This research assignment reflects what actually is an Enterprise System?, its types and how the implementation of Enterprise System proves to be very effective and profitable for the growth of any organizations business when controlled in a disciplined manner changing the course of their business. The research states the impact of these systems on an organizations product and process strategies and innovations based on analysis of stats and other facts taking Enterprise Resource Planning, a type of Enterprise System into consideration. This research addresses Enterprise System by focusing on Enterprise Resource Planning most commonly known as ERP Analysis will be done comparing statistics between an organization that has implemented ERP in an efficient manner with the other whose implementation proved to be ineffective. It also refers to the current trend of ERP systems and the applicable areas in the near future.
Enterprise Systems is an application software package that is usually designed to collate all the different operational wings of an organization into a centralized zone. Enterprise Systems can also be termed as a combination of software and hardware of an organization to ensure smooth flow of data across all its functional units. These systems are not confined only to software of an organization but from hardware prospect they are the baselines of their Information Technology infrastructure. Enterprise Systems are not only applicable at large or small sized businesses but they can be utilized everywhere, provided the necessity for its use and depends on the effective utilization if implemented.
Enterprise Systems Types
Although there are lot of classifications for Enterprise Systems the three most widely regarded are
Enterprise Resource Planning (ERP) integrates all of an organizations core business process allowing them to share and communicate information with each other. This ERP will have several in built modules to support and execute various processes for each of its type.
Customer Relationship Management (CRM) deals with an organizations interactive approach towards their present and future customers. They focus on increasing their sales, understanding the needs of their business users and providing strong technical support for the problems encountered by the customers.
Supply Chain Management (SCM) deals with collection of manpower, infrastructure and scheduled tasks that put together are required for putting a product into production and finally delivering it to a customer. With SCM collaborators can coordinate and share their strategies and the flow of their materials on a regular basis.
3. RESEARCH OBJECTIVES AND PURPOSE
The purpose of this research is to know how a shift to an Enterprise System such as ERP boosts an organizations business. Does it justify the cost incurred and are they able to keep up to the challenges that arise due to the shift. A conclusion shall be drawn based on statistical analysis of the impact on the success or failure of an organization implementing/ted ERP. Does an organization really need to adopt these Enterprise systems to stay alive in the current era of IT Advancements?
4. DESCRIPTIVE STUDY AND LITERATURE REVIEW
When a company wants to increase its business than its current flow, it needs to consider few factors. Whether to upgrade technology wise by shifting to some tools or to increase their current teams to produce more products and increase their business? This process might not work if their current teams cannot cope up with the increased workload and will end up delivering products, but faulty. This will in turn affect the companyâs business and its image in the market and its customers. If they proceed with their conventional approach and do not implement it correctly, they will incur cost overheads which will result in total failure. An alternative to this approach would be the former option to make a shift technology wise. When itâs operating on a number of core processes, they would prefer shifting to an Enterprise System. Now that they have opted out for an Enterprise System, they must analyze their adoption choice areas. Do they need to control their processes, their customer interaction or the initial process of collating the essentials required for producing and delivering a product? At this point ERP comes into picture.
This review brings out the information published in various articles, blogs, journals and web after 2010 on this particular domain in a systematic review approach. Nowadays one of the major strategic advantages in increasing the business is speeding up the supply management. This strategy has been long followed but by the use of information systems. These systems are todayâs ERPâs. Back then, they proved to be major boosters to the business in IT. The current trend is controlling and organizations large scale operation from a different geographical location. This proves to be very effective in tracking the status of any tasks of different operation teams from a single location. Albeit there are drawbacks in any system, ERPâs force an organization to completely integrate into their frameworks, which is beneficial in the long run.
Let us consider the following example to understand the application of an ERP system. There is an educational institution that has number of branches in a single state. Each branch has its wings such as the student data, the administration department, financial wing and its HR department. The flow of information is large and there are different teams working at each of their branches. There is considerable amount of work in implementing new strategies, ensuring smooth flow of current processes and upgrading to new infrastructure etc. It is not efficient for each of those teams to implement all these in their respective branches independently. Instead, a centralized unit at this organization can be utilized for this. Employees at all branches can work with this unit and make sure everything gets implemented. This is exactly what an ERP System offers. It gives different users at different location, access to the same data or functionality. In this way, Enterprise systems can be utilized at an institutional level to combine all of itâs into a centralized entity and operate on each of it separately.
5.1 Challenges Faced while ERP Implementation
The most important challenge while implanting ERP is the need for its implementation. There isnât must need If it can continue with its current approach.
One of the challenges is the cost involved in purchasing of an ERP tool, it is very high. When a company prefers to buy more modules for its different processes the cost will eventually go up.
