In an organization, the management team and the business owners has to take tough decisions in managing the different operation processes in the organization. Enterprise resource planning is beneficial for the organization and it requires a lot of financial resources, effort and time on a regular basis in the organization. These packages save the money of the organization and it helps in product development as well as in supply chain management. Moreover, the ERP system will also help in improving the business packages of the organization. Many researchers has defined enterprise resource planning (ERP) as an important business with much wider applications that has helped in incorporating diverse business capacities of the organization such as human resource management, stock management, finance and accounting (Tarhini et al. 2015) . Moreover, it will also help in taking wider decisions such as operational planning, strategic and tactical planning, cost reduction and effective communication. An essential goal of ERP software in the organization is integration of the business processes and facilitation of the flow of information in the organization that will help in taking important business decisions that are usually data driven (Hwang and Grant 2016). The main aim of the report is to understand the beneficial effects of ERP system and the issue that are associated with the disparate legacy system. The paper will also highlight relevant literature to highlight the importance of ERP in integration of business practices and systems.
With the development of industries and the growing importance of resources and management of different procedures, it is vital to have such a tool that will help in the co-ordination of several activities. ERP will give the opportunity of integrating the various procedures of the business and improving the quality of service in the organization. They are also regarded as an essential tool in making important decisions on real time basis and progonosis regarding different organization. Moreover, the strategic planning of the different organization will also be managed by ERP and thus it will help in the integration of wider changes in the organization. ERP system will be beneficial for the manufacturing companies and it is necessary to upgrade the technology in this sector so that it will help in minimizing the manufacturing cost and also develop the resource utilization of the organization. Moreover, ERP has also facilitated several companies in transparent mode of operational process among different departments and organizations (Khan et al.2015).
The performance metrics and the different measurements are important in evaluating the business progress and it will also help in setting up of future goals in the organization. It can be said that when a business grows, it will become difficult for the organizations to calculate the sales margin, other metrics and profit ratios in the organization. ERP also helps in bringing automation in the business organization by allowing the employees to access the shared data without the need to maintain manual records in the organization. It will help in the generation of synchronized report on the key business metrics in the organization (Elragal 2014).
The workflow process will be improved and it will help to streamline and get access to the user friendly interfaces and thus the employees will be able to acquire the relevant information that is necessary to do the job. It is also important to extract a custom or standard report and thus will be easier with the help of ERP software. This will also lead to enhanced productivity of the employees in the organization. The main objective of ERP is to integrate the varied functions into a unified platform. There are many business organizations that are stuck in inevitable positions and their data is stored in multiple systems and locations. This can be done with centralizing the data and streamlining the means of accessing the data that will help in contributing to greater efficiency in the business model (Tomić and Jovanović 2016).
In most business organization, the data stored and the information used are extremely business assets. Data integrity and security is extremely vital for strategic business information that is accessed and processed by the people. The data that is maintained can be given to the people with proper authority. It will also help in maintaining the data safely and it will also give proper access to the data. One of the major problem with the non-centralized data management is continuous occurrence of data management. This redundant data will lead to inconsistencies and thus there will be confusion over the passage of time. ERP system will also help to join the processes and data that will help in getting a proper view (Haddara and Elragal 2015).
An ERP system will also help in automation of the business processes by placing a proper format that is standardized and useful for the whole organization. A powerful ERP system will also help in the integration of sales, equity, marketing, products, processes, stocks and supply chain in a single database. It will also help in elimination and occasional loss of retyping errors and thus integrate all the departments and functions in the organization (Pridmore et al. 2014).
There are various challenges associated with the implementation of ERP . It is important to know the systems and processes that needs to be integrated. It is also difficult to know the different integrating system in the organization which will help in gaining competitive advantage and thus it will hinder the workflow in the organization. It also becomes harder and complicated in large organization because there are different business divisions in each organization and it difficult to handle them accordingly (Nwankpa and Roumani 2014). It has been found that the decision makers are not aware of the ERP system in the organization when they are planning for launching complicated system. Another important challenge in the ERP system is the well designed measurable objections and goals which are important for the implementation of ERP software. The implementation issues are directionless and thus it will lead to frustration and challenges. The goals must be defined properly at the outset of the project and it is necessary to change or add more to these goals. Moreover, it is also important to designate the implementation team at the beginning. It is also necessary to understand the departmental needs and goals by the end of ERP. A commonly misunderstood issue in the ERP system is belief that requires an extensive customization. In certain cases, it is found that the companies are not engaged in different kinds of solutions (Kilic et al. 2015).
