The ERP Objective
One of the primary objectives of ERP systems is to implement a solution that best models and supports your business workflow. As a general rule, an organizations’ logical ERP transactions (those captured within your ERP solution) match and are in synch with the physical (real-world movement of goods) transactions. That is, in a way that best supports your objectives and business model, an organization wants the physical movement of product to be accounted for logically at any point in which inventory is moved or changes in value.
The ERP Objective Value-Add
Accurate management, visibility, and accountability of transactions in the ERP workflow from start to finish is a must. This is because the benefit, and return on investment, for ERP systems is that they bring to an organization many advantages including, and especially, the management of your dollars within the organization.
“ERP transactions are dollars.” – Dr. Jack G. Nestell
There are significant demands (especially for PE M&A activity) for assembling the right people, processes, and systems in an effort to save a company, improve EBITDA, improve sales, improve profits, and/or increase market share; these are all critical to the health of any organization. To accomplish any of these means that the portfolio needs to effectively manage their dollars. And, one fairly good and accurate way to think of ERP transactions is in terms of representing dollars.
ERP Transactional Discipline
If one cares about dollars, then one should care about properly, and expeditiously, managing ERP transactions. Accurate and timely visibility to your dollars is critical, and therefore, accurate and timely ERP transactions are also critical. ERP transactions are a systematic and logical representation of your dollars. ERP transactions (for the most part) represents either the transfer of a dollar or the transformation of a dollar. Every ERP operational transaction is essentially the movement of money. Every operational transaction in an ERP solution is kind of like a T-account where debits and credits need to net zero. ERP systems don’t, can’t, and should not “poof” dollars unless you have an operational process and/or ERP issue. Just like T accounts are a visual representation of individual financial accounts, the ERP system is an operational representation of the business transactions that ultimately drive your T-accounts and financials. ERP transactions are often the input to your financials.
The ERP Objective is to Provide Accurate and Timely Business Intelligence
Diligently managing ERP transactions as per your business model is critical. That is one of the big reasons for building ERP systems as they are critical components of organizational learning that happens to inform future/present change if managed effectively and with discipline.
Learn more about the ERP Objective and ERP success here, “ERP Achievement: The Elevator Pitch”
And learn more from this insightful article: https://nestellassociates.com/why-should-pe-firms-care-about-erp-critical-success-factors-because-erp-transactions-are-dollars/
Nestell & Associates is the trusted and valued added partner to support your ERP objective.