Discuss About The System Implementation Among Malaysian Smes?
Enterprise resource planning (ERP) refers to integrated business management software which can manage and automate different functions of an organization. The ERP systems are commonly used in an organization, and it is used to automate different back office functions related to technology, service and human resources. Today, ERP software are constructed to integrate all the facets of an organization‘s operations which includes planning, manufacturing, sales and marketing. It is a single database used which can maintain and control all the functions and operations of an organization (Grabot, Mayere & Bazet, I2008).
ERP is an abbreviation standing for Enterprise Resource Planning. There are various processes requires for running a business which includes inventory management, accounting, human resources and the customer relationship management. The ERP software integrates different functions of an organization to streamline and coordinate different processes of an organization. The ERP systems have a long history dating back to 1960s. However, the term was coined by Gartner in 1990. The ERP system focused on inventory management and control in the manufacturing sector. The engineers developed programs for the management of inventory and adequate reporting so that the organization does not run out of supply. Later, in 1990s, the concept expanded to other back office functions of an organization such as accounting and the human resources. At present, ERP system has prevailed to other parts of business functioning which includes front office functions such as sales, automation, marketing, salesforce and ecommerce (Nwankpa & Roumani, 2014). Although these systems were designed for large business organizations, several small and middle scale organizations are also adopting ERP software system. Moreover, in the recent years, ERP system have also become more affordable with the advent of cloud computing. The cloud based solutions have not only made ERP system more affordable, they have also made the system easier to implement and manage. It has also enabled real-time reporting of various events and supported the Business Intelligence (BI) of the organizations.
There is high business value of the ERP systems as it helps in breaking down the obstacles between business units. The ERP solution provides a global, real-time view of data which enables the companies to address different issues proactively and increase improvements. The ERP system can assist the organizations to comply by the financial standards and reduce risks related to management. It also automates core business operations of an organization such as financial management, order fulfillment and procure to pay processes. It also assists in establishing high-quality customer service so that customer loyalty can be established (Maditinos, Chatzoudes, & Tsairidis, 2011).
ERP software is an enterprise application in which software is designed for large business organizations which have numerous and diversified business functions. Different teams work on different information sets and if they are available at one platform it can streamline the operations of the organization. The software is dedicated to the integrated management of business operations and processes of the organization. It work at real-time and use software abs technology. The software used in ERP application focuses on the collection, storage, management and the interpretation of different business activities. With ERP system, the organization can provide an integrated and updated view of the business processes with the help of maintaining common databases. The primary aim of the ERP system is to keep track of the organization’s resources which include the financial resources, production capacity and the payroll or purchase orders (Shatat, 2015). The ERP system helps in sharing the system data across various departments which includes manufacturing, purchase, sales and accounting. It also ease the process of information flow between different departments and manages the connection between different stakeholders. The ERP system streamlines different functions of an organization; therefore, it facilitates error-free transactions, production and the manufacturing process.
Although, there are several benefits of the implementation of ERP system, several times the implementation of the system is not successful. If the system is not giving expected benefits or it is not implemented within the timeline, then the implementation of the system is considered as unsuccessful. There are several standardized ERP systems available in the market but the organization can also customize the ERP system according to the use specific to the organization (Sykes, Venkatesh & Johnson, 2014).
Moreover, the implementation of ERP system is also challenging for the organization. Before the implementation of the system, the organization should also define the scope of the project. The management should establish the expected functions of the system so that it can be designed accordingly. The implementation of the system also faces resistance from the employees. The staff of the organization resists the implementation of new system as they have to learn new technologies. Most of the business organizations implement a combination of strategies to reduce the resistance created by the business organizations. These strategies include consulting, customization and support. The management of the organization should consult with the employees the benefits of the ERP system and how it can simplify the overall operations of the organization. The training sessions should also be conducted so that it the employees can learn new technology and do not face any difficulty in learning new processes. The customization of the system is also important for business organizations for maximum utilization of the system. Every business organization has is unique operations and business processes. With customization, the organization can adapt the system so that it suits its business process and operations. It will also ease the operations of the organization. During the customization, the organization should also consider the handling process of software. It should be assured that the employees can easily operate the system. However, the customization of the software increases the implementation time of the system. In large organization, the implementation time of the ERP system can extend from months to years. The implementation time of system depends on the number of modules, business size, and customization and process changes (Tenhiälä & Helkiö, 2015). Several big business organizations such as IBM and Walmart use the ERP software to increase the efficiency of the organization. The ERP system can be implemented for a specific subsection of the organization as several organizations use ERP system for human resource management or inventory management of the organization. The implementation and the design of the system completely depend upon the requirements of the organization.
It is important to prepare the organization as well as the employees for the implementation so that the system can be implemented successfully. The main reason for the project failure is the poor understanding of the project and its need in the organization. The lack of acceptance for the project can result from lack of understanding of business processes, infrastructure issue, training or lack of motivation for the system implementation (Madapusi & D’Souza, 2012).
