What are the Goals of ERP?

ERP or Enterprise Resource Planning is a type of software used by organizations to manage several different business processes depending on the capability of the particular ERP they are using and their own business needs.

Different organizations have a different approaches when it comes to using ERP and use it for different purposes so it's important to identify what is the primary goal of an ERP system for your business? How a company operates and the nature of its business decides what could be the most effective ERP key determinants for them.  In this article, you will learn about some of the major goals of implementing an ERP can help you achieve.

With the difference in company goals, arising due to the difference in the target audience, companies use different technology, resources, ERP features, and types of ERP and integrations that revolve around how their current systems are deployed and can be circumvented by asking your leadership and teams what is the primary goal of an ERP system? Some of the major goals that should be implemented for creating efficient processes and business practices across all types of companies are discussed below: 

• Automating Business Processes
• Decreasing Operating Costs  
• Superior Supply Chain Management
• Higher Competitiveness - Areas of Growth
• Adopting Technological Innovations
• Business Intelligence Solutions
• Enhanced Client Relationship Management
• Higher ROI (Return on Investment)

These goals are elaborated further below on how they can effectively enhance the business processes using business intelligence and smart inventory/ client relationship strategies. There are various stages of resource planning and ERP systems evolve each year to offer more tools and technology.

Automating Business Processes

This is one of the basic and oldest purposes of ERPs and with the advent of rising technological innovations at the end of the 1990s and the start of the 2000s, the answer to the question, what is the primary goal of an ERP system began to take shape in features and functionality offered by ERP systems. During this time, bigger companies with large amounts of data shifted towards automated business processes with databanks of all business resources which included cash revenues and production resources being recorded electronically.

Along with recording all business commitments with its suppliers, stakeholders, and customers. Automating such processes using technology results in creating efficient processes and removing human error, adding to the reasons so many companies chose to undertake an ERP.

Decreasing Operating Costs

According to an independent survey by CGS, 68% of respondents from 70 business leaders ranked this as one of the major goals in implementing ERP systems for their company.

With management having insights into operational costs it can help reduce the impact of unnecessary operating/overhead costs, which is a key characteristics of ERP that companies look for.

Superior Supply Chain Management

What is the primary goal of an ERP system in supply chains? With ERP systems having the entirety of information in one place companies can track their orders more efficiently and the raw materials can be acquired on-need basis. In short, ERP systems allow better management of the company resources while creating new products or delivering services or the management/cohesion between internal departments.

This allows for transformational business leaders to devise their own approach to achieve the target and company goal.

Higher Competitiveness

For achieving higher competitiveness in large markets ERPs make for an efficient tool to decide how the company and management can use attention to detail to revamp current systems. Important decisions such as outsourcing or in-house manufacturing can be taken with the help of the data coming from the ERP to devise best business practices that can increase the product or service’s market share or capitalization.

According to a survey by CGS, 7% of companies responded how ERP systems helped with returning a portion of their production in-house which yielded better results for the company.

Adopting Technological Innovations

Using ERP systems, business leaders can decide on what is the primary goal of an ERP system by adopting various new technological innovations that might be for managing inventory or creating opportunities for creating growth in ROI by managing employees better and enhancing customer advocacy.

Business leaders can use this data to decide the right product mix that is most advantageous for their specific company. This can include the development of new or by-products using existing resources and the framework of the company.

According to a CGS survey, 72% of the market leaders rated new areas of developmental growth as the 2nd highest determinant for deploying ERPs.

With the right data companies can decide whether entering a new market is a better business strategy or developing a new product team. 

Business Intelligence Solutions

According to the ERP survey conducted by CGS, 76 % of the respondents mentioned that business intelligence had the most impact on their companies.

Business Intelligence allows important stakeholders to pinpoint any loose ends in the company processes and get rid of any extra costs while allowing to see how any unused capability or resource can be allocated where it can enhance other operations or create new deliverables.

Enhanced Client Relationship Management

With large amounts of data from the start of the supply chain, the sales or the support department can be made aware of the exact shipping/ delivery times or the time required for the specific request by the user for enhanced customer relationship management. ERP can provide companies numerous advantages in streamlining and centralizing supply chain data and processes. 

This creates a harmonious transparent relationship with the customer which allows higher customer retention and higher retained revenue streams for the company.

As per a CGS survey, 45% of the companies are focused on customer-centric growth, which means making sure that the right product is being created in the right amount so that there are no excess costs endured by the company.

The companies today that strive for customer advocacy end up becoming market leaders in turn. 

Higher ROI (Return on Investment)

At the end of the day, all businesses and investors are looking to enhance the return on their investment. An efficient ERP will help do just that for you. After all, what is the primary goal of an ERP system if not to improve efficiency and streamline business processes. From reducing costs from unwanted operational excellence to freeing up time for trainers and tracking the productivity of each employee properly and managing rewards and bonuses for the company employees.

One of the challenges of ERP is a successful implementation and realization of ROI. Choosing the best ERP for your company by comparing top systems like SAP ERP and the looking at them side-by-side (like Oracle vs. SAP and SAP vs. ServiceNow) can help you ensure you choose the best ERP the first time around. 

The truly qualified ERP can help increase revenue by new product diversification or increasing the competitiveness of a company against major competitors of the firm.

With today's fast past economy it is necessary that entire outdated business processes and current systems be wiped out to be replaced with better database management practices by thinking about what is primary goal of an ERP system and how to prepare for implementation. ERP implementations can take a year or more depending on business size and complexity, so it's important to choose the ERP that supports your goals best and properly plan for implementation.

One of the two major objectives of an effective ERP system regardless of the industry it is operating in should be to streamline operations across the entire company with one centralized ERP platform. A second goal of ERP is the improvement of business processes, relationships, and reporting across product delivery and lifecycles.

An ERP system utilizes the data from the company’s central database to increase efficiency in business outcomes from procurement to customer relationship after product/service delivery.

As such the main goal of the ERP system should be to ensure that all important data points for the company’s operations are being recorded, tabulated, and stored properly and that the necessary information from that resource is available to the department or employee that is working on it. All of the sub-goals defined can be worked on if the ERP itself has this capability.