Benefits And Risks Of Implementing ERP Systems: A Case Study Of Wesfarmers

Business Processes and their Importance

Discuss about the Business Value of Enterprise Systems.

Enterprise Resource Planning (ERP) systems allow centralization of data for the users accessing the system. It contributes in taking effective decisions for the company and thereby creating competitive advantage. It provides cross-functional business processes for an organization. This allows companies to bring changes in their organizational behavior. It customizes the way business processes are performed in an organization. Besides these advantages of enterprise resource planning systems, these also have some disadvantages (Chunhe Yang, et al 2013). ERP systems are prone to security vulnerabilities like DDoS attacks. Hackers find it easier to attack the system’s privacy due to an out-dated version of the system. This report wills going to describe the use of enterprise resource planning systems for an organization. It is the systematic approach that is used by most of the companies to enhance their business procedures effectively and efficiently. This report will provide information regarding Wesfarmers Company which is using ERP systems to manage their business processes (Bryson, 2017).

Business Processes are the collection of activities that are performed systematically to achieve organizational goals and objectives. Business processes are based on rules that are strictly followed by the organizations. This helps them to improve their economic value among the other competitors of the market. Business processes provide a direction to the company in maintaining specific organizational value in the market (Adil, and ?lker, 2017). A lot of things has been changed due to globalization and therefore companies have to give priorities in efficiently managing their business processes.

There are different types of business processes which are as follows-

• Manufacturing- this type of business process focus on the development of quality assured products on demand of the customers. In such a business process, continuous enhancements and maintenance are done for the developed product. Manufacturing mostly involves the external stakeholders to make deals for every new project (Dewi and Suprapto, 2017). However, internal stakeholders are responsible for looking after the machinery and other resources. Finance- this involves the risk management process for an organization regarding the status of their accounts (Caterina, Karen, Evans and Kara, 2009).
• The billing process is also a part of a financial business process. Every day companies make a lot many transactions some are the payments that are received from customers while others are the bills that need to be paid (com, 2018).
• Health- these are the medical assessment related processes which are done for the welfare of people. This allows individuals to take drugs in order to cure their diseases. Health is both Government and private based which have different facilities and costs depending on the type of treatment (Editorial Board, 2017).
• Banking- all individual wants to protect their account asset, therefore, banking processes are used to ensure that the customer’s and employees money is safe. The credit and debit processes are the part of a banking process (Darshana and Guy, 2010).
• Travel- to organize trips and events for the individuals who want to view and experience all of their favorite Tourism companies also face many challenges in their business process due to frequently changing prices.
• Defense- these are the emergency based business processes which are used to protect the personnel from any harm. It is done for the welfare of the citizens of a country.
• Public Sector- this is related to the Government sector. There are many policies and procedures developed by the Government to fulfill the requirements of their citizens.
• Human Resources- to manage the personnel that is being hired by the company’s officials. Human resources are the most important asset of the company.
• Among the above-discussed business process, manufacturing business process has been chosen. Wesfarmers is a manufacturing company that focuses on providing best quality products to their customers. The company Wesfarmers has a proper schedule to run their business processes simultaneously without interrupting the whole system. A company is using an appropriate format to run their business to attain customer satisfaction (Gareth, White, Charles and Aneka, 2016).
• The enterprise resource planning system will be helpful for the company to manage its important information. This will manage the ever-increasing costs in the market. A company wants to expand their business to different parts of the country as well. Therefore, an enterprise resource planning system will be helpful for the company to achieve the competitive advantage within the manufacturing industry market (Goni, et al 2017).
• Wesfarmers is developed by the committee of cooperative farmers that used to serve the rural community of Western Australia. This company mainly provides services as the agricultural merchandise to the rural and urban cities of Australia. The company became a leading manufacturer of liquefied petroleum gas which was exported to different countries. Besides that, Wesfarmers performed various business activities in the field of retailing, industrial, energy and insurance. Wesfarmers has become a public company providing best of their services to the customers. The products and services of the company have now reached to New Zealand area as well having a significant growth in their business.

Wesfarmers wanted to expand in different business processes like industrial, retail, energy and many more Therefore, their business requirements have changed to what they used to do earlier when the company was just started. Wesfarmers divided their business requirements into two main categories one is retailing and the other one included chemicals, energy etc. Business requirements for Wesfarmers are as follows-

The company designed their business requirements and has reached to their targeted milestones. Starting Coles retailing, Wesfarmers has increased their revenue and also increased sales. It has become the largest retailer in Australia. This success of Wesfarmers is measured by the economic value it has achieved with the years of hard work and the effective decision-making process by the senior managers of the company. Wesfarmers generated 58% revenue in 2010 after they started the different businesses altogether. The company received positive reviews for the products and services they sell to the customers (Guillaume, et al 2011).

