIs. They offer a comprehensive toolkit for production managers to gauge and optimize their operations.
By closely monitoring and optimizing these KPIs, production managers can steer their operations toward greater efficiency, improved quality, and enhanced competitiveness in the dynamic landscape of manufacturing. These KPIs for production managers serve as a compass, guiding them to make data-driven decisions, address challenges proactively, and ultimately contribute to their organizations’ overarching goals of profitability and scalability.
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Which KPIs are most critical for production managers in monitoring and improving efficiency?
The most critical KPIs for production managers revolve around performance, lean, quality, maintenance, and efficiency. Production/schedule attainment, changeover time, and takt time are essential performance KPIs. They offer insights into operational efficiency. While lean KPIs like cycle time and first pass yield focus on waste reduction and resource optimization. Quality KPIs such as yield, first time yield, and scrap rate provide a comprehensive view of product quality. Maintenance KPIs like MTBF and percentage maintenance planned help gauge equipment reliability. And efficiency KPIs like throughput rate and overall equipment effectiveness (OEE) measure productivity and workflow optimization.
How do performance manufacturing KPIs like production/schedule attainment impact a company’s bottom line?
Production/Schedule attainment directly influences a company’s profitability by quantifying the alignment between actual production and scheduled targets. A higher production attainment score indicates superior performance, demonstrating that the manufacturing process operates in sync with planned schedules. This alignment is crucial for meeting production goals efficiently and minimizing delays. Conversely, a lower production attainment percentage suggests inefficiencies, potential delays, and challenges within the manufacturing process, which can adversely impact the bottom line by affecting delivery timelines and customer satisfaction.
How can production managers use lean manufacturing KPIs like cycle time to enhance operational efficiency?
Lean manufacturing KPIs like cycle time play a pivotal role in enhancing operational efficiency. A lower cycle time indicates a streamlined process, allowing for faster response to production demands. Production managers can use cycle time insights to identify bottlenecks, streamline workflows, and improve overall efficiency. Conversely, a high cycle time suggests inefficiencies, potential delays, and a decreased ability to respond promptly to customer requests, impacting operational agility and competitiveness.
The HCM market is generally divided into three segments based on company size: (1) organizations with up to 100 employees, (2) those with 100 to 1,000 employees, and (3) enterprises with over 1,000 employees. Each segment has distinct needs, and HCM solutions are typically tailored to reflect those requirements. For smaller companies—those with fewer than 100 employees—simplicity is key. These organizations often prefer solutions that are easy to implement without the need for consulting support, favoring a DIY deployment model. Such platforms prioritize user experience, often featuring flatter data structures and minimizing complex hierarchies to reduce implementation friction.
The next tier of HCM solutions adopts a suite-centric approach, often paired with managed services. In the mid-market segment, managed services are especially critical, as most organizations lack the resources to monitor and stay compliant with the complex and ever-changing labor laws across multiple counties, states (or provinces), and countries. Managed services are also a key differentiator for solution providers, allowing them to demonstrate more value compared to their larger peers.
Larger solutions offer a broader range of technical capabilities to support diverse compensation structures, labor profiles, and business models. However, they may not be as user-friendly or easy to implement, as they prioritize data integrity—an essential factor for large companies focused on enhancing HR operational efficiency and minimizing administrative overhead. While mid-market solutions often include localizations for multiple countries, their vendor partner ecosystem tends to be less robust, limiting consulting options.
Selecting an unsuitable HCM software that is not tailored to your industry can impact your enterprise architecture. This list aims to outline the pros and cons of the leading HCM software options available in the market.
10. UKG Ready
UKG offers two main HCM products tailored to different business sizes. It is built for small to mid-sized organizations, with a focus on ease of use and lower implementation costs. It stands out by offering managed services and better reporting capabilities compared to many entry-level products. While not ideal for very small startups, it provides a middle ground between lightweight platforms like BambooHR and more complex systems like Workday. UKG Ready also supports global operations, with coverage across over 85 countries.
Is your business looking for simplicity without giving up reporting power? Do you need a global HCM system, or are you managing a U.S.-focused workforce? How important is ease of implementation versus advanced features like succession planning? Understanding where UKG fits in the HCM landscape is key to being successful with this product. For a deeper look at how it compares to other platforms, download the Top HCM Software in 2025 report now.
9. Zoho HCM
Zoho HCM serves SMBs across industries like IT, education, media, and finance. It works especially well for companies already using other Zoho products. One of its biggest strengths is its bundled pricing. You get access to multiple apps for the price of just one from other vendors. The platform also supports advanced features, including complex benefits rules and employee type management—features not always found in mid-market solutions.
Are you already using Zoho apps and considering expanding into HCM? Do you need more robust recruiting and workflow tools without jumping to a full enterprise solution? How important are managed services and global payroll support in your decision? Zoho HCM may be a good fit if your needs include strong recruiting capabilities and customization flexibility. For a full breakdown of where it stands in 2025, download the Top HCM Software in 2025 report now.
8. Infor WFM
Infor WFM targets industries that need strong scheduling features, especially healthcare and retail. It supports complex compensation setups and works well for managing branch-level operations. However, its overall HCM suite is not as broad as some competitors. To fill those gaps, companies often need third-party tools. It’s a solid choice for enterprises already using other Infor products, but not ideal for smaller businesses or organizations needing an all-in-one HCM.
Does your organization require tightly integrated scheduling within your HR system? Are you in healthcare or a similar field where staffing rules are complex? How important is having managed services bundled with your HCM platform? If your answers lean toward niche workflows and deep scheduling needs, Infor WFM might be the right fit. For a full look at how it ranks and where it shines, download the Top HCM Software in 2025 report now.
