Literature Review:
What is Enterprise Resource Planning?
Enterprise Resource Planning is a packaged business system or software that provides business solutions. These business solutions include processes that automate and integrate different processes of the organization and share common data across the enterprise (Shang and Seddon, 2002).
Enterprise Resource Planning can also be understood in 3 ways (Gable, Klaus and Roseman, 2000). He said that Enterprise Resource Planning is just like a commodity or product in a Software form. Enterprise Resource Planning is software integrating all processes and data of the organization in an integrative structure. It can also be called as an important element of the organization infra delivering solutions
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This would improve the decision making of management and also improvise planning and performance of the organization.
Strategic benefits: Enterprise Resource Planning (ERP) systems also bring strategic benefits as it involves large scale business, integration of internal and external capabilities, Enterprise Resource Planning (ERP) assists in business growth, innovation and differentiation.
IT benefits: Through Enterprise Resource Planning (ERP) systems, organization has standard and integrated applications. These applications support business flexibility and thus reduce IT cost, marginal cost of IT units etc. Enterprise Resource Planning (ERP) system also builds capability of the organization to implement quickly new applications.
Organizational Benefits: Enterprise Resource Planning (ERP) systems support the organizational growth by supporting its structural change, improving the learning of employees, empowering them and building a
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When Enterprise Resource Planning (ERP) solutions and systems came in early 90ies, they were considered too expensive and complex for smaller organizations and were mainly considered by the largest organizations. However, vendors like SAP have started to redirect the system towards SMEs also and cheaper and inexpensive versions are rolled from them that are making Enterprise Resource Planning (ERP)s very popular among SMEs also (Everdinen et al., 2000).
While there are many advantages discussed by many researchers, few looked down to the other side of the coin and tried to check disadvantages of ERP systems and solutions, Helo, Anussornnitisarn, & Phusavat (2008) discussed following risks and disadvantages of Enterprise Resource Planning (ERP) systems:
1. Many organizations find it troublesome to understand the logic behind the Enterprise Resource Planning (ERP)
Umble, E., Haft, R., & Umble, M. (2003). Enterprise resource planning: Implementation procedures and critical success factors. European Journal of Operational Research, 146(2), 241-257. doi:10.1016/s0377-2217(02)00547-7
Adoption of an ERP system enables an organization to eliminate dozens or even hundreds of separate systems and replace them with a single, integrated set of applications for the entire enterprise.
Enterprise Resource Planning (ERP) is now being hailed as a foundation for the integration of
Advantages Koch (2005) and Montgomery (2003) state advantages of using the ERP are; Improvement in the time taken to process the data as each department have same standard and can access to the data easily. Communication between each department will be improved as well. More flexibility in the system as it comes from one vendor and the software has been developed to be applicable for all departments in a company. Easier to predict the costs of buying ERP systems as it only comes from one vendor. Having integrated applications solutions with no complex interfaces. All of the data is stored in one central database.
To be successful in today's competitive and continuous evolving information technology (IT) market companies must be able to utilise their skills, information and knowledge to the highest efficiency level possible. Utilisation of and control over these factors will aid companies in acquiring and maintaining competitive advantages over others operating in the same competitive IT market. The implementation of an Enterprise Resource Planning (ERP) system would be perfect to suit a
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 Programming, or similar systems, have become a major part of a company’s tool set. Because of the fast pace of today’s society, the business environment has to struggle continuously in order to keep up. ERP enables companies to accomplish that by creating a “one stop shop” for all of the company’s vital information. This gives a business the ability to streamline the process of getting the item in question from the factory to the customer as quickly as possible.
"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.
In order to compete in the industry with other competitors effectively, organisations must seek to achieve competitive advantages over them and Enterprise Resource Planning (ERP) can play an important part in helping organisations to gain and sustain competitive edge.
There are two basic types of ERP research, implementation-oriented and performance-oriented. The first type studies what factors foster success in implementing ERP, while the second investigates factors in ERP that affect performance. Research has shown that companies that use ERP outperform those that do not in functional efficiency, productivity, stock market, and financial metrics. Interestingly, ERP is found to have a neutral or negative effect on customer satisfaction and operating expenses. More predictably, general performance dips
Information technologies are becoming an inseparable part of today’s business world.ERP systems is one such example as they have become an important instrument without which the majority of enterprises could no longer function(Pabedinskait,2010).Successfully implemented ERP systems generate organisational synergy, which provides a motivation for the improvement of particularly efficient processes necessary for the success of an organisation. ERP implementation systems have become more popular within the last 15 years. They are now a common way of implementing organisational changes today. Organisations that successfully employ ERP systems, such as software and industry processes have enormous benefits such as greater efficiency. Companies that have succeeded in their respective ERP implementation include Cisco, Tektronix and Harley Davidson Motor Company.
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).
Enterprise Resource Planning is a system packaged business software system that allows an organisation to automate and integrate the majority of its business processes, share common data and practices across the entire organisation and produces and access information in a real time environment.
The business world is characterized by heavy technology. Firms are relying on technology to handle numerous processes. It is for this reason that organizations are hunting for integrated systems that can combine all subsystems into a big one capable of sharing common database. Thus, enterprise resource planning (ERP) plays a great role here. The ERP system incorporates several information structures into one system. IT firms can have three main information systems namely manufacturing, human resource and finance. This software integrates data from these subsystems into a single one as well as enhancing data sharing. Any company intending to adopt the systems should consider whether or not it is increasing efficiency (McGaughey &
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.