First: ERP Strategic Role in Organizations
ERP systems are used by business organizations to automate processes supporting all the organizational functions. ERP systems allow the integration of an organization’s information through a centralized database and to use the integrated business processes. ERP benefits are mainly, the fast response of the system, fulfilling customer needs, increasing product and service quality, enhancing organizational performance, efficiently using the resources of the organization, assuring information security and accuracy. Moreover, intangible benefits could be represented in creating integration forms (Al-Sabri & Al-Saleem, 2013).
This research focuses on enterprise resource planning systems (ERP) as they function as a valuable resource that must be managed carefully and efficiently. It consists of five parts covering, ERP strategic role in organizations, the business benefits of an ERP system, ERP system architecture, ERP system planning and ERP system design and implementation.
Enterprise Resource Planning (ERP) system is used in business process development as it is considered a tool for integrating the organizational structure. The popularity of ERP increased in the last few years. As the ERP market grew from 28.8 Bn. $ in 2006 to $47.5 billion in 2011 and is expected to grow to an estimated 67.7 Bn. $ by the end of 2017. The ERP spending increased by 31% in 2011 compared to 2010 and then increased again by 4.5% in 2012 compared to 2011 (Hwang & Min, 2015).
IS strategic role consists of using information systems and technology to develop products, services and competencies to gain competitive advantage. This creates “strategic information systems” concept that supports the -business strategies. ERP systems are the most preferable in the decision-making process in management, as the ERP is responsible for forwarding information gathered to necessary and different managerial levels as soon as possible when encountered a situation or problem. An ERP system is mainly a software solution that consists of many sub-systems working on a process-based approach that designates targets for the enterprise and responses for data and information needs by integrating all functions tightly creating a detailed information system for the enterprise. This system consists of package programs that connect enterprise various functions. ERP advantages are increasing flexibility and productivity, creating healthy communication, lowering operating costs, revenue growth, short cycle time, effective co-operation and high profit margin (Ucakturk & Villard, 2015).
There are several benefits to business from ERP implementations that could be arranged into 3 categories including strategic, tactical, and operational benefits as follows (Elmeziane, et al, 2011):
Second: Business Benefits of an ERP System
ERP implementation was in general a top-down decision, and the success of such an implementation depended on the alignment of the ERP adoption with strategic business goals.
- Tactical benefits: consists of three main factors as follows
- Effective project management: ERP could be managed to effectively plan for project management, in order to succeed in accomplishing implement an ERP system.
- Re-engineering business processes: organizational management should fully realize the current business processes it needs to re-engineer to be compatible with the ERP software.
- Suitability of software and hardware: management must choose an ERP package that best matches the legacy systems including, hardware platform, databases or the operating systems.
- Operational benefits: mainly appear in education and training, as it is very important that the users be capable to use the ERP system when the ERP system is up and running to be aware of the ERP logic, functions and concepts.
IT can serve either as an enabler or a barrier to KM when connecting people at different levels, or in different units.
The system architecture is used to integrate new types of business applications that must be regarded as a continuous process and a long-term strategic investment. Integration benefits appear in the long run, that it may be considered as a form of “life insurance” for the organization’s information system. According to Aderina and Nela (2010), two major realistic alternative approaches to integration should be taken into consideration:
- Internal integration: That focus on the intra corporate economic processes, covered by ERP
- External integration: combines the services of several suppliers in order to support the extended operations management, information exchange, coordination and cooperation throughout the extended value chain (expansion of the traditional ERP applications by means of “newer” Customer Relationship Management CRM and Supply Chain Management SCM).
ERP system and organizations influence one another. They are built by managers to serve the interests of organizations, that’s why organizations must be open to the influences of the ERP system to benefit from new technologies and information technology. Interactions between ERP systems and organizations is complex and is influenced by many mediating factors including the structure, business processes, organizational culture, politics, surrounding environment, and managerial decisions (Laudon & Laudon, 2011).
