Management Information Systems - Benefits of SAP ERP and Epicor implementation in Business - Essay Example

Management Information Systems By Author Date Table of Contents Table of Contents 2 SAP Enterprise Resource Planning System for Accounting 3 Comparison between SAP ERP and Epicor 5 Benefits of Implementing SAP ERP for Accounting 6 Challenges of ERP implementation in Business 8 Recommendations 10 Conclusion 11 References 12 Introduction Systems Applications and Products in Data Processing (or simply SAP) was designed and established by 5 engineers while working at IBM 1972 as standards based software option or solution to custom built ERP software, however soon after the emergence of SAP, it has reached far away. In fact, since that time SAP has been in the front position of ERP software. Historically, SAP was established in 1972 by five former employees of IBM Corporation in Mannheim, Germany, the world's largest inter-enterprise software firm and the world's fourth-largest self-governing software supplier, on the whole. In addition, SAP has in recent times introduced its products and services underneath a wide-ranging Web interface, acknowledged as mySAP.com, as well as included innovative e-business software solutions such as supply chain management (SCM) and customer relationship management (CRM) (Magna Training, 2012; Payne et al., 2009). In this scenario, the SAP® ERP Financials solution, which is a significant component of SAP Business Suite software, provides a comprehensive, upgraded monetary management solution in order to ensure compliant, expected business performance. In fact, as a vital element of an enterprise business strategy, SAP ERP Financials offers a solid basis to spread out its business, identify and adopt greater efficiencies throughout key financial processes, and help make sure compliant and correct accounting and financial reporting (SAP3, 2012). Without a doubt, SAP offers a wide variety of solutions for the management of its accounting functions and being an enterprise resource planning system it is implemented on the entire organization. This report discusses some of the important aspects of SAP accounting information system. This report will discuss some of the benefits and limitations of SAP accounting system along with recommendations (i.e. how organizations can make use of these functions in order to attain competitive advantage). SAP Enterprise Resource Planning System for Accounting An Enterprise Resource Planning (ERP) system is a significant enterprise tool that combines a number of discrete departmental tasks and activities inside a single huge application. As a result, it becomes easier for an organizations to keep track of the data flow all the way through different departments and entities. For instance, accountants or managers can be able to access their desired information such as sales data, and other critical data using a single application. In addition, the implementation of an enterprise resource planning system allows an organization to decrease the functioning expenditures associated with traditionally maintaining and repeating data and information because of different and individual systems. One of the most important advantages of ERP systems such as SAP is that it offers comprehensive visibility into all the significant actions and activities occurring in different areas of an organization. In fact, it automates all the major processes of an organization which reduces a large number of mistakes. Similarly, SAP Business Suit is a collection of various financial solution. SAP ERP is the important financial solution of business suit that gives cohesive financial management solution that facilitates integration in the departments and it also increases the predicting capability of the firm. The most important strategy of the strategy of the SAP ERP solution is to predict accurate assessment of financial reporting and business accounting. (Barron, 2009). Moreover, SAP business suits also support other important processes of the firm like building customer relations, management of human resource, assessment of accurate risk, supplier relationship management, and last but not the least supply chain management. In SAP ERP financial solution different variation can be used by firms with the help of service oriented architecture (SAO) .For this purpose SAP Net Weaver® a technology platform that offers opportunity to coordinate the value chain companies and any one can take advantages from SAP and non-SAP solution.it also facilitates integrated operation of a company by improving their business processes and IT strategies. The modular software of the solution provides strong support to other business processes because they are compatible with other SAP and non-SAP. This software is also used to tackle different business challenges without incurring much cost (Barron, 2009; Rolia, et al., 2009). Furthermore, SAP business suit is very useful in providing clear and deep understanding of various processes of organization.it improves efficiency and effectiveness at all levels of changing. Likewise, financial management software is very supportive in controlling and in meeting different accounting standards to ensure the transparency in different companies of different countries. Furthermore, financial experts are required to manage conversion cycle and working capital more efficiently and effectively. For this purpose a financial expert can gain insight and clear understanding of account receivable, account payable, cash flow and its improvement through automation. In other words financial