Introduction their information systems, if the information system

Introduction

Throughout
the course of this essay I will be discussing Enterprise Resource (ERP)
systems, their benefits and how these benefits materialise, as well as whether
or not I believe all businesses would benefit from having an Enterprise
Resource Planning system implemented. I will also touch on Information Systems.

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An
Information System (IS) is a computer system or set of components that are able
to collect, create, store, process and distribute information. Information
systems typically include hardware, software, system users, as well as the data
itself. They are essential to the infrastructure of every organisation to the
extent that many organisations have become totally dependent on their
information systems, if the information system stops working then the
organisation is forced to stop working too. Enterprise resource planning
systems are a type of information system. They are a third-party application
software which provides an organisation with system integration across a wide
range of standard business processes (WHITELEY, D. 2013). Enterprise resource
planning systems are used by an organisation in order to manage its day to day
business activities (Oracle.com. 2017).

 

How
does an Enterprise Resource Planning System work?

An Enterprise resource
planning system works by tying together a number of different business
processes within an organisation. They are designed to collect data from
multiple sources within an organisation and compile it into a centralised
database. They use a standardised business processes design in order to
integrate and streamline the business processes (WANG and GREASLEY. n.d.). Before
enterprise resource planning systems, individual departments would have had to
buy and maintain their own software systems due to the fact that the
organisations did not have a centralised database and so each department was
responsible for its own data. In practice, this means that employees that work
in different departments within the organisation can rely on information from
the same database for their specific needs. They also offer some degree of
reporting automation, instead of forcing employees to maintain separate
databases and spreadsheets that have to be manually merged to generate reports,
with enterprise resource planning systems being able to pull data from just one
system, it makes the creation of reports much easier for everybody that it
concerns within the organisation. In today’s modern society Enterprise resource
planning systems are critical for managing thousands of organisations of all
sizes and all industries. “ERP systems eliminate data duplication and provide
data integrity with a single source of truth” (Oracle.com. 2017).

 

 

Enterprise
Resource Planning System Benefits

Enterprise resource planning
systems also come with many benefits.

Firstly, they are a modular
system, with many modules available, this means that depending on the business
needs it is possible to implement only a few modules or more if needed. This
also means that modules can be added or removed, when the system is upgraded,
if needed as the organisations needs change overtime. As an enterprise resource
planning system builds on a single database system, it enables a centralised
storage and back-up of enterprise data, this means that it gives the
organisation the ability to accurately define, effortlessly integrate and
effectively retrieve data for internal applications as well as external
communications. However, implementing an enterprise resource planning system in
a decentralised organisation is difficult, due to the organisations dispersed
processes and systems.  Also, due to the
enterprise resource planning system providing a centralised database, it means
that individual departments do not have to buy and maintain their own software
systems which enables an automatic and coherent work flow from one department
or function to another. As well as this it allows for a unified and single
reporting system to analyse the business statistics in real time. Having and
enterprise resource planning system also means that certain vendors can extend
them in order to be provided with business intelligence functionalities and
allows advanced e-commerce integration. Enterprise resource planning system
vendors also often argue that enterprise resource planning includes best
practice, as they research business processes and include the most up-to-date
and beneficial software. They were also a popular solution when dealing with
the millennium bug, a serious of computer bugs which were related to the
formatting and storage of data, in order to update systems for the euro
currency and for introducing e-commerce. However, once the enterprise resource
planning system is implemented, the organisation is then locked into the vendor
for any future changes and upgrades etc. that may need making.

 

What
steps should be taken for a successful implementation of an Enterprise Resource
Planning System?

In order to ensure the
successful implementation of a new enterprise resource planning system, there
are a number of steps that should be carefully considered by the organisation.
Firstly, an assessment of the organisation should be undertaken. During this,
the organisations business needs should be identified, the key performance
indicators and the critical business processes should also be documented. This
will help the organisation to pinpoint the enterprise resource planning system
that best suits their needs.  Secondly,
the organisation should consider whether it would be beneficial for them to
hire a team of specialists, although this is not essential, many organisations
lack any internal experience and expertise of enterprise resource planning
system implementation. Therefore, the hiring or contracting of an experienced
professional will help to ensure that the implementation of the enterprise
resource planning system within the organisation is successful.

