CHAPTER I
Introduction
1.1 BACKGROUND OF THE STUDY
1.1.1 ENTERPRISE RESOURCE PLANNING
Enterprise Resource Planning (ERP) is one of the widely used software for managing and integrating the whole business. It gives a real time view of business and uses a database in the centre to manage and update the entire information flow in an organization. An ERP focuses on three main aspects as its name suggests they are: Enterprise, Resource and Planning. It concentrates on integrating all the departments in an organization which is considered to be the most difficult part in an ERP implementation process.
The concept of ERP was initially applied to reduce the inventory costs and was mainly used in manufacturing industry. The inventory levels were monitored and real time updates were done and status reports were done. During 1970’s MRP (Material Requirements Planning) was majorly used to schedule the production and understand the requirement of materials; later during 1980’s the scope of MRP expanded to MRP-II (Manufacturing Resource Planning) where it moved beyond material handling and inventory control and extended itself to entire manufacturing operations like Human resources, asset management etc.
These applications acted as the basic foundation for the ERP systems of today. ERP scope has expanded way beyond manufacturing; its presence is inevitable in almost all the industries. It has been able to accommodate all business functions by integrating both front and back end
Today Enterprise Resource Planning (ERP) is extensively adopted by many organizations regardless of kind and size, mainly because it provides enterprise-wide view of information across all their business operations and help organizations achieve consistency across all their functional departments. The potential benefits of ERP system implementation include improved coordination across functional areas, increased efficiency, reduced operational costs, rapid access to information for decision making, managerial control and support for strategic planning.
Enterprise resource planning enables firms to replace different departmental information systems and database silos with systems that collectively work as a single cross functional database. ERP systems are available for every key business function such as order processing, production control, HR, warehouse, marketing, finance and much more. By having a common technology and database platform throughout the firm, systems and processes from various departments can be integrated that achieve superiority in terms of enhanced cost, operational and productivity benefits. Implementing an ERP system requires careful planning to achieve the targeted benefits and minimize the risk of project failure.
Enterprise Resource Planning systems are integrated software applications that assimilate internal and external information that is required to manage an organization efficiently and effectively. The system encompasses finance, accounting, manufacturing, sales, service, and customer relationship management and automates these activities with a unified software system. The main purpose of an ERP system is to facilitate the flow of information between all business functions within an organization. ERP systems also aim to simplify the sales process by automating the entry requirements and making it easier for different business functions to access the
Enterprise Resource Planning System (ERP), also referred to as the traditional management system, was generated from the MRP or the Material Requirement Systems. Companies have utilized this system for well over 25 years. In its primary set up, the MRP stores data related to inventory control and production planning. The system is widespread with the use of one its system with the largest market share, the SAP system is the primary base system for over 60 percent of multinational companies. Many companies have been influenced by ERP over the years, including both small and medium size businesses; it is the
The object of this research paper is to describe the implementation challenges of an enterprise system, then to analyze the changes required in its implementation and discuss the advantages of ERP over legacy systems. Some of the informational background will be discussed in this paper regarding enterprise resource planning systems. This paper will construct some examples from my research findings to show why ERP has advantages over legacy systems. This paper will also not only provide strengths of having an enterprise system, but will show weaknesses as well. And to conclude, this paper will explain why and how enterprise systems will be of benefit for organizations and business with decision-making processes.
Today’s owners and management teams are faced with making tough decisions about how to manage operations in their organization. They need to be innovative to help reduce internal costs, improve processes, and increase efficiency across the organization (SelectHub, 2015). Thus, implementing an enterprise resource planning (ERP) system can provide many benefits to an organization. The benefits of using an enterprise system offer particular benefits, such as the support of teamwork, an improved response to the marketplace, increased work quality and greater employee collaboration and efficiency (SelectHub, 2015). Even though, ERP can provide many benefits, it also has pitfalls due to the complexity to implement, time consuming, requiring
Enterprise Resources Planning (ERP) is the core system of any company. In order to facilitate all departments in a manner to improve issues, there are a few things that must be meet to successfully utilize a software system such as ERP. This allows any member within the company to access a single and centralized data source with information regarding products, services, customers and suppliers (Sadrzadehrafiei, Chofreh, Hosseini, & Sulaiman, 2013). The ability to share and access one software benefits the company to improve in areas such as sales and marketing, customer satisfaction, human resources, operations, and more. In addition, business intelligence tools such as ERP systems provide the techniques and solutions managers need to analyze and understand complex business situations, and simplify decision making processes that is of crucial importance during times of financial and economic crisis (Antoniadis, Tsiakiris, & Tsopogloy, S. 2015). This paper explores the definition and functions of an ERP system and the successes and costs of implementation.
