Usefulness Of ERP For Effective Management
Abstract
ERP systems have been used by companies to increase their managerial efficiency for a long time. This report has been developed to assess the usefulness of ERP system for effective management. To do so, a research question was formed which guided the whole research study. Literature was examined thoroughly and it was analyzed to reach a conclusion. Future implications of study have also been included.
Introduction
Enterprise resource planning is one area in which businesses are interested the most and investing considerable amounts on it. It has been measured through a survey comprising of 30 industries, 1500 organizations in 48 countries that spending on information was recorded in US $ 138 billion in the year 2009 (Zammuto, 1982). ERP has been defined as an integrated software package which is known to manage organization’s processes and resources as well as provide it with various advantages like faster information transactions, financial management particularly cost management, supply chain links and improved responsiveness (Dezdar & Ainin, 2011). Some of the reasons why the companies are forced to spend large amounts on IT are because customer demands are changing, there is a high level of global competition and technologies are becoming obsolete at a rapid pace (Siriginidi, 2000). Considering the benefits of an ERP system, it is simple to understand why it has been accepted worldwide.
Importance of ERP
ERP gathers, controls and markets details across efficient limitations and helps break down the details “silos”—those limitations that stand in the way of full collaboration between production, materials, planning, technological innovation, finance and sales/marketing. The resulting better quality, reduced time-to-market, reduced lead times, greater efficiency and reduced costs can help improve customer support and increase revenue and business as well as edges.
- ERP system saves money.
- Increase productivity and efficiency of business.
- Helps to manage day to day activities properly and with ease.
- Enhances the strategic planning process.
Research questions, Statement of the purpose
The research question which will be answered through this report is:
“What are the benefits derived from implementing an ERP system within Companies?”
Through this research question, I will be aiming to understand the usefulness of ERP for effective management. Also I will be trying to answer the secondary research question:
- Are benefits recognized similar for companies globally?
The purpose of the secondary research question has been added to comprehend whether benefits which I recognized in some studies synonymous with the others? This will provide an insight into the usefulness of ERP systems for businesses.
Qualitative research is a method through which researchers explore ideas, issues, understand phenomena and answer questions (Kotler, 2009). Secondary research has been defined as reviewing data that is already present or data which has already concluded and analyzed a particular topic (Foddy, 1993).
Research Analysis and Argumentation
ERP systems do pose a number of advantages as discussed earlier. In the study conducted by Spathis & Ananiadis (2005), it was deduced that when an ERP system is implemented, managerial benefits are recognized first most, followed by operational and information technology benefits. It is agreed that these studies do provide a detailed analysis of the benefits derived from an ERP system.
ERP and Change Management
Innovation and change are not directly linked with each other; like innovation is related with to bring new things into existence or change is related to the improvement in the old thing. Yukl (2006) described the initial model related to the change process which is Lewin’s (1951) three stage force field model. Elrod and Tippett in 2002 give the change curve through which they find out the impact of change on the self esteem of people with the passage of time.
ERP and Supply Chain
With regards to benefits recognized in the case of supply chain integration with an ERP system, it was observed that through ERP, companies can better manage their value chains, create successful relationships with suppliers and also improve their manufacturing, product and process areas. It should be noted however, that ERP systems do not help organizations in managing their internal supply chains and also give limited support to a number of functions (Lenny & Saad, 2006).
Executive Support through ERP
Another observation which was made while reviewing different journals and articles is that, implementing an ERP system is costly and financially burdening for a company (Redshaw, 2000). Due to this, companies are reluctant to invest in ERP systems, especially the smaller ones. Another limitation towards recognizing ERP benefits is that some studies have reported data quality issues after implementing an ERP system which means that the benefit of efficiency and effectiveness in business operations might get offset (Siau & Tia, 2002).
Skilled Resource Management through ERP
Companies all over the world are acknowledging this system, are implementing it and are also investing in it. In fact it has been discovered that ERP has been implemented in not only companies operating within developed nations like Canada and United States but also in the Middle East and developing nations like China and Malaysia(Dezdar & Ainin, 2011). This supports the fact that the benefits of the system do exist. Another reason which supports usefulness of ERP for effective management is that ERP’s use has been extended to not only the management of accounts but also towards knowledge management and supply chain development. If ERPs are properly implemented, companies can create competencies for themselves and can not only achieve cost advantages but can also differentiate themselves from other companies operating in the same industry. ERP systems therefore have helped companies in increasing their efficiency and effectiveness for a long time. When other systems have failed to provide solutions for supply chain, it has been an ERP system which was able to integrate business processes with the entire supply chain of the company.
Conclusion
It can be easily concluded that despite a number of findings which show that ERP implementation is depended on various factors to succeed and the benefits might not be enjoyed to the same extent by every company who implements the system, ERP does have benefits attached to it. This means that it can be concluded that ERP does have usefulness for effective management.
Limitations of the study
There have been limitations in this research study. However, one limitation which includes is the lack of time and also the inexperience of the researcher. At times, some of the quantitative data in the journal articles were too complicated to be understood.
Significance of study
This paper has number of contributions as it will highlight the benefits of the ERP therapy through proper data analysis. It will help managers and other employees to get knowledge about the benefits of an ERP therapy. In this paper many other benefits of RP will be highlighted that will help the university students and other industry stakeholders to have a depth knowledge of ERP therapy.
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