MITS5502 Enterprise Systems: ERP Advantages and Challenges

This report, prepared for the MITS5502 course, delves into the realm of Enterprise Resource Planning (ERP) systems, highlighting their advantages over legacy systems. It explores the benefits of ERP, such as improved efficiency, unified reporting, and enhanced customer relationship management, while also addressing the challenges associated with ERP implementation. The report analyzes the drawbacks of legacy systems, including inflexibility, security vulnerabilities, and user dissatisfaction. Furthermore, it presents case studies of ERP implementation failures, such as those experienced by Hershey's, Nike, and HP, emphasizing critical factors for successful ERP adoption. The report concludes by underscoring the value of ERP in modern business and the importance of careful planning and execution for successful implementation. It uses the journal "Implementation Challenges of an Enterprise System and Its Advantages over Legacy Systems" by Dr. Nabie Y. Conteh as a reference.

Running head: ENTERPRISE SYSTEMS
Enterprise Systems
Name of the Student:
Name of the University:
Author Note:

ENTERPRISE SYSTEMS
Table of Contents
Introduction:....................................................................................................................................3
Analysing the chosen topic..............................................................................................................3
Advantages of ERP..........................................................................................................................6
Some failed cases of ERP:...............................................................................................................7
Conclusion.......................................................................................................................................9
References......................................................................................................................................10
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Selected journal for the report is:
Implementation Challenges of an Enterprise System and Its Advantages over
Legacy Systems by Dr. Nabie Y. Conteh
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Introduction:
To stay up to date with the modern world technologies, it is always important for the
system involved in a particular business to evolve. Evolution helps in blooming of business
along with increased effectiveness and efficiency. To develop the business, a huge amount is
invested in the computing system and technologies. There are certain business present who till
date uses some systems which cannot be updated to their latest version any longer. These
systems are referred to as the Legacy System. These system are not incapable of doing task,
instead it will be correct to say that they cannot match the latest organisational needs anymore.
This report discusses about the Enterprise Resource Planning and its benefit in a business
industry. This also discusses about the benefits of ERP or Enterprise Resource Planning over the
legacy system in the business industry [1]. The issues regarding the implementation of the ERP
system is also stated here.
Analysing the chosen topic:
Whenever there are issues with the existing systems of the organisation, evolution is
inevitable. The Enterprise Resource Planning is one such step taken by the business organisation
now a days to meet there requirements. The ERP is a Business Process Management software
which allows an institute to application of the system in an integrated manner. This is done to
automate and manage various back office work and functioning related to the services,
technologies and the human resource management. There are certain drawbacks in the legacy
system which are stated below:
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 Inflexibility in development and methodology delivery
These system are not meant for changes. There are two main functionalities, Start
and Stop. The changes with which these system are acquainted with generally long
termed business changes. That is how the mainstream business used to run previously, as
the organisation would wait for an update. They will not upgrade their system until it was
a necessity [2]. Now a days lean IT systems are used which are compatible for
improvement in the organisation on daily basis.
 The system security is not up to the mark
As the upgrade is delayed, the latest security threats prevails in the system.
Continuous system update or at least updating on a regular basis helps in improving the
quality of the security. There are certain threats that cannot be fixed as these legacy
systems are inflexible [10]. Even if there is a possibility to fix the issue, that is generally
delayed and hence they become very difficult for the developer to design a fixation for
such a system which is out dated. Hence the threat prevails.
 Complexity in structure along with difficulties in managing the programmes:
The legacy system are capable of handling data up to a certain format. After that
limit is reached, and the format is evolved, it becomes incompatible. This is not suitable
for a business. The business is basically stuck in a situation where it cannot accept any
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newer format whereas their clients, suppliers and the partners are compatible with the
latest format of data acceptance and storage.
 User expectation and functionality mismatch:
The legacy system becomes slower and compatibility reduces. This causes
difficulty in usage. The system tends to crash with simple changes made to it. The
customers notices these issues in the system before anyone else does [3]. If they find
better system with the competitors, they may change their services from the organisation
to the better one.
 Gaps in the functionality resulting in user dissatisfaction:
Evolution is inevitable, hence, people prefers to move on with the evolution and
changes in the system. On the other hand the Legacy System which generally doesn’t
make use of the new applications and software prone to get stuck. If the competing
company or organisation have an upgraded system it is prone to attract more customer
with better facilities [11].
 Expensive
It may appear that the legacy systems are less expensive as they are old; but this is
not true. The older systems are more expensive to maintain than the newer ones. The
upgraded software or hardware for the older systems, if available, are more important.
Most of the time they are unavailable as the developers do not develop older updates as
they are complicated and they have very less demands in the market [9]. Hence
upgrading to a new system is better for every organisation.
 Obsolete software and hardware
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Older the software and the hardware are, the more difficult it is to sustain in the
competitive environment. It gets very annoying when an urgent task is to be performed
and the system takes a long time to open or reboot. It is very difficult even for the IT
department to follow up with the issues, as in the organisation consisting of the legacy
system as every other computer tends to have similar issues.
Advantages of ERP:
ERP can manage a number functions relevant to business as a result businesses can be improved
through user efficiency and productivity which leads to improved customer service. There are
several benefits using ERP [4], such as:
