Importance of ERP Software
for Businesses
ERP software business solutions are
designed for companies that work in a wide variety of areas. IT combines a
large number of different elements into a single unit. Three of the most
important ERP tools available today are manufacturing, human resources, and
finance.
The
finance tools allow companies to successfully maintain their financial
information like that of the assets, accounts, budgets and cash. ERP can also
assist a company in managing internal as well as external factors affecting it.
A company that uses ERP financial products can save a great deal of money over
the long term, the reason being, the productivity of the organization will be
improved. Enterprise Resource Planning is instrumental in getting rid of time
consuming activities as paper management. A company is able to study their
processes, earnings, and performance by merging their operational information
with their financial information. Once this information is connected together,
a company can become more competitive and productive. Synergy is an important
part of ERP solutions. The concept of combining multiple processes into a
single whole will allow the company to become successful in the long term.
In
addition, to finance and business processes, it is also important to look at
materials maintenance. Enterprise Resource Planning will allow a company to
successfully automate the process of buying materials and maintaining them.
There are modules that track the supplies that are purchased and can also make
calculations about how these materials should be distributed. It also becomes
possible for a company to predict the demand of the market based on history,
economic statistics, and data from their employees. They can even decide when a
product should be produced, and they can do this based on the raw material that
is available.
Enterprise
resources planning (ERP) systems have been a popular information technology in
the changing business environment and one of largest IT investments. It software
has traditionally been used by capital intensive industries, such as
manufacturing, construction, aerospace, and defense. Besides that, it recently
been introduced to the finance, education, insurance, retail and
telecommunications sectors.
A theoretical framework is required
to interpret the impacts of ERP technologies on the organization. The five
major contextual factors which impact both business processes and product
associated with IT implementation in manufacturing firm. The organizational
innovation model (Kwon and Zmud’s 1987), they identified five major which are
characteristics of user community, characteristics of the organization,
characteristics of the technology being adopted, characteristics of the task to
which the technology is being applied and the characteristic of the
organizational environment.
Using this framework, the task and technology
characteristics of the three technologies are conceptually examined as the
input data to the capacity resource planning (CRP) module in MRP, MRPǁ, and ERP
and how the degree of potential integration between task and technology affects
compatibility in the manufacturing process.
The IT industry forecasts strong
demand for ERP and supply chain management applications over the next several
years. ERP has been selected worldwide for its integration capability
reputation, standard software, three-tier client/server architecture, business
engineering, and migration tool from the mainframe. Regarding the technology
characteristics, most ERP systems have three distinct features in their
architecture. These integrated features could facilitate compatibility between
task and technology inthe ERP system. The first is their data dictionary, which
specifies thousands of domains that are associated with supporting fields and
arranged in numerous tables.
The second is a middleware which could make
distributed systems possible by allowing users to set up application modules
and databases at different locations. The third is the repository. This is the
foundation of the business framework, because the repository captures all
semantics in the business processes, business objects, and organization model.
The ERP repository is able to exchange information via application programming
interfaces (API). These three technology features are used to coordinate
marketing, manufacturing, distribution, and human resources tasks in the firm.
So,
the most data on ERP were collected from IT industry reports and ERP advocates
that that the ERP software has a number of integrated businesses and IT
factors. The ERP solutions will likely continue to define the IT standards that
could enable end users to integrate most of their information systems into one
cohesive technology infrastructure. Many of the firm's applications in their
legacy systems could be replaced in the process of adopting ERP. ERP could
provide IT benefits to the firm from the inherent technological context.
Furthermore, with ERP all the tasks along the firm's value chain from
production planning to capital asset management could be integrated across
business processes.
Impediments to Successful ERP Implementation Process
In
term of ERP implementations, compared with findings from earlier work on
reengineering and change management, point to some of the areas in which
critical impediments to success are likely to occur. The impediment for ERP
implementation which are Human resources and capabilities management,
cross-functional coordination, ERP software configuration and features, systems
development and project management and change management.
Firstly,
is the human resources and capabilities management. In the absence of in-house
expertise, enterprises have turned to outside consultants to facilitate the ERP
implementation process. On other that, management of in-house and external
human resources in a coordinated process is critical for success. For example,
lack of user training and failure to completely understand how enterprise
applications change business processes that can cause to impediment of ERP
implementation process.
Secondly,
is cross-functional coordination that require to coordination across s
different functional areas as well as with external project members. The
problem of coordination is counted as one of the most important issues leading
to failure of a number of ERP implementations (Kumar and Van Hillegersberg,
2000). The lack of coordination can lead to implementation delays and
organizational conflicts, while piecemeal implementations can negate the very
purpose of an integrated package.
Besides
that, ERP software configuration and features also the Impediments to
successful ERP implementation process. Configuring the system involves making
compromises and has limitations, given the adaptability of the software and the
effort involved (Davenport, 1998). This fine-tuning of the standard system is a
key process in the implementation and requires translating business needs into
appropriate parameter settings.
Systems
development and project management also list of impediment ERP implementation.
Implementing an ERP system is a careful exercise in strategic thinking,
precision planning, and negotiations with departments and divisions that
requires careful selection and the appropriate project management structure and
methods (Bingiet al.1999). Given that most customers find that at least 20
percent of their need functionality is missing from a typical package (Scott
and Kaindl, 2000), systems development impediments may be critical. Furthermore,
novel combinations of hardware and software as well as a wide range of
organizational, human and political issues make ERP projects inherently
complex, requiring significant project management skills (Ryan, 1999).
Next,
change management important thing for implementations of technology and
business process reengineering that information technology system comprehensive
approach toward the large-scale process and system change associated with ERP
implementations. So, without appropriate change management processes,
enterprises may not be able to adapt to the new systems to make performance
gains.