Enterprise Resource Planning Integration of Nonfinancial Measures for Business Success - Literature review Example

Enterprise Resource Planning (ERP) Integration of Nonfinancial Measures for Business Success Enterprise Resource Planning (ERP) Integration of Nonfinancial Measures for Business Success Introduction Enterprise resource planning is the process of integrating the essential components of the business, more so in manufacturing, with other departments in an attempt to create harmony and uniformity. In this system, various areas including planning, purchasing, and inventory and marketing departments within the business are integrated with the help of information technology in order to create harmony, understanding and coordination within the business. Though most business integrate enterprise resource planning as a management software, ERP is not merely computer application, but the creation of harmony between processes, departments and human resource to ensure that the business realize maximum potential at all times (Moalagh & Ravasan, 2013). This topic has attracted researchers from various disciplines including accountants who attempt to bring together different business domains and improve the success chances of a business. The implementation of ERP into the business remains a serious challenge due to the time, cost and resource demands that a business must be willing to part with. In most instances, ERPs have failed in a number of companies with strong financial muscles and human resource base due to lack of coherence between the plans and the goals of the organization (Chaabouni & Triki, 2013). In this paper, the benefits of enterprise resource planning in information collection in nonfinancial situations will be evaluated. Benefits of enterprise resource planning The changing business environment has forced companies to rethink their strategies and develop approaches aimed at achieving the strategic goals with minimal losses at all times. Today, the challenge of competition, market expansion and the high expectation of the informed customers make it difficult for corporations to succeed unless proper plans are adopted. To survive in the tough and murky markets, corporations have been forced to reduce the cost of the supply chain and the time taken for a product to reduce the final consumer with the aim of reducing the overall prices. As competition continue to control the nature of business practices and the need to adopt global collaborative models, internal planning remains important in the overall success of the organizations. As a result, corporations must continue to engage their suppliers, the distributors and the retailers in ensuring that the quality and the relevance of the product are sustained within the supply chain (Chaabouni & Triki, 2013). Internally, an organization must also ensure that the functions are well-integrated and proper communication models are developed which support accurate communication and interaction at the organization level and beyond. These goals have forced companies to embrace the enterprise resource planning as it enables organization to adopt a unified take on the business and support departmental integration. Enterprise resource planning also provides room for the creation of a comprehensive business database where crucial information for the business, the market and the supply chain can be stored and used to improve processes. Enterprise resource planning also improves communication within the organization, further enhancing cooperation and interaction within and without the business. Institutions that integrate the enterprise resource planning will enhance the technological level of management and eliminate the sluggish and slow traditional approaches that have been used across the board. In most companies, technology is embraced in limited department and no integration is developed, thus reducing the ability of the business to mutually interact and address the emerging issues. Processes must also be efficient and information stored must be readily available at all times, a situation that can only be achieved through the implementation of the enterprise resource planning. Enterprise resource planning and nonfinancial information Most business application models have concentrated on the approaches that can be adopted to improve the financial performance of businesses without highlighting other aspects of the business that are of importance. Enterprise resource planning allows businesses to acquire nonfinancial information that are critical in the management of various fronts within an organization with the sole interest of improving profitability. Enhancing access to information about consumer preferences, change in market demographics and other social factors that influence demand is critical in the success of any organization. This section will thus evaluate how enterprise resource planning can enhance business access to non-financial information that is critical in the success of the financial departments (Chaabouni & Triki, 2013). Enterprise resource planning allows for the development of e-procurement platform and interface that enables an organization to interact with various people within the organization, in the market and beyond. With e-procurement, an organization acquires information on the vendors in the market, the interests of the competing bidder and their price ranges. This enables the organization to develop a more competitive bid and improve its chances of servicing government and major corporation contracts. With e-procurement, the hustles of interacting physically with the contract providers is replaced with computer interface that is easy to use, preserves the integrity of the organization and is cheap. Information is also transferred electronically, eliminating the cost of postage and sending information through the poster as has been witnessed in various organizations without the enterprise resource planning. Access to account histories also enhance the information level of the business and provide a more empirical, cheap and convenient way of solving management and financial challenges (Safaris, Jenab & DSouza, 2012). All success stories of the implementation of the enterprise resource planning demonstrate a certain level of focusing on the customer and enhancing customer satisfaction through access to