Enterprise Resource Planning - ERP - Assignment Example

Enterprise Resource Planning ERP is an abbreviation of Electronic Resource Planning. This term is highly important in the corporate world and it assist in managing a number of tasks in a business. ERP is beneficial not only for one department but it gives it benefits to every department of an organization. In total, one can state that ERP provides a single solution for the needs of every department. The incorporation of ERP in an organization is a step towards betterment of an organization because due to this system a single computer is enough to fulfill the needs the different departments (O'Leary, 2000). Whether it is a marketing department, a warehouse or a finance department, the software of ERP meets the needs of all of them. It is because of the fact that this software is designed in a unique way that has multitasking abilities. Due to this dynamic software of ERP, people of different departments can easily communicate and share information with each other. In addition to this, it is imperative that organizations install the ERP software in an appropriate manner to get benefits from its results. Multiple issues can be resolved with the incorporation of ERP in a firm (O'Leary, 2000). For instance, after the customer places an order, it goes through different stages but not all the departments in a single organization are aware about the updates of that order. If marketing department wants to know the updates, it will either email or call the other departments for getting knowledge about the order. This results in delay of order and misunderstanding the customer’s specification. However, ERP removes all such problems and provides an excellent solution for this. With the help of ERP software, marketing department, finance department, warehouse, and all the other departments of an organization are aware about the status of an order at a single time (Monk & Wagner, 2009). At present, ERP is only used by the employees, but with rapid changes in the world, the demands of customers are also increasing and they now want to have access to the ERP system so that they can also view the status of their orders. This is a complex time and involves high amount of risk. ERP removes the old system and offers a new system of automation and ease. It is not essential that every organization should purchase the entire package of ERP, but ERP provides an opportunity to its customers that any single module from the whole package can also be purchased (Monk & Wagner, 2009). The implementation of ERP needs a lot of time, though there are some people who say that ERP can be implemented in a period of around six months but not all these sayings regarding the implementation are true. A short time of six month can occur only if the organization is quite small or if ERP needs to be implemented on any specific area of an organization. In order to implement ERP at every level of an organization, it is essential to change the way through which employees perform their duties as well as the functions of a business. It is true that the implementation of ERP requires time as well as effort but on the other hand, it benefits are remarkable and it takes an organization at a place where it can easily compete with all of its competitors and satisfy all the needs of its customers. The estimated time for complete implementation of ERP in a middle size organization can range from two to three months. However, due to rapid developments in information technology, a new ERP software came into being which takes less implementation time than the conventional ERP software. This new version of ERP software is referred as SAAS (software as a service). As far as the cost of the ERP software is concerned, its cost is associated with a number of hidden costs. These hidden costs include training cost, testing cost, data conversion, and customization. Training of the employees regarding this new system is highly essential because if employees lack knowledge about this system, benefits can never be gained. In addition to this, employees will find difficulty in working in an organization, which has brought a new change and not taught the employees about how to use it. Since all the employees from different departments will use this software, it is imperative that each of them will have an appropriate understanding about it. Besides this, testing cost is also an important cost, which cannot be avoided. Customization is the type of cost, which can be avoided by organizations who do not need to customize certain portions of it according to their specific needs. However, it is a common observation that most of the organizations do not prefer customization of the ERP software (Leon, 2008). Another type of the hidden cost is of data conversion that refers to the transformation of data records from the old system to new ERP system. Most of the companies expect that they will start gaining good returns on their investment from the next day of implementation of ERP system. However, this is not true, though ERP provides returns on investment, but it needs some time. ROI cannot be gained in a very short time. For installing ERP, three common ways are adopted by organizations. These ways are franchising strategy, big bang and the slam-dunk. The big bang system is the one in which high amount of risk is associated because according to this strategy a company should install the entire ERP system at once. Since the company has no former experience of using this system, there is high probability of risk that either the employees will be comfortable in this system or not. Franchising strategy does not call for the installation of an entire ERP system at once but in this type of strategy, separate ERP modules are installed in separate units of an organization. In this strategy, only such information is mutually shared between departments that are essential to share between them. The franchising strategy begins with the pilot installation and it is usually preferred for those businesses in which the core element of the business is affected by a minute mistake (Hamilton, 2004). The third system is termed as slam-dunk and the small companies who wish to implement the business process re-engineering in their organization usually acquire it. As it was mentioned above that ERP has variety of modules, which includes finance, human resource, quality management, marketing etc. and the basic purpose of ERP systems is to form a combined solution for all departments therefore, in databases and across systems, some of the master tables are used. These tables are shared with multiple functional areas and due to this reason; the data in these tables should be accurate and high in quality. A number of employees use the data of any organization and if preventive measures are not taken many errors can arise in the data. In order to get rid of this problem, master data management is used. MDM automatically corrects the errors in data and ensures that the data is kept safe and secured. MDM is incorporated to secure the most significant data mainly of an organization, such as ledgers, invoices, reports, and other tools. With the use of this data, many kinds of frauds may occur. Therefore, if an organization does not gain expertise in ERP, such problems are likely to arise. Not only is this, but this can create confusion and misunderstanding between different departments which in turn can affect the production. The methodology to maintain these master tables in the ERP systems is quite easy. It is because audits are performed on these tables so that any lapses can be checked and recovered. Besides this, authorization is needed for modifying these tables and the process is documented (Hamilton, 2004). ERP systems are an essential need in the twenty–first century. Since rapid globalization has occurred and mass production is practiced in organizations, it is imperative to bring a positive change in the business. There are plenty of benefits, which the ERP system offers, but acquiring these benefits requires time and patience. Besides this, if any organization implements an ERP system it should ensure that its employees are ready for this change and it will be master in it in the future. References Hamilton, H. (2004). Maximizing Your Erp System. London: Tata McGraw-Hill Education. Leon, A. (2008). Enterprise Resource Planning. New Delhi: Tata McGraw-Hill. Monk, E. F., & Wagner, B. J. (2009). Concepts In Enterprise Resource Planning. Australia; Boston, Mass.: Course Technology Cengage Learning. O'Leary, D. E. (2000). Enterprise Resource Planning Systems. New York: Cambridge University Press. Read More