Use of Enterprise Resource Planning Systems - Research Paper Example

Business Information System Enterprise Resource Planning Table of Contents Table of Contents 2 Introduction/Executive Summary 3 3- Information systems/Management Information Systems 3 4-Enterprise Resource Planning System 5 5- Use of ERP technology 7 6- Business Support Areas 8 7- Benefits That ERP Brings To Business Area 9 8- Benefits for Organisation as a Whole 11 9- Conclusion 12 10- Bibliography 12 1- Introduction/Executive Summary The computer based information systems are becoming a vital part of almost every organization or business. We can see the implementation of computer based information systems is all the areas of business and organizations. This paper presents the analysis of one of the most important computer based information systems corporate implementation sector. Enterprise resource planning or ERP is one of the main types of the business information systems. This paper will investigate how enterprise resource planning systems can be used to manage and plan the corporate resources. This paper will also outline how this technology supports that business area and the benefits they bring both to that business area and the organization as a whole. 3- Information systems/Management Information Systems Data can be defined as collection or gathering of unrefined facts representing events taking place in organizations or the physical environment prior to they have been structured and managed into a structure that people can identify and make use of it. In addition, data can contain text, numbers, images and videos. On the other hand, information is collection of data that have been changed into a structure that is important and functional to human beings (Shelly, Cashman, & Vermaat, 2005, p. 6; Norton, 2001, p. 4; Laudon & Laudon, 1999, p. 7). A system is a group of related elements that work together to carry out a job in order to achieve a goal. Any organization or business that makes use of information technology will have a computer-based information system encompassing software, hardware, data/information, actions, workers, and communications setups. These components work together to offer management with information for running the business (Hutchinson & Sawyer, 2000, p. 9.3). (Shelly, Cashman, & Vermaat, 2005, p. 620), explains information system as a collection of hardware, software, data, workers, and methods that work in collaboration to turn out functional and valuable information”. An information system helps out in every day, short-range, temporary, and long range activities of users. Various examples of users consist of store clerks, sales representatives, accountants, and supervisors, managers of construction projects, executives, and customers (Shelly, Cashman, & Vermaat, 2005, p. 620). According to (Turban, Leidner, McLean, & Wetherbe, 2005, p. 18), an information system collects, processes, stores, evaluates, and distributes information for a particular function. Similar to any other system, an information system consists of inputs (such as instructions and data) and outputs (reports, calculations). It performs operations on the inputs by using technology like PCs and develops outputs that are delivered to users or to other systems by means of electronic networks (Turban, Leidner, McLean, & Wetherbe, 2005, p. 18). “The information system can be defined technically as a collection of interrelated components that bring together, process, store, and distribute information to carry decision making and control in an organization” Information systems keep and maintain information about important people, places, and things inside the corporation or in the set up surrounding it (Laudon & Laudon, 1999, p. 7; Hoffer, Prescott, & McFadden, 2007, p. 429). However, management information system (MIS) is an information system that produces correct, on time, and structured information, so managers (enterprise resource planning) and other users can make decisions, supervise activities, solve problems, and follow development (development of projects) (Shelly, Cashman, & Vermaat, 2005, p. 727). Also, according to (Whitten, Bentley, & Dittman, 2000, p. 47), a management information system is a function or application of information system that offers for management oriented reporting. These reports are typically developed or produced on a predetermined schedule and come out in a prearranged structure (Whitten, Bentley, & Dittman, 2000, p. 47). A management information system is a collection of software applications that helps managers to collect, systematize, and evaluate information concerning a workgroup, department, or a whole organization. These systems are designed and developed to meet the requirements of three diverse classes of managers, executives, middle managers, and front line managers by creating an assortment of scandalized reports drawn from the organization’s database. A well-organized management information system summarizes huge amount of organization’s data into information that is functional to each type of managers (Laudon & Laudon, 1999, p. 7; Norton, 2001, p. 460). According to (Worthington, 2003, p. 22), a management information system is a structured group of people (such as staff, users, and customers), actions, software, databases, and devices utilized to provide customary information to managers and decision makers. Therefore, the concentration of a management information system is mainly on working effectiveness. Moreover, production, marketing, finance, and additional useful areas are maintained by management information systems and connected through a central database (Worthington, 2003, p. 22; Stair & Reynolds, 2003, p. 23; Hutchinson & Sawyer, 2000). 