ERP System Adoption in Companies - Assignment Example

? Provide a balanced discussion of the factors that a medium to large sized company should consider before adopting an ERP system. Inserts His/Her Name Customer Inserts Grade Course Customer Inserts Tutor’s Name Writer Inserts Date Here (Day, Month, Year) INTRODUCTION: Information Technology has evolved the world we live in and has transformed the methods of businesses. It has brought a drastic change in our life since the last decade. Previously computers were only used for limited purposes such as type writing but today, it is difficult to imagine this world without computers. And on the industrial side, ERP has gained a lot of momentum. Enterprise Resource Planning (ERP) is a process by which a company or manufacturer manages and integrates an important part of his business. In today’s business world, ERP play’s an extensive role in the field of business and information technology. Global strategy leader, Arthur D. Little spoke about ERP and quotes: “it is conquering the world. Almost every important company is more or less in its hand.” (ERP) There are several kinds of ERP software, but SAP is the most famous and acknowledged one. The acronym of SAP is Systems, Applications and Products in Data Processing. It is used around the globe to access the needs of the customers and offer them with widespread range of services and facilities. Leading resource companies such as Comal co Ltd., Sasol Synfuels International (Pty) Ltd. and Sasol Mining (Pty) Ltd effectively use SAP to manage assets, improve productivity and attain better decision-making abilities. ERP has not only helped large global firms earn gigantic amounts of revenues but small and medium enterprises also avail this system for procuring profits. It is the invaluable technology tool for the companies to increase productivity, profitability, sales and service. The implementation of ERP system does not limit to the size of the organization but the fact that where the system is implemented. Both developing and developed countries are applying and implementing ERPs. ADVANTAGES AND DISADVANTAGES INHERIT IN AN ERP SYSTEM: ERP system has brought revolution to the entire framework of supervising industries. ERP system is not a stand-alone system and so, companies that fail to utilize this find themselves difficult to function with each other. It facilitates operational coordination across functional companies. It is important for medium and large scale companies to have complete knowledge of its competitor’s strategy and policies. Not only this, ERP system has a standard of collecting all business areas in one system which would makes it easier for companies to compete on the same benchmark. The foremost advantage of an ERP system is that it saves time and brings down the costs of large corporations. Large firms cannot risk wasting their time in procedural maneuvers and unwanted delays. It ensures quick processing of information and reduces the burden of paperwork. It is difficult to manage large firms without proper records, and so ERP system maintains work effectively with minimum chances of error. ERP system aims for perfection; it keeps track of its order. It serves the customers efficiently by way of prompt response and follow up. Whether it’s the case of queries of the customers or in the payment, ERP system provides them with ease in every procedure and administers them with detailed information. ERP system also excels in accounting applications. It can incorporate the cost, profit, revenue information of sales that are made by the company. It is responsible for altering the product, and upgrading it order to capture a wider audience. It can make amazing quality products by mere design engineering. Large firms are required to have greater security, for which ERP system are considered to be ideal as they are an indispensable tool in the area of security. It protects the company against some considerable crimes such as embezzlement or industrial espionage, thus safeguarding the company from massive losses every year. Large firms usually undermine the concept of mass-utilization of resources, while today the world has become more advanced and believes in efficient allocation of resources and go green products. Everyone is responsible to promote the society and protect it from the possible dangers. ERP system allows the firm to utilize its resources to the maxim. Large and medium companies are generally anticipated to appreciate the importance and need of valuing world’s present resources and so the adaptation and implementation of ERP system will help them to harmonize the concept of corporate social responsibility. ERP has sped up the whole process of manufacturing and accessing the status of the goods on a “click” of a button. Quick processing of information and fast transmit commodities through online transactions serves the customer efficiently and in time. Automation of supply chain management and advantages like better finance reports might seem short term gains to the company, but in fact place great impact in the profits of the company in the long run. In a way, ERP system increases the employee’s productivity and provide them with the insights needed to make decisions that set the firms apart from their competitors. ERP systems provide firms with competitive advantage by means of automation, transformation and as well as sharing common data across organizational boundaries. Based on the