7. BambooHR
BambooHR is built for small to mid-sized businesses with straightforward HR needs. It offers a simple setup, which keeps implementation quick and cost-effective. Its easy-to-use interface supports tasks like onboarding, training, and document management. However, it relies on partners for managed services and may lack the depth some businesses need. While great for startups, it doesn’t offer robust reporting or built-in tools for more advanced functions like time tracking.
Is your team looking for a lightweight HCM that’s easy to adopt? Are advanced reporting or built-in time tracking essential to your workflows? Would you prefer a system that reduces your reliance on consultants? If your priorities align with simplicity and fast deployment, BambooHR might be a strong match. To compare BambooHR with other top platforms, download the Top HCM Software in 2025 report now.
6. ADP Vantage HCM
ADP Vantage is built for large enterprises needing a full suite of HR, payroll, and workforce management tools. It’s especially valuable for companies already using ADP payroll, with strong support for complex org structures. Its real strength is in payroll and benefits administration—so much so that even other vendors rely on ADP for these functions. However, the platform’s modular history can lead to a fragmented user experience and added complexity during setup and integration.
Are you managing a large workforce and need a system with strong payroll capabilities? Do you already use ADP services and want tighter integration? Or are you weighing the trade-off between robust functionality and ease of use? For a deeper look at how ADP Vantage compares to other top HCM platforms, download the Top HCM Software in 2025 report now.
5. Dayforce HCM (Previously Ceridian)
Dayforce is one of the few HCM platforms that caters to both SMBs and large enterprises. While it started in the SMB space, it now supports organizations with tens of thousands of users. It may not match the scale of legacy enterprise systems, but its modern design and faster deployment make it attractive for companies wanting to avoid lengthy implementations. Dayforce is particularly strong in payroll, WFM, and benefits—especially for companies using Microsoft ERP systems.
Is your business in a sector where scheduling and compliance are critical? Are you using Microsoft ERP and looking for a more complete HCM experience? Does your team need strong payroll tools but not managed services? If so, Dayforce might be worth a closer look. Download the Top HCM Software in 2025 report now to explore how Dayforce compares to other leading platforms.
4. UKG Pro
UKG Pro serves mid-sized and enterprise organizations. It strikes a balance between broad features and ease of use. Managed services are a key part of its value, helping companies without large HR teams manage compliance and labor regulations across borders. Pre-built integrations speed up deployments and reduce the need for custom setups.
Do you need support for complex workflows without the heavy lift of a traditional enterprise system? Are you looking for a platform with strong global capabilities and built-in regulatory tools? Do managed services matter to your HR team? If so, download the Top HCM Software in 2025 report now to see how UKG Pro stacks up against other top platforms.
The 2025 Digital Transformation Report
Thinking of embarking on a ERP journey and looking for a digital transformation report? Want to learn the best practices of digital transformation? Then, you have come to the right place.
Oracle Cloud HCM targets large enterprises. It supports complex org structures, approvals, and global compliance. Industries like tech, telecom, and healthcare benefit most—especially those already using Oracle ERP. Its native integration offers value but can increase costs and complexity, particularly where tight HCM-ERP alignment is a must.
Does your organization need advanced support for compensation models and large-scale workflows? Do you already rely on Oracle for other business systems? Are you equipped with the IT resources to manage a high-touch platform? If so, download the Top HCM Software in 2025 report now to see how Oracle Cloud HCM compares across enterprise needs.
2. SuccessFactors
SAP SuccessFactors HXM Suite caters to large, global companies. It supports high volumes, complex business models, and multiple geographies. With support for 43 languages and more than 45 localizations, it meets the needs of multinational workforces. Like Oracle Cloud HCM, it may require a strong IT team and consulting support, especially when configuring workflows or compliance processes.
Does your company operate across many regions with complex HR needs? Do you need industry-specific extensions or plan to integrate with other SAP tools? Are you ready to invest in a platform that brings deep localization and enterprise-grade functionality? Download the Top HCM Software in 2025 report now to see how SuccessFactors stacks up against leading HCM platforms.
1. Workday
Workday remains a top choice for large enterprises. It offers strong tools for managing complex HR processes. Its architecture is modern, and the interface is easy to navigate. However, Workday adoption in the mid-market has been slower. Many mid-sized companies prefer platforms with bundled managed services, which Workday doesn’t offer directly. Without strong IT support, mid-sized firms often struggle during implementation.
Is your organization dealing with complex compensation or benefits workflows? Do you need a scalable solution that integrates with tools like Salesforce or ServiceNow? Are you prepared for the technical depth Workday demands? Download the Top HCM Software in 2025 report now to see how Workday compares to other leading platforms.
Final Words
Due to differences in labor laws across regions, choosing and implementing HCM products requires specialized expertise. HCM workflows are often closely integrated with ERP, MES, and Service Scheduling modules. As a result, selecting the right HCM software can significantly impact the overall enterprise architecture and affect operational efficiency.
When integrating HCM software into your system architecture, it’s important to define the roles and responsibilities of each system interacting with the HCM software. This guide will help you narrow down options that best align with your architectural requirements.
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FAQs
Why can’t companies manage their HR processes inside the ERP systems?
HR is a distinctive function with specific requirements for employee confidentiality. Data such as compensation, gender, and marital status may have unique compliance and reporting needs for each country. Storing such HR data within the ERP system not only adds unnecessary data but also entails costly customizations for HR reports, which might be available with dedicated HR software out of the box.