expert is one who can manage and reduce complexities to gain accurate and deep insight of business processes that can also help in achieving better business performance effective working of a firm (Barron, 2009; Rolia, et al., 2009). Comparison between SAP ERP and Epicor Both SAP ERP and Epicor offer almost the similar functionalities. However, SAP is an experienced organization in the domain of ERP systems. Thus, this experience makes it superior over other organizations and products: In manufacturing business, Epicor manufacturing solution is used for making plans and schedules. Moreover Epicor solution also facilitate the execution and monitoring of manufacturing activities. Epicor manufacturing solution provides its customer with effective and efficient technology and that is the reason it has more than 20,000 customers in 140 countries. Epicor solutions have designed to provide ease to customer. Its easiest production management capabilities helps in removing complexities that may create in make-to-order and mixed-mode manufacturing. Businesses can operate effectively and confidently with the help of clear and accurate view that is provided by Epicor manufacturing software. The ERP solutions of Epicor are useful for different industries sectors like manufacturer, services, distributors, hospitals and retailers. The subsidiaries of Global 1000 can maximize their profit and growth with the help of these solution (Manufacturing Software Comparison, 2015). Epicor manufacturing solutions have experience of more than 30 years of managing daily activities in manufacturing industries and their consistency in providing effective services to customer can be easily observed in their highly functional and flexible system Epicor manufacturing solution has successfully managed the installation of more than 105,000 solution worldwide. On the other hand SAPER provides its customer an innovative feature that make SAPER different from other systems because it is a system that can be easily upgraded by the customer. SAPER liberates the customer from the option of using fully upgraded system only. In this way, SAPER system provides effective, efficient and smooth functioning of the organization. SAPER system is considered as the most flexible system that can be used by the different business of different sizes .it helps in reducing the overall business cost and also useful in meeting the demands of this fast moving world (Manufacturing Software Comparison, 2015) Benefits of Implementing SAP ERP for Accounting Information technology is something that has revolutionized the outlook of the world. It has brought changing in various fields of the world especially in Business. Companies started to adopt enterprise resource planning (ERP) system like SAP. These kinds of systems proved helpful because they are used to assimilate different departments, systems and procedures into one database. The adoption of SAP system in the field of business was the beginning of the new technology age in business. With the help of SAP system companies could easily integrate their different department and they also reduce their responding time by providing immediate information to one another. ERP systems also replaced different information system because it could manage the multiple functions of different information systems. Furthermore, it has also transformed the practices and ways of doing business. The data could be easily stored, collect, circulate and retrieved any time. Moreover, the transformation of information system and its use also changed the accounting process. Different studies stated that with the installation of ERP system in different companies have changed procedures of accounting and also affect the role of accountant in an organization (Kallunkia, et al., 2011). It was inferred in different studies that ERP systems have introduced new accounting practices and it also facilitate these new accounting practices and SAPER system is most important in this respect. SAPER system supports data collection activities and also provide wide view of different management accounting practices of the organization. The support system like SAPER gives new accounting practices and with the help of these practices a company can easily handle large database and large amount of data collection that can easily be retrieved anytime.it makes the whole process more effective, flexible, quick and efficient. The installation of any management control system like SAP not only helps in learning new logics of the solutions but also useful in discovering new combining accounting practices and management rationalities (Shehab, et al., 2004; Spathis, et al., 2004). There many advantages of using SAP ERP but the most important benefits are: it provides new accounting applications of integrated system. Moreover it also offers flexibility in generating reports and it also speed up the process of reporting. It is useful in processing reliable and accurate information for the closure of annual accounts. These new improvements in company accounting practices are responsible for improving the quality of decision making and coordination of integration in enterprise. Likewise, the other benefits of SAP ERP are: it makes the accounting process speedy and improved. It also responsible in reducing different costs of business like inventory cost, financial close cycles cost, expense of personnel’s, management cost, and IT installation cost. Similarly, it speed up various process as well like deliveries time and information access time. It also provides financial control, better decision