Introduction

The initials ERP denote Enterprise Resource planning. It is a basically a software that is used in organizations for business management purposes. Ideally, Enterprise Resource Planning encompasses integration on various applications that are essentially significant in managing businesses. As a matter of fact, the Enterprise Resource Planning software integrates all the phases of operations of businesses ranging from sales and marketing, manufacturing to development projects in an organization.

Businesses and individuals purchase ERP systems depending on their specific needs and technical abilities of their organizations. Nowadays, ERP software’s come with various enterprise software modules. Each and every ERP module targets a specific area in business operations processes. For instance, there are ERP software modules specific for accounting, human resource, inventory control, product planning, and distribution and marketing.

Due to increasing popularity of Enterprise Resource Planning methodology, many software applications have emerged and hastened implementation of ERP in other businesses within organizations. The main aim behind this is to provide for a central unit of information that can be utilized by all Enterprise Resource planning divisions for a smooth and fast flow of data across the organization (Khosrowpour, 2001).

Within the organization, people from different departments can have access to the same information simultaneously and update it at their own pleasure. For instance, if one department let’s say the inventory control unit finishes with an order, it can transmit that order automatically through the Enterprise Resource Planning system to another department such as the sales and marketing department. The beauty of this is that information and flows instantly to all the departments’ thereby increasing efficiency and turnaround time of customer’s waiting to take their orders.

Organizations seeking to capture the original promise of enterprise resource solutions must therefore adopt such business management software such as Enterprise Resource Planning system. An ERP system not only ensures accuracy of data and information but also ensures that all programs within the organization are up to date  (Cunha, 2007).

A good Enterprise Resource Planning system must be able to integrates, optimize and informate for it to act as a vital tool in business management endeavors. Basically ERP systems are designed to integrate data across organizations, processes and people, thereby, enabling facilitating and streamlining operations and hence supporting business growth.

Meaning of “intergrate” and its potential benefits in organizations       

The term “intergrate” as a necessary element in a good Enterprise Resource Planning means the ability of the ERP software to consistently put together or bring all information and data of organization into a central repository unit. This, in turn, ensures timely availability of data and information among different personnel in different departments across organizations. As a result, efficiency in terms of transactions, costs is greatly reduced leading to an increase in the profit margin of organizations (Pamungkas, 2009)..

The presence of Enterprise Resource Planning that is capable of integrating all operations of an organization becomes one of the answers to organizations that are seeking to capture their original promise of enterprise resource planning. This facilitates all processes in the organization at all angles of production such as inventory management, planning, scheduling of tasks, notification of emails and so forth. This, in turn, assists organizations to avail information and data to those who need it thereby ensuring optimality in terms of customer relations, employees, suppliers and partners. ERP integrations have the following benefits to an organization;

Reduction of costs

With the fact that ERP system allows for real time data and information, the cost of relaying this data and information to customers, employees, suppliers and partners is reduced. This is because data is available in the hand of those who need it instantly. The advantage of having an ERP integrative system is that it avails data and information, thereby, allowing customers to view inventories and the latest orders at the click of a button. This in turn reduces cost and updates sales information simultaneously (Ray, 2011).

E-commerce has received a major boost following the presence of Enterprise Resource Planning integration. For instance, all sales information is available to customers, suppliers instantly at their own ERP system. Due to the fact that ERP system users can update their systems as they wish, they receive the most up to date data, thereby, giving them a chance to plan their purchases. This then cuts down the inventory cost making the organization to realize an extra profit. In addition, based on Web transactions, interested persons in products of different organizations have access to financial reports of the respective organizations thereby enabling them to make the correct decisions.

Reduction in Human Resource Involvement

The benefits of having an Enterprise Resource Planning integration process encompass multiple business processes thereby reducing human resource involvement in all these processes. This ensures that sales orders in the web are real time and enabling the back office ERP user to instantly track the order and process it instantly. As a result of this, human involvement, redundancy of data and errors are reduced.

The Availability of ERP integration integrated in the ERP system facilitates availability of web customer details, payments and web orders thereby eliminating the need of re-entering the data.

Increase in customer satisfaction

Customers who use the ERP system get the most up to date product information and details of availability of inventories. This raises the level of customer satisfaction and at the same time reduces the operational challenges for organizations.

Business control is increased

Integrating e-commerce with the Enterprise Resource Planning integration system, gives organizations better control of their businesses allowing the owners to enjoy a better competitive edge.

Therefore, having an integrative ERP system, allows owners of organization to have increased access to enterprise data and information facilitating better decision making, improvement in responsiveness to business changes as well as cut down the operational expenses.

Meaning of “optimize” and the potential benefits

The term “optimize” refers the need for an organization to continue doing its operations using as few resources as possible. This is a very significant tool in a good Enterprise Resource Planning system in reducing operational costs of the organization and enhancing efficiency. The ability of an organization to utilize the resources it is endowed with optimally without wastage can put the organization at the next level. This, therefore, calls for efficient and effective ERP systems that will ensure optimality of resources is maintained at a predetermined level (Leon, 2008).

For instance, companies must consider optimizing their Enterprise Resource Planning systems for them to increase their business portfolios. This is because of the fact that return on investment mostly comes from improvement in business operations and not from the ERP software. Organizations must optimize their ERP system if they are realizing their anticipated returns. When an organization is considering optimizing its ERP system, it should focus on the following issues,

 

1. The organizations must prioritize its options. This calls for the organization to rank its options depending on the cost of implementation, time for implementation, readiness of the organization to accept the feature and the anticipated benefits that will accrue after implementation.
2. The company should understand its present needs as well as its capabilities. Organizations must determine what their operational objectives are and relate them with their current ERP package. The functionality and features of the ERP software must be closely examined and a solution met.
3. Organizations must understand that optimization is a continuous process. This is because applications and processes change over time and therefore the company must move with time.

Organizations must understand that due to the fact that they use ERP system, their operations will be transformed abruptly. It is the optimization of the ERP system that leads to success to organizations and the responsiveness of the organization to customer changes. The following are the benefits that comes up with optimizing the Enterprise Resource Planning system,

There is an improved business operation

Organizations that optimize their ERP systems over time have seen an improvement in their business operations level. This has in turn led to expansion of their business portfolio as well as significant growth in their profit margins.

There is increased integration of data

An optimized ERP system ensures integration of various process and programs used across organizations. This ensures a timely availability of data and information to different persons requiring that information at ease and hustle free with just a click of a button when they log in in their ERP systems. This hence facilitates planning and decision making.

It promotes team work within the organization

An up to date ERP system centralizes data and information at a central point. This enables employees within different departments in the organization to access those data easily regardless of the department they are in. For example, when an employee in the Inventory department posts an order in the ERP system, it becomes very easy for another employee in another department to track it (Glenn, 2008).

It enhances flexibility in the market

 

Organizations that optimize their Enterprise Resource Planning systems regularly are at an upper hand of reacting to market changes. This is because they have an updated date on their ERP system. This also allows for a firsthand information regarding variability in customer demands. As companies and customers become more dependent on the world of information technology, the supply chains channels have also changed significantly thereby providing pressure to companies to reduce costs. Optimizing the ERP systems provides considerable benefits to the organizations without incurring more costs and risks.

 

Part 2

For quite a long time, Enterprise Resource Planning has been used to enhance business efficiency. Many studies that have been carried out by different scholars have shown that there exists certain factor that determines the success or failure of implementing ERP systems. To justify this statement i will look at how the utilization of Enterprise Resource Planning System Helped Dolphin Software to increase its sales and dominated the market.

Dolphin Software is a private owned software company in Lake Oswego, Oregon. It has become the leading provider of data management tools for many businesses in its locality. Following its dominance in the market, the owner of this company faced different challenges as the number of his customers increased. The sales manager lacked a system that he could use efficiently to track his customers records. The organization required a tool that will see its sales cycle reduced for them to get an insight of any forthcoming opportunity in the market. Pressurized by these factors, the company needed a solution to these problems that had already curtailed them profit (Pamungkas, 2009).

The organization held a meeting and agreed to purchase software that will solve all these problems and increase its efficiency. It is then that they approached The Maximizer Enterprise Solutions Company for an ERP system. Though the software was costly, it had the potential to solve their problems. Enterprise Resource Planning System had more advantages to the organization than its disadvantages. It had a very easy to use interface.

After the purchase of the ERP software, the organization started to configure it so as to capture customers’ data and existing business processes. The management then trained its personnel especially from the customer service and sales departments. This placed the organization at a better position since its employees would come up with customization programs that would be most beneficial to its prospective customers. I addition, this helped to minimize costs and keep the implementation period at a minimum.