Which datasets need to be exchanged for HCM software to be integrated with the ERP?
The HR software can stay isolated unless one of the HR datasets affects operational workflows. For instance, if employee data needs synchronization with the scheduling module, integrating employee data into the shop floor module becomes necessary. Otherwise, HCM software can remain isolated.
How does the need for HCM software vary across industries?
The choice of HCM software depends significantly on industry-specific needs. Industries with a high concentration of blue-collar and temporary workers have distinct requirements compared to those predominantly hiring white-collar workers. A key distinction in software targeting blue-collar industries lies in its comprehensive support for union reporting requirements.
Looking for an ERP consultant who might be able to answer every question you might have? Well, unfortunately, just like different skill sets exist in a house construction project, ERP projects are no different with their need for digital transformation roles and skill sets. In fact, at a much bigger scale. Also, the more components you have in your architecture, the more skillsets you might require. Because the underlying technologies may be different, and they require years of training and specialization – to hit the ground running from day one, as that would be the expectation from ERP consultants.
Additionally, their educational backgrounds vary. The person who studied Supply Chain is likely to be deeper in the Supply Chain role. The same could apply to accounting and sales processes as well. A weaker chain (or an inexperienced resource) might slow down the whole project as they would need to be coached at every step of the way. Think of coaching basic ERP concepts such as the difference between a receipt and a voucher – and their implications on the process if interchanged. Their decision-making might not be sound either, which might have catastrophic consequences for the project.
So, understanding the importance of each of the digital transformation roles is critical for the success of your digital transformation initiatives. Most digital transformation initiatives fail because of a missing skillset. Or assigning unqualified resources to crucial positions. This is especially important for key cross-functional roles such as project manager or sponsor. These roles are typically more critical than the others, such as subject-matter experts. This list will help you understand the different digital transformation roles that might be required for your unique project.
The 2025 Digital Transformation Report
Thinking of embarking on a ERP journey and looking for a digital transformation report? Want to learn the best practices of digital transformation? Then, you have come to the right place.
The change management consultant drives the entire change management process (and is among one of the most critical digital transformation roles). It starts with the identification of change, creating a business case to justify the change, exploring several change initiatives, and finally, implementing and monitoring changes. Depending on your budget, you might hire a dedicated change consultant or work with an independent ERP consultant. The independent consultants might bundle change management offerings along with their ERP selection, implementation, and integration expertise.
Irrespective of the approach, change management is absolutely essential for the success of your technology initiatives. The technical vendors (and your internal teams) will struggle with change management due to the “power struggle.” So an external change management consultant is recommended. Depending upon the structure of your organization (and the scope of this role), you might need up to 20-25% of their time allocated to the project. With more involvement during the pre-selection phase, as well as the training phase.
9. Best-of-breed Apps and Add-on Experts
The role of best-of-breed apps and add-on experts is to provide the functional and technical expertise of these add-on products. Most ERP consultants are unlikely to have depth with each add-on or application.
So you might need at least part-time resources that are familiar with these apps. The more apps you have in your architecture, the more skill sets you might require. And the more part-time resources you are likely to have as part of your project, the harder the scheduling will be, driving the overall costs of the project. Depending upon the structure of your organization (and the scope of this role), you might need a couple of hrs of their time as and when needed. Since these resources could be a true bottleneck to the project planning, you might want to pre-allocate some of their capacity. Or identify areas where their input might be required early in the process to ensure that they are not a showstopper for the project.
8. ERP Integration Consultants
Most ERP applications are huge in size and have thousands of tables and modules. The traditional ERP consultants are divided into two streams: functional and technical. ERP technical consultants specialize in Windows and proprietary database programming for that application. Also, traditional ERP applications were not service-oriented architecture-based. So, ERP consultants didn’t have as strong integration skills. The integration consultants specialize in API integrations, enterprise integration patterns, master data governance, and enterprise architecture.
If you have multiple applications in your architecture, you will need specialized ERP integration consultants. Depending upon the complexity of your architecture and integration requirements, you might need part-time or full-time integration consultants. The integration consultants might also require time from ERP technical or functional consultants – to get help on cross-functional testing (as they might not be as deep functionally with each application in the architecture). So their availability can’t be the bottleneck, similar to other cross-functional roles mentioned below.
7. ERP Technical Consultants
ERP technical consultants are the technical experts of specific applications. Each product may have its own technical specialist. For example, technical consultants who focus on NetSuite might not have experience with Oracle Fusion Cloud. Or vice versa. The technical consultants are also extremely weak in their functional knowledge. And they can’t act as a functional consultant due to their limited knowledge. Their educational background is in software engineering, while the ERP functional consultants are likely to have an accounting, industrial engineering, supply chain, or mechanical engineering degree.
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Even among technical consultants, there might be several skill sets, such as a report writer, form designer, DBA, or data migration consultants. They each have different expertise and skill sets. Depending upon the customizations expected, the need for technical consultants might vary. Heavier customization would typically require a higher allocation of technical consultants. However, technical consultants might not be required for the entire duration of the project. Their need would be more critical during the development phase. Once the customizations stabilize, the functional consultants should be able to handle the project – without their help.
6. ERP Functional Consultants
ERP functional consultants specialize in specific functional areas. The larger the products, the more complex the functional processes are likely to be. And the more consultants you are likely to need. For example, Smaller systems such as NetSuite or Acumatica may require only one functional consultant. Systems such as SAP S/4 HANA, Oracle ERP Cloud, and Microsoft Dynamics F&O, on the other hand, may require several functional consultants with a specialization in each functional area, such as accounting, supply chain, manufacturing, sales, etc.