 

Another step that should be
considered is evaluating the system during the selection process, as the right
system depends on the type of industry, the organisations business needs, as
well as its system preferences. During this, the organisation should evaluate
whether they would be best suited to an onsite enterprise resource planning
system or whether it would be more beneficial for them to have a cloud
computing enterprise resource planning system, this would be less costly than
implementing an onsite system, as rather than purchasing the system outright,
cloud-based systems are paid for through a subscription model, which often
includes not only the enterprise resource planning software but also the costs
to cover hosting and supporting too (UTZIG, C. ET AL. 2013). I believe that
cloud-based systems will become a more popular choice amongst many
organisations in the future, as the maintenance of hardware, software and IT
infrastructure is no longer considered a core part of an organisations key
business processes and freeing up IT resources allows staff to play a more
strategic role in helping the organisation become more competitive (SHEIN, E. 2017).
The evaluation of the enterprise resource planning system prior to its
implementation is critical and if it is not carried out properly or thoroughly
enough then the enterprise resource planning system may fail.

 

The organisation must also
prepare for a big change when planning the implementation of their enterprise
resource planning system as they are not only about changing the technology
within the organisation but it is also about changing the culture. In order to
do this the organisation must be completely transparent with its employees from
the beginning and get them involved with the changes that are being made within
the organisation where possible. The preparation of data should also be
considered by the organisation as not all data on the current system will be
able to be converted into a format that is compatible with the new system.

 

Once the above steps have been
considered and possibly completed its time to start the implementation of the
new enterprise resource planning system. After the implementation of the system
is complete, the next step that needs to be undertaken is the testing of the
enterprise resource planning system. The testing is done to ensure that the
system works without errors and does what the organisation requires of it
effectively and efficiently. If it is not running smoothly during the testing
phase, this gives the organisation time to iron out any errors that may have
occurred before the system goes live, in order to try and eliminate any
disruption to the organisation once the system is live. Another step that needs
to undertaken before the system goes live is training the organisations
employees on how to use the new system. The organisation may choose to
outsource this training to a company that offers onsite training or they may
choose to carry out this training in house. After the implementation and
testing of the system and the training has been completed, it is time for the
system to go live (YASIR KHAN, A. 2015).

 

Enterprise
Resource Planning System Complementarities

Typically, in order to support
a successful Enterprise Resource Planning system, it is advised that other
communications and systems should be eliminated. Enterprise Resource Planning
systems are supports for planned and routine management, this leads to the view
that Enterprise Resource Planning systems are not compatible with less
structured and spontaneous based systems (WANG and GREASLEY, n.d). However,
McAfee (2008) introduced Enterprise 2.0 as a way to introduce the social
interactions within organisations. McAfee (2009) pitched Enterprise 2.0 as the
aim to build “internet based software platforms” (WANG and GREASLEY, n.d) in
order to facilitate less structured, more spontaneous knowledge-based works
within the organisation. Technically, Enterprise 2.0 was developed from web 2.0
in order to enhance communication. Beyond the technology Enterprise 2.0
benefits organisations by establishing a network orientated structure and a
collaborative, trustful and transparent culture (WANG and GREASLEY. n.d). The
combination of an Enterprise Resource Planning system and Enterprise 2.0
enables a high level of collaboration within the organisation. Enterprise
Resource Planning systems improve the collaborative activities between
departments. The key tenants and customer information sharing is limited
between the groups. However, the organisation is horizontally linked by the
integrated Enterprise Resource Planning system and Enterprise 2.0 (WANG and
GREASLEY. n.d). As discussed above Enterprise Resource Planning systems are
thought to be more successful when implemented into isolation and in my
opinion, this is how organisations should implement their chosen Enterprise
Resource Planning systems, in order to help to ensure a safer and more
successful implementation. However, some software can be adapted, for example
McAfee (2008), in order to support and work alongside the Enterprise Resource
Planning systems and if an organisation wanted to integrate its new Enterprise
Resource Planning system with another piece of software, it should not cause
any harm to their Enterprise Resource Planning system as long as the software
has been adapted accordingly.