 Using ERP can improve the efficiency and can merge the whole costs of IT. ERP focuses
on the unified cost of the multiple systems, which require staffs, support teams and
licenses. Hence, using a unified system decreases the requirements of training for the
consumers as the users need to acquire the knowledge of only one system.
 ERP assists in accessing every relevant process involved in the business as it enables the
data to be accessible by every employees. Due to the availability of all the information in
a central authority, the cooperation among all the employees become efficient and the
task gets completed earlier.
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 As ERP prefers unified system, there is unified reporting system for the process involved.
Hence, there is availability of unit source of truth which leads to generation of efficient
reports and required analytics whenever possible regardless of any particular time [8].
ERP software provides relief from the hassle of multiple information such spreadsheets,
email, etc. Therefore, this software serves improved report and planning.
 Since ERP serves various applications with many components that can be chosen
according to the requirements, which means the ERP software can stand alone with the
larger suite.
 This software helps to reduce the effort and time needed by the staffs to perform their
regular activities in the organization. By using this software the team members can focus
on the task and its earnings as it decreases the manual process that involves repetitive
actions [12].
 Building relationship with the Customer is an important factor to focus for every
business. As the ERP software, provides centralized information and streamlined
processes, the business employees can have best practices to build a strong relationship
with the customer.
 ERP can serve data security at a good level even on Cloud-based system as it deals with
single input system [5]. The security experts are very efficient in protecting the data that
are uploaded on the Cloud, which leads to standardized business processes.
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Some failed cases of ERP:
To cope up with these issues, the organisations may consider moving on towards the
Enterprise Resource Planning. Though there are many benefits of ERP, there are certain cases
that summarises the failure of the above mentioned planning process.
 Implementation Issue of Hershey’s ERP:
In the mid of the month of July, Hershey’s made an investment towards placing
new computer systems in the company [6]. This included some automated services too.
Later in that year it self, the company declared some sort of issues in the system that has
resulted in a loss of about 150 million dollars.
 Nike’s issue:
In the year of 2000-2001, Nike made an investment of $400,000,000 on the
Supply Chain Management and Enterprise Resource Planning. This did not go well
either, as they places a software of latest demands without prior testing. This cost them
about 20% drop in the stock and $100,000,000 loss in revenue.
 HP’s ERP failure:
HP Company faced a lots of issues while shifting the whole unit under one ERP system.
A loss of $160 Million was faced by the company along with many other effects.
There are few more cases of failure of the ERP which has resulted in a heavy loss in the
business. But that did not prevent them from using ERP [7]. There are certain critical factors that
has to be kept in mind while using ERP. The list of the critical factors are stated below:
 System that is open and can interact with the third-party-application easily.
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 The customization must be limited such that the system is not overridden during the next
major update due to the customization done outside the ERP system.
 Some of the legacy standard infrastructure must be maintained so that the data transfer
from the older to the newer system may be challenging at some point of time.
 ERP technologies should be secured at each level of the development so that the security
issues does not occur and the failed case incidents can be avoided.
 Third party support is essential for the system as the ERP is complex and difficult to
understand at the core stage.
 Implementation of the Enterprise Resource Planning is a difficult task. Hence, it is
mandatory to be performed by the experts in this field. Business Process Planning is
important. The connectivity, customization and integration should be checked before the
release is validated.
Conclusion:
Enterprise Resource Management is beneficial as the single system usage in the
organisation is cost efficient but also is beneficial over the large and heavy outdated legacy
systems used in the business organisation. The business organisation consisting of the legacy
system is prone to falling behind in the evolving world of technologies. Hence, the ERP can
indeed make some changes in the system and bring efficiency in the organisation. Moreover,
considering some of the critical factors in the ERP implementation can be more beneficial.
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References
[1] N.Y. Conteh, and M.J.Akhtar, “Implementation challenges of an enterprise system and its
advantages over legacy systems”, International Journal on Computer Science and
Engineering, 7(11), p.120, 2015.
[2] G. Seo, Challenges in implementing enterprise resource planning (ERP) system in large
organizations: similarities and differences between corporate and university environment
(Doctoral dissertation, Massachusetts Institute of Technology), 2013.
[3] M. Ali, and L. Miller, “ERP system implementation in large enterprises–a systematic
literature review”, Journal of Enterprise Information Management, 30(4), pp.666-692,
2017.
[4] S. El Kadiri, B.Grabot, K.D. Thoben, K. Hribernik, C. Emmanouilidis, G. Von
Cieminski, and D. Kiritsis ,“Current trends on ICT technologies for enterprise
information systems”, Computers in Industry, 79, pp.14-33, 2016.
[5] H. Meyr, M.Wagner, and J.Rohde, “Structure of advanced planning systems”, In Supply
chain management and advanced planning (pp. 99-106), Springer, Berlin, Heidelberg,
2015.
[6] J. Mula, A.C.Lyons, J.E. Hernández, and R. Poler “An integer linear programming model
to support customer-driven material planning in synchronised, multi-tier supply chains”,
International Journal of Production Research, 52(14), pp.4267-4278, 2014
[7] P. Burcher, “Material requirements planning”, Wiley Encyclopedia of Management, pp.1-
2, 2015.
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[8] A.Lawrence Norton, Y. May Coulson-Thomas, C.J. Coulson-Thomas and C. Ashurst,
“Ensuring benefits realisation from ERP II: the CSF phasing model” Journal of
Enterprise Information Management, 26(3), pp.218-234, 2013.
[9] I. Madanhire and C. Mbohwa, “Enterprise resource planning (ERP) in improving
operational efficiency: Case study” Procedia CIRP, 40, pp.225-229, 2016.
[10] R.Seethamraju and D.K. Sundar, “Influence of ERP systems on business process
agility” IIMB Management Review, 25(3), pp.137-149, 2013.
[11] H. Ince, S.Z. Imamoglu, H. Keskin, A. Akgun and M.N. Efe, “The impact of ERP
systems and supply chain management practices on firm performance: case of Turkish
companies”, Procedia-Social and Behavioral Sciences, 99, pp.1124-1133, 2013.
[12] A. Uçaktürk and M. Villard, 2, “The effects of management information and ERP
systems on strategic knowledge management and decision-making”, Procedia-Social and
Behavioral Sciences, 99, pp.1035-1043, 2013.
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