Depending upon the complexity of your project, you might need full-time or part-time functional consultants – to test the configurations and resolve functional issues. Their role will also be to assist the principal functional/technical consultant (and project manager) with research and recommendations. Their role would be relevant during the implementation phase, with minimal involvement during the pre-selection phase.
5. Vendor- and Solution-agnostic ERP Consultant/Enterprise Architect/Principal Functional Consultant
Just like you need architecture for your home or kitchen, you also need for your software and IT applications. Architecture is a blueprint that clearly describes the boundaries of each system and its role in enterprise architecture. It also describes the interaction flows, with a clear agreement between data producers and custodians. Finally, it defines the model for reconciliation between different systems – should there be a conflict among systems.
Most teams and vendors are likely to create architecture from their perspective. And this often results in application silos, duplication of efforts, overengineering of components, and data issues. This one is perhaps among the most critical digital transformation roles for your project. Some independent ERP consultants might be able to include this role along with their change management expertise. However, an external consultant is recommended for this role. Depending upon the complexity of your architecture, you might need at least a part-time resource who acts as the advisor or oversees the overall process. This role is the longest-serving role of the ERP project, starting from the beginning of the project to the post-implementation phase.
4. Internal Subject Matter Experts
These subject matter experts should be the focus of your implementations. Why? Because they need to drive the training and evangelize the change for their internal teams. It’s critical that they appreciate and embrace the new platform. These are your internal operational users (such as supply chain managers, ops managers, and sales managers) who have the most depth in the business processes. They provide crucial details that strategic business process owners need to make key decisions.
You need to allocate at least 10-20% of their time for the entire project. And involve them during the selection, process re-engineering, solution design, UAT, and training.
3. Internal Business Process Owners
These are your business processes executives such as VP of Sales, VP of Ops, VP of Engineering, VP of Supply Chain, and VP of Finance who are responsible for making crucial decisions for their respective functions.
They work in conjunction with subject matter experts and make decisions with a strategic perspective in mind. You will need their few hours allocated every week to be part of weekly demos and monthly steering committee meetings, along with any detailed meetings that may require their input for the to-be state.
2. ERP Project Manager
The ERP project manager is perhaps the second most critical role in your transformation. And ideally must be served by controllers, VP of Finance, CFOs, and sometimes by the CEOs for smaller organizations. They might hire a project coordinator to hand off some of the operational responsibilities if they are too busy with their day jobs.
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This person is responsible for driving the project and keeping the project under budget and on time. This person must be comfortable negotiating with business process owners in the event of a conflict among different functions. Depending upon the size of the organization, allocate either full-time or 50% to ensure he/she is not the bottleneck for the project.
1. ERP Sponsor
The ERP sponsor is either the CFO, COO, or CEO, depending upon the size of the organization. The role of the sponsor is to set the vision for the project, provide resources, set KPIs to measure success, and help business process owners make key strategic decisions.
Their role is not to make decisions for them. But to ensure that the decisions are consistent with the original vision and the interests of all functions are equally represented in the architecture. The ERP sponsor must participate in the monthly steering committee meetings and will need a few hours of their time each month.
Final Words
Building an ERP project team is an art and science, with the expertise to be able to foresee showstoppers before it’s too late. The issues could be related to the team or technology. They each impact the cost and scheduling of the project.
While you will get better with your team-building expertise and experience, don’t underestimate the importance of any of the roles mentioned on this list. The primary reason why most organizations struggle with digital transformation initiatives is that they underestimate the effort involved with these initiatives – and try to “outsmart” the process, which fires back more often than not. So be really informed with each of your decisions – as you build your core project team that is capable of delivering on your vision.
FAQs
Why do we need so many different skill sets for a digital transformation project?
Think how many skill sets you would need to run your company. The enterprise transformation projects touch every business function. And requires deep functional expertise to standardize processes – and build models that would yield business results. This expertise is nearly impossible to find in one person. And that’s why you need many skill sets.
Which role is the most critical for ERP projects?
The vendor-agnostic consultant who acts as the principal functional and technical consultant, as well as the project manager, is perhaps the most critical role for ERP projects. These roles are responsible for cross-functional alignment, as well as resolving conflicts among functional leaders while removing risks for any technical showstoppers.
Why is the involvement of the CEO a must for ERP projects?
The CEO is perhaps the only cross-functional leader in most SMB organizations. The CEO also has the authority and influence over the functional leaders to resolve any conflicts and if they try to pull the processes (and architecture) in their direction.
Who would not like to find the “secret” recommendations for digital transformation? Unfortunately, with enterprise-wide transformation projects, there is no checklist that can be followed. These projects require careful preparation and alignment of several areas. And they all, collectively, drive the success of your digital transformation projects.
Also, with enterprise transformation projects, technology alone can’t solve business issues for you. You will need to align the compensation structure along with KPIs and enterprise architecture. Also, even if you have invested in substantial efforts with your pre-selection and business process reengineering, things might fall off during the implementation phase unless you have controls in place for code, master data, and architecture review (and compliance).
Finally, most departments typically try to pull the architecture in their direction. This often results in the “loudest” departments being more represented in the architecture. Implications? Both overengineering and under-engineering issues will cause a disjointed experience for users. And they might end up with siloed applications or spreadsheets – defeating the overarching purpose of transformation initiatives. Following these recommendations for digital transformation will set you up for a successful transformation project.
