Enterprise Resource Planning (ERP) System Implementation For Large Enterprises

Introduction to ERP for Large Enterprises

Question:

Discuss About The ERP System Implementation Large Enterprise?

Enterprise Resource Planning (ERP) is a cross-functional technology strategy that supports all the activities of a business. It is the most important component of the IT strategy and therefore should be well implemented to integrate all facets of an operation such as marketing and sales, manufacturing, product planning and development, service delivery, inventory and materials management, finance and human resource. ERP continuously updates the core business processes by use of common databases maintained by a database management system. Through the use of ERP, the business can use a system of integrated applications to standardize and automate its back office and client-based functions and activities related to technology thus increasing the efficiency and effectiveness of its operations. This is because everyone uses the same data thus reducing confusion and mix-up when carrying out the organization’s various activities (Tarhini et al, 2015). During ERP installation, the project manager must ensure that the software is customized and takes into account variation in business requirements, processes and technologies, in addition to supporting the company’s strategy and plan of action.

ERP was established to outspread the capabilities of Material Requirements Planning (MRP) or Manufacturing Resource Planning (MRP II) and Computer Integrated Manufacturing. ERP systems experienced a rapid growth in the 1990s where many companies decided to use them to replace their old legal systems as a result of disruption of the latter by euro introduction and the year 2000 problem.

Initially, it was meant to automate back office functions such as management in order to avoid direct contact with customers and the public in general which could probably have affected the business negatively. Currently, developers are making an effort to incorporate ERP in mobile phones along with other business applications. The modern ERP contains networking, hardware and even supply chains integration. It has a wider range of functions and roles which include decision making, globalization, standardization and stakeholder relationship building.

• It is a common database that supports all the enterprise applications
• It provides real-time access for all employees and stakeholders
• It is an integrated system
• Its installation is usually a mammoth task
• It has a consistent reflection across all modules

1. ERP facilitates the flow of information in all the functions of the business.
2. It also manages information flow to the external world, for example to shareholders
3. ERP saves time and business expenditure as a result of integration of business processes
4. It makes decision-making easier, faster and more accurate
5. Enhanced data accessibility as ERP maintains a chronological history of all transactions
6. Enhances revenue tracking for the organization thus it can determine whether it is making profits or losses
7. It enables sales forecasting which brings about stock optimization for business operations
8. It makes it possible to track orders and therefore make genuine sales
9. ERP makes allowance for legitimacy and transparency in business activities
10. Protection of the organization’s sensitive data
11. It provides an opportunity for increased teamwork among the employees as it displays a collaborative platform that enables them to focus on content.

• Customization of the organization’s needs may be difficult. ERP usually meets the common requirements of the business which may then be forced to come up with other means of meeting its unique demands.
• Installation of ERP software may be expensive offsetting the business’ competitive advantage and revenue capability.
• It increases the expenses of the company due to maintenance and constant upgrading. There is also need to train the employees on the usage of the new technology
• A lot of time is spent while trying to harmonize the ERP with the organization’s systems and technologies (Galliers et al, 2014).

A module, in software, is a part of a program or programs that is independently created and linked to form the latter. Basically, ERP consists of several enterprise software modules individually purchased or developed in accordance with the organization’s specific technical requirements. Each module is focused on a particular core business process such as product planning. The common ERP modules include:

• Customer Relationship Management (CRM): this aids in boosting sales by establishment of strong customer relationship to make them feel highly valued. This module contains the particulars of the clients in a chronological manner bringing about easy management. It can be integrated with the sales module to create future opportunities for the organization (Holmberg, N., & Johansson, B., 2017).
• Production: this module takes care of product availability in the organization. It includes activities such as product planning, direct and indirect raw material usage, reporting of the production status, production forecasting and the actual production.
• Sales and Marketing: this entails information on product promotion with the aim of increasing sales, maintaining existing customers and expanding the market. The sales module keeps records of all sales transactions such as accepting orders, handling sales queries and tracking pending orders.
• Supply Chain Management (SCM): this involves demand and supply of products to and from the manufacturers, that is, the supply of raw materials and demand for finished goods by wholesalers and traders. The data found in this module include shipment tracking and sales returns.
• Human Resource: this module deals with the organization’s employee records such as the payroll system and personal details. It may also include particular employee expenses and allowances.
• Accounting and Finance: contains all the financial details of an organization including ledgers, balance sheet, receivables and payables, budgeting, tax information, activity-based costing, cash management and details of the available fixed assets.
• Inventory module: it is used to keep track of individual items in the organization to find out their location and usage rates. The functionalities of this module include inventory reporting and stock utilization.
• Purchases: it has all data relating to procurement of items required by the company such as vendor listing, recording received and sent quotations and preparing purchase orders.
• This module is combined with the inventory and the engineering/production modules for constant updating of stock.

