Enterprise Resource Planning (ERP)

Benefits of ERP: ERP enables an organization to look itself in wards as well as outwards towards the market. Due to the holistic view provided by ERP, the organization has a better insight into its own policies, systems and procedures. The organization is also able to look at the inefficiencies, bottlenecks and deficiency in communication across functions / departments / divisions present in the enterprises. It can help identify any area where the different departments of the enterprises are working at cross purposes. The very word integration signifies that no part of the organization is an island. All those that were islands earlier would be connected to each other effectively with the introduction of ERP.

ERP’s strength lies in its ability to provide information that is comprehensive, instantaneous and up-to-date. It provides this to all segments of the enterprise. The information from the different segments of the enterprise also gets into the ERP system seamlessly. Thus, the two way exchange is almost effortless. Sharing of information should make it easy for people to work together many of the wastes in corporations are due to the non-availability of information or due to constrained flow of information and hence the same to being available at the time when it is needed . These wastes could be eliminated with the use of ERP. ERP proves that formation is indeed power in today’s competitive market that needs an agile response from an organization.

(a) The benefits of having an ERP system installed are:

1. up to date
2. uniform
3. comprehensive, across the entire organization
4. integrated, linking all the functional departments and divisions.

(b) The ERP software embeds the best practices followed by corporation across the world.
(c) The instantaneously available comprehensive information, the linking of different departments, and the embedded business processes in the ERP software can help a manager to take appropriate decisions with speed and quality.
(d)It integrates the work flow in the entire enterprises. The organizations could thus be made more agile responding quickly and appropriately to the market situation and in attending to the customer.
(e) Every decision maker, whether the decision is big or small is put on the ‘value chain’. There is therefore more focus imparted to the organization.
(f) It helps an organization to look inwards and thus discover areas that could be improved upon.

Since establishing an ERP requires large investments the CEOs of the enterprises are typically interested in the return on investments (ROI). While there is nothing wrong in watching the ROI, the top executives should be conscious of (and develop measures to monitor) customer satisfaction (the ultimate goal), cycle times, delivery performance, decisions making time and intangibles like the quality of decisions etc.

Implementation of ERP: However, just by installing an ERP system an organization cannot expect the benefits to flow. Much of the results depend on the way ERP is implemented. First and foremost, the attitudes of people have to change. ERP expects people to change the way they do their jobs. People in general resist change. The software is less important than the changes in the way people do their jobs. In fact if people’s attitudes are changed, the software may even become an impediment to the smooth running of the operations. That is the downside, if the organization is not well prepared for the changes.

Moreover, the results from ERP like any transformation in the systems are not instantaneous. At least not those that concern the revenues profit and ROI. ERP, as transformational process, can take two to three years. An organization has to keep on improving its policies, systems procedures and ways of transacting business with ERP as an enabler. The point is not to expect a revolution, but a gradual transformation. Much of the benefits due to ERP depend on the amount if introspection the organization does about its own ways of doing business. It is a prerequisite to put one’s house in order before one does business with other organizations.–

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