The 2025 Digital Transformation Report
Thinking of embarking on a ERP journey and looking for a digital transformation report? Want to learn the best practices of digital transformation? Then, you have come to the right place.
People often forget that your architecture is more important with enterprise-grade transformations than the technologies used. While it might appear promising at the surface, new software very rarely would solve your business problems. But why? Because unless there is a clear alignment in current gaps and process changes, the new system might not be as effective. It might even cause disruptions to your current operational processes if not planned well.
Your chances of success will be higher if you redefine a vendor-agnostic architecture tailored to current operational limitations. First, improvement opportunities with the current architecture were identified. Then, only if it makes sense, replace a system where it’s a clear misfit based on your business model and growth ambitions. Assessing your architecture requires deep subject matter expertise with your systems, processes, and data – in order to perform an informed assessment. This assessment helps understand if the changes would make sense for your architecture (and at the stage of your business).
2. Centralized Transformation, Change, and Budget Management
Due to the lack of perceived short-term benefits (and risks for business process leaders), enterprise transformation initiatives typically take the backseat. So what’s the solution? Form a centralized digital transformation team and allocate a corporate budget for enterprise-wide transformation.
What else? Identify change opportunities that impact your current systems and processes. Manage them centrally. And Define the blueprint for each changeset and assess its impact. Anything else? Yes, prioritize them and design phases including release strategy, And then execute them based on feasibility. Recommendations for digital transformation such as this help your vision take the front seat and resolve conflicts easily.
3. Compensation and KPI design
Have KPIs that are not only departmental. However, they should be aligned with the strategic priorities as well. Most corporations focus on short-term results. And that comes at the expense of the lack of interest in long-term strategic investment and initiatives such as enterprise-wide transformation.
Impact of the short-term mindset? It results in duplicated efforts across departments and information silos. These silos are typically counterproductive for the overall success and financial health of the organization.
4. Don’t Ask Your Technology Vendors to Define Your Enterprise Architecture
Your enterprise architecture is essentially your business model. While technology vendors such as SAP or Oracle and their resellers might provide great technical capabilities, they are experts at tools in their portfolio. Their role should be limited to defining system architecture once the other architecture has been well-defined.
So, what are these other architectural pieces? Business, process, and data architecture. And they all must be designed in a technology- and vendor-agnostic fashion. Who can help with this design? Qualified consultants with multi-system and multi-ERP expertise are better positioned to offer recommendations for digital transformation architectural components and their interactions.
5. Invest in Pre-selection Phase
The software development lifecycle requires you to go through the four critical phases of software implementation. Namely, requirement, design, test, and implementation. While buying enterprise software can save you a ton of effort and risk, these phases are equally relevant even for enterprise software implementation. Sometimes, even more so.
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The pre-selection phase identifies requirements and process states. It also provides visibility into the as-is and to-be workflows for each department. Then it helps focus on the right critical success factors along with identifying gaps and development efforts required.
6. Get help from Independent ERP and Digital Transformation Consultants
Most executives go through 3-5 digital transformation initiatives in their careers. So designing the state of the system and processes based on this limited experience would not provide enough data and sample size to learn the architectural best practices. And forecast the possibility of each decision.
The independent ERP and digital transformation consultants work with many different businesses. And they have already seen the mistakes that you are likely to make with your next transformation. Are consultants too expensive? Hire them at least to vet your plans and mentorship if you are on a tight budget.
7. Don’t Let Developers/IT Managers or Functional Subject Matter Experts Design the Architecture
Designing an enterprise system is similar to engineering functions in manufacturing. How so? The skill set that might be good with operational execution might not be the best for strategic and engineering design. Also, the developers and IT managers typically don’t have the visibility and business background to be able to negotiate process changes with functional stakeholders.
The same applies to functional leaders. While they might know a lot from the business perspective, the technical perspective is equally important in assessing performance and process issues due to poorly coded and integrated processes. You need someone who has a deep background in designing enterprise-grade systems, along with deep business expertise and education.
8. Try to Reduce the Amount of Code You Own
With custom software, you might own 100% of the code, whereas with an ERP implementation, you might own roughly 30%. This might include any customizations, home-grown integrations, or proprietary systems. While software development might appear cheaper on its surface, owning and maintaining code over time requires economies of scale. So unless the custom code is part of your commercial offering, owning it will always be more expensive.
So are there any components that are better suited for internal ownership? Yes, the components that change frequently such as EDI integration. Or the ones that may require substantial manual inputs from business users during the processing of transactions. The rest of the components can easily be bought at a much cheaper price from enterprise software vendors.
9. Invest in Master Data Governance
Most organizations end up reimplementing the same ERP system at least 2-3 times even within 5-10 years of the upgrade cycle. Most times it’s the mismanagement of master data that is the culprit. Poor master data management often leads to ad-hoc processes, adoption issues, and the need for external systems.
The successful management of master data requires clearly defined roles and responsibilities for each system. And functions controlling the data and its interaction flow. It also requires forming a centralized function responsible for designing and maintaining master data compliance.
10. Be ready to “Kill Your Darlings”
Fragmented and siloed operations often result in proprietary applications. These applications might make sense in a siloed and fragmented architecture. But not in the context of enterprise architecture.
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The legacy and proprietary applications might drive the customizations and additional unnecessary integration flows to accommodate their shortcomings. It might be cheaper to replace these proprietary systems and use components that might be pre-integrated with the new solution.
Final Words
There are no secrets to digital transformation. It’s the structured approach along with the alignment that makes or breaks ERP implementation. With the increased number of channels driven by customer experience, the importance of architecture can’t be underestimated.
