Businesses cannot manage what cannot be measured

Businesses cannot manage what cannot be measured

Management thinker Peter Drucker is often quoted as saying that “you can’t manage what you can’t measure.”

Drucker means that you cannot know whether your business is successful, unless success is defined and tracked with a clearly established metric for success, you can quantify progress and adjust your process to produce the desired outcome. Without clear objectives, you are stuck in continues state of guessing.

Due to nature of business operation complexity and the need of business owners or decision makers to improve business performance, they need to measure every aspect of the business and its relevant relation to detect the areas of defect and start to make changes for improvement.

How decision makers can do this while every department is working on their own in separate islands with their specific measures without taking in consideration other departments needs and specific operation requirements, and how the decision makers can implement policies and procedures to enhance the processes and collaboration between these departments.

Here comes the need of implementing business applications like ERP and CRM to act as a central repository of entire business data with tied relation between departments. Business owners and decision makers can have a full view of organization business data in one place to be able to analyse it and measure it against business KPIs, so they can improve the process and manage their business more effectively.

For example, you may experience delay in sales while you see hype in the market about your product, but you do not know the real reason behind it. When you investigate more about the reason, you may find no available final product in your warehouses, but the question is, is it because you have delays in manufacturing process? or you have defect in one of the production lines? or the delays came because of the delay in raw material purchase? Or the sales team has a delay in identifying the potential customers?

All these questions can be answered with a single report from the ERP or CRM application. Business applications continuously records all data from all departments, so business owners or decision makers can measure its performance against business metric and identify the fault immediately and take the right decision for improvement depending on real data not only guesses, the key factor here it does not take much time to identify the problem and take the right decision for solving it.

So, the true outcome from implementing business applications like ERP or CRM applications, is to measure business performance against your business metrics to be able to improve its process and manage it in the most effective way. “Businesses cannot manage what cannot be measured”