ERP system is frequently used in the context of software as the software methodology has become quite popular to assist the companies in managing the ERP system. The ERP system refers to a connection which binds all the computer systems in an organization. Each department of the organization has its own system which is optimized for that department. The functioning of the software is dependent upon the particular task and operations of that particular department. With ERP system, an organization can streamline the operations of the organization. The ERP system allows each department to have its own system; however, they can communicate with ease with other parts of the company (Supramaniam, Abdullah & Ponnan, 2014).
The ERP software is integrated in the central part of a business. It collects information related to different divisions of the corporate organization and makes them available to other parts of organization. The primary function of ERP system is to collect information related to different departments of the organization and different departments of the organization can use the same information to ease their operations. In the present, the users can add information in real time which will be beneficial for the users (Shen, Chen & Wang, 2016). Different users can access the system with valid password at any time. The ERP system can assist the organization to become more self-aware regarding different functions related to production, finance, distribution and human resources. However, a business organization should not experience cost overrun if the ERP system is not implemented carefully. The ERP system cannot control inefficiencies in the business. It is important that the business adapt or customize the ERP system according to its business operations of the organization.
Currently, most of the large business organizations have implemented ERP system in their business operations. However, research and investigation have been conducted to expand the applicability of ERP systems in the business organizations. The ERP systems are too expensive for small and medium enterprises; however, the advent of cloud computing has reduced the cost of the system. Recently, SaaS solution has also been developed so that ERP system can be implemented in an economic manner. The small and medium enterprises which are looking to innovate and expand their business operations can use ERP system to seize new business opportunities (Kilic, Zaim & Delen, 2015). The ERP system should offer flexibility so that new users can use it quickly and it should also be able to support the changing demands of the business and the market. In the present, the ERP system has been developed so that it can integrate different processes of a business organization. The ERP system has been successful in interconnecting all the departments of an organization with a single data depository and user experience. However, ERP system should also be able to access advanced features such as data visualization and analytics. The business organization should not only focus on some specific activities with the ERP system but it should also be extended to other departments (Matende & Ogao, 2013). The employees should also be able to access the information through their mobile devices and new age devices.
Conclusion
ERP systems are essential for the present business organization. It is software based solution which integrates the different business operations of the organization with a single data repository. It is important in business intelligence and decision-making. In large enterprises, there are several different departments with their unique needs and operations style. Therefore, each department develops their own IT system. However, different IT system brings complexity in the operations of the organization and the employees of different departments will not be able to operate the system. Therefore, it is important that the organization develops an integrated system which manages all the activities of the organization. The ERP system offers this facility to an organization. However, there are significant challenges in the implementation of ERP system which often results in failure in system implementation. Running out of budget or misalignment with the operation of a company are the primary reasons which may result in the failure of implementation of ERP system.
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References
Grabot, B., Mayere, A., & Bazet, I. (2008). ERP Systems and Organisational Change: A Socio-technical Insight. Springer Science & Business Media.
Kilic, H. S., Zaim, S., & Delen, D. (2015). Selecting “The Best” ERP system for SMEs using a combination of ANP and PROMETHEE methods. Expert Systems with Applications, 42(5), 2343-2352.
Nwankpa, J., & Roumani, Y. (2014). Understanding the link between organizational learning capability and ERP system usage: An empirical examination. Computers in Human Behavior, 33, 224-234.
Tenhiälä, A., & Helkiö, P. (2015). Performance effects of using an ERP system for manufacturing planning and control under dynamic market requirements. Journal of Operations Management, 36, 147-164.
Shen, Y. C., Chen, P. S., & Wang, C. H. (2016). A study of enterprise resource planning (ERP) system performance measurement using the quantitative balanced scorecard approach. Computers in Industry, 75, 127-139.
Maditinos, D., Chatzoudes, D., & Tsairidis, C. (2011). Factors affecting ERP system implementation effectiveness. Journal of Enterprise information management, 25(1), 60-78.
Madapusi, A., & D’Souza, D. (2012). The influence of ERP system implementation on the operational performance of an organization. International Journal of Information Management, 32(1), 24-34.
Shatat, A. S. (2015). Critical success factors in enterprise resource planning (ERP) system implementation: An exploratory study in Oman. Electronic Journal of Information Systems Evaluation, 18(1), 55-89.
Supramaniam, M., Abdullah, A., & Ponnan, R. (2014). Cost analysis on ERP system implementation amongst Malaysian SMEs. International Journal of Trade, Economics and Finance, 5(1), 72.
Sykes, T. A., Venkatesh, V., & Johnson, J. L. (2014). Enterprise system implementation and employee job performance: Understanding the role of advice networks. MIS quarterly, 38(1).
Matende, S., & Ogao, P. (2013). Enterprise resource planning (ERP) system implementation: a case for user participation. Procedia Technology, 9, 518-526.
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