ERP Systems and their Benefits

System requirements are a set of statements that consists of a document which is shared by all the staff members of the company. It specifies the requirements of internal and external stakeholders of the company. The aim of system requirements to collect and determine the specific requirements of a customer. The system requirements will include the hardware and software requirements for the development of ERP system. The document of system requirements will also specify the functional and non-functional requirements that will be used to develop the system. The system will be able to automatically save the data of the users which will allow easy retrieval of information in future whenever required. The system will be reliable, accessible and will have better performance for the users.

Online shopping- Customers of Wesfarmers will be able to make the request for a product online. Online shopping helps customers to choose the products according to their specific needs. They can set a payment method like credit/debit card or cash on delivery as suitable. It makes the customer know each and every detail about a product they want to purchase than the offline purchasing (Guo and Miguel, 2009).

• Login/Register- the new users for the ERP system have to first register into the system using their personal details like email address, contact number, password, city etc. Where as existing users have to simply enter their valid email address and password to efficiently access the system. This ensures that only authenticated users are accessing the system.
• Accessibility- the software system will be accessible to all the users. There will be a user manual provided to the users so that they can access the system efficiently using the step by step process (Glenn, Roan and Gareth, 2015).
• Reliability- the system will have the option of automatic update and auto-detection of issues (if any) within the system. This will reduce the cost of maintenance and will provide reliability to the users.
• Performance- the framework of ERP system will allow managers of Wesfarmers to take effective decisions regarding their business. This system will capable of keeping track of the trends in the market and will provide the competitive advantage to Wesfarmers. Security- the most important system requirement is the security(Naser, et al 2012).
• Since the internet has become a trend and also medium for communication, it is important to keep the system secure. The ERP system will have authorization and authentication so that the sensitive information of the company is saved from the intruders.
• Accuracy- ERP system will provide efficiency in creating bills and maintaining records of the company. The data will be automatically saved using sequential file organization that will provide accuracy in the business processes.

• The software solutions are required by almost every company if contrasting globally. Software system increases work efficiency of the business processes that take place in a company. Besides that, companies need effective approaches which can help in creating better strategies. Selection of right vendor for a business is the necessary task. It can help Wesfarmers to compete in the market with other similar companies and to guide about effectively using resources of the company. Software and vendor selection process needs to be done considering the positive and negative impacts of the software and how much benefit vendors can provide to the company.
• Communication- companies follow a structured process when dealing with vendors to ensure that their meeting could finalize some important decisions for the company. Creating checklists to decide vendors for the business is not a good idea rather than a conversation. Conservations can build better vendor-relations so that business processes can be made reliable to use (Jenny and Helen, 2014).

Therefore, Wesfarmers has decided not to create a checklist for selecting a vendor but to have a conversation with the recommended ones.

• Automated processes- such processes allow companies to have business continuity. The continuous improvements in the business increase economic value of the company. It also helps managers in developing best suitable business strategy. It can be beneficial to use automated processes but not too much otherwise it can lead to system failure.
• Evaluation of people- contract from the investors should be made on an appropriate basis. All the terms and conditions must be defined earlier only. Cancellation fees, licenses and so on should be clarified before launching or selling a product to customers. The software vendors must be contracted according to the specified skills they have (Kamariotou and Kitsios, 2017).
• Vendors should have complete knowledge about accessing the system as well as to resolve issues that might occur in the ERP system. Vendors should be evaluated according to their capabilities and who can provide effective business solutions for Wesfarmers in growing their business rapidly (Jan, Paul, Van and Joseph, 2014).

• The information systems are most widely used in different countries to manage the business processes effectively. It allows companies to accomplish their goals/objectives by providing opportunity market new products, create a business model, enhanced decision-making process, maintaining the better relationship with customers and so on (Kavanagh and Johnson, 2017). Wesfarmers requires having better productivity in their business; therefore, the software system is important to be implemented in the company. It is not possible for the staff members to manage a large amount of information on a daily basis. Software system allows automated processes to accomplish task each day more accurately and efficiently. This is the challenging situation for the company to manage the different functional areas of production, designing, development, and testing of a software.
• Communication software- team communication is necessary for Wesfarmers to manage their ongoing business process. There should be no situation of miscommunication occur in the company that might lead to the loss of business. Miscommunication can create the loss of sales and productivity of the business. Video conferencing is the most effective communication tool for the team members of Wesfarmers to transfer the messages.

Task Management Software- this allows team members to create a schedule to perform business activities in an efficient manner. Milestones can be framed for the projects to accomplish in the given time duration. Wrike and Basecamp are some of the task management software tools to manage projects (Sang and Seon, 2015).

• Time tracking tools- if enhancement in business performance is required then time tracking tools are the best suggestion for Wesfarmers.