information. With information on the preferences of the customers and their buying patterns, an organization improves the business-customer relationship, a situation that positively enhances the profitability of the business. Enterprise resource planning does not just enhance the satisfaction of the external customer, but also the internal employees who are instrumental in the success of the organization. As opposed to back office application that has been used by various companies with little success, enterprise resource planning has enhanced front-end services supported by access to crucial nonfinancial information on the customers. However, this application may look like the replacement of computers and systems, enterprise resource planning attempts to integrate information technology with the objectives, visions and missions of the organization. As a result, issues associated with resistance and challenges facing change are eliminated as the employees are allowed to work towards the overall goal of the business while implementing a new effective strategy (Quiescenti, Bruccoleri, La Commare, Noto La Diega & Perrone, 2006). The replacement of the old system with the enterprise resource system at the federal prison industries ushered in a new era of effective management and communication within the organization. The replacement of the old system with a system supported by information technology led to the elimination of the delays, the contingencies and the challenges that this government department had faced in the previous years. The success of the system according to Thomas Phalen can be attributed to enhanced access to information that arose from the incorporation of the new system. The organization could access information on the target market, work towards satisfying the needs of the consumers and preempt any eminent changes in the market that can affect the organization. This demonstrates the access to nonfinancial information due to the use of the enterprise resource management enhances leadership, collaboration and interaction with the employees, thus creating coherence and understanding. With enterprise resource planning, various individuals are placed in charge of their departments and empowered to make crucial decisions based on the information they possess without involving the highest management officials (Safaris, Jenab & DSouza, 2012). According to Carp Diem group, an information technology and information corporation, the adoption of enterprise resource planning has enhanced the management of various organizations across the board. The success behind most of these projects is attributed to the manner in which these organizations handle the people trusted with implementing the goals and objectives of the organization. Focusing on the external market leads to lose of focus and motivation among the employees and this result into loss of profits and a reduction in sales. However, the introduction of enterprise resource management has enhanced the interaction between an organization and its people through access to crucial information and data (Quiescenti, Bruccoleri, La Commare, Noto La Diega & Perrone, 2006). ERP and earning information management To reduce the level of losses in an organization, it is imperative to manage the earnings and make accurate forecast of the exact amount of money the business expect to get in a given fiscal year. The integral role of enterprise resource planning in the management of organizational finances is crucial in enabling businesses to embrace discretion as far as the earnings are concerned. In most instances, organization will avoid adopting systems, which will increase constraint and limit its ability to manage effectively the earnings of the organization at any given time (Safaris, Jenab & DSouza, 2012). The chief benefit of incorporating the ERP model in businesses is its ability to enhance the managerial decision-making through the provision of accurate and precise enterprise information. Enterprise resource management systems collect crucial information and disseminate them in a timely manner in order to enhance financial reporting in the organization. Such information will include the approaches that the organization can adopt in order to improve customer relations and the impact of the external environmental factors to enhancing the business. Integrated systems within the enterprise resource planning also allows managers within the organization to share and access information internally which are essential in decision making and planning for various functions in the organization (Lewiston, 2014). The availability of real time information due to the functionality of the enterprise resource management is crucial in the success of all institution that adopts the models. Information on the financial situation of the business is critical in decision-making and removal of the barriers that can affect the communication between various levels of management within the organization. Evidence has also indicates that businesses that embrace ERP outperform none adopters due to access to crucial information that is used to inform decision-making and the development of strategic plans in the organization (Shouhong & Hai, 2014). The computerization of systems as a result of the enterprise resource planning system also enhances the earning release date management framework in an organization. The release of date of earnings is crucial to departmental heads and the overall managers of the organization and must be done in a comprehensive and inclusive manner. The integration created by enterprise resource planning enables all leaders in the organization to understand the financial and accounting information and how such data will influence the release of earnings (Shouhong & Hai, 2014). ERP implementation steps Successful implementation of ERP is critical in ensuring that adequate and critical information is collected and use to influence the decisions of the organization at all time. As a result, organizations must follow the implementation protocol to increase the chances of success and integrate the process into the culture and processes of the business as a whole. Before making a decision on whether to adopt enterprise resource planning, it is imperative for an organization to plan strategically and determine the strengths and weaknesses of the organization