The organizations must try to install the modules from the ERP vendors at the beginning of ERP implementation. This will facilitate in the expansion of the organization and thus help in purchasing the modules from different vendors. Moreover, the business process will change the other integration processes and it will also provide support for data transformation and other additional data formats. On the other hand, if the existing applications are tightly coupled, it will be costlier to modify and adapt flexibility and business agility. The process of ERP business integration has been successful in the transaction process which were earlier carried out by inbound integration processes. There is also a need to provide outbound data from the ERP system to other enterprise system. In many cases, the web portals will also require real time information (Molin and Silfverhielm 2016).
The multinational companies that are facing the ERP has gained substantial benefit in capital investment and thus have gained successful outcome. The implementations have delayed an estimated schedule and an initial budget. Moreover, the implementation process has failed to help in the achievement of desired outcomes and targets of the organization. It has been found that the failure of ERP is not caused by the software itself, but due to a high degree of complexity because of massive changes in the organization. The failure can be explained by the fact of ERP implementation which has forced the companies to adopt the best practices in the successful organizations and also to conduct adopt a successful reference model. The major problem of ERP is related to the technological issues, compatibility and standardization process. These are also related to organizational culture, top management, resistance to change, project mismanagement and incompatible business practices. It can be said that the risk factors that are associated with different organizational outcomes such as skill mix, organization considerations, user involvement, management and control and technology planning. Since the implementation of ERP causes organizational changes, therefore it is important to engage the senior members in the organization who will be able to resolve the conflicts in the organization. This will avoid high risk of failure of the ERP system in any organization. Due to changes in business practices across the organization, there will be resistance to change in adoption or implementation of the ERP system. This system integrates and connects the varied functions which are within the business organization. Thus, it can be said that it is critical for the staffs in the organization to be committed towards their work and this will equip the employees who are engaged with the clear channels of communication. Lack of training in the organization increases risks in the organization through creation of inaccuracy and confusion and this decreases the satisfaction of the users and the credibility of the entire system ((Pridmore et al. 2014).
It can be said that excellent project management is also associated with the successful implementation of the ERP system. ERP integrated a diverse range of business functions in the organization in a single system. This will necessitate an integrated and complex software packages and if the team does not help in understanding the changes in the organizational structure, it will result in great loss for the team members. Therefore, it can be said that in order to implement ERP, the team members must try to strike a balance between the experiences in the organization as well as the external experts who are specialized in ERP software (Laudon and Laudon 2016).
ERP system addressing the integration issues
There is importance for the need of alignment between the different applications and strategies in different organization. It can be said that in the manufacturing sector the investments in different information technologies and the IT applications must be aligned according to the competitive processes and strategies in the organization. There are certain dimensions of strategy and it can be said that the manufacturing sector is associated with the superior performance and it demonstrates a clear link between the organizational strategy and business (Hedman and Sarker 2015).
The ERP system integration will help in the internal application and the legacy system that the tax customs integrations will help over the passage of time. The complexity that is tied around the integration process is associated with the primary sources that are associated with an array of service associated with multiple vendors and up gradation of schedules in the organization. The increasing use of industrial internet will also lay an impact on the integration of ERP system and the companies that will start to collect the data will integrate the traditional ERP data. The companies will start to gather data from the sensors on the platform with the help of shipping pallets and this will help in the integration of data with the help of traditional ERP data.
The business process integration in the ERP system will help in primary inbound integration. There must be provision for the outbound data to connect with the other ERP system and enterprises. In certain cases, it has been found that ESB can be integrated with flexible, scalable and future proof way in the enterprise system. The complexity of ERP has forced many organizations to collaborate with the other consultants so that they can adopt the ERP solutions very easily. A major problem of ERP solution is to avoid conflict with other business strategies. It can be said that the non-flexible nature of ERP solutions will abandon the way of doing the business. It might affect the companies in certain cases and thus it leads to bankruptcy (Hedman and Sarker 2015).