"Enterprise Resource Planning is an integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. ERP modules may be able to interface with an organization's own software with varying degrees of effort, and, depending on the software, ERP modules may be alterable via the vendor's proprietary tools as well as proprietary or standard programming languages" (pcmag.com). After researching companies who offer ERP solutions, I have decided to cover the following; SAP, IBM, AMS, and Oracle.
The purpose of this paper is to research and discuss issues and challenges related to Enterprise Resources Planning implementation projects in Manufacturing and public sector. Examples from over organisations were also used as a lot of the main people issues are related to many organisation implementation of Enterprise Resources Planning systems. This paper focuses on the issues and challenges associated with people/users of an organisation. Before that an overview and definition of ERP is provided. The issues and challenges discussed are fear of change and resistance to change, engagement of users in the implementation phase, role changes, knowledge and no/limited training. Solutions and recommendations are provided to
ERP (Enterprise Resource Planning) support communication at all levels of the organization, whereas businesses steadily look for innovative ways to communicate cost-effectively throughout its organization. Likewise, businesses such as the medical field are spinning toward ERP to escalate operational proficiency by merging administrative systems utilizing one single program. The software solution of ERP incorporates data that link departments with a multiplicity of modules in which businesses can select the one that is pertinent to their necessities and as they expand into various zones of the commerce which can be mingled into
Successful implementation of an Enterprise Resource Planning (ERP) is not impossible in real life but for that it must be developed through a proper planning and implementation. ERP are designed to upgrading an organization’s ability to generate more timely and accurate information for its supply chain. Organization must be ready for reengineered before the success of productivity can be realised. Most of the companies have faced heavy problems while trying to implement ERP systems and have led to serious problems.
[2] To be able to identify and evaluate major advantages and disadvantages of ERP systems [3 Marks] - Advantages of ERP - Reducing raw material and inventory costs. Production costs and time can also be reduced. ERP can impact the organisation by forcing changes that will benefit the organisation. It could also be implemented as a stage for different other applications and also be able to evaluate the performance that ERP has on the company. [5,6,11] (Deutsch, C.H. 1998); (Main, J. 1990); (Schlack, M. 1992)
Enterprise Resource Planning refers to an integration approach for a business. “Employee Resource Planning (ERP) is an integrated automated application which helps the organization to maintain all the micro, tough, difficult business transaction at one common location” (Wanare & Mudiraj, 2004). It was first defined by the Gartner Group in 1990 and has been widely used as the next generation of Manufacturing Business System and also as a Manufacturing Resource Planning software (Gartner Group). It relates to a system which is integrated, configurable, as well as tailorable for information flow where all plans and business resources are planned and managed (Bakry & Bakry, 2005).
ERP is an abbreviation of the word Enterprise Resource Planning; this is a software designed to offer assistance in business management. It a collection of integrated applications used by a company to collect, manage, store, and interpret business data sourced from different business activities carried out by our company. These business activities include data collected from service delivery or product planning. This software is designed to allow flexibility that helps in quick decision making and business management. ERP systems are integrated software packages, meaning they are built to cover all functions in a business setup (Gefen & Ragowsky, 2005).
The Enterprise resource planning system has become more popular in business management system and although provide great benefits to large organisations. However, implementation of an ERP has not been successful in all organizations. Since with the implementation of an ERP it certainly have a great effect on the entire organizations such as process, peoples are culture. There are certain numbers of challenges that the companies faced through an ERP implementation. Although many universities and business organization has started using an ERP system to overcome the problems arising with disparate system in order to improve the management and administration .ERP is generally a software which is helpful in integrating various functions of business and data in a single system which is to be shared among all peoples working in an organizations. For instance, ERP has now started expanding its scope worldwide in1990’s to perform various other functions such as human resource, finance and production planning process.(vandacle2011).However now ERP has started incorporating various organisations to build consumer relationship to become more competitive in business world. ERP helps in increasing operating efficiency of the firm (Beheshti, 2006) .ERP helps in sharing the same information in a single system because all data are entered in a single system and are communicated within the entire organizations and a as result cooperation and interaction of peoples