Discuss About The Factors Enterprise Resource Planning System?
The enterprise resource planning systems could be regarded as the most innovative development in the IT for the last decade (Chang, Kuo, Wu & Tzeng, 2015). Many organization have been shifting from the functional to the process based information technology infrastructure, and the ERP systems they have become one of the most widely used information technology management solutions (Al-Mashari, 2003). The concept of this technology has been focused on the standardization, the synchronization as well as the improved efficiency (Seethamraju, 2015). The ERP systems could be regarded as the configurable information system packages which have the capabilities of integrating of the information as well as the processes all across the functional areas within an organization. The benefits which have been encountered by the use of the ERP system has been significant (Arik, 2002). Some of these benefits have been coordinating of the processes as well as the information, reduction in the carrying costs, the decrease in the cycle time along with the improvement of the responsiveness to the client’s requirements (Al-Mashari, 2003). What has really motivated the organization in implementing of their ERP system has been their integration as well as the standardization capabilities, the flexibility of the client/ server architecture, along with the abilities of driving the effective business reengineering as well as the management of the major and support processes (Seethamraju, 2015). Traditionally, it has been observed that the ERP system have been implemented in the capital- intensive industries for example the manufacturing, construction as well as the defence. In the recent years these systems have been implemented in the other sectors such as the finance, insurance, as well as the education (Arik, 2002). Currently, these system have now been considered as the standard technology upon to which the major organizations are operating their business (Chang, Kuo, Wu & Tzeng, 2015). In this essay it intends to discuss various aspects such as the role and purpose of the ERP system, the benefits and the drawback associated to this system, the implementation process of the ERP system, the ERP solutions to the organizations, and the future of the ERP systems.
In the business world organization, the business software usually play a vital role when it comes to the support as well as its activities to be able to increase on the productivity along with the efficiency of the business (Chang, Kuo, Wu & Tzeng, 2015). The business software offer benefits to the organization it also brings about major implication for the firm when they decide to implement the various type of the business software.
The enterprise resource planning system are usually designed for the distributors, the retailers as well as the professional services organization basing on their needs (Shaul & Tauber, 2013). The company by the name SAP Aktiengesellschaft is well known as the world market leader in the supply of the ERP technology.
The ERP system are implemented in order to offer more accurate data as well as safe time. Moreover, the system also reduces the asset costs and the financial cycle, increase the satisfaction of the clients and the globally integrate of the data all across the organization supply chain (Bi, Da Xu, L., & Wang, 2014). The ERP uses the relational database technology for integrating of the different units of the organization data system that integrate on all the processes of the business and sub-processes which are linked as well as unified into the single system. This system has been designed to be able to focus on various areas of the company such as the financial, the human resource, supply chain and the marketing (Chang, Kuo, Wu & Tzeng, 2015). The ERP is important to all the needs of the organization and it can be utilized in any type of the business, despite the objective of the business, size or even the area of the operations. This system is able to economize and also improve on the efficiency of the average existing work process (De Toni, Fornasier & Nonino, 2015). Without the use of the ERP system the modern organization will not be able to compete well. The purpose of the ERP is to configure and accommodate different business processes to enable it run more efficiently and effectively.
The benefit which the ERP system bring to the business is that it reduces on the costs as well as the cycle times, increase on the productivity and the quality, improve on the customer services through the automation of the basic and the repetitive operations (Seethamraju, 2015). The use of these system are able to automatically estimate on the demand for the products, the number of the orders, raw material, tracking of the inventory, allocate on the costs, provide on the schedule for the production and keeping of the data for the client (Seethamraju, 2015). This system is able to repeat on these operations and also keeps the data to help the organization in analyzing on the effects of the changes in the production mix and the volume to be able to maximize on the corporate margins for the profits.
The ERP system is able to provide the informational benefits especially to the management. It help the business to achieve better management of the resources such as the employee management which helps in improvement of the manpower allocation (Sadagopan, 2003). Other areas would be the inventory management for improvement of the inventory turn and the stock allocation, production management for optimizing the supply chain and the production schedules (Leon, 2014). The ERP helps in the improvement of the decision making by increasing of the market responsiveness, there is also better control of the costs and improvement of flexibility of the customer services by increasing on the services adjustment and the response customer demand.
The integrated information systems in the business provide new opportunities to support on the link between the company and the business (Leon, 2014). The ERP offers E-business through use of the web integration capabilities which helps to get the customer closer to the business. Moreover, there are opportunities in the business to business interactive customer services.
The drawbacks which are associated with the implementation of the ERP system are as follows; one of them is the high cost which is associated to the installation of the system (Bi, Da Xu, L., & Wang, 2014). The cost of the ERP can cost up to one hundred million dollars. Based on research, back in the year 1999, most of the companies spent between ninety million on the ERP system.
The installation of the ERP system also takes a longer period of time this is a drawback to the business as they would want to implement it and leap on the benefits associated to the system (Nofal & Yusof, 2013). The ERP is a complicated system and it more often take more than a year to be installed and become operation in the business (Chofreh, Goni, Shaharoun, Ismail & Klemeš, 2014). The installation takes longer because there is study which should be carried out and reviews made before it is installed so that to match on the requirements of the business.
The implementation of the ERP system could hurt on the processes of the business, break the relations of the customer and the business require a lot of time to achieve long term goals (Global, 2010). Moreover, the implementation of the ERP system entails a new procedure to be able to manage the system, training should be done to the employees on the procedure of the system which caused many companies change to this new system to be slow.
In the implementation of the ERP process, it is important that the organization to clearly know the steps which are involved. The following are the steps which are involved.
Discovery: This comprise of the processes which help in defining on the needs, the vision as well as the scope of the project which the organization is involved in (O'Leary, 2000).