Each organization seeks benefits of implementing ERP systems as improved process flow, best data analysis, high quality data for decision making, reduced inventories, and better customer service. The ERP system is considered a major project for the organization that requires a significant level of resources, commitment and process changes. The ERP implementation process should take major concerns in the organization because of numerous failed cases, with few fatal disasters, which may lead to the collapse of some organizations. Regarding these problems, organizations implement ERP systems with some plans to extend later (Tenkorang & Helo, 2011).
According to Ziemba and Ob??k (2013) ERP system goes through sequential stages as follows:
Process adaptation: In order to improve its performance, enterprises should moderate business process and management behavior, according to the ERP system requirements to achieve the expected effects of the system of business process reengineering (BPR) that helps in redesigning the enterprise business process based on a fundamental analysis.
Organizational resistance: Employees may resist change as a result of ERP implementation, as employees have got used to the regular business model of doing their job. The resistance against change mainly occurs due to some reasons as: narrow mind and focus, educational factors, skills that might be challenged and security.
ERP implementation: The ERP system has to be suitable for the organizational business processes, this factor is considered an important factor for the success of the implementation process of ERP. Tailoring the software package is necessary to best fit the business process.
Third: ERP System Architecture
ERP adaptation: ERP system manufacturer supposes that an ERP system is the optimal application practice for organizations and most of them can adapt themselves to the organizational feeling, economic factors and the fear of unclear future (Chen, et al., 2009).
As a result of employees resistant to change, organizational change management plans need to more positively impacting the culture of the organization. It is also necessary that the project teams and executive sponsors communicate key process and organizational changes to employees as well as the complex set of stakeholders whom need to be well communicated. Stakeholders as internal and external customers and external taxpayers. These reasons clarify why ERP systems often require long duration and more costly to implement (Ravichandran & Piramuthu, 2012).
Conclusion:
In the recent years, the popularity of the ERP systems increased for supporting role in operational organization. It is important to sustain existing unique competencies of the organization or to create new unique competencies that define what it wants to place on the market. Here rises the importance of the selection of ERP system that offers the most suitable option. This task is considered a complex task and is strongly influenced by the organization’s individual requirements, business processes and it affects the level of initial and running cost due to the variety of available selection criteria as well as a highly nontransparent ERP market offering more than 100 different ERP systems (Alpers, et al., 2014).
References
Aderina, M & Nela, S 2010, The importance of the implementation of integrated information systems in the restructuring and European integration process of organizations, University of cluj Napoca.
Alpers, S, Becker, C, Eryilmaz, E & Schuster, T 2014, A systematic approach for evaluation and selection of ERP systems, Springer International Publishing, Switzerland.
Al-Sabri, H, &Al-Saleem, S 2013, ‘Using a KMERP framework to enhance enterprise resource planning (ERP) implementation’, IJCSI International Journal of Computer Science, Vol. 10, no 1.
Chen, H, Chen, S & Tsai, L 2009, ‘A study of successful ERP- from organization fit perspective’, Systemic, Cybernitics and Informatics, Vol. 7, no. 4., pp. 8-16.
Elmeziane, K, Chuanmin, S & Elmeziane, M 2011, ‘The importance of critical success factors of enterprise resources planning implementation in China’, Business Management Dynamics, Vol.1, no.6, pp. 1-10.
Hwang, D, & Min, H 2015, ‘Identifying the drivers of enterprise resource planning and assessing its impacts on supply chain performances’, Industrial Management & Data Systems, Vol. 115, no. 3 pp. 541 – 569.
Laudon, K & Laudon, J 2011, Management information systems, Prentice Hall, USA.
Ravichandran, K & Piramuthu, R 2012, ‘Change management: challenge to transformation in public sector organization’, Far East Journal of Psychology and Business, Vol. 7 no. 1, p. 22.
Tenkorang, R, & Helo, P 2011, ‘Enterprise resource planning (ERP): A review literature review’, Proceedings of the World Congress on Engineering and Computer Science, Vol. 2, San Francisco, USA.
Ucakturk, A. & Villard, M., 2013, The effects of management information and ERP systems on strategic knowledge management and decision making, Science Direct.
Ziemba, E & Ob??k, I 2013, ‘Critical success factors for ERP systems implementation in public administration’, Interdisciplinary Journal of Information, Knowledge, and Management, Vol.8.
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