 

Do
all businesses need an Enterprise Resource Planning system?

Although in today’s world
Enterprise Resource Planning systems are designed for all organisations of all
sizes and all industries, I do not believe that all organisations would benefit
from having an Enterprise Resource Planning system implemented. For example, a
typical Enterprise Resource Planning system implementation for a business can
range from anywhere between $10,000 (£7399.20) to 10+ million depending on the
type of organisation, its size and its location (HUTCHINSON, C. 2017).
Implementing a cloud based Enterprise Resource Planning system, instead of an
onsite system, can help to reduce these costs, however, the implementation can
still be very costly especially to organisations of a smaller scale. Some
smaller businesses such as corner shops are often owned by families with the
main shopkeeper having extra help from one or two of their family members but
only when they are needed. Their turnovers are often very small compared to
larger organisations and as they are not large scale, they are not made up of
multiple departments and therefore they not have large volumes of data that
need to be compiled into a central database. Rather they are likely to have
only a few pieces of data e.g. stock and orders, that the shopkeeper can
compile onto a single spreadsheet themselves if and when it is needed. However,
I do think that smaller organisations who do have more than just a few members
of staff and does have different departments with a high turnover may benefit
from the implementation of a basic Enterprise Resource Planning system. Also,
smaller businesses that want to gain the benefits of a smaller scale, lower
their costs as well as drive standardisation should consider looking into
implementing a cloud based enterprise resource planning system as this may be
more beneficial for them. But I believe that medium and large-scale
organisations are the most likely to gain the most benefits from the
implementation of an Enterprise Resource Planning system. Despite the initial
cost on implementing the system, the centralised database making it easier for
reports to be created and the fact that each department no longer has to build
and maintain their own systems, means the organisation will be able to see its
savings and the systems benefits not long after implementation, if the
implementation of the enterprise resource planning system was successful.

 

Conclusion

In conclusion, an enterprise
resource planning system is a type of information system that provides
organisations with system integration across a wide range of the organisations
business processes by collecting the organisations data from multiple sources
and compiling it into a single centralised database. And as the enterprise
resource planning system builds on a single centralised database system, it
provides a better company-wide visibility and therefore enables faster
collaboration across every department. In order for an organisation to
successfully implement an Enterprise Resource Planning system there are a
number of steps that should be carefully considered from choosing the right
Enterprise Resource Planning system for them, to hiring a team of specialists
to oversee the implementation and training of employees on how to use the new
system. If these steps are not carefully considered before implementation then
the Enterprise Resource Planning system implementation may be unsuccessful and
could cost the organisation a lot of money. Furthermore, the expense of
implementing a new Enterprise Resource Planning system would not be beneficial
to some organisations and could cause businesses of a smaller scale to go out
of business as they would not see many, if any of the benefits that an
Enterprise Resource Planning system is designed to give an organisation.
Especially if the business does not have multiple departments and therefore
does not need data from multiple sources compiling into one single database. If
the business only has a small turnover, then the cost of implementing a new
Enterprise Resource Planning system would more than likely put them out of
business before any benefits could even start to be seen by the business owner.
Furthermore, larger organisations looking to lower their costs and drive
standardisation within its different departments and functional units, should
consider the implementation of a cloud-based enterprise resource planning
systems. Enterprise resource planning systems in the cloud are the future and
are set to become the more popular choice amongst organisations within the next
few years. Even organisations that have valid reasons as to why they have not
yet taken the plunge into the world of enterprise resource planning systems,
should continue to monitor the developments of enterprise resource planning in
the cloud and should consider its benefits, e.g. low cost and no IT
infrastructure to maintain etc. in their long-term plans (UTZIG, C. ET AL.
2013).

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