Enterprise Resource Planning ERP Systems

Running head: ENTERPRISE RESOURCE PLANNING (ERP) SYSTEMS 1

Enterprise Resource Planning (ERP) Systems

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ENTERPRISE RESOURCE PLANNING (ERP) SYSTEMS 2

Introduction

The exceptional intensification of Information and Communication Technology (ICT)

supported by software systems, computer hardware, and microelectronics has impacted all the

aspects of computing applications in all the establishing and established organizations across the

world. The business environment is becoming more and more complex with essential functional

sections requiring adequate inter-functional information flow for efficient and timely

procurement of products, distribution of products, and management of human resources,

inventory, inventory, and decision-making (Rashid et al., 2002). Therefore, Enterprise Resource

Planning (ERP), Systems, is a good example of the software systems for the management of the

organizations.

Definition/statement of the ERP Systems

Enterprise Resource Planning (ERP) Systems are software systems designed for the

organizational management, involving modules that sustain purposeful areas in an organization.

Such functional areas in the business management include manufacturing, marketing, financial,

distribution, e-business, service and maintenance, inventory management, project management,

transportation, planning, human resource management, accounting, and sales. The architecture of

the ERP software initiates transparent integration of modules, thus helping in the providing flow

of information system between the functions within the organization (Rashid et al., 2002).

Areas of consideration

There are many companies that realized the need of using the software systems in their

business management. Some companies argue that adopting the software system has benefited

only for the finance departments such as debits and credit departments. Other organizations

ENTERPRISE RESOURCE PLANNING (ERP) SYSTEMS 3

claim that adopting the system is essential for the competitive advantage of the organization.

Beverage distributor, Device Manufacturer, and Civil Engineering Firms are key examples of

organizations that realized the need of using ERP software systems (Ciecierski, 2013).

Talking Rain is an example of a beverage distributor based in Washington State. Rain

claimed that the organization was wasting time since they had adopted manual processes in

carrying out their daily activities in the organization. Time wastage forced Rain to install the

ERP system software. Thus, the solution has enabled no time wastage in performing various

tasks. Currently, the company is growing rapidly due to many tasks completed within a short

time. Besides, a Device Manufacturer went green after realizing the need for implementing a

novel ERP system. Currently, instead of printing many papers for people to review, they are

currently sending electronic papers, and the papers are sent automatically to the expected people.

The expected people receive the documents through their emails so that they can review and

approve them. Also, approvals of the transactions have been eased since the approvals are stored

in the software systems with electronic signatures installed in them. Before the systems were

installed, one of the sales was required to walk around the organization looking for the sales

orders and collecting signatures for approval. These took a lot of time. Currently, the company

has gone green since the software systems are designed to work on various duties. Also, MacKay

& Sposito is an example of the Civil and Engineering Company that was experiencing

difficulties in determining which segments and projects were profitable. The company decided to

install ERP software systems. The system has eased everything in the company since there is

control of materials, segments, projects, and financial management (Ciecierski, 2013).

However, there are other companies that never accepted the use of the ERP Software

systems. WESCO Inc. is an example of a company that never appreciated the need of installing

ENTERPRISE RESOURCE PLANNING (ERP) SYSTEMS 4

the ERP software system. The company undertook a key overhaul of its information systems.

The information systems allow managers to access inventory and sales information from the

field. Also, the information systems enabled the managers in the company to know the products

that are being often bought than other products. Such features in their information systems made

the company not to appreciate the need of having the ERP Software Systems (Duvall, 2007).

Impacts of ERP Software Systems on the business efficiency

ERP Software Systems have various impacts on the business efficiency. For example, the

software impacts business efficiency through management integration. In this case, the software

allows the users in joining multiple segments of the business into a single program, thus allowing

managers to access all the databases that capture client’s figures, invoices, information, and

orders. Moreover, an ERP software system impacts the efficiency of business due to its cost

advantage. For example, medical industries are identifying approaches of cutting down the costs

but maintaining the efficiency of the business. In this case, the system can play an essential role

in cutting down the costs of operations, thus being a benefit to the organization. Managers can

make substantial cutback of costs relating to administrative and inventory mistakes (Rashid et

al., 2002).

ERP Software Systems are essential for the business efficiency since they take part in the

strategic planning of an organizational business. The systems will allow the managers to identify

their target market markets and define the objectives and aims of the organization. Also, the

systems controls finance since they keep watching the approaches that are being used by the

financial department in their operation, thus helping in ensuring the efficiency operation and

performance of the organization (Rashid et al., 2002).

ENTERPRISE RESOURCE PLANNING (ERP) SYSTEMS 5

Advantages of allowing ERP Software Systems Technology

There are many advantages when the ERP Software System technologies are allowed to

be implemented in organizations. Information is readily available on the systems for the proper

usage. The information is kept properly in the central repository. Also, the system is required to

be allowed in many organizations because there are reduced cases of data redundancy with a

proper comprehension of the overall picture of the business. In case a firm does not have the

ERP Software Systems, the firm is not likely to run at its full potential, thus, it is essential for the

system to e allowed in the organizations (Dunaway & Bristow, 2003).

