Importances of Enterprise Resources Planning (ERP)

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.