in light of how this will affect the success of the project (Gelogo & Haeng-Kon, 2014). Though new ERP systems have a potential to change the fortunes of the company, its success will largely depend on an understanding of the incumbent system, its weaknesses and areas that need more focus. Introducing a new ERP will not automatically lead to an improvement in the process of information collection and enhance the overall performance of the organization based on the availability of information. Instead, an in-depth understanding of the incumbent system and the challenges that it brought to the organization that can be solved through the introduction of the ERP must be identified. Enterprise process planning is simply a tool, the level of understanding it creates with the existing systems and the employees only influences its success. Though a business may have outgrown the current system, its weaknesses and strengths is essential in influencing the success of the new ERP model within the organization (Gelogo & Haeng-Kon, 2014). The second step involves a review of the model and possibility of success in the face of the current challenges, opportunities and weaknesses, a situation that can only be achieved through homework and collaboration. Each enterprise resource planning software has its own needs that influence its ability to succeed within the business environment. Through homework and collaboration of the enterprise resource planning, an organization identifies its needs and adopts a system that has the capability to address the rigors of the company. Information collection for nonfinancial uses can be done through a number of ways and is influenced by the size of the company, the target market and the expertise of the available human resource (Gelogo & Haeng-Kon, 2014). Choosing an ERP system must therefore be influenced by whether the organization intends to collect nonfinancial information electronically or manually irrespective of the market size and the goal of the project. However, a common standard operating procedure must be developed for all departments in order to create coherence and improve the likelihood of achieving the expected goals (Gelogo & Haeng-Kon, 2014). Enterprise resource planning is used for various purposes, including control of budgets, earnings, response within the market and the collection of nonfinancial information critical in the success of the organization. To implement an ERP, its cost to the organization must also be conducted in order to introduce an effective and productive tool aimed enhancing the performance and productivity of the business. To this end, elements must be defined as either budgeted or non-budgeted and implemented based on their relevance to the organization (Shaul & Tauber, 2013). Care must always be taken to ensure that the impacts of non-budgeted elements of implementing the ERP do not make it expensive and counterproductive in the end. Enterprise resource planning is aimed at introducing budget controls at various levels of the organization, which makes it important for the management to control the cost and reduce losses arising from the introduction of a system aimed at collecting lean management information (Shi Liang, Lida & Wu, 2009). Enterprise resource planning is a new concept that will face similar challenges, support and opposition from the employees like any other new idea or plan. The introduction of efficiency and use of information to eliminate losses and failures in the management structure will lead to redundancy in some traditional roles. Redundancy is a reason for lying off employees in order to reduce the wage bill of the organization, a situation that will most likely increase resistance and opposition to the plan (Shouhong & Hai, 2014). To eliminate such challenges, the organization must introduce training aimed at ensuring that the available employees are enlightened on how to use the system as a way of reducing movement of the organization. Training will increase understanding in the organization that will effectively map the processes and increase the likelihood of success and acceptance. Conclusion Enterprise resource planning is information based approached embraced by organization to enhance the performance of the system and reduce the level of redundancy in its operations. Though traditionally used in the collection of accounting and financial information, enterprise resource planning is effective in the collection and use of non-financial information in decision-making processes. In this paper, the concept of enterprise resource planning has been discussed in light with the new role of collecting and using nonfinancial information. References Chaabouni, A., & Triki, A. (2013). Contribution of an ERP (Enterprise Resource Planning) system to the decision making: Case of Two industrial SMEs. Revue Des Sciences De Gestion, 48(259/260), 10. Gelogo, Y. E., & Haeng-Kon, K. (2014). Mobile Integrated Enterprise Resource Planning System Architecture. International Journal of Control & Automation, 7(3), 379-388. doi:10.14257/ijca.2014.7.3.36 Moalagh, M., & Ravasan, A. (2013). Developing a practical framework for assessing ERP post-implementation success using fuzzy analytic network process. International Journal of Production Research, 51(4), 1236-1257. doi:10.1080/00207543.2012.698318 Quiescenti, M. M., Bruccoleri, M. M., La Commare, U. U., Noto La Diega, S. S., & Perrone, G. G. (2006). Business process-oriented design of Enterprise Resource Planning (ERP) systems for small and medium enterprises. International Journal of Production Research, 44(18/19), 3797-3811. Safaris, A., Jenab, K., & DSouza, A. C. (2012). Evaluating ERP implementation choices on the basis of customisation using fuzzy AHP. International Journal of Production Research, 50(23), 7057-7067. doi:10.1080/00207543.2012.654409 Shaul, L., & Tauber, D. (2013). Critical Success Factors in Enterprise Resource Planning Systems: Review of the Last Decade. ACM Computing Surveys, 45(4), 55-55:39. doi:10.1145/2501654.2501669 Shi Liang, W., Lida, X., & Wu, H. (2009). Industry-oriented enterprise resource planning. Enterprise Information Systems, 3(4), 409-424. Doi: 10.1080/17517570903100511 Shouhong, W., & Hai, W. (2014). A Survey of Open Source Enterprise Resource Planning (ERP) Systems. International Journal of Business & Information, 9(1), 1-28. Read More