making, coordination, information transparency and new improved reports of accounting. Furthermore, in the paper (Kanellou & Spathis, 2011) have explained the framework for accessing advantages from ERP system. The proposed framework classifies the benefits of ERP into five dimensions i.e.; managerial, IT infrastructure, operational, strategic and organizational. Similarly other researches have explored new usage of ERP system in small medium enterprise (SMEs) from that five dimensions .The researchers explained that ERP benefits and their realization dimension are interrelated and the manager of an organization should recognize the realization after the installation period of ERP. In addition, some benefits of ERP system that has been deduced after analyzing the literature are: it minimize the cycle time and overall cost of the operations. Furthermore, it improves the quality of decision making and it supports organizational changes, variations of IT infrastructure and flexibility of business practices. Moreover, researches on ERP benefits also demonstrate the advantages of using SAP system as ERP system in which the benefits are categorized into various forms like; organizational benefits, operational benefits, managerial benefits and IT benefits. Above the all, according to the various researches the most important benefit of SAP system is accounting benefit that occur when a business includes accounting department into SAP ERP system. With the help of SAP system in accounting department a company can create flexibility in generating information, it increases the coordination and improvement in generating various reports, it can speed up the process of disseminating information and it can also reduce the cost for closure of annual reports. In short, ERP system increase coordination and integration among various departments, it decreases the overall cost and provide flexible and timely information processing at any time. However, there is need to conduct experimental research on the ERP and its impact in accounting advantages (Kanellou & Spathis, 2011; Kallunkia, et al., 2011; Spathis, et al., 2004). Challenges of ERP implementation in Business Undoubtedly, since 1990 ERP has made tremendous progress till present day in the field of business worldwide. In spite of the convenience and ease that company are availing from ERP system, they are also facing different challenges and issues in installing ERP system. According to the research, ERP are being used by small and medium enterprises more frequently than the large multinational firms because ERP is not providing successful outcome even though it promises its quality for large capital investments. Most of the times, ERP have commonly show delayed and time consuming schedule likewise it also overestimate the initial cost of the budget. Moreover, researches and literature shows that ERP fails to complete the desire result and outcomes of the company. Likewise, many other researches also explain that failure to achieve the outcome is not the consequence of the ERP software but main reason of its failure is its complexities and considerable variation (Nah, et al., 2001). The main reason of failure of ERP system is their implementation. It compels the company to use its principle of best practices for creating proper reference model for the organization. The other most important reason of ERP system failure is its technology and its complexities. ERP system uses complex technology that creates problem like incompatibility with businesses processes, resistance to change, hesitation in using new technology, project mismanagement and mishandling, disturbance of organizational culture and management commitments related issues. These risks also explains different organizational concern like; project management, skill mix, user involvement, risk planning, personnel’s training, technology planning, and organization fit (Seo, 2013; Nah, et al., 2001). Moreover, when a company uses ERP system then it will become mandatory for the company to introduce organizational changes. For this purpose, the high involved senior management is required to resolve the conflict that arise from the organizational change, if involved senior management is absent then ERP system will fail in achieving the desire goal. As ERP integrates all the departments of the organization it difficult for the senior management to be committed all the time that is the reason company provides ERP system to ensure the smooth flow of communication in various department. In regard lack of training can create inaccuracy and confusion. For this purpose the project management team should provide clear understanding regarding the execution of ERP system to all members of the staff from work plan to resource allocation information. Without the god project management and handling techniques result can be in the form of failure (Nah, et al., 2001; Seo, 2013). Moreover, the role of team is also very important in the implementation of ERP system and its uses. The variety of functions are included in the process of integration of different departments through complex and integrated software package of ERP system. Therefore, clear understanding of among team members is highly required. If they don’t have clear understanding of the process, strategies and structure of ERP system then they cannot reap the true benefits of ERP system. For creating clear understanding, best balanced and experienced specialist of ERP are required. Iron triangle also explains this perspective of project management in which scope, schedule and cost are the basic element. In ERP