Implementation of ERP needs support and backing from senior personnel within the organization.
While shifting to ERP one must analyze their requirements throughout the planning process. If this is not done, then it will end up in a complete mess.
If everythingâs in place then they must have the skill to operate on an ERP system, if unavailable additional costs and considerable amount of time will incur in training their selected personnel.
Choosing different vendors for each of their requirements will result in compatibility issues. It must make arrangements to handle this.
5.2 Benefits of ERP Implementation
The core processes operations are transparent and very useful for senior management in tracking the progress of the units.
A centralized unit providing the status updates and the activity reports of all the departments in real time.
If ERP tools from a single vendor are used for, individual departments do not face difficulty in maintenance and other issues encountered can be handled easily.
Advanced integration into web services can be made easier using ERP software such as e-commerce.
Tracking of inventories of sales, income, orders and other operations becomes easier.
When an ERP system is implemented a repository is created at the back and all the data required is accessed through this database.
For large organization ERP is without a thought a great choice to boost its business.
ERP systems offer enhanced security than others due to its centralized access making it easier to apply different security protocols.
Having an ERP system will reflect its efficiency in its service to the customer and supply chain as well. An ERP system offers flexibility in integration with fewer modules or more modules, more the modules more is the integration and communication between various departments.
5.3 Statistical Analysis on Implementation of ERP
Two stalwart confectionary firms have implemented ERP and the results are as follows
5.3.1 ERP Implementation Success Study
Cadbury, this Birmingham based Corporation is the second largest manufacturer of chocolate in the world after its competitor Hersheyâs. They had shifted to ERP and implemented the SAP ERP 6.0 throughout its processes. Crediting ERP for reducing their operational costs, they were continuously sending the data to their integrated SAP solution and linked them to more than 1600 applications.
At the very beginning of their ERP implementation Cadbury was left with surplus amount of chocolate products which kept on increasing their sales and in turn their revenues by reducing their costs and ensuring smooth functioning of their processes by the end of 2005.
This implementation of ERP further stroke a five year deal integrating the companyâs supply chain, sales, and marketing with the SAP ERP. The implementation has been by far very efficient with only a few addressable challenges.
The implementation of ERP in Cadbury proved to be very effective for its business keeping its pace up with the other competitors by increasing the efficiency and structuring its data management system centralizing all its offices. Though the initial rise in business was at a slower pace, but once it got on it kept growing and growing with time, showing the long time benefits of ERP.
5.3.2 ERP Implementation Failure Study
The Hershey Company is the largest chocolate company in the world. Most of Hersheyâs income, in fact more than 80% comes from chocolate products and the remaining from non-chocolate products.
During the 2000âs Hersheyâs approved a project to implement ERP into its processes to improve its service and competency. For this it had opted to Implement ERPâs from four different vendors for each of Enterprise System types SAP for ERP , Siebel and Manugistics for SCM, Siebel and IBM CRM trying to integrate these systems and their processes. This was a costly project and also involved a time span of five years for successful implementation, but Hersheyâs demanded it to be implemented within less than two years. This led to a complete failure in its Supply Management and its inventories kept increasing to more than 25% than previous years unable to meet the demand and eventually failing to deliver the order. This had a huge impact not only on its revenue but on its global image as well. The Hersheyâs Companyâs stocks kept losing at as high as 8 to 9% in a day. A ten million project cost them more than 150 million and the sales dropped by 12 percent and profits by 20 %.
The conclusion that can be drawn from this analysis is that the implementation of ERP should be followed in a systematic manner. Most often implementation should be considered from a single vendor as it will provide additional benefits and also reduce the maintenance costs. A simple decision to implement it in very less time span proved to be a costly affair in terms of revenue and image. Thus success and failure of an organization depends on the effectiveness of an ERP system implementation a step by step manner.
The reason for statistical approach is that the numbers would be easily effective in reflecting the turnaround of and organizations business instead of long theoretical reviews.
6. Planning and Analysis
This research has focused on clearly getting to know the need for an Enterprise System Implementation. For any business one must clearly identify their requirements and understand whether they need to make changes in their strategies and approach to boost their business or can also be done with the current strategies in use. Whenever one needs to assess the outcomes, they must analyze trends of their similar or related businesses and then come to a conclusion. Numerically analyzing such information can give them a clear picture of the results when they do not understand the impact theoretically.
7. Other Considerations
With this research survey, ERP must not be limited to only a fewer areas but must move beyond into further advancements by integrating systems with an Application programming Interface in the near future. One must think to a greater extent to visualize how ERP can bring major changes in different sectors of business be it IT, Manufacturing, Health care etc.
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