company integrating the system with its own processes to make it unique and the cost and time put in will be offset by the benefits of the system. On the contrary, ERP system comes along with a number of risks attached to it which does not only affect the productivity and profitability of companies but also its environment around it. Complete understanding and adaptability of ERP system is required, which otherwise would stake the entire existence of the company. It is a huge investment, but on several occasions ERP system are unable to match with the business processes as most companies are cultural origination, that is they are resistant to any change. (Exorcys) Lack of scalability, system bugs, and lack of ERP functionality might lock up the system which might turn into a serious problem. Along with implementation of ERP system, company is required to alter its labor force and its absolute methods of manufacturing and production. Senior and experienced employees will be replaced by the new ones, which would harm the integrity of the company. (Benefits of ERP system) WHETHER ORGANISATIONAL SIZE OR DIVERSITY HAVE AN IMPACT ON THE DECISISON TO ADOPT ERP: Training skills and infrastructure facilities are needed to make the system work properly. Redundant amounts of team work and leadership is required to attain maximum amount of work done. The system is implemented after going through some complex stages which takes approximately 12-18 months, which is a long time for a large scale company to settle. It then also requires abundant to make the old legacy system and new technology to become familiar with each other. Furthermore, if the company is deprived of the IT department, then it may require in order managing this system. The whole adaptation and implementation asks for tremendous amount of costs, which leaves the managers to make a prolonged, logical, and practical decision for the company. Some companies attract customers due to their attribute of simplicity and monotony while ERP system sometimes causes over-engineering relative to the customer’s needs. The company would not want its prestigious and loyal customers to be disappointed and so before going for this system it needs to decide if the company and its customers are willing to adopt radical changes in the process of production and distribution. Organizational diversity affects in the way ERP is adopted and eventually the overall adoption of ERP. In a diverse organization, people coming from difference races and ethnicities may have a different perspective for technology. There might be some who are very techno savy while there may be some who are hesitant to adapt technology and to become used to new ways and things. Adoption of ERP would mean convincing people across the organization over the benefits of this system. However, once people have adapted themselves to the ways of an ERP system they come to realize its far reaching benefits (wire.com) THE EXTENT THAT ALTERNATIVE, PARTIAL ERP AND NON-ERP, SYSTEMS CAN FULFIL ORGANISATIONAL REQUIREMENTS: ERP system is not mere a computer software, it is in fact the ERP Software, Business Processes, Users and Hardware that run the ERP software; which makes up the whole system. The imperative factor of an ERP system is the users. The intelligence and good knowledge of each entity of the system, to the users, makes the account of an ERP system successful. (ERP) The system also seems to be inflexible to many companies and too restrictive, depending on the nature of the product or service that the company provides. Although ERP systems are good at what they do, but the problem is how they do it. There is rigidity in their working approach and everything is coded, if the company needs to change it. Eventually a slight regulatory change creates a need to change in the finance process, causing a company an average cost of millions of dollars. Mike Fauscette; Analyst, IDC; spoke about the success of ERP system in major companies and quoted: “Honestly, from the implementation perspective, the vendor definitely shares the responsibility with the customer. I think the vendor has to have a good methodology to help customers understand how to mitigate risks.” The success of the system does not only depend on how the workers utilize it, but how it modifies the system to suit to its immense potential. ERP system adaptation demonstrates that most organizations have concluded that the benefits resulting from such implementations outweigh the substantial risks and cost of ERP systems. ERP systems are certainly risky to implement, but perhaps the risks of not adopting ERP are determined to be greater than the risks faced by adopters. (wire.com, Exploring ERP Fundamentals) Works Cited Benefits of ERP system. (n.d.)., from http://www.benefitsoferp.com/theadvantagesoferpsystems.html [Retrieved Jan 11, 2010] ERP. (n.d.). from Intuitive: http://www.intuitivemfg.com/faq/g_whatiserp.aspx [Retrieved Jan 11, 2010] Exorcys. (n.d.). Advantages and Disadvantages of ERP. from http://www.exforsys.com/tutorials/erp/the-advantages-and-disadvantages-of-erp.html [Retrieved Jan 11, 2010] Wire.com, E. (n.d.). Advantages and Disadvantages of ERP., from http://www.erpwire.com/erp-articles/erp-advantages-disadvantages.htm [Retrieved Jan 11, 2010] Wire.com, E. (n.d.). Exploring ERP Fundamentals., from http://www.erpwire.com/erp-articles/erp-fundamentals.htm [Retrieved Jan 11, 2010] Read More

 

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