In the study, we would get information about the high-end technology system called as ERP system which is required for the organisation for proper business management and the whole processes an organisation can have in its whole business process. The study reflects the role of ERP system and the implementation process to an organisation. It also provides with the knowledge of benefits that are obtained from the ERP system to an organisation along with the selection criteria of it and the vendor providing the services. The recommendation for the issues that are faced by the vendor selection and the ERP system implementation are also focused.
Introduction to ERP System
The ERP system is the latest technology with the solution of high-end processes that has been lent by the information technology to the businesses. This system is implemented to the organisation for the purpose of proper and smooth running of business in terms of employee, money, materials and the machinery through the informative way. Enterprise resource planning is the manipulation of manufacturing requirements planning which in short called as MRP. The implementation of the ERP system has made the organisation very easy to maintain and manage their business very well. In this study, it has been discussed the ERP system and the process of implementing the same. The whole overview of the ERP system and the selection of vendors are also enclosed within it. It has been discussed the areas of implementation of this software system.
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There are certain issues relating the ERP system and in the processes of implementing to the organisation and these are also elaborated in the report. Selections of vendor have some fault and are provided with the information on it in this study. The possible recommendations for the issues that are coming into effect and create problematic areas are provided in the study.
Understanding the ERP system
ERP system is the latest high-end technologies which are implemented to the organisation for the management of all activities that are done throughout the entire business. According to Poba-Nzaou et al. (2014, p.602), it generally integrates and streamlines the operations of the processes of the company to work together with the resources of an organisation such as workers, the material used, monetary transaction, machinery. Reducing the ultimate cost of the organisation is the main target of implementation of this system. From the business perspective, the ERP has extended from the coordination of process in manufacturing to the wide backend processes of enterprises. The ERP system has various components such as ERP software, business processes, the ERP users and some hardware and its operating systems.
Definition of ERP software
The ERP system is nothing without relevant software. The whole processes are conducted using this software. Thus ERP software is based on the various modules and is the core of the ERP system. Every software module does their processes by automated mode within the business processes and plays important functional role to an organisation (Powell et al. 2013, p.408). The ERP modules are commonly comprised of the planning of products, purchasing of parts, inventory control, distribution of products, tracking orders, accounting, finance aspects and also aspects of human resources of an organisation.
Features of ERP system
The important features of the ERP are:
- It does facility the company with the integration of information system by covering all of the function such as product manufacturing, distribution and selling, making payments and receipts, inventory processes, deal on accounts, making purchases as well as human resource managements.
- It acts as the activities of core corporate and enhances the customer services. Thus elevate the image of the corporate world of the organisation.
- It acts as the bridge of the organisation that fills the information gaps of the company.
- Across the organisation departments, the ERP system does provide the complete combination of the systems and do the same for the companies that are managed by the same management (Galy and Sauceda 2014, p.314).
- The ERP is responsible for the best management of the projects and allows automatic establishment of technologies such as interchange of electronic data, electronic transfer of funds, intranet, the internet, conferencing through video and the processes of e-commerce.
- The ERP software is responsible for the analysis of waste materials that are produced within the organisation and helps to reduce them.
- It provides the present requirements of the organisation and works continuously for further enhancements by the notification of refining of business processes and its improvements.
- The ERP does provide tools of business intelligence such as decision supporting system, reporting, executive information system, early warning facilities, and data mining. These are provided by the ERP system to enable the people to make proper decisions that are helped to improve the processes of business.
Benefits of ERP software
Helps to reduce the cost of operations- the ERP software does integrate the business processes throughout the departments of the organisation into the information system of the single enterprise. It helps to improve the coordination within the functional areas and increase the efficiency of doing business. Helo et al. (2014, p.653) states, the implementation of the ERP software provide benefit for reducing the cost of operating such as the cost of lower inventory controls, low marketing costs, low cost of production and the low costs of providing support by the help desk of the organisations.
ERP provide daily management facility- it provides facilities that are required for daily management of the organisation processes. There occurs nurture to the inception of backbone to the data warehouses. According to O'Leary (2012, p.58), this also provides better access to the data that are used for managements of the processes of the organisation and can gain every minute access information which is responsible for making of decision and control of managerial works. It provides the information of actual cost the organisation to perform its processes.
ERP software provides strategic planning support- the steps which provide access to resources and needs are supported by the ERP software. It helps to define the targeted audiences and set the specified goal and the objectives for them. According to Magal and Word (2014, p.63), it is responsible for the planning of design oriented strategies with the evidence of proper success. It does connect logically with the needed strategies, assets and the desired outputs. It does measure and evaluates the processes and outcomes. The ERP software is structured to support resource planning which relates strategic planning.
