BCO6603 ERP Systems: Stages, Benefits, Barriers - Research Report

This report delves into the intricacies of Enterprise Resource Planning (ERP) systems, examining their significance in today's volatile business environment. It explores the various stages of ERP implementation, from setting objectives and defining scope to data migration, infrastructure checks, customization, and ongoing support. The report highlights the benefits associated with each stage, emphasizing the importance of aligning resources, integrating processes, and leveraging technology for improved business outcomes. Furthermore, it identifies the drivers and barriers that influence a company's progression through the ERP journey, including factors like setting the objectives, defining scope, evaluating options, data migration, infrastructure checks, customization, change management, knowledge and technology transfer, project management, and on-going support. The report uses case studies to demonstrate different company experiences, reinforcing the varying benefits and weaknesses of ERP systems, and concluding with the idea that the ERP journey is ongoing.

Running head: ERP SYSTEM
ERP System
Name of the student:
Name of the university:
Author note:

2ERP SYSTEM
Table of Contents
Introduction:...............................................................................................................................3
Importance of Enterprise Resource Planning (ERP) system:....................................................3
Different stages of ERP system:................................................................................................6
Benefits of each of the stages of ERP system:...........................................................................9
Identify the drivers and barriers of different stages of ERP:...................................................10
Conclusion:..............................................................................................................................12
References:...............................................................................................................................13
2

3ERP SYSTEM
Introduction:
In the highly volatile business environment, it has become the matter of utmost
importance for the management of corporate entities to manage the business properly.
Czekster et al. (2019) commented that aligning all the resources properly is the key of
strengthening the inner value of business. There lies the significance of enterprise resource
planning (ERP) which helps the management of an organisation to align all the resources
properly from one state to that of the other. As discussed by Ghobakhloo et al. (2019) in the
global business environment, the need of designing customised products or services is also
increasing in a rapid manner. ERP plays a critical role in terms of integrating all the resources
such as employees, financial resources, raw materials et al within a single platform in order to
deliver high quality of customised products or services and keep the customers happy and
satisfied. Present paper would put forth the discussion of ERP system. Different stages of the
system and the benefits of each of the stages will be discussed in the paper. Furthermore, this
paper will also shade light on the barriers of implementing ERP system in the context of an
organisation.
Importance of Enterprise Resource Planning (ERP) system:
Alomari et al. (2019) perceived that ERP is defined as the package software solution
which plays a critical role in addressing the processes, which an organisation requires in
terms of running the internal functionality properly. With the assistance of ERP, the
organisations can implement certain core processes such as order processing, purchase order,
order fulfilment, invoicing, production planning, shipping and Bill of Material which are the
fundamental factors of getting desired business outcome. According to Monteiro (2019)
Enterprise resource planning (ERP) is defined as one of the major processes with the
3

4ERP SYSTEM
intension of managing and integrating multiple parts of business. This is basically a software
application, which has been designed especially in order to implement resource planning all
the processes that are highly required for the sake of running an organisation as the single
system.
As per the perception of Chang and Hsu (2019) ERP systems is one of the most
critical factors that aligns corporate business processes and data access together in an
integrated manner which helps the companies to explore the ways of running the business
properly. As the degree of complexity is increasing in a rapid manner, the organisations need
to implement ERP systems which get information, greater information visibility, and
accuracy in a single data base which are the key factors of strengthening the inner value of
business. This is the way, through which the organisations also executes standardise
processes. Warner and Zhu (2018) put stress on the fact that successful implementation of
ERP system also allows the companies to have better understanding regarding the entire
business picture. The benefits of ERP system are endless. This allows the organisations to
access multiple functionalities within a single perform which is the key of running the
business in a consistent manner. Su et al. (2018) opined that high availability of all the data
within a single system makes it easy for the management and executives to make better
decision in accordance with the latest trend in the external environment.
Pandey (2018) stated one of the most significant benefits of ERP system is that it
supports the management of an organisation to promote potential growth of business by
dealing with future e-commerce and e-supply chain investments. With the advancement of
technology, the organisations are facing pressure constantly to integrate technology within
the business process in order to promote speed in business. However, Bailey et al. (2018)
counter argued by saying that huge cost of technology is making it difficult for their
organisations to run the business in a cost effective manner. Here also ERP system plays a
4

5ERP SYSTEM
major role in reducing the cost of technology as this system supports in aligning all the
information in a single data base.
Boon et al. (2018) put stress on the fact that ERP systems are enduring as one of the
most powerful tools for the industries and the organisations. Wide ranges of innovation have
been implemented in recent years which are playing a critical role for the firms to put stress
on the supply chain management and customer relationship management. Stewart and Brown
(2019) shaded light on the fact that there are multiple ERP vendors who have amalgamated
both supply chain management and customer relationship management within their inner
business system for the sake of serving the customers in much better way. This is the way,
through which the ERP vendors have integrated flexibility within their business practice
which has enabled them to compete in the highly volatile business environment. One of the
major future impacts of ERP system is that the alignment of cloud computing within the
business process (Collings et al. 2018).
Cloud computing will allow the corporate entities to access valuable resources and
software which are highly required in terms of strengthening the inner value of business. In
future, wide ranges of companies will access this opportunity and thus run the business in a
timely and cost effective manner. Ahammad et al. (2018) stressed on the ideology that with
the assistance of cloud computing, the companies can manage both hardware and software
and pay in accordance with the usage of service without making any kind of capital
investment. At the same time, communication and collaboration in terms of e-mail and file
sharing will also be affected positively by the implementation of ERP system. With the
assistance of ERP system in terms of cloud computing will help the companies to deal with
several factors such as trade finance, workflows outside of the company, transactions
sourcing, procurement and supply chain which are the key factors of sustaining in the highly
globalised business environment. Gutierrez-Gutierrez et al. (2018) observed that flexible
5

6ERP SYSTEM
technology is paving the way for the companies to agile business without facing any kind of
issues related to technological infrastructure. Business intelligence is one of the major future
impacts of ERP system. It is worthy to mention in this context that business intelligence will
allow the companies to execute computer based technique in order to analyse the data and
make effective decision. Meyer and Xin (2018) showed that SaaS or softwareas-a-service is
also offered by business intelligence which will help the companies to support the front office
workers to perform their assigned tasks with utmost efficiency. In the public sector
organisations, business intelligence as the most effective part of ERP system will help in
focusing on critical areas such as public safety, tax collection and broader management.
Different stages of ERP system:
ERP system is one of the most significant parts of business management software
program which is playing a critical role in terms of promoting sustainable growth of business
and enable the management of the firms to ensure stability in the business process. Berman et
al. (2019) said that the multinational companies are facing significant issues in the way of
managing multiple activities of businesses across the different countries. There lies the
significance of ERP solution which is helping the firms to run their business in the systematic
manner by aligning all the resources in a single platform. Through this way, ERP is playing a
critical role for improving the business outcome for the firms. Amarakoon et al. (2018)
commented that there are multiple steps which are to be followed by the firms in order to
implement ERP system successfully. The steps of implementing ERP are as follows:
 Set the objective
This is the first step of implementing ERP system. As ERP provides wide ranges of
solution to multiple issues, it is imperative for the firms to set the right objectives behind
executing this system. Soltis et al. (2018) showed that analysing Key Performance Indicators
6

7ERP SYSTEM
(KPI) is very much needed in this context as it is the key of software integration. In order to
implement ERP successfully, the organisation need to figure out the main issue which are
driving them to integrate the system within their internal functionality.
 Define scope
There may be wide ranges of objectives such as transparency of operations, maintaining
financial control, supporting organic expansion, supporting common processes an
acknowledging the importance of merger and acquisition. As delay and over budgeting are
the common threats towards implementing ERP, it is imperative for the firms to synchronise
their common need. The organisations should make the ERP system in accordance with the
budget (Buckley et al. 2019).
 Evaluate the options
This is the third step of implementing ERP successfully. In order to attain optimal
utilisation of ERP system, the management of corporate entities should take time in order to
evaluate the options available for implementing ERP. In addition to that, the organisations
need to explore the difference in between the ERP package configuration and customization
undoubtedly. Consultation with the ERP vendors is very much needed in terms of bringing
the best system.
 Data migration
Data migration is another vital step of executing ERP system successfully. After finding
the right ERP solution, it is imperative for the companies to implement data migration
technique. Implementing ERP is a costly process which can make it difficult for the
companies to run the business in a systematic manner. Thus, the companies should figure out
7

8ERP SYSTEM
which data is required for implementing ERP system. At the same time, the organisations
should also ensure that the data has been integrated properly.
 Check infrastructure
Keeping the organisation ready is the core step of implementing ERP successfully. After
consulting with the ERP vendor and generating relevant vrainstorming, it is imperative for
the organisations to install effective infrastructure which can match with the requirements of
ERP system (Rana 2019). The scope of scalability and options to update are needed to be
checked before installing ERP system.
 Customization
This is the sixth step of implementing ERP system. As ERP solution is the matter of huge
investment, the companies should manage the tabs of ERP system continuously and manage
the system consistently. At the time of pilot testing, the management should evaluate the
value of the system against the organisational objectives.
 Change management
Change is inevitable while the organisations are trying to think out of the box. Thus, it is
imperative for the organisations to take necessary steps in terms of managing change. As
ERP is the new system, it is imperative for the organisations to involve the employees and
prepare them to work efficiently in the new system. Cordial communication is highly
required for keeping them informed regarding the new system. Care must be taken in order to
ensure that all the employees have been accustomed with the new system.
 Knowledge and technology transfer
8

9ERP SYSTEM
In this step, the organisations should keep proper vendor detailing as well as
technological know-how and align them with the organisational IT support. Proper training is
needed to be provided by the company to equip the staffs with necessary ERP related
knowledge.
 Project management
This is one of the most important steps of implementing IT successfully. Necessary
improvisations are needed to execute in this step in order to implement the ERP system in
systematic manner. Testing is an imperative factor in this step (Madapusi and Ortiz 2019).
 On-going support
This is the final step of ERP implementation. After checking and implementing the entire
ERP solution, it is important for the companies to update the software regulatory and ensure
that they have taken all the necessary hardware synchronization. In addition to that, the
organisations need to test all the reports.
Benefits of each of the stages of ERP system:
Enterprise Resource Planning is the best way of dealing with the complexities of all
managing the functionality of all the departments. This is the way of making systematic
design of business which is the key of delivering positive outcome. As implementation of
ERP is a complicated process, the inclusion of different steps can help the firms to complete
the entire process in a systematic manner. Identification of the issue is the initial step of
implementing ERP system which can help the companies to assess the scalability of the
system and accommodate changes in futures per the business need (Holsapple et al. 2019).
9

10ERP SYSTEM
Defining scope is another important step which can help the companies to have
effective control process which is very much needed in terms of completing the entire process
of implementing ERP system in a timely and cost effective manner. In addition to that, an
well-defined scope statement will also help the companies to keep all the stakeholders such as
business stakeholders, internal IT groups, and the Implementation Partner informed regarding
the process which is the key of enabling them to focus on the project. Brainstorming is
another vital way of implementing ERP (Hughes et al. 2019). This enables the organisations
to customise their ERP software as per their business need. In addition to that, brainstorming
can also help the firms to figure out the current needs of the customers and design the ERP
system accordingly for the sake of keeping the customers satisfied. As the process of
implementing ERP system requires huge cost, the step of data migration can help the
companies to transfer the most important data to the software complete the entire process of
implementing ERP in a cost effective manner. The internal infrastructure of an organisation
plays a major role in terms of running a process successfully. Checking the infrastructure can
help the companies to ensure the availability of all the tools which are highly required for
implementing the system property (Crane et al. 2019). Customisation is the greatest way,
through which the organisations can be able to make positive changes as required.
Identify the drivers and barriers of different stages of ERP:
As ERP has gained popularity and is considered to be one of the favourites of
entrepreneurs and businesses for a seamless experience, some challenges have cropped up in
its implementation process (Madapusi and Ortiz 2019). Moreover, most of the times, the
organisations are not prepared to introduce the ERP in its system due to inadequacy of the
organisation. In the coming section the challenges are discussed in details.
10

11ERP SYSTEM
 Due to the cutthroat competition in the market, there are around 500 ERPs in the
market which makes the entrepreneurs to choose the perfect one that would suit
their requirement. The selection of the appropriate ERP is imperative as the
productivity quotient of the company depends on this factor (Crane, et al. 2019).
In regard to this, the company should take a detailed investigation on the previous
projects undertaken by the vendor, the vertical and experience of the industry.
 The implementation process of the ERP takes time as it involves various steps.
This time taking factor is not realized by most of the companies thereby posing as
a threat to the business’ investment.
 The cost of implementing ERP in its various stages is an expensive affair unlike
the initial setup cost. Also, the cost varies according to the customization the
company has opted. Therefore, the company needs to reserve a substantial amount
for the ERP implementation process.
 The company should be ready to provide adequate training to the employees as
the functioning of the ERP needs proper knowledge, or else the entire decision of
implementing it can backfire. The productivity can decrease and thereby affect the
company’s profit.
 The senior management plays a crucial role in the implementation of the ERP.
Any ignorance or lack of enthusiasm on their part can bring in inefficacy of
decisions and delay in the operation process.
 Implementation of ERP needs proper management comprising efficient
employees. Most of the times, company faces difficulty in getting experts from
within the company and thereby they have to appoint external help.
 According to Holsapple, Sena, and Wagner (2019), the maintenance cost of an
ERP is too high and the slightest negligence can cause the company to bear its
11

12ERP SYSTEM
repercussion. Therefore the company must acknowledge the issue of its
maintenance before taking a decision on implementation.
 There might arise numerous software glitches due to slow system performance.
Therefore, the company must invest on the installation of proper internal hardware
or it might results in low performance and insufficient storage that can hamper the
function of ERP.
 Sometimes, the companies do not have essential planning and analysis of the
requirement before the implementation of ERP which may reduce the business’
productivity thereby posing a threat to the profit making objective (Rana 2019).
Considering the above challenges, the implementation of ERP can be a disadvantage
if the companies are not aware of the entire information (Hughes, et al. 2019). However, if
they are willing to overcome these challenges, it can be of great advantage as it will give
them an edge over competitors. It will also save resources and provide the company with
benefits in the long run.
Conclusion:
Based on the discussion, it can be concluded by saying that ERP system plays a
pivotal role in integrating all the fundamental business processes within a single platform by
aligning multiple divisions, business functions and geographical locations. Through this way,
through which the performance of an organisation is improved. In the globalised business
environment, ERP has revolutionised the way of running by improving the business process
efficient and cost-effective. This is the way, through which ERP is paving the way for the
firms to ensure that the customers are getting high quality of products as per their
requirements. This system is helping the companies to increase the flow of information across
all the departments which is very needed in order to strengthen the value of business.
12

13ERP SYSTEM
References:
Ahammad, M.F., Glaister, K.W. and Gomes, E., 2019. Strategic agility and human resource
management. Human Resource Management Review, 5(3), pp.100-107.
Alomari, I.A., Amir, A.M., Aziz, K.A. and Auzair, S.M., 2019. Enterprise resource planning
system business process attributes: A research note. IJAR, 5(3), pp.111-115.
Amarakoon, U., Weerawardena, J. and Verreynne, M.L., 2018. Learning capabilities, human
resource management innovation and competitive advantage. The International Journal of
Human Resource Management, 29(10), pp.1736-1766.
Bailey, C., Mankin, D., Kelliher, C. and Garavan, T., 2018. Strategic human resource
management. Oxford University Press.
Berman, E.M., Bowman, J.S., West, J.P. and Van Wart, M.R., 2019. Human resource
management in public service: Paradoxes, processes, and problems. CQ Press.
Boon, C., Eckardt, R., Lepak, D.P. and Boselie, P., 2018. Integrating strategic human capital
and strategic human resource management. The International Journal of Human Resource
Management, 29(1), pp.34-67.
Buckley, M.R., Wheeler, A.R., Baur, J.E. and Halbesleben, J.R. eds., 2019. Research in
personnel and human resources management. Emerald Publishing Limited.
Chang, Y.W. and Hsu, P.Y., 2019. An empirical investigation of organizations’ switching
intention to cloud enterprise resource planning: a cost-benefit perspective. Information
Development, 35(2), pp.290-302.
Collings, D.G., Wood, G.T. and Szamosi, L.T., 2018. Human resource management: A
critical approach. Routledge.
13

14ERP SYSTEM
Crane, A., Matten, D., Glozer, S. and Spence, L., 2019. Business ethics: Managing corporate
citizenship and sustainability in the age of globalization. Oxford University Press.
Czekster, R.M., Webber, T., Jandrey, A.H. and Marcon, C.A.M., 2019. Selection of
enterprise resource planning software using analytic hierarchy process. Enterprise
Information Systems, 13(6), pp.895-915.
Ghobakhloo, M., Azar, A. and Tang, S.H., 2019. Business value of enterprise resource
planning spending and scope: A post-implementation perspective. Kybernetes, 48(5), pp.967-
989.
Gutierrez-Gutierrez, L.J., Barrales-Molina, V. and Kaynak, H., 2018. The role of human
resource-related quality management practices in new product development: A dynamic
capability perspective. International Journal of Operations & Production
Management, 38(1), pp.43-66.
Holsapple, C., Sena, M. and Wagner, W., 2019. The perceived success of ERP systems for
decision support. Information Technology and Management, 20(1), pp.1-7.
Hughes, C., Robert, L., Frady, K. and Arroyos, A., 2019. Managing Technology and Middle-
and Low-skilled Employees: Advances for Economic Regeneration. Emerald Group
Publishing.
Madapusi, A. and Ortiz, D.A.C., 2019. The influence of technical competence factors in ERP
system implementations. American Journal of Business, 10(2), pp. 78-96.
Meyer, K.E. and Xin, K.R., 2018. Managing talent in emerging economy multinationals:
Integrating strategic management and human resource management. The International
Journal of Human Resource Management, 29(11), pp.1827-1855.
14

15ERP SYSTEM
Monteiro, J., 2019. Factors that affect effectiveness in the use of enterprise resource planning
systems. CRC Press.
Pandey, J., 2018. Managing emotional labor for service employees: An HRM-based
approach. Human Resource Management International Digest, 26(4), pp.1-4.
Rana, S., 2019. Managing Organizations Through Employee Engagement: An Indian
Perspective. In Management Techniques for Employee Engagement in Contemporary
Organizations, 2(1), pp. 256-267.
Soltis, S.M., Brass, D.J. and Lepak, D.P., 2018. Social resource management: Integrating
social network theory and human resource management. Academy of Management
Annals, 12(2), pp.537-573.
Stewart, G.L. and Brown, K.G., 2019. Human resource management. Wiley.
Su, Z.X., Wright, P.M. and Ulrich, M.D., 2018. Going beyond the SHRM paradigm:
Examining four approaches to governing employees. Journal of Management, 44(4),
pp.1598-1619.
Warner, M. and Zhu, Y., 2018. The challenges of managing ‘new generation’employees in
contemporary China: setting the scene. Asia Pacific Business Review, 24(4), pp.429-436.
15