Further, the ERP Software Systems are essential technologies that are required to be

allowed in various organizations because the technology can allow users or managers in the

organization in formulating a better comprehension of the overall business picture. Additionally,

the technology is required to be accepted in the organizations because executives and

managements can formulate better decision-makings in the business since all the required

information is installed in the system. In addition, ERP technology is supposed to be allowed in

firms because business performance and efficiency can improve because the system integrates

various processes in the business.

The ERP Software systems is an essential technology that is required to be allowed in an

organization because of its aptitude to manage and control the probable development of business

contained by the organization and prospect e-supply and e-commerce succession investments.

The Information Technology (IT) costs can be decreased vitally when installing an ERP

Software System in an organization. For example, in the banking firms, the merging financial

institutions can lessen the time integration of post-merger by 12 months to 18 months with a

ENTERPRISE RESOURCE PLANNING (ERP) SYSTEMS 6

saving cost of about $60 million to about $80 million. When the technology is allowed in the

financial institutions, the systems can help the institutions with an incessant firm-specific

pressure. The pressures can be globalization and governmental regulations, thus helping the

organizations in smooth running of the operations since the regulations are comply (Dunaway &

Bristow, 2003).

Further, the ERP technology is required to be allowed in various organizations because of

its availability and improved security. There are next to no cases when a company installs the

system in its operation, thus improving the security. There is an increased flexibility and time

management of an organization when the system is allowed in the organizations since the system

can work in various tasks since different commands are installed in the software systems. There

is a cost reduction in the operation of the firm when the system is allowed in the organizations

(Dunaway & Bristow, 2003).

Other advantages of allowing the system in an organization includes efficient business

operation, improved harmonization of the Information Technology (IT) infrastructure, reduced

complexity of different tasks in the organization, faster and better compliance with the legal

frameworks and requirements, and an improved business integration of an organization

(Dunaway & Bristow, 2003).

Disadvantages of allowing ERP Software Systems Technology

However, the system should be allowed due to some reasons. For example, the

installation of the system is costly, especially for the establishing organizations, thus being

expensive for such firms. Also, the system requires knowledge while operating them, thus being

hard to be operated by the non-skilled people. Besides, the system is not required to be allowed

ENTERPRISE RESOURCE PLANNING (ERP) SYSTEMS 7

in the organizations because of the resistance in sharing of the information in an organization,

thus leading to the reduction in the efficiency of the system. Change of the employees in an

organization may lead to the recruitment of the non-trained employees who have no idea in the

management of the system. Therefore, the system is not required to be installed in the

organizations (Hoseini, 2012).

The advantages of the systems are not realized immediately after installation. The

benefits are realized after a long period of operation, thus making the organization to realize its

benefits after a long time. Thus, the system is not required to be allowed since the organization

will wait for a long time to realize its benefits. The maintenance cost of the system is expensive,

thus being a problem for the most of the organizations to maintain the system. Therefore, it will

be necessary not to allow the system in the organizations since the system requires a lot of

money to be maintained (Hoseini, 2012).

How does ERP technology change the corporate culture?

Adoption of the ERP technology changes the corporate culture of an organization in

various ways. For example, certain behavioral patterns of the technology users are regularly

varying as a result of the acceptance of the technology. The acceptance of the technology has

facilitated the corporate culture change happening currently in different organizations through

permitting the management of the organizations to realize that the technology requires certain

types of the behavioral patterns. Such behavioral patterns that are being changed by the

technology includes additional task commitment by the user, acceptance of change by the user in

the organization, timely decision-making process by the user in the organization, and process

discipline of the user in the organization (Rajapakse, 2012).

ENTERPRISE RESOURCE PLANNING (ERP) SYSTEMS 8

Initially, before the implementations of the technology in various organizations, there

was no corporate culture change. But due to the evolution of the technology, many organizations

have accepted the technology into their firms, thus leading to the corporate culture change.

Culture transformation has taken place in various organizations due to the adoption of the

technology since the organizations needed to nourish the performance of their business.

Therefore, organizations that adopted the technology are recruiting professional people to replace

the retired individuals. Recruitment of the professional people reduces the cost of educating non-

professional people regarding the management of the system (Rajapakse, 2012).

How to control possible abuse of the technology in the workplace?

Abuse of the ERP Software Systems can be possible in the workplace. For example,

managers or any other user in the organization can opt to use the system for the personal purpose

rather than focusing on the purpose of the system. Therefore, such abuse of the system can be

controlled in various ways. For example, such abuse can be controlled by reinforcing regulations

of the use of the system. Any user found using the system inappropriately is reliable for broken

regulation. Also, misuse of the system can be controlled by assigning the right person to be

dealing with the system rather than allowing any person to operate the system. Lastly, abuse of

the system can be controlled by educating the staff on the essentialities of the system and the

possible outcomes if the system is misused. Therefore, the staff will have a rough idea of the

possible outcome if the system is misused, thus enabling them to understand the proper usage of

the system.