This is an integrated office system for government bodies, that is, it is the ERP for the public sector. The differences in ERP software between the private and the public sector are culture. This is because unlike the private sector, government agencies are mainly concerned with offering services to the country’s citizens. The private sector usually prioritizes on organizational expansion, achievement of set objectives and profit maximization.

Benefits of Implementing an ERP System

Plant floor communications are the control and facts interactions found in automation surroundings of manufacturing and processing plants. Manufacturing uses discrete control while processing uses continuous control. Many plants, however contain a hybrid of both since the auditing systems are often a combination of multi-vendor products to create a single system (Costa et al, 2016)

Direct Integration: this is whereby ERP systems already have communications with the plant floor equipment as a part of the after-sale service from the vendor. This therefore requires the vendor or suppliers of the systems to be experts on the products with which they are dealing.

Database Integration: in this case connectivity is carried out by the systems integrator. ERP software stage tables in a database onto which the plant floor systems deposit information. ERP systems vendors do not need to know the particular technicalities of their product connectivity.

Enterprise Appliance Transaction Modules (EATM): these transact data with the business systems in ways considered best by the latter through their ability to communicate directly to the plant floor apparatus. The major advantage of this integration is that it offers a complete solution off the shelf while still reducing long-term operational costs and customization expenses.

Custom Integrated Solutions: These are custom made and are created per order to meet site and specific system requirements. They are mostly used on workstations even if they have the highest level of initial installation and maintenance costs. The long-term upkeep costs can however be minimized via proper documentation and watchful testing of the systems.

This is the process of actually putting the ERP systems into the organization’s daily operations. The nature and scope of ERPs implementation demands for changes in employees and partners custom practices and activities. The three major tasks involved in the implementation process are Consulting, Customization and Support. The time used up in implementation depends on the size of the organization, customization needs, the readiness of the customer to begin use of the new system and number of modules in the company (Chugh et al, 2017).

Before application, the project manager should ensure that he or she has a thorough understanding of the systems that need to be changed and why the change is necessary (Tasevska et al, 2014). In addition to minimizing the chances of project failure, analyses of the existing automation solutions also decrease the possibility of mismatch between the two systems. Generally, implementation of ERP in decentralized organizations takes a longer period of time and is costlier due to presence of various decision-making and management units which may have different development policies, procedures and regulations.

Key Considerations for Successful ERP Implementation

Configuration: this entails trying to balance the ERP software between its nature of performance and the manner in which a specific organization requires it to operate.

Theoretically, ERP systems are created in industrial best practices and the developers expect the organizations to use them as such. Room for configuration is however given to give these organizations ability to gear the software towards their needs. Gaps in features often remain after this practice whereby the organization can rewrite a portion of the software, write another module that works within the software or create an interface with external sources. These activities refer to customization of the ERP software and are aimed towards reconciling the gaps in the system features.

This refers to ERP software that allows companies to run two different ERP systems at once one at the management level and the other at the subsidiary level. This would further increase the efficiency of workflows due to the availability of more systems that align with the organization’s IT structures and improve the agility and flexibility of the business. This would, however, intensify implementation and maintenance costs. Besides, many organizations believe in the use of quicker and cheaper ERP implementations at the subsidiary level.

Conclusion

As observed above, Enterprise Resource Planning is an essential component of business growth due to its numerous benefits such as increasing the effectiveness of customer services and the rate at which business operations take place thus saving time and coinage. The implementation process of ERP, however, demands an enormous amount of money which small businesses may not be able to offer. Therefore, before installation of an ERP software the project managers should carry out a thorough evaluation of the entire organization’s requirements to determine the need for the ERP, the number of modules that should be upgraded and the amount of finances that the business can afford to spare for the ERP enactment.

References

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