An integrated system is beneficial for the company and acts a great contributor to the success of the business. An integrated system helps in reducing crucial barriers in the business and offers transparency to all its processes. Integrated is important in today’s companies because most of the processes are complex and difficult to conduct. Integrating these processes in one place with the help of an integrated system or software is crucial for the companies to improve their performances. An integrated system helps in increasing the company’s efficiency and facilitates better transactions. This is because integrated processes help the company to achieve competitive advantage over other competitors in the industry they operates (Seethamraju 2015). Through this system, huge data sheets and information of the company are readily compiled in one place. Integrated system thus offers major benefits to the business:
The first benefit that is commonly seen in any company that uses integrated system in its operations is uniform data pool. This shows that through integration the companies create an organized data pool in which all the necessary information is available. Thus, while conducting certain task the employees does not need to search or look into any other systems to get the current data. This also gives the employees benefits of time management.
An integrated system helps eliminating the false or duplicate data entry in the system that reduces the chances of error to zero. This is because the system offers similar type of rules to each system. This same type of principles is applied to all type of activities such a customizing, product database, financial data and others (Seethamraju 2015).
Integrated system also helps in reducing the cost of support from IT by implementing integrated system in its daily activities. this is because integrated system integrates different system in one system and all the tasks are proceeded through this oe system. thus, the cost that would have used in other systems gets reduced.
Integrated system also result in a reduced training cost because once the employee are taught about this one system, there is no other system to be learned to carry out various tasks(Seethamraju 2015). This is because the cost of conducting training for teaching other systems is reduced and candidates can perform all activities using this single integrated system.
Integration of business processes also plays a crucial role in improving the visibility and forecasting power of the business. Integration improves visibility as most of the process and systems are clear to the employees and compiled in one place. It offers great benefits to the employees at all level as they can see the status of the business and track necessary changes that are happening (Seethamraju 2015). Such kind of system in mainly required in big organizations, which has various complex activities and large data to handle.
Thus along with these the system also offers various other benefits such as mobility, easy software upgrade, increase in profit margin and others. The integration process makes the business processes easy and highly achievable by the employees as most of the complexities get reduced.
Many companies lack integration processes and has faced various challenges over the years. One example of companies that faces huge challenges due to lack of integration is IT sectors. Companies such as OFX, Canva and others facing lack of integration will suffer a lot of back draw in their daily operations. A lack of integration among various tasks makes it difficult for the employees to manage it and thus lead to issues in processes. Lack of integration processes is mainly due to compilation of IT infrastructure and difficulties are mainly visible in the recruitment, sales, marketing and quote to cash department (Alfalla-Luque et al. 2015). Such kind of integration lacking in the operational a support systems lead to excess of mistakes and replications.
Example of company that initially did not follow integration process in its operations such as marketing, customer relationship and others is Lingerie Company. Due to lack of integration, the company faced a lot issues in its marketing and operational activities. Despite having large number of staffs, the company faced inaccuracy in contact details and they faced difficulty in viewing the customer details. Thus, lack of integration creates many difficulties and errors for the companies in various grounds, whether it is customer loyalty, data management, and marketing or client relationships (Chang 2016). For example, if the company wants to carry out a direct marketing process for any of its products, a lack of proper customer contact details will restrict the company in carrying out the marketing process efficiently. This is because direct marketing process requires them to connect with the customers details. Moreover, Lingerie Company faced the difficulty in marketing as they were planning to become a retail sector rather than being a wholesale supplier company. For being a successful retail company they required to carry out marketing process effectively and contact the customers directly.
There are companies in other industries as well that faces similar difficulties due to absence of integration process such as retail, manufacturing industry, FMCG industry and others. The most common issues that they face are data complexities, as there are various kinds of data to be managed (Erturk and Arora 2017). This is because data is the most crucial element and asset of a company as it helps the business to analysis its position in the market.
Enterprise Resource Planning is a system that integrates various processes in an organization under a single umbrella. Some of the crucial tasks of the business such as operations, supply chain, services, marketing and others are all integrated in one place with the help of ERP system (Ahmad, Naveed and Ahmad 2016). This system allows the company to eliminate the unnecessary resources and keeps the useful one. Thus, ERP system will have various benefits in the companies mentioned above as they lack the integration process.
Lingerie Company will benefit from the ERP system, as it will help them to manage the inventory and delivery of the product in an efficient way. The company previously faced a cumbersome delivery and inventory control management. Thus, it will be beneficial for the company to integrate both delivery and inventory control process to benefit from it efficiently. Moreover, the system will also help the company to maintain a transparency in their financial department (Tenhiälä and Helkiö 2015). This allows them to look at the profit effectively and increase it as and when desired.