Security concerns

Security is essential for the ERP Software technology since the system is used in wide areas such

as medical, intelligence, finance, and defense. Therefore, organizations that are using the

ENTERPRISE RESOURCE PLANNING (ERP) SYSTEMS 9

technology are required to develop a security policy that will help in focusing on the

confidentiality of the security. Organizations that are using the system are required to have the

Web services security and security policies that will help in the safe usage of the technology

(Thuraisingham & She, 2007).

Why is the security of the technology complicated?

The security of the technology is complicated because establishing user management, financial

data management, internal controls, compliance, protection against external and internal threats,

and other cyber threats is a difficult task. Solving the issues requires a professional person, and

finding such a person is hard.

SWOT analysis of the system

Strengths

Weaknesses

Opportunities

Threats

 The system is

in one place

 Full Microsoft

environment

 Provide

reliable

information

 Complex in

using it

 Need

professionals

in using it

 capable to

additional

integration

 Currently,

there is no stiff

competition

over the

system

 Different in

accepting the

system by

various people

 The system

uses strict

rules

How the topic fit what had been discussed in the textbook written by Hossein Bidgoli

ENTERPRISE RESOURCE PLANNING (ERP) SYSTEMS 10

The topic of this paper fits into what we had discussed in class regarding the book written by

Bidgoli. For example, different aspects have been discussed based on the topic. The same aspects

were captured in the book. The concepts, Personal, Legal, Ethical, and Organizational Issues of

Information Systems, is a topic captured in the book. Also, the aspect, Protecting Information

Resources, is also captured in the book. These aspects have been discussed in this paper, thus

giving me confidence that my topic fits into what we had discussed in class about the book

written by Bidgoli.

Conclusion

Based on the critical analysis of the topic, it is, therefore, necessary to conclude that ERP

Software Systems is an essential technology that is looking forward to driving the reformation of

various organizations. Based in this context, organizations are required to adopt an efficient and

timely information system that will help in the competitiveness of the organization at a reduced

cost of operation. Therefore, managers in various organizations are required to understand that

Enterprise Resource Planning (ERP) Systems is the organizational process management software

that permits firms in using an integrated system in the management of the business and

computerize many other office functions that are relating to human resources, services, and

technology.

Recommendation

Based on the discussed advantages and disadvantages of the Enterprise Resource Planning (ERP)

Systems, I, therefore, recommend organizations to adopt the system since the discussed

advantages outweigh the disadvantages. The outweighing of the advantages means that the

technology is essential, especially when adopted by originations.

ENTERPRISE RESOURCE PLANNING (ERP) SYSTEMS 11

References

Ciecierski, A. (2013). Three Examples of Companies that Used ERP Software for the

Competitive Advantage. ERP Consultant Network Blog.

http://www.erpvar.com/blog/bid/94414/Three-Examples-of-Companies-That-Used-ERP-

Software-for-a-Competitive-Advantage

Dunaway, M. & Bristow, E.S. (2003). Chapter 1: Importance and Impact of the ERP Systems on

an Industry and Organization. The University of Arkansas. Fayetteville.

http://web.calstatela.edu/faculty/pthomas/sap/Readings_on_ERP_chapter01.pdf

Duvall, M. (2007). Why WESCO Doesn’t use ERP Software System.

http://www.baselinemag.com/c/a/Business-Intelligence/Why-Wesco-Doesnt-Use-ERP

Hoseini, L. (2012). Advantages and Disadvantages of Adopting ERP Systems Served as SaaS

from the Perspective of SaaS Users. School of Information and Communication

Technology, KTH. http://www.diva-portal.org/smash/get/diva2:647780/fulltext01.pdf

Rajapakse, J. (2012). Can ERP adoptions change organizational culture in developing countries

in Asia? An empirical investigation. School of Information Technology, Sunway Campus,

Monash University, MALAYSIA.

https://www.computer.org/csdl/proceedings/hicss/2012/4525/00/4525f093.pdf

Rashid, A.M., Hossain, L., & Patrick, J. D. (2002). The Evolution of ERP Systems: A Historical

Perspective. Idea Group Publishing.

https://faculty.biu.ac.il/~shnaidh/zooloo/nihul/evolution.pdf

ENTERPRISE RESOURCE PLANNING (ERP) SYSTEMS 12

Thuraisingham, B. & She, W. (2007). Security for Enterprise Resource Planning Systems.

Information Systems Security. The University of Texas at Dallas, Richardson, TX, USA.

https://www.utdallas.edu/~bxt043000/Publications/Journal-

Papers/DAS/J46_Security_for_Enterprise_Resource_Planning_Systems.pdf

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