4-Enterprise Resource Planning System According to Al-Mashari (2003) the enterprise resource planning systems (ERP) systems can be viewed as one of the most modern and effective developments in 1990s business information systems and information technology (IT). By means of the rising attention of a lot of businesses in moving from traditional functional approach to IT and business IS based, process-based corporate working environment. Enterprise resource planning systems have turned out to be one of today’s most extensive business information system solutions. The main quality of enterprise resource planning business solutions has motivated businesses to put into practice enterprise resource planning systems. The main reason behind the implementation of ERP are the qualities of standardization and integration capabilities, besides this flexible in the both server and client architecture, as well as their capacity to take effectual organizational reengineering as well as management of foundational and support processes (Al-Mashari, 2002). According to Effy Oz (2008), the enterprise resource planning systems are becoming a vital part of corporate business management and handling. The enterprise resource planning systems provide business information that is useful in planning as well as managing the corporate resources such as funds, personnel, vehicles and raw materials. Though, enterprise resource planning is a misnomer for the corporate/business infrastructure, since these systems mostly provide assistance to corporate administration and management in monitoring as well as adjusting company developments as they happen. Effy Oz (2008) states these business information systems are not only for planning (Oz, 2008). According to Chou, Bindu, & Chou (2005), the formation of enterprise resource planning system incorporates the entire operational and functional areas of the business. Enterprise resource planning Systems are backbone structures for the majority of organizations that puts together back-office business information system applications such as purchasing, finance, inventory management, HR etc. However enterprise resource planning Systems are able to put together the entire company transaction data into their main and master business databases system for business/organizational planning. But, enterprise resource planning system it is not a system that is intended for decision support and data analysis process (Chou, Bindu, & Chou, 2005). 5- Use of ERP technology Effy Oz (2008) describes that many businesses/organizations desire to replace old, disparate and less flexible business information systems with a new and modern enterprise business support applications that hold up the entire or the majority of the corporate activities (Oz, 2008). Kakouris & Polychronopoulos (2005) outline that enterprise resource planning systems are multi-purpose technologies those are utilized not simply for planning however as well for handling and managing daily business/corporate operations. The enterprise resource planning systems technology designers/developers obtains a systems technique to a business. For instance, the manufacturing resource planning (MRP) part of this huge technology utilizes the business information recorded on a sale to obtain product specifications. In regard the system specified data is employed to produce business purchasing data and information like that quantities, items as well as the schedule for suppliers to transport/supply for the business purchasing branch. This system also used for the recording of the business shipping information like that destination and content, next to corporate billing data or information. Therefore this technology is also really helpful in management of operations of billing and shipping documentation. Another main feature of the ERP technology system is to record the financial transactions linked in the similar activities like that: payment performed from a company bank account. The accounting section of the ERP system records all the business transactions (Kakouris & Polychronopoulos, 2005). According to Effy Oz (2008) another significat purpose of enterprise resource planning systems is regarding the availability of management of the human resource modules intended for payroll, employee evaluation and employee benefits management software (Oz, 2008). As Elbertsen, Benders, & Nijssen (2006) state that enterprise resource planning systmes also incoporate the capability or facility to add customer resource management (CRM) components. These components are as well obtainable and are attached to other enterprise resource planning system components in the course of orders applications as well as sales records (Elbertsen, Benders, & Nijssen, 2006). 6- Business Support Areas According to Al-Mashari (2002) organizations for all time require integrating recently-obtained business functionalities and areas into its overall corporate data processing systems by means of the least time possible. The elasticity of enterprise resource planning systems refers to the degree to which an enterprise resource planning structure can be dynamically capable to express innovative business models as well as processes. Though, one of the main drivers of application enterprise resource planning systems is their capability of being planned and designed foundational on most excellent practices as well as their capability to standardize and regulate business procedures as well as structures. Corporations observe enterprise resource planning-enabled standardization and consistency like a very important means to incorporate discrete managerial structure that provides a faultless access to corporate data and information all through the business divisions. As well as this system also need to formulate knowledgeable business decisions on strategic as well as routine business issues (Al-Mashari, 2002). The enterprise resource planning system offers various facilities regarding each aspect of business operation and working. This system offers many advantages regarding the effective business and corporate operational management areas. Figure 1 Business Support Areas -- Source [ (Al-Mashari, 2002)] 7- Benefits That ERP Brings To Business Area Spathis & Constantinides (2003) state that ERP based business information systems have a significant and decisive impact on traditional legacy systems based data and information processing for business planning and operational