Similarly, IT sector also benefits from the integrated ERP system as IT companies has to maintain huge amount of data and thus it is important that they use the integrated system in their work place. It helps the companies to improve their core competencies by helping them manage their core processes such as insurance, retail, delivery options and others (Al-Ghofaili and Al-Mashari 2014,). Integrated system also facilitates the IT Companies as they form a lot of acquisition with other companies in order to benefit from their processes as well.
Thus, it is seen that ERP system not only looks after the internal businesses process, it also takes care of the external decision that takes place such as acquisition, merger. This is because it plays an active role in managing the tasks of the business as the complexities increases due to merger or acquisition (Nwankpa and Roumani 2014). This process looks after changes in methods and operations that the companies have changed after the merger or acquisition took place. Thus, it can be seen that Lingerie Company can benefit from such system as it is planning for a merger with certain brands and become a retail company.
Conclusion
From the above analysis, it can be concluded that ERP is one of the most useful and beneficial system used by business to compile various processes under one ground. ERP has been used by various organizations to fight tough competition in today’s business environment. This is because of the increasing complexities in their processes. Integrating business process is important in many ways for the benefits it offers such as transparent business process, better operational mode, improved metrics goals, atomization of process, management of time and others. The most common benefit those different kinds of business faces after adopting the ERP system is time management. ERP system helps the organization to automatism their operations by compiling various tasks together and saves their time. Data management process that the system offers reduced the time to find various data for different activities. In the absence of proper ERP system business face, various issues such as limited expansion, complexities, increased time consumption and others. as it is seen that IT sector and Lingerie Company faced a lot of problem in its initial stages of business due to absence of integrating system. IT sector faced challenges in maintaining the huge database for the company. On the other hand, Lingerie Company faced challenges in their marketing, customer loyalty as well as data management processes. Thus, implementing integrated process in the business environment will help both the company to succeed in their respective grounds and processes.
References
Ahmad, N., Naveed, R.T. and Ahmad, S., 2016. Attainment of Competitive Advantage through ERP and Procurement. Oman Chapter of Arabian Journal of Business and Management Review, 6(3), pp.37-44.
Alfalla-Luque, R., Marin-Garcia, J.A. and Medina-Lopez, C., 2015. An analysis of the direct and mediated effects of employee commitment and supply chain integration on organisational performance. International Journal of Production Economics, 162, pp.242-257.
Al-Ghofaili, A.A. and Al-Mashari, M.A., 2014, August. ERP system adoption traditional ERP systems vs. cloud-based ERP systems. In Innovative Computing Technology (INTECH), 2014 Fourth International Conference on (pp. 135-139). IEEE.
Chang, J.F., 2016. Business process management systems: strategy and implementation. CRC Press.
Elragal, A., 2014. ERP and big data: The inept couple. Procedia Technology, 16, pp.242-249.
Erturk, E. and Arora, J.K., 2017. An Exploratory Study on the Implementation and Adoption of ERP Solutions for Businesses. arXiv preprint arXiv:1701.08329.
Haddara, M. and Elragal, A., 2015. The Readiness of ERP Systems for the Factory of the Future. Procedia Computer Science, 64, pp.721-728.
Hedman, J. and Sarker, S., 2015. Information system integration in mergers and acquisitions: research ahead.
Hwang, Y. and Grant, D., 2016. An empirical study of enterprise resource planning integration: global and local perspectives. Information Development, 32(3), pp.260-270.
Khan, S.A.R., Dong, Q. and Zhang, Y., 2015. Classification of important and critical factors in enterprise resource planning. Life science journal, Zhengzhou University, 12.
Kilic, H.S., Zaim, S. and Delen, D., 2015. Selecting “The Best” ERP system for SMEs using a combination of ANP and PROMETHEE methods. Expert Systems with Applications, 42(5), pp.2343-2352.
Laudon, K.C. and Laudon, J.P., 2016. Management information system. Pearson Education India.
Molin, E. and Silfverhielm, J., 2016. Managing the organizational paradox of isomorphic pressure from ERP systems.
Nwankpa, J. and Roumani, Y., 2014. Understanding the link between organizational learning capability and ERP system usage: An empirical examination. Computers in Human Behavior, 33, pp.224-234.
Pridmore, J., Deng, J., Turner, D. and Prince, B., 2014. Enhancing Student Learning of ERP and Business Process Knowledge through Hands-On ERP Exercises in an Introductory Management of Information Systems Course. In Southern association for information systems conference (SAIS) 2014. AIS Macon, GA, USA.
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