Integrated systems are implemented by the organizations to measure the effectiveness of their business processes. Every organization wants to have better economic growth and develop their business value within few years of their start-up. But most of them fail due to improper management of utilizing resources. Not only this, there are many issues that are raised by the organizations for managing their business. The integrated systems allow companies to manage their data about the international clients, internal and external business processes and many more. Wesfarmers is also looking forward to innovative ways to attain competitive advantage in the market which has been made possible by ERP systems. ERP systems allow business processes to perform as a single process rather than a distributed one which makes the performance level increased for any task. There are many modules provided by an ERP system that allows business activities to be performed efficiently.

• Management Integration- employees of Wesfarmers can operate multiple systems while managers have the access to the complete database system. This integration allows managers to keep track of the activities performed by the employees. This system will perform well even when multiple users will access the system (chron.com, 2018). Users are allowed to take guidelines for accessing the system efficiently so that they can also perform few actions on the new system. This reduces the manual processes and makes the work process much easier. This technology has provided benefits to the users’ ina ll sorts of performing business operations in a better way.
• Cost Benefits- ERP systems manage cost that is used by the company to purchase resources. Processes like inventory management that requires a specific cost of ownership are easily managed by ERP systems. Communication between different departments of a company like accounts, sales, and marketing. Operating costs of the company can be managed efficiently by the integrated system. ERP systems increase the efficiency of the organizational processes thus decreases operating costs.
• Strategic Planning- ERP systems help to analyze the activities performed by the company’s competitor. It provides a way to identify the target market so that appropriate strategies can be constructed by the managers. Strategic planning involves effective communication between the external stakeholders and the managers of the company.
• Financial Controls- the financial department is the most critical part of a company that consists of the most sensitive information (Stair and Reynolds, 2017). Using the business analytics tool, company’s managers can view the transaction details of the accounting department. This helps to know about the opportunities that the company have by analyzing the overall cost.

System Requirements

Unsupported software system disables users to perform business activities. Software versions which have become old do not have efficient compatibility. The software also not integrate with the advanced business processes. The out-dated systems are not capable enough to store a large amount of information thus creates issues in the system (Thomas, 2018).

The functionality of the system does not address the requirements of the users which creates the loss of accessibility to the data in an ERP system. Users want the system to be user-friendly to perform the business operations. When user’s loss control to data they are not able to manage the processes like maintaining excel sheets for keeping records. When records are not maintained properly attackers get the way out to have access to the system.

This lead to software vulnerabilities as most of the hackers find it easier to attach to the system’s security (Whittington, 2014).

It is important for the companies to frequently update the system. Wesfarmers can either deploy a system which can automatically install updates or customize the current system.

One of the major issues for Wesfarmers was to implement an ERP system and then to manage the security risks associated with it. Consequences of risks are that it creates the loss to the economic value of the company resulting in decreased revenue. Partnerships with other companies and other external stakeholders are also not managed properly due to loss of essential data. Security vulnerabilities also affect the brand image of the company. Wesfarmers must ensure that they will take appropriate advice from the software system experts and hire a software engineer to manage issues regarding their current software system. This will reduce the security risks for the system.

Use Demand-Driven MRP: this will help Wesfarmers to analyze the demands of the market and will increase the reliability of the supply chain. Market records and customer behavior can be analyzed at a higher level which will help in fulfilling the demands of the customer. This allows companies to perform the business process in a real-life scenario. It enhanced the network of the distribution channel for a company and ensures that the supply chain procedures will be managed effectively (Rubik, and Frankl, 2017).

Automate recorders and manual tasks: One of the main causes of security risks is the mistakes which are made manually. Companies can rely on the automation systems that provides accuracy to the business processes. Automation helps in managing daily transactions, supply chain, sales, and marketing department of a company like Wesfarmers. Automated systems also provide opportunities to the companies to expand their business and to generate more leads.

Security Risk Associated with ERP Systems

Share supply buffers with partners: Wesfarmers should adopt the cloud services to manage the data. Since a large amount of information is accessed daily, it is equally important to store that information and manage that IT asset of the company. Cloud storage keeps the stock at a specific level as required (Tsang, 2014).

Improve decision-making with a single source of truth: improved decision-making process is effective for each of the business. It ensures that the company will gain profits with the constantly changing business strategy. Decisions are mostly taken by the higher authorities of the company like the senior managers. Each of the issues, requirements, and views (Pearlson, Saunders and Galletta, 2016).

Conclusion

Manufacturing companies like Wesfarmers have to constantly develop strategies to improve quality of their business. This is because the competition has increased in the market and innovations are the new trend that the customers want. Therefore, Wesfarmers has to focus on maintaining better customer relationships. It is to conclude from this detailed report that in order to manage business processes an efficient software system is required. The report has describes the different types of business processes and how these can be managed by using a software system. Benefits of an Enterprise resource planning system have been described and also ways to mitigate the risks associated with it.

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Mitigating the Risks Associated with ERP Systems

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