The digital transformation initiatives were never meant to be this difficult. But they do require expertise and thoughtful execution. Also, cultural and process changes have a direct impact on digital transformation initiatives. By following these recommendations, you will be set up for success with your digital transformation initiatives.
FAQs
Wouldn’t cloud systems provide higher ROI than legacy technologies?
Unfortunately, with technical architecture, there are so many variables that are typically in play. So while the new technologies would be easier to use, you might still not get business results from your systems. Why? The alignment of processes, data, architecture, and business model is essential to get business results from your technology investments.
Why is vendor-agnostic architecture important for the success of digital transformation?
The vendor-agnostic architecture helps us decouple vendors’ dependencies on the architecture. Most ERP vendors like to control the architecture by using most of their products in the architecture – regardless of whether the products will be the right fit for your use case. So how does vendor-agnostic architecture help? By creating the right boundaries for vendors and helping with faster debugging.
How can a centralized budget strategy improve the success of digital transformation initiatives?
With the departmental budget, most of the functions are busy meeting their short-term goals. And this comes at the expense of the long-term organizational goals. The centralized budget and KPIs help ensure that most departments are aligned with organizational goals. And not pulling architecture in their direction.
Most executives are afraid of digital transformation. And I don’t blame them–with the amount of undertaking required for such projects. Not to mention that it took a long time for companies to understand – that digital transformation projects are not meant to be technology projects (The initiatives that developers can code in their backyard. The ones that can provide a crystal ball that can solve all your business performance issues). In reality, digital transformation failure typically has more impact on your businesses than most other disruptions (Unless it’s a full nuclear war). So why are some projects more successful than others?
There are millions of variables that could be responsible for failure. Team. Technologies. Vendors. Project managers. Change Management. Also, with so many variables involved, everyone is likely to have their own theories. There is no clear consensus, which makes it confusing for first-time buyers. While it’s much harder to find why a specific digital transformation project may have failed, it’s much easier to analyze the successful ones. One thing that successful teams do differently is that they don’t underestimate the efforts involved with these projects.
That’s probably the reason why the larger companies with multiple ERP implementations under their belt are likely to be more successful than the smaller companies. There are smaller companies that are likely to be successful as well. However, in their case, the executives must have experience leading multiple ERP implementations at larger companies. While this is one factor, there are more layers to what makes them successful (as per our study done with more than 200 executives suggests). Excited to review the results?
1. Misalignement in scope
Misalignment in scope is perhaps the #1 reason for digital transformation project failure. Some people might blame the “invisibility” aspect of software development – to claim that there will always be surprises with software implementation. Also, there is a common misconception that there is no point in planning if there are going to be surprises anyway. Following this approach is an “extreme” thinking mindset where you don’t prepare for an exam – just because there might be a chance of failure.
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Software implementation projects require the same amount of engineering processes. As much as manufacturing or construction. Sure, there have been advancements in methodologies – such as agile – to uncover risks earlier. However, the fundamentals of software engineering still apply. They require careful analysis and design by qualified ERP consultants (the consultants that regularly implement for various industries and business processes).
Also, unfortunately, analyzing at “100K-foot” levels (the mindset that going too deep into technical analysis may be a waste of time) approaches aren’t good enough to be successful with these projects. It’s a careful balance of high and low-level needs. A balance that will help you find the scope with an iterative process and a scope that will likely not have any misalignments. Or surprises (Don’t we like surprises?).
2. Unrealistic Expectations
The only reason why unrealistic expectations lead to ERP implementation failure is to underestimate the amount of effort required. In fact, unrealistic expectations and misalignment in scope are so interdependent that they could be each other’s cause (Wait, what? Have I confused you enough yet?).
The root cause for unrealistic expectations is the “mindset” that maybe there is an easier way. Maybe the “consulting companies” are in the business of overcharging their customers. Maybe consultants have a tendency to overcomplicate things so they can make more money. While, as with any profession, there might be some bad apples out there, the issue is typically with the companies who don’t have enough experience under their belt in leading digital transformation initiatives.
The best way to mitigate such issues is to be patient with the process and do as much research as possible to understand the core issues. Also, recommended is not ignoring the advice of your consultants. The more implementation you have under your belt, the more conservative you will be with these projects. And the higher chances you will have of success with such projects. The only way to succeed is to be realistic (and extremely conservative) with these projects.
The 2025 Digital Transformation Report
Thinking of embarking on a ERP journey and looking for a digital transformation report? Want to learn the best practices of digital transformation? Then, you have come to the right place.
3. Inability to re-engineer processes (aligned with the capabilities of new system architecture)
Constructing a house based on how your old house appears today is likely to result in the same “old” house – with not much improvement (Isn’t that what we all want? The constructive ways of wasting our money? For all practical purposes, no!). Constructing an improved house requires you to have a deep reflection on the old house as well as the root cause of each issue you had in the old house. Along with the “mental model” (I prefer a blueprint on a piece of paper) of the new house based on your new needs. This task is way harder than you would think.
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Being successful with it would require a solid knowledge of several different ERP systems and implementation experience in several industries. So, you have enough data points to identify the right model that will be successful, given the constraints of this new house. Without business process reengineering, companies mistakenly assume “old and broken” processes as their needs. And hand it over as requirements to the technical teams.
Given the constraints, the technical team might spend months customizing these needs. And even after successful technical implementation, they might never work for users as they might deviate from the system’s optimal state. Skipping the crucial step of business process reengineering results in ERP implementation failure. Along with adoption and change management issues due to the limited understanding of the rationale for change.
