Financial Information System

Introduction

This report is aimed to analyses the main issues and factors that needs to be considered by organization planning to implement an ERP system.

What ERP is

Definition of ERP

ERP also termed as ‘Enterprise Resource Planning’ is a software and systems that is applied to make planning and manage all the main activities of the organization that includes supply chain, finance, manufacturing, and other organizational processes.

Purpose of ERP

The purpose of an ERP system is to enhance the organizational capability and efficiency of an organization through effective managing and improving the resources of the company. It is aimed to decline or improvise the resources without minimizing the performance and quality. This is done to enhance profitability and improvise the growth of business (Sanjay, 2011).

Benefits of ERP

It is seen that ERP enhance the reporting system of business by making the usage of better reporting tools that possess real time information. It also provides better customers services by giving better access to customer information and giving faster response times. It also improvises the on-time delivery and provide order accurately. ERP also helps in improving the inventory costs and even increases the flow of cash. It helps in making better invoicing and makes usage of better collection tools to bring faster cash. It also improvises inventory planning and make proper procurement management. It even improvises the relation of organization with vendors and even improvise the business process by implementing smarter employees and automate manuals. For students who are seeking business dissertation help, understanding the role of ERP systems in enhancing all sorts of business operations is a critical aspect.

Costs of ERP

The costs of implementation of an ERP changes greatly which totally depends upon business types. In a small business types, it costs $10,000-$150,000 wherein it costs $150,000-$700,000 in a middle-sized business. Lastly, it also about $1 million -$15 million in a larger business enterprise. Apart from implementation costs, there are various costs associated with it which includes software costs, infrastructure costs, human resource costs and also database management system costs (Sanjay, 2011).

Key risks and issues

Different risks and issues of ERP

Higher costs: The implementation of ERP system is very costly and demands for major investments in the initial phase. The consultants of ERP are also expensive and take majority of the company’s budget. The costs of ERP are not only restricted to integration and consultancy but also includes payment done for storage, training of the staffs as well as improving the prevailing business process.

Risks of Failure: The success of the ERP is highly depended upon the experience and skills of the employees which includes education and ways to make system work effectively. There are major chances of failure which could be due to choosing of wrong ERP systems and also increase in the initial budget. Company could even fail if change due to ERP could not be managed effectively (Sumner, 2015).

Needs thorough training: ERP also needs thorough training which needs to cover every features of ERP systems. The training of ERP should be in line with the process of business which costs a larger amount of money. It is also important to give training to IT users to understand the technical aspects of ERP systems. Thus, training enhances the costs and also declines the workability during the time of training.

Wrong ERP software’s: After the introduction of pirated software’s in the market, it has become a major risk for the company to implement ERP software. There are larger number of ERP solution in market but most of them are wrong ERP software’s. The choosing of wrong software might not fit the objective of the company and might not possess features related with the industry. This results into wrong functioning of the company.

Unacceptance of the software by users: The implementation of newer ERP software might frustrate organization’s users or employees as they might not accept the change. This can disturb the working time or could even interrupt the normal functioning of the work activities (Sumner, 2015).

Case study of LeasePlan

The company had made the initial plan to unite its 35 system which is spread in different countries into single with the usage of SAP S/4HANA which is an ERP software. The company had hired HCL technologies to integrate SAP system and manage the change and transformation (CIO, 2020). However, company failed to implement the system as it was planning to unite 35 systems, which was enormous task and not possible to handle. The company even failed to implement SAP at one of its affiliates which tool them 4 years to implement and 3 years to settle. Company was also not able to manage the change which have lead company in a loss of €100 million into its SAP efforts (Consultancy.eu., 2019).

What the pre implementation planning and testing would involve?

Build a stronger project team: Since, ERP projects possess larger number of Pre-defined tasks, each of them executes their own dependencies and schedules. Thus, it is important for the company to build a team which could assist in reviewing and performing tasks and also work together so as to complete the project effectively. Moreover, it is also important to choose expert and trained employees while building a team.

Establish Project charter: It is important for the company to establish project charter. The ERP project charter would assist the company to know important aspects of the projects. It will assist in knowing goals of projects and will give steps to attain goals. This documents also helps in understanding stakeholder, identify risks, and also overview budgets (Sanjay 2011).

Focus on change management: It is essential for the entrepreneurs to give major importance to the change and should aware the employees regarding the project. It is necessary to define the change in role and make frequent communication with employees.

Educate executives regarding continued buy-in: It is essential for the company to create benefit realization plan for stakeholders that can help in visually understand the values along with ROI. It can assist in quantifying costs saving and helps in attaining benefits of ERP (Sanjay, 2011).

What a post implementation review cover

Reviewing training: If a company want to adopt the desire results from ERP system in future than it should initiate training classes for the refreshers quarterly. This will help the users to attain full knowledge of the software and helps in using the system to the fullest. Online training courses is also beneficial and excellent ways to give system reinforcement training which can help refresher to gain knowledge about ERP (Khaparde, 2012).

Establish system government structure: Users of ERP faces plenty of issues whereby traditional IT tools are not able to handles the backlog request for this system. Company should manage the issues through application lifecycle management software which helps team to manage user’s requirement and give traceability from functionality system.

Feedbacks from the users: Users faces plenty of issues while dealing with ERP system. It is important for the organization to attain feedbacks from the users regarding the experience attained and should ask a reference document for future changes (Khaparde, 2012).

System evolution planning: Company should regularly schedule executive meetings which should focus on system of ERP. This will help the functional group to stay acquainted with the System and also permit the business to operate effectively. It also assists users to offer direction for the evolution of system of ERP (Sumner, 2015).

Conclusion

ERP is an effective system that helps in managing various activities of business including finance. There are plenty of benefits and risk involved with it, but effective planning can help in dealing with all the risks and issues of ERP.

References

Consultancy.eu., 2019. LeasePlan incurs tech blow from failed SAP implementation. [Online]Available at: https://www.consultancy.eu/news/3384/leaseplan-incurs-tech-blow-from-failed-sap-implementation (Accessed on 3 May, 2021).

CIO, 2020. 16 famous ERP disasters, dustups, and disappointments. [Online]Available at: https://www.cio.com/article/2429865/enterprise-resource-planning-10-famous-erp-disasters-dustups-and-disappointments.html (Accessed on 3 May, 2021).

Khaparde, M., 2012. ‘Barriers Of ERP While Implementing ERP’. IOSR Journal of Mechanical and Civil Engineering (IOSR-JMCE) ISSN: 2278-1684, Vol. 3, pp. 49-91.

Sumner, M., 2015. Risk Factors In Enterprise-Wide/ERP Projects. Journal of Information Technology, Vol. no. 15, pp. 317–327.

Saumyendu, G. & Skibniewski, M., 2010. Enterprise Resource Planning Systems Implementation As A Complex Project: A Conceptual Framework. Journal of Business Economics and Management, Vol. 11, No. 4, pp. 533-549.

Sanjay, J., 2011. ‘Interrelations Of Critical Failure Factors In ERP Implementation: An ISM-Based Analysis’. 3rd International Conference on Advanced Management Science IPEDR, Vol.19, IACSIT Press, Singapore.

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