management. Enterprise resource planning systems have been really effective in satisfying business departments and working areas. This offers the capability regarding the production of real-time business information plus mainly information and realty facts regarding the for business decision making are evidently influencing not just the business accounting information systems however as well, to the company processes as well. Also, times decreasing for accounts closure, augmented accessibility of information systems and groundwork of financial reports are as well apparent like profits resulting as of enterprise resource planning applications. Additionally, enhanced decision-making procedure, better management among all business departments as well as enhanced inner business departmental communication, have as well been extremely rated additional strengthen the overall corporate operations (Spathis & Constantinides, 2003). Spathis & Constantinides (2003) offer some benefits that ERP brings to business area (Spathis & Constantinides, 2003): Greater flexibility in information production Better quality of reports of business financial statements Improved incorporation of applications to business structure Effective protection of databases Valuable logistics operations Enhanced business communication Efficient business decision-making procedure Well-organized data processing 8- Benefits for Organisation as a Whole Business information systems present a variety of procedures that are helpful regarding the data relationships, exploring data and trends in the course of linked methodologies to illustrate business results. The ERP procedure is able to augment revenue as well as develop equipped competence within an organization. As managerial ERP structure is dominant for storing and processing business transactional data as of a variety of inner as well as outside sources. The incorporation of ERP information systems is able to strengthen corporate decision-making capacity in the course of employing the investigative ability of business intelligence system as well as data managerial potentials of enterprise resource planning system. This structure will result in a most excellent utilization of ERP for enhancing business operational management. Additional enterprise resource planning framework would be able to produce the following benefits: (Daniel, Wilson, & McDonald, 2003; Spathis & Constantinides, 2003; Chou, Bindu, & Chou, 2005): Facilitating finance personnel to produce expense/ revenue reports rapidly Permitting the manager to be familiar with business cash flow in real time Allocating sales information by means of the business management, this facilitates in formulating improved business decisions foundational on a inclusive analysis of the business To carry out interdepartmental association Enhancing the accounts payable as well as seller relation administration Facilitating sales force administration Enhanced productivity through analyzing dealings data and forecasting and company trends Augmenting the client relations in the course of effective sales decision Offering online access to business and management data Minimizing time to produce regular reports 9- Conclusion Enterprise resource planning systems have turned out to be a vital need to any business or organization. The implementation of the enterprise resource planning based information systems offers better business and corporate operational support. This offers better business and organizational management by enhancing the business decision making. This paper has presented detailed analysis of the information system and enterprise resource planning technology systems. In the first part, this paper introduced information systems and then discussed enterprise resource planning and its usefulness to organizations. I hope this research will offer deep insight into the enterprise resource planning technology and its potential benefits. 10- Bibliography Al-Mashari, M., 2002. Enterprise resource planning (ERP) systems: a research agenda. Industrial Management & Data Systems Volume 102, Issue 3, pp. 165-170. Chou, D. C., Bindu, H., & Chou, A. Y., 2005. BI and ERP integration. Information Management & Computer Security Volume 13, Issue 5, pp. 340-349. Daniel, E., Wilson, H., & McDonald, M., 2003. Towards a map of marketing information systems: an inductive study. European Journal of Marketing Volume 37, Issue 5/6, pp. 821-847. Elbertsen, L., Benders, J., & Nijssen, E., 2006. ERP use: exclusive or complemented? Industrial Management & Data Systems Volume 106, Issue 6, pp. 811-824. Hoffer, J. A., Prescott, M. B., & McFadden, F. R., 2007. Modern Database Management, Eighth Edition. Pearson Education, Inc. Hutchinson, S. E., & Sawyer, S. C., 2000. Computers, Coomunications, Information A users Introduction, 7th Edition. New York: Irwin/McGraw-Hill. Kakouris, A. P., & Polychronopoulos, G., 2005. Enterprise Resource Planning (ERP) System: An Effective Tool for Production Management. Management Research News Volume 28, Issue 6, pp. 66-78. Laudon, K. C., & Laudon, J. P., 1999. Management Information Systems, Sixth Edition. New Jersey: Prentice Hall . Norton, P., 2001. Introduction to Computers, Fourth Edition. Singapore: McGraw-Hill. Oz, E., 2008. Management Information Systems, Sixth Edition . Thomson Cource Teachnolgy. Shelly, Cashman, & Vermaat., 2005. Discovering Computers 2005. Boston: Thomson Course Technology. Spathis, C., & Constantinides, S., 2003. The usefulness of ERP systems for effective management. Industrial Management & Data Systems Volume 103, Issue 9, pp. 677-685. Stair, R. M., & Reynolds, G. W., 2003. Principles of Information Systems, Sixth Edition. Toronto : Thomson Learning, Inc. Turban, E., Leidner, D., McLean, E., & Wetherbe, J., 2005. Information Technology for Management: Transforming Organizations in the Digital Economy . New York: Wiley. Whitten, J. L., Bentley, L. D., & Dittman, K. C., 2000. Systems Analysis and Design Methods 5th Edition. New York: Irwin/McGraw-Hill. Worthington, P. 2003. Introduction to Information Systems. Singapore: Thomson. Read More