Plan and monitoring: this comprise of the processes which are involved in the developing of the strategy for the completion of the work, along with the measures of the progress as well as the corrective actions which are required (Chofreh, Goni, Shaharoun, Ismail & Klemeš, 2014). This usually takes place throughout the entire process.
Analyze: In this stage it is much detailed level of the discovery and it comprise of the processes which are involved in the gathering a detailed requirements and analyzing on the customer business needs.
Build: This involves the processes which carry out the tasks which have been identified in the strategy.
Stabilize: This usually comprise of set of the processes which are aimed in nursing that the solution is able to meet on the requirements of the clients and it is ready for the full deployment to a live production environment (Global, 2010). Moreover, this also comprise with the readiness of the client in using the solution.
Deploy: These are the processes which are essentially deployed to the business to the production environment.
The business should understand these processes very well to enable proper implementation of the system to prevent shortcoming which are associated with wrong implementation which could cost the business a lot of money.
The ERP has been accepted business practices since the 90s. The vendors ERP systems allowed for the organization integration of many of their core function which are part of many business regardless the industry they are in. The organization in the industries as different such as the manufacturing and the insurance share common function areas for example the human resource, project management and the accounting (Hoch, & Dulebohn, 2013). The generic administrative functions are part of the ERP system which happens to be implemented successfully by the organizations (Global, 2010). The other part of the system of the ERP is to handle on the core business processes and it is dependent on the type of industry. The ERP system vendors such as the SAP and oracle are encountering challenges to their several areas of their products which have evolved in serving ever more specialized industries with the use of their generic applications. The ERP systems have been threatened by SOA that has been introduced in the major organizations. The large companies usually have more resources to be able to implement middleware solutions as well as build sosphicated applications (Global, 2010). The small organizations usually depend on the vendor ERP system as well as rely on their upgrades to be able to add on the functionality at the functional levels. As the Small and the Medium enterprises adopt on the ERP systems they will continue to provide more middleware to be able to allow on the customization.
The ERP systems has changed more drastically since its conception (Global, 2010). There is new features, functionality as well as technology which extend the ERP systems across the entire ERP system across the business to enable it to thrive. The automated processes as well as the increased visibility have helped in the reduction of the costs, gain competitive advantage along with adding value to the software investment (Global, 2010). As a result of the advancements as well as the improvements, there have been a number of the trends which are growing more rapidly in today market. Some of the trends which to look in the ERP system would include; one would be the cloud deployment- there would be an increase in the cloud adoption especially to most of the ERP system. This would reduce on the costs in the capital expenditures as well as the information technology resources (Al-Mashari, 2003). Other trends would be the social media integration. Many of the ERP vendors have grown to see the value as well as the growth of the social media and many business have incorporated it into their systems. The future of the ERP system is very bright. Gone and those days when the businesses used the spreadsheets and the manual processes (Lasisi, Owens & Udagedara, 2017). Currently, it is time for the upgrade to enable the organization to gain the competitive advantage, reduce on the costs and build of a foundation which is solid for the business. These trends will continue to offer additional resources to have a better connection to the business both internally as well as externally.
In this essay it has discussed on the concept of Enterprise resource planning system which many organizations have adopted. The research has discussed various components such as discussing various aspects such as the role and purpose of the ERP system, the benefits and the drawback associated to this system, the implementation process of the ERP system, the ERP solutions to the organizations, and the future of the ERP systems.
Al-Mashari, M. (2003). economicsresource planning (ERP) systems: a research agenda. Industrial Management & Data Systems, 103(1), 22-27.
Arik Ragowsky, T. M. S. (2002). Enterprise resource planning. Journal of Management Information Systems, 19(1), 11-15.
Bi, Z., Da Xu, L., & Wang, C. (2014). Internet of things for enterprise systems of modern manufacturing. IEEE Transactions on industrial informatics, 10(2), 1537-1546.
Chang, B., Kuo, C., Wu, C. H., & Tzeng, G. H. (2015). Using Fuzzy Analytic Network Process to assess the risks in enterprise resource planning system implementation. Applied Soft Computing, 28, 196-207.
Chofreh, A. G., Goni, F. A., Shaharoun, A. M., Ismail, S., & Klemeš, J. J. (2014). Sustainable enterprise resource planning: imperatives and research directions. Journal of Cleaner Production, 71, 139-147.
De Toni, A. F., Fornasier, A., & Nonino, F. (2015). The impact of implementation process on the perception of enterprise resource planning success. Business Process Management Journal, 21(2), 332-352.
Global, E. R. P. (2010). Enterprise Resource Planning.
Hoch, J. E., & Dulebohn, J. H. (2013). Shared leadership in enterprise resource planning and human resource management system implementation. Human Resource Management Review, 23(1), 114-125.
asisi, M. O., Owens, J. D., & Udagedara, S. (2017). Key benefits of enterprise resource planning adoption within small family businesses: a conceptual framework.
Leon, A. (2014). Enterprise resource planning. McGraw-Hill Education.
Nofal, M. I., & Yusof, Z. M. (2013). Integration of business intelligence and enterprise resource planning within organizations. Procedia Technology, 11, 658-665.
O'Leary, D. E. (2000). Enterprise resource planning systems: systems, life cycle, electronic commerce, and risk. Cambridge university press.
Sadagopan, S. (2003). Enterprise resource planning. Encyclopedia of Information Systems, 2, 169-184.
Seethamraju, R. (2015). Adoption of software as a service (SaaS) enterprise resource planning (ERP) systems in small and medium sized enterprises (SMEs). Information systems frontiers, 17(3), 475-492.
Shaul, L., & Tauber, D. (2013). Critical success factors in enterprise resource planning systems: Review of the last decade. ACM Computing Surveys (CSUR), 45(4), 55.
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