Benefits and Importance of Enterprise Resource Planning - Essay Example

Running Head: Enterprise Resource Planning Enterprise Resource Planning [Institute’s Enterprise Resource Planning ERP, is an abbreviation for Enterprise Resource Planning, is predominantly an amalgamation of business management practices and modern technology. Information Technology (IT) incorporated with the core business processes of a company to restructure and accomplish explicit business objectives (Patrick & Rashid, pp. 39-42, 2002). Therefore, ERP is a combination of three most imperative components: “Business Management Practices, Information Technology, and Specific Business Objectives” (O’Brien & Marakas, pp. 111-113, 2005). In other words, enterprise resource planning is an enormous software design that ropes the streaming and distribution of geographically spotted venture wide information across all the functional units of a business house. It helps the top management and executives of a company to do an overview of whole of its business execution, which in turn manipulates their decision in productive way. ERP is mainly a well-managed and essential data repository, which gets hold of information from and supply information into the disjointed applications working on a universal computing policy (O’Brien & Marakas pp. 23-25, 2005). In large business organizations, information exits on a variety of servers across many functional units, and sometimes, these data is alienated by geographical boundaries. In the result, the tool of enterprise resource planning facilitates organizations, especially bigger organizations to manage their resources, in order to ensure their utilization in an efficient manner. Previously, ERP systems were used in superior and more manufacturing types of companies; however, the use of ERP has changed fundamentally over a period of few years. Today, the phrase is applicable to any type of company, working in any kind of field and of any enormity. Todays ERP software structural design can possibly envelop an extensive assortment of enterprise wide functions and integrate them into a single incorporated database repository (Shanks & Seddon, pp. 36-43, 2003). For example in the past, organizations have to put enormous efforts on different departments and tasks, such as human resources, manufacturing, logistics, etc individually with the help of different and specific software for each expertise. However, introduction of enterprise resource planning infrastructures have enabled organizations to monitor and utilize all expertise and resources in a centralized manner with the help of networking and databases with the help of ERP. ERP works as as a cross-functional endeavor backbone that put together and computerize many internal business processes and information system within the manufacturing, logistics, distribution, accounting, finance, and human resource functions of a company. Outsized companies all around the world started to install ERP system during 1990s as a theoretical framework and mechanism for reengineering their business processes (Nah, pp. 11-13, 2002). It is observation that “ERP also served as the vital software engine to integrate achievements of different cross-functional processes” (O’Brien & Marakas pp. 257, 2005). Now ERP has recognition of a necessary ingredient that many companies need in order to gain the efficiency, agility, and responsiveness required to succeed in today’s dynamic business environment. “ERP is the technological backbone of e-business, an enterprise wide transaction framework with links into sales order processing, inventory management and control, production and distribution planning and finance” (O’Brien & Marakas pp. 258, 2005). ERP is a cross-functional endeavor system driven by an incorporated suite of software modules that support the basic internal business processes of a company. For instance, analysis has indicated that ERP software plays a significant role in incorporating processes of every department of the organization. For instance, a manufacturing organization will be able to acquire the information within few clicks regarding different processes of the company from production unit to the shipping and sales. In addition, new advanced ERP software now allows organizations to acquire reports related to prospects and business forecasts regarding their raw material, as well as any requirements in terms of human resources that are significant attributes of the ERP (Patrick & Rashid, pp. 66-69, 2002). Although organizations were able to monitor their different processes with the help of different departments and human expertise, however, it is observation that such efforts took a huge amount of time of the companies. On the other hand, ERP solutions facilitate organizations by providing detailed information of different business processes in the real-time that has become crucial for businesses in this era of competitive business environment. In brief, organizations are now depending on the expertise of database management that put efforts to integrate processes, activities, and performances of every department in the organization with the database system that enable the company to track its core business processes and make efficient decisions on time. Nowadays, many organizations and manufacturing industries have implemented ERP, due to the need for managing procedure and resources, and thus, a very important tool that helps in coordinating numerous activities. There are various advantages of having ERP. It provides with an opportunity of incorporating every procedure of business while enhancing the quality of several areas at the same time (Wagner & Monk, pp. 71-74, 2008). These areas include human resource, operations, and accounting. ERP also helps to raise the level of production and allow them to control the cost in effective n efficient manner. The most important function of ERP is that it increases accessibility of information that helps different companies to have information in real time to make decision regarding organization. Mainly manufacturing industries implement enterprise resource planning. This usually happens in order to perform integral strategic planning. It also helps in keeping an eye on daily activities of the entire organization. Implementation of ERP system makes it possible to communicate within the organization and outside the organization as well. For instance, finance department knows when funds are required in other departments, all departments are inter-connected, and information is available at the center point so everyone within the organization can have access to it. Conclusively, the paper has discussed some of the significant aspects of enterprise resource planning, and analyzed its benefits, as well as drawbacks. The paper has identified and analyzed different studies related to the topic; however, it is anticipation that future researches in this regard will allow a more comprehensive and updated understanding of the impact. It is an expectation that the paper will be beneficial for students, teachers, and professionals in better understanding of the topic. References O’Brien, James A. & Marakas, George M. (2005). Management Information Systems. Mc-Graw Hill Professional. Patrick, Jon David & Rashid, Mohammad A. (2002). Enterprise Resource Planning. Idea Group. Wagner, Bret J. & Monk, Ellen F. (2008). Concepts in Enterprise Resource Planning. Cengage Learning. Nah, Fiona. (2002). Enterprise Resource Planning Solutions and Management. Idea Group. Shanks, Graeme & Seddon, Peter B. (2003). Second-wave Enterprise Resource Planning Systems. Cambridge University Press. Read More