4. Over-customization of the software
Most companies with limited experience with ERP implementation have a tendency to underestimate the effort involved in customizing software. The customization not only results in the core system’s sub-optimal performance. But it also causes user adoption issues due to the alteration of systems’ natural state.
Also, most organizations that may have promoted their developers to IT operations managers too early to a CIO role are likely to customize the software heavily (Also, they hate dollar conversations, which is perhaps the bread and butter for a CFO) The business rules in ERP are so nested that even if you implemented a feature successfully (for your own use case), it’s likely to break for other departments.
So, customization of software will always have a much higher chance of implementation failure. The best strategy to save an ERP implementation because of over-customization is to perform a thorough gap analysis during the selection and get recommendations from implementation architects in terms of the effort involved – in implementing each gap. If the effort seems too high, most likely, you have selected the wrong software. Or your process needs to be simplified further (You also have the option to pray. They always work with digital transformation). Thorough scrutiny and deep probing of each gap will help you understand that you are customizing only when it’s absolutely essential.
5. Usage of too many poorly written bolt-ons (impacting operational performance)
Most systems’ design assumes their natural state for optimal performance. While they all might allow customization, the system may have never been tested with the overlapping boundaries of add-ons. The add-ons might also be poorly written – and might cause performance implications.
There is also a misconception that no-code technologies can help you integrate anything and everything. Yes, that is true. But when it comes to mapping data flows and identifying sources of authority, the fewer variables you have in your model, the higher chances you would have with your digital transformation initiatives. (You want one thief to steal your money. So you kind of know who stole what)
Using too many add-ons is a major factor in digital transformation failure. This is due to the increased number of variables that are controlled by multiple vendors, their technologies, and release cycles. Having too many add-ons is a clear red flag that there might be better options out there. And a factor that you should watch closely while signing your software contract.
6. Organizational change management
Underestimating the importance of change management results in digital transformation failure. But change management is typically the first symptom (Like a fever is an expression of inner rage) that you might notice regardless of the underlying issues that might be driving poor adoption. For example, change management issues could be a result of poor training, suboptimal system design, and workflows – or misfit technical systems.
“Business consultants” with very little background in formal software engineering have a tendency to believe that you can solve all change management issues with superior training. Well, it’s almost like saying that you can solve all sales performance issues with the right “mindset.” Can you?
Sure, “mindset” and “training” play a huge role in change management. But it’s not just the training that is responsible for the success of digital transformation initiatives. It’s the synergy of systems, technologies, design, processes, and motivations that make digital transformation initiatives successful. But the most important factor for effective change management would always be the ability of change management consultants to work with the technical teams – to ensure that there is no misalignment in strategy and execution.
7. Lack of maturity of enterprise architecture
The lack of maturity in enterprise architecture is a leading cause of digital transformation failure. Most SMB companies don’t even understand the number of components that might be included as part of the software contract. Just like manufacturing, a critical part can halt your product line, and a weak component of your “software BOM” could lead to digital transformation failure.
Irrespective of whether you buy or build – or how many ever add-ons you have in your architecture – enterprise architecture is extremely critical. The enterprise architecture encompasses four different perspectives: 1) business architecture 2) process architecture 3) data architecture 4) system architecture.
When most companies think of enterprise architecture, they see it as a “technical” concept. But just like an org chart is to people, enterprise architecture is to systems. And the success of your enterprise architecture relies on having clear boundaries of systems and processes. Because they each play a role in defining cross-functional processes So not having a clearly defined enterprise architecture is the surefire way of failing your digital transformation initiatives.
8. Poor governance of master data
Master data forms the foundation of your enterprise architecture. Without having a clear interaction model of each dataset, the systems are likely to have duplicated data in multiple systems. The inefficiencies caused by duplicate data and data silos lead to more fragmented systems. Ultimately causing even more data silos. Tracing data dependencies in your enterprise architecture might feel like a confused mouse in a maze.
Even developers and technical architects struggle to understand the concept of sources of truth. The most common misconception is about the multiple sources of truth. Some people believe that multiple sources of truth mean keeping duplicate data in multiple systems. Sure, are there any systems that can be implemented by completely decoupling data dependencies? Yes. But is that architecture going to be appropriate for every single dataset? Probably not. And most certainly not for the architecture containing financial systems and processes.
Implementing event-driven architecture with completely decoupled datasets works when the reliability of data is not as important a concern. Think of social media messages or error logs published by remote devices. What’s a big deal if we might lose an error or social media message? No big deal right? But with financial data where the books need to be reconciled to pennies, the reliability of data is extremely critical. And the data architecture that allows you a high degree of relatability and traceability is a crucial requirement.
9. System selection gone wrong
Selecting appropriate systems requires you to have updated knowledge of architectural patterns – and several enterprise software categories, including ERP, HCM, CRM, and eCommerce. The software systems available in the market have extremely overlapping boundaries – with substantial duplication in code bases. And this is only going to get worse! Also, it is equally critical to have profound expertise and advanced knowledge of your industry and business model.
Without a comprehensive knowledge of systems and processes, your gap analysis is likely to miss critical gaps that command the highest amount of dollars — and lead to ERP implementation failure. Also, prior to investing in technology, you need to invest in defining the other three legs of the stool: 1) business architecture 2) process architecture 3) data architecture. Selecting a poorly fit system will lead to over-bloating of processes and systems, resulting in serious adoption issues. Don’t sign a software contract without performing an exhaustive search of all systems available in the market.