system most of times scope is overestimated while schedule and cost are always overestimated in this way ERP system transformed the whole processes and when they are transformed it become difficult to revise the transformed process. Hence, ERP system requires integrated and coordinated perspective, accurate assessment and systematically arranged entire implementation process (Seo, 2013; Shehab, et al., 2004; Nah, et al., 2001). Recommendations All companies that are using ERP system should know the important fact that ERP system is totally different from other IT systems.it has changed the global business processes and its usage is not the end but the start of post implementation activities in the organization. Hence, it shows constructive relationship between ERP system practice and operational efficiencies of the firms (Kanellou & Spathis, 2011). The implementation of an ERP is believed to be a large size project covering almost all the areas of an organization and a huge investment. In addition, the success and failure of this implementation project heavily depends on the development and implementation team. Thus, in order to make this project a success, there is need for effective planning and resource allocation. The management should spend considerable time in planning and managing suitable resources for the project. They should hire experienced firm to lead the project so that this investment could get appropriate return (Nah, et al., 2001). Since the objective of the implementation of an ERP system is to automate and computerize the entire organization and this automated tasks would be carried out by the organizational staff members who were performing these jobs manually and are not used to this automation. Thus, it is necessary to consider their viewpoint before the implementation. They should be confident of any implementation. And they should have all the necessary knowledge about the decisions that are being made related to their jobs because they have to complete the tasks. In addition, appropriate training should be launched after the implementation of an ERP system. The employees should be provided with sufficient training that is required to operate an ERP system (Nah, et al., 2001). Moreover, in an organization there are so many departments that are closely connected to each other and the functionality of each department heavily depends on other department. Additionally, there is a chance of politics throughout the organization. Since some people go in favor of this implementation and some resist any change. On the other hand, the implementation of an ERP system requires extensive resources (financial and human) so this investment should not go in vein. There should be some meetings between all the stakeholders prior to the implementation of an ERP system. All the stakeholders should come on a common decision. The selection of an appropriate ERP system depends on the needs of an organizations. The implementation of an ERP system is a costly endeavor so the organization should conduct an analysis of its needs and required functionalities before choosing an ERP system. It should see its budget for the implementation. There are a large number of ERP systems that come with different functionalities and prices. So the organization must choose a system that fulfills its entire requirements at a minimum price (Nah, et al., 2001). Conclusion An ERP system is a large size system that automates almost the entire functionality and departments (such as human resources, sales, accounting and so on) of an organization. It is very costly to implement an ERP system because it requires a lot of investment in the form of financial and human resources. There are a large number of vendors that provide a wide variety of ERP systems. In this scenario, SAP offers a wide range of solutions for the management of all kinds of an organization’s operations. This report has discussed some of the important aspects of a SAP ERP system with respect to its accounting functionalities. This basic objective of this report was to discuss the importance of SAP ERP system for the management of accounting functions of an organization. In this scenario, this report has discussed some of the benefits and limitations of SAP ERP system and the recommendations that an organization should follow while the implementation of an ERP system. Since the implementation of an ERP is believed to a huge project so the organization should put a huge emphasis on planning and management of this project. It should use all the efforts in order to make this project a success. Since the success or the failure of an organization heavily depends on the working environment of an organization. In addition, all the employees should take active part in the development and implementation of this project. References Barron, J., 2009. SAP® ERP FINANCIALS ENABLING FINANCIAL EXCELLENCE, s.l.: SAP AG. Kallunkia, J.-P., Laitinen, E. K. & Silvola, H., 2011. Impact of enterprise resource planning systems on management control systems and firm performance. International Journal of Accounting Information Systems, 12(1), pp. 20-39. Kanellou, A. & Spathis, C., 2011. Accounting Benefits and Satisfaction in an ERP Environment. Thassos Island, Greece, 8thInternational Conference on Enterprise Systems, Accounting and Logistics (8th ICESAL 2011). Magna Training, 2012. What is SAP. [Online] Available at: http://www.magnatraining.com/what-is-sap/ [Accessed 03 May 2015]. Manufacturing Software Comparison, 2015. Compare Manufacturing Software Vendors. 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