May 05, 2013

The Role Of Enterprise Resource Planning

Enterprise Resource Planning is the process of implementing an Enterprise Resource Planning system and ensuring that it synthesises effectively with existing systems and software architecture within the business. Since the original development of ERP's in the early 1990s the sophistication of these systems has increased exponentially and with the complexity of organisational software and Management Information Systems (MIS's). Organisations have come to rely on ERP's to help them achieve their strategic goals and objectives which has increased reliance on management data and effective interface between various different management systems within the business. The role of an ERP is to bring together all of this information in a central repository so that managers within the business can be confident that they have the most accurate and timely information on which to base their decisions.

However it is unrealistic to think that a full organisational-wide ERP can be implemented in one attempt. Normally, it is necessary to adopt a modular approach to ERP implementation at various stages in the process. It is necessary to integrate the ERP with existing systems such as accounts packages and Materials Resource Planning (MRP) packages. One very popular ERP has been developed by the company known as SAP. This is a modular ERP which helps to improve and ensures that organisations gain return on their investment and information flows within the business remain accurate and timely. The reason for this is SAP has worked with many organisations to create a software solution which can be adapted to suit the needs of the business.


Sources:

- Kallunki, J. P., Laitinen, E. K., and Silvola, H. (2011) Impact of enterprise resource planning systems on management control systems and firm performance. International Journal of Accounting Information Systems, 12(1), 20-39.

- Su, Y. F., and Yang, C. (2010) Why are enterprise resource planning systems indispensable to supply chain management. European Journal of Operational Research, 203(1), 81-94.


- Momoh, A., Roy, R., and Shehab, E. (2010) Challenges in enterprise resource planning implementation: state-of-the-art. Business Process Management Journal, 16(4), 537-565.


- One comment Not publicly viewable

  1. Ioannis Belekoukias

    Hello Chiu,

    The analysis that you did above is quite interesting and it is mentioning many key issues for ERP.
    However, this is the one side of the coin. Probably, all the organizations that would like to implement ERP should consider some more issues which in response I can say that are ‘thorns in the roses’.

    What I mean is that ERP might be considered as a panacea but a panacea after all needs to be administered with finesse and professionalism. The hurdles in the path of a successful ERP implementation are:

    • Expectations from ERP
    There is a feeling that ERP is an intelligent wand that solves all business problems. The fact is that it is an application framework which has to be tuned to the organization’s requirement and run by humans who make the decisions. On the flip side ERP is often classified with an off the shelf accounting package whereas the fact remains that an ERP is an integrated framework that addresses most of the organization’s business functions.

    • Unstructured Processes
    A majority of the organizations are closely held businesses where the business processes have evolved over years. Realigning of these business processes and streamlining of data to suite the ERP requirement is a major exercise where the participation of the clients is critical.

    • Commitment from Management
    Any ERP implementation is phased over a period of time. In quite a few cases it has been observed that there is a wane in the interest and commitment of the management during the implementation process. This result is cost and time overrun and in some cases the process gets nipped in the bud.

    • Cost Benefit Utopia
    A common expectation is to get the “skies for nothing”. Although there have been efforts to optimize the total cost of ownership, the fact remains that value which one can expect is proportional to the investment. An imbalance in terms of trying to derive more can lead to skewed delivery – Quality suffers.

    If there is any comments or you feel that you have a different view please do not hesitate to add your thoughts.
    Any comment will be more than welcomed.

    Regards
    Ioannis

    05 May 2013, 19:24


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