10. Past results = Future success (With digital transformation initiatives)
You might never be proud of the first home that you bought. As you develop deeper recognition of your own needs, you are likely to do a lot more planning and “sketching” with your next purchase. The same principles apply to digital transformation. First-time executives are likely to be most optimistic about finding “cheaper” and “smarter” approaches to digital transformation (unfortunately, poker strategies don’t work very well with digital transformation initiatives).
As you implement more systems, the deeper will be your analysis. And more conservative will be your approach. The conservative approach to system design and planning leads to digital transformation success. So make sure you don’t cut corners in hiring the right expertise to lead your digital transformation initiatives.
11. Ability to work with technology vendors
Just like an engineer must be able to connect and relate with your shop floor workers, your ERP core team must be able to connect and relate with your developers and technical consultants. This relatability requires you to speak their language in the format they understand (and with digital transformation implementation, God will not translate for you).
Not listening to their concerns or ignoring their advice with the attitude of “too much into weeds” will lead to ignoring critical issues that might have disastrous consequences on your enterprise architecture. They also require translating business vision and priorities into technical architectural components that will help them connect the dots. Several years of experience working with technology vendors helps in building the right rapport with technical teams – and leads to digital transformation success.
12. Poorly written test scripts (and the missing framework for test compliance)
Writing good test scripts takes years of practice. With ERP systems, it’s even harder. Because you need to segment the functionality that is pre-tested and provided by OEMs – from your custom configurations and customizations. To do this, you need to have a deep understanding of the core ERP functionality. And The more lines of code you own – the more testing you need (like the more money you own, the more stress you will have).
The main issues with enterprise-grade systems are data dependencies and the length of enterprise transactions. That makes documenting and tracking test cases and results much more difficult. It takes years of practice for ERP testers to identify the right test scripts. That will help uncover critical issues early in the process. And avoid showstoppers later in the release cycle. The showstoppers that typically lead to digital transformation nightmares.
13. Uncontrollable issues
Because of the “invisibility” issue of software implementations, you will always find uncontrollable issues. However, it is the thorough planning and early detection of critical technical and process issues that help minimize uncontrollable issues. It is also the research that has gone into each issue to minimize the impact on time and budget.
But sometimes, finding a fine balance between the time required to perform research and the budgetary implications of showstoppers is key. Investing too much time in issues that might never surface may be a pure waste of time and resources. This is why consultants who have deep experience in executing large programs are better equipped to identify these issues much earlier in the process – and save digital transformation nightmares.
14. Not having a dedicated internal skilled project manager
The most challenging part of a digital transformation project is the missing cross-functional link. Typically, in SMB organizations, the CEO has the most cross-functional understanding. And the only person who is qualified to negotiate with each department in executing or organization’s vision. The problem may be more difficult with organizations with multiple subsidiaries.
And unfortunately, the CEO very rarely has time to get into the “weeds” of the project (who cares for a neglected weed anyways?). Or mediate conversations when there is a conflict among functional or BU leaders. This is where the project mangers’ role is absolutely critical for the success of the project.
The project manager must have several ERP implementations under his/her belt and have a formal educational background in business or supply chain. Also, one of the most critical skills of a project manager is to be unbiased (except when it comes to preference for their coffee) and spend time working closely with executive teams. Hiring an intern or a “generalist” project manager with no formal background in Supply Chain and software engineering is a sure recipe for disaster.
15. Treating digital transformation projects as a technical implementation
While the major component of digital transformation initiatives is technology, it alone can’t solve all your problems (with solitude, it’s independence; with digital transformation, it’s interdependence). It has to be the synergy of processes, data, organizational structure, compensation plans, and systems.
Treating your digital transformation project as a technical project typically leads to over-customization of workflows, overengineering of processes, and data siloes. They all lead to poor adoption – and, ultimately, digital transformation failure. Involving your business users from day one through the process of business process re-engineering will help them understand the technical challenges and articulate their needs in a technically feasible manner. This will also help forecast the challenges they might expect when they are live on a system.
Final Words
There are several factors that could lead to digital transformation failure. It’s never one vendor. Or a system. But one surefire way to fail your digital transformation would be – to underestimate the amount of effort involved with digital transformation and ignore the pre-selection phase. This sets the tone for how badly the digital transformation initiative will fire back. Because they always fire back unless carefully planned.
Digital transformation initiatives are like going for heart surgery. The first time will always be the most painful. As you get used to surgeries — and how to mentally prepare for the surprises with each one – hopefully, you won’t be as afraid with your next surgery.
FAQs
Would custom development have a higher success rate than buying an ERP system?
With these projects, the major costs would be in the long-term maintenance of the owned components. When you buy off-the-shelf products, you typically own 30% of the code. When you build it from scratch, you would end up owning 100% of the code. The more code you own, the higher chances would be of failure.
Why is there such a high failure rate with digital transformation projects?
In most cases, it’s because of the limited experience with the transformation initiatives. Companies also underestimate the amount of effort required and the importance of each role. Finally, these projects require alignment of people, processes, and technology, which requires attention from the executive teams and the CEO.
What can be done to improve the chances of digital transformation failure?
The first thing that companies could do to improve the chances of these digital transformation initiatives would be to plan carefully, the way you would plan for a manufacturing or construction project. Then go through the engineering phase, and reengineer your data as well as process and build the vendor-agnostic architecture. And then finally select the technical components.
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2025 Digital Transformation Report
This digital transformation report summarizes our annual research on ERP and digital transformation trends and forecasts for the year 2025.
