Enterprise Resource Planning (ERP) Systems: Emergence, Importance And .
The International Technology Management Review, Vol. 4 (2014), No. 4, 170-175Enterprise Resource Planning (ERP) Systems: Emergence,Importance and ChallengesDr. Adnan Mustafa AlBarDepartment of Information SystemsFaculty of Computing & Information TechnologyKing Abdulaziz University, Jeddah, Saudi ArabiaEmail: ambar@kau.edu.saMashael A. HddasDepartment of Information SystemsFaculty of Computing & Information TechnologyKing Abdulaziz University, Jeddah, Saudi ArabiaEmail: profmashael123@gmail.comMd. Rakibul Hoque*Department of Management Information SystemsFaculty of Business StudiesUniversity of Dhaka, Dhaka-1000, BangladeshEmail: rakibul@du.ac.bdAbstractThe Enterprise Resource Planning (ERP) has dawned as a tool to facilitate the flow of information and allowinformation sharing among different business partners. It appears as a response to the inappropriateness of thetraditional systems which become outdated as a result of the change in business needs and the development ofsoftware programs. The use of ERP software has become more common in a lot of businesses nowadays. Itappears as a complex and comprehensive software through which organizations can control and integrate all thebusiness functions and processes in an extensive and innovative technique. This paper is dedicated to discussenterprise resource planning, its emergence, implementation, importance of using it within organizations and thedifferent challenges related to its implementation. Finally, discussion will be identified to review the mostimportant issues and provide suggestions on the practical level to make effective use of this system.Key words: ERP, Software systems.1. IntroductionThe complexity of the business and work environmentnowadays and the changing nature of marketrequirements have led to looking for systems that couldimprove organizations competitiveness, achieve costeffectiveness and cope with the logistic needs. TheEnterprise Resource Planning (ERP) has emerged as atechnique to balance between demand and supply,reinforce business productivity and promote the qualityof processes.1 ERP is a software that is dedicated tomanage all business processes through using anintegrated and comprehensive applications to managedifferent tasks and operations in different fields such asplanning, manufacturing, sales, marketing, humanresources, purchasing, etc and unified them in a single*Corresponding author: Cell: 8801912928171.Email: rakibul@du.ac.bdPublished by Atlantis PressCopyright: the authors170
AlBar, Hddas and Hoqueplatform that lead to effective real changes on theorganizational level and increase in the level ofrevenues. 2 The emergence of ERP software as a way tointegrate the processes and functions of the organizationin a unified and advanced technique by sharing acommon database in such a way that supports theeffective and efficient implementation of differentoperations within the organization.3There are many factors that prompt the use of ERP indifferent business organizations among them are theinability of existing system to fulfill organizationalneeds and provide extensive resources for maintenanceand support, the incompatibility of several informationsystems with the current business systems and theinability of employees to respond easily and quickly tocustomers or suppliers' inquiries and concerns. 4ERP systems contain several configuration options foreach business process based on best practices whichsometimes force the firm to reengineer its businessprocesses to be compatible with the software packageoptions.5 The retrofit of technical infrastructure hassucceeded in transforming the way ERP systems work;at first, installing and maintaining an ERP system wereexpensive and took a relatively long time to get therevenue, after that the implementation and maintenancecost of ERP system was greatly decreased due totechnical infrastructure modernization. 6According to Chung, ERP systems are able to minimizedata replication, control data records, and reduceregistration errors. The interdependence andinterconnectivity among all processes of ERP systemsreduce the time needed to perform the differentoperational tasks, so the process efficiency can beincreased and the speed of performing operations can bedoubled.7Also, Umble tried to highlight the strengths thatdistinguish ERP systems from non-integrated traditionalsystems; first it provides a unified enterprise view of thebusiness and a scheme of how functions should beperformed in different departments. Second, itintroduces an enterprise database where all businesstransactions are saved, processed, evaluated anddisclosed. In other words, it provides an accuratemethodology which helps mangers and employers toquickly access database and find what they aresearching for.8In addition, it can be used as a measure for enterprisedevelopment. Once the firm acknowledges ERPbenefits, then those potential benefits can be used as apredicator for signifying the extent of attaining goalsand objectives to identify whether enterprises haveachieved the potential benefits or they need toreorganize and restructure their processes to achieve theexpected outcomes from the implementation of thesesystems.9 Jackson proved that the use of ERP systemscan be very effective in day-to-day HR administrativetasks through creating integration in its all processes,this integration results in improving productivity,reduced cycle times, and availability of timelyinformation regarding all tasks within thesedepartments.10Even though, the growing use of ERP system and theincreased importance of such systems to the businessand work environment, some enterprises may findcertain difficulties related to the complexity of thesoftware whether in its activation or implementation.This issue was stressed in many studies mentioned inthe literature, for example Gall identified one of themost prominent obstacles that challenge the effectiveimplementation of such systems within businessenvironments such as the huge complexity of ERPsystems.11 Researchers stated some considerations mustbe taken into account while implementing ERP systemswithin organizations such as operational disruptionswithin the work environment, network, application anddatabase security, processes interconnection and riskcontrol.122. Emergence of ERPERP system can be dated back to standard inventorycontrol packages designed to handle traditionalinventory processes without addressing the finance andaccounting area.13 The late eighties and early ninetieshas witnessed the emergence of new software systemsknown as ERP targeting mainly large complex businessorganizations. This complex, expensive and powerfulsystems become available for most organizations, itrequires nothing but consultants who can install andimplement them based on the company’s requirementsand real needs.14She & Thuraisingham tried to mention the merits of thistechnology by emphasizing its role in integrating thecore processes within the business chain. One mustrecognize that the advancement of ERP systems are nowexperiencing will make it highly integrated, morePublished by Atlantis PressCopyright: the authors171