Selection of ERP system vendor
The selection of ERP vendor is meant to evaluate the ERP package which is considered for better crucial steps. This selection and evaluation of the ERP are considered as:
- It has to check the all the aspects of the functional area of the business are totally covered by the ERP system.
- There should be proper checking for all the processes and the function of the ERP.
- According to Wei et al. (2015, p.50), there should present all recent information technology trends within the ERP software that are provided by the vendor.
- Proper selection of ERP can be done by checking whether the vendor has the facility to customise with the requirements and implementation ability.
- It needs to see whether the organisation can cope up with the cost of implementation of ERP system.
- Proper and effective ERP system is the technology which can return effective returns from the investment done to implement such latest technology.
Selection of ERP vendor
There are certain points to remember before selecting the vendor who would provide the ERP system.
- The vendor must be financially sound enough since they implement the business application.
- The vendor who is prospective in nature must have some specific methodology that can be proven for the smooth move from older system to a newer one.
- The vendor must be stable for many years and providing support to various organisations. According to Bingi et al. (2012, p.12), there should be a strong base of the customers who are using their services for a longer time.
- There must be some professionalism that is visible from the market presence and through which they can be judged.
- There should be a company website for the vendors that can elaborate every detail about them and their products.
- The selection of a vendor needs a keen look after the position of the vendor in the recent market.
- A vendor having the well established reputation in the market are preferred most and can be trusted by the various organisation that are not using one or are not satisfied using older ERP system to manage all the need of the organisation (Al-Johani and Youssef 2013, p11).
- There is need to find the offers that are provided by the vendor and judge the profitable vendor for the implementation of ERP system.
- It also needs to find whether the vendor is providing service that is compatible with the cloud computing.
Issues of selecting ERP system and its vendor
The selection and implementation of ERP system to an organisation often face some major issues. There are poor judgements in the selection for the vendor who can provide ERP system for business managements within the organisations. According to Karsak and Özogul (2014, p.662), the selection of the ERP system often done by some person, who intentionally provide and recommend the ERP systems that are less efficient in managing all aspects of an organisation need to cover from it. The ERP systems are provided by the marketing team of the organisation that lacks from its functionality and capability. The selection processes are often started without any business objectives. The current information about the vendor is not judged properly before having the ERP system from them and this has resulted in receiving bad ERP system. Implementing the ERP system from any vendor who is lacking with the proper system is to be checked before getting one from them. Without getting the knowledge of key feature of the ERP system marketing team often get the ERP system and this result in improper function from it. The implementation of ERP system to an organisation often faces some issues such as improper use of the system by the user. The priorities of the organisation that are to be done from the implementation of ERP system were not set before using such latest technology.
The selection of ERP system and the vendor are to be taken in the very serious matter. There are certain recommendations that can be suggested to the organisation or anyone who want to have one for implementation purpose for the benefits of the business. According to Umble et al. (2013, p.251), the marketing team of the organisation need to judge the present situation of the vendor and the marketplace through which it can be judged on the ERP quality. Implement the services of ERP from the vendor who has their own website that can elaborate the products and make the present status of the vendor and its market position in terms of completion in the relevant field of providing ERP services to the organisations. Before getting the services of an ERP system the organisation need to know about the key features of the system that a vendor is providing for managing the business. Yang et al. (2013, p.791) state that once the ERP system is implemented it cannot go back from it so proper judgements have to be taken for selecting the vendor. There need to set the goal for which the system has to be implemented. Look for an ERP vendor that can provide with the proper management system which would return money over investing the system for the organisation. Properly judge the licensing agreement of the vendor and the term and condition of the ERP system before taking the final decision for having such high-end technological ERP system. Getting reference, from the previous users, who can provide valuable feedbacks from their experience are the most important matter to look for receiving ERP services. There should be proper training on the ERP system to all the employees before the system start to act. Thus these are recommendations that can be followed to grab an ERP system from a vendor.
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Implementation of an ERP system which is provided by the vendor is the most wanted from the point of concern of the organisation installing the system are required for configuration and integration of the ERP system. As the models of the ERP system are applied to the organisations it represents the case study of the relevant topic. From the study, it can be concluded that there is meaningful relationship within the business representatives and the team dealing with the technical areas of the organisations. The limitations of implementing the ERP system need to be properly judged before the actual implementation of the system to an organisation.
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- Powell, D., Riezebos, J. and Strandhagen, J.O., (2013). Lean production and ERP systems in small-and medium-sized enterprises: ERP support for pull production.International Journal of Production Research,51(2), pp.395-409.
- Galy, E. and Sauceda, M.J., (2014). Post-implementation practices of ERP systems and their relationship to financial performance.Information & Management,51(3), pp.310-319.
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- Bingi, P., Sharma, M.K. and Godla, J.K., (2012). Critical issues affecting an ERP implementation.IS Management,16(3), pp.7-14.
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