After the successive implementation of Enterprise resource Planning system by Dolphin Software’s, its average sales volume increased by 10 %. Additional sales turn over period shortened. The sales department also could have a quick access to their accounting histories. All these benefits came as a result of the fact that all data and information was put in single system which can be accessed by all people at their own convenience.

As a result of successive implementation of ERP system, customer satisfaction is enhanced, employees work more efficiently and revenues increase. A successive ERP system implementation requires vital understandings of crucial organization requirements and clearly defined project goals. In addition, if implementation of ERP system is to be a success and lead to increase of sales revenue, businesses need to set their goals early in advance and elect a committee that will see the implementation of the project up to completion. Additionally, employees should be trained on the usage of this ERP software to ease their tasks and meet their performance obligations (Rainer, 2010).

The spirit of keeping customers in mind and utilizing an effective and efficient ERP system can improve business processes, productivity of employees and still improve the business ability to increase its sales revenue, remain profitable and stay competitive in the market.

From this case study we can be able to see that ERP systems may be of considerable benefits to organizations. ERP has been used by many companies to solve a number of problems in their business operations. To start with, it has been realized that companies that fail organizations that do not utilize such software such as the ERP, may end up using other packages that may not work well with them. For instance, when a company decides to design a new product, the ERP system may be the best in designing of the product. Additionally, ERP is used extensively in taking orders. Customers make order online and the company can easily track down those orders and process them instantly reduces the distribution channel. ERP also allows the company to get detailed information of customers and therefore come up with excellent marketing strategies. If, for example, different software was used there could be inconsistency in data and errors might also be very high.

Enterprise Resource Planning has played the biggest role in its accounting application. This is because it can integrate information on sales that are made, cost that has been incurred and the profits that has been realized in a simple to understand way. ERP can also play the role of altering how products are manufactured. This can be designed such that the company will know when their products needs to be updated thereby ensuring that their products remain competitive in the market. In addition, the company will be in a better position to track their product and manufacture high standard products (Hossain, 2002).

Lastly, Enterprise Resource Planning may act as security tool. This is because it can protect organizations from crimes such as industrial espionage and embezzlement of funds.

Barriers faced by companies while using ERP system

Apart from the fact that Enterprise Resource planning system has got may advantages such as ensuring transparency in business operations and integration of business operations, it also has drawbacks.

Lack or Inadequate training of employees

This factor presents itself as a major hindrance towards proper implementation of Enterprise Resource Planning System. This is often brought about by constraints in the budgetary allocation of fund for staffs training (Behl, 2009). It is common that those employees who do not know how to use the ERP system properly will not take the full potential of the ERP system. For an effective and proper implementation of Enterprise Resource planning system, staff training and experience is core. This is because, the more experience one has on using this system, the greater the advantage he derives from the ERP system.

Cost of the ERP software

This is another barrier facing organizations and companies as they try to integrate their business operations and increase their customer’s satisfaction as well as remain profitable. The price of an ERP system as at 2010 was ranging from $50,000 to $500 million international corporations. To make matter worse, an annual license fee and renewal fees are charged even after the installation of the Enterprise Resource Planning system. Usually, these fees are related to profitability of the business and the size of the implemented Enterprise Resource Planning (ERP) system. This factor has left many companies to use in house systems that may not tackle the entire organization because of the high cost of the Enterprise Resource Planning system (Stair & Reynolds, 2012).

Maintenance of the ERP system may also bring additional costs to the company in the long run. This may force companies to spend its savings on maintenance of the system instead of re investing in the companies processes.

 

Lack of support

It might be very difficult to manage Enterprise Resource Planning system without a well set training and support structure. Inadequate technical support that comes from the ERP systems is mostly unavailable. This support is also not efficient since different companies have different business structures and are of various sizes.

 

Lack of customization

 

The ability to customize the software so that it fits and companies needs is limited. Some companies may want their work flow and processes but this ability is curtailed. This, therefore, makes it hard to use ERP system thereby discouraging employees from continuing with their training on the system. Additionally, each and every company has some processes that are localized. From the fact that ERP systems cannot be customized to be in line with organization’s or company’s processes, some processes may be re-engineered to meet the current needs of the organization.

 

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