ERP Systemscollaborative, web-enabled, and even wirelessdepended.15ERP systems have begun to emerge in the field ofresource management in the late 1980s and thebeginning of 1990s mainly targeted to large businessorganizations. To run these complex and powerfulsystems; they require professional consultants toimplement them within organizations that have differentrequirements and needs and as a result, these systemsrequire organizations to reengineer all their businessprocesses to accommodate the software modules. Thesesystems have options to add "add-on" whenorganizational processes required these options toensure effective and comprehensive application.16The need for information systems in general and ERPsystems in particular emerged from the assumptions thatthese systems are considered as being pillars for thesurvival of organizations as they can provide manyoptions facilitating the flow of processes and operationsacross the organization such as speedy access ofinformation anytime and anywhere and accurateprocessing of data that can be used in differentoperations and by different levels from seniormanagement to ordinary employees. Speedy access ofdata is very helpful especially for the processes ofpreparing different reports and minimizing errors thatused to occur while depending on manual strategies forcollecting information.17information systems represented in ERP software helpdifferent organizations to gain competitive advantageand enhance their productivity during changingenvironments and during times of crises in such a waythat encourages their expansion.19Seo showed that the real benefits of using ERP systemsin organizations stemmed from the fact that they affectthe entire organization including processes, employeesand organizational culture, they provide opportunitiesfor enhancing real time capabilities and ensure thesmooth communication among all employees anddepartments within the organization in such a way thatemphasize the unity of the organization policies,objectives and visions.20 In addition, Zimmerman &Smedley stated that the use of ERP systems is effectivemechanisms that can be used in creating an internalflow of information accessible to everyone within theorganization.21Accurate processing of the data and effective use ofinformation are pivotal elements for the success of alltypes of organizations around the world. By and large, itis observed that using the ERP systems can enhance theefficiency of doing business processes, facilitateorganizational learning, broaden workers' skills andcapabilities especially in the field of information skills,all these issues have positive effects on the quality ofwork and as a result on the overall performance of theorganization and its market shares locally andglobally.223. Importance of ERPERP systems are of great importance for work andbusiness environments today; while looking at differentorganizations and processes associated with them, wecan say that organizations aren't separated entities inwhich each department works independently of otherdepartments but rather they are integrative processeswhere all departments work in harmony with each otherto achieve the objectives and goals of the wholeorganizations. Avram stated that among the mostimportant advantages of using ERP in organizations arethe integration of different tasks and functionalities andhelp senior management in decision making processesthrough providing different alternatives and showing thenegative and positive effects linked to them.18ERP software is seen as a strategy that help differentorganizations to cope with the requirements and needsof the current era that heavily depend on competitionamong different organizations. Here, Employing4. Implementation of ERPERP system can run on different hardware and networkconfigurations such as Software as a Service "SaaS",Mac OS, Linux and so on, the operation process can bedone through a comprehensive database that help inkeeping information from all organization departmentsaccessible for whom it may concern, the database hereis used as a central repository for information thatallows faster and accurate analysis of data.23It is worthy here to mention that the effectiveimplementation of ERP systems depends on manyinternal and external factors for example organizationalculture, leadership support, clear implementation plan,continuous overview of the budget and availablefinancial resources and employees' internal motivationand openness to change, desire to update the traditionalmethods of doing work are among the common internalfactors that may affect the implementation of ERPPublished by Atlantis PressCopyright: the authors172
AlBar, Hddas and Hoquesystems in organizations while the policies andobligations that govern the work environment and besupported by higher authorities are considered amongthe external ones.24Abdelghaffar investigated the different factors that mayaffect the implementation of ERP systems in developingcountries organizations. The results of the study showedthat economic growth, government policies, the type ofICT infrastructure and organizational factors especiallythe computer culture, management commitment,business process re-engineering and IT maturity levelare among the most important factors that may affectthe implementation of these systems.19Motwani et al. found that a cautious, bureaucraticimplementation process backed with careful changemanagement, and cultural readiness can lead to asuccessful ERP project implementation.25 It is alsoobvious that ERP implementation depends on fourdistinct phases such as preparation and intenance. Peslak et al found that two significantphases which directly influenced ERP implementationare preparation and training phase and performance andusefulness phase.26Researcher identified different strategies such asorganizational, technical, and people strategies forimplementing ERP successfully. Organizationalstrategies include change management re,managerial style, and organizational resources.Technical strategies include technical aspects of ERPinstallation, adequacy of in‐house technical expertise,ERP complexity, and time and cost of implementation.Finally, people strategies include staff and managementattitudes, and training.275. Challenges of ERP Systems ImplementationIt is also not uncommon that there are many challengeslinked to the use of ERP systems in organizationsrevolved around the financial and technical issues.Grabski et al. identified five major challenges whichinfluences the effective implementation of ERP systemswithin the organization such as the lack of consistencyor harmony between the requirements of ERP systemand the real needs of the business processes, thepossible loss of control over employees or overprocesses, the risks related the level of complexity inmanaging the system, lack of in house skills. Sometimesusers and/or employees may feel resistance of this typeof systems due to their inability to go in harmony withthe requirements of these systems or their desire toadhere to the stereotyped models of performing theroles.28Although stories of success of some organizations thathave managed to effectively implement ERP software inmanaging all their processes can be used as usefulguidelines for analyzing varying factors that help inimproving the performance of ERP, these stories andexperiences can't be used in other organizations becauseof the differences in the organizational processes,leadership styles and organizational objectives andgoals, consequently the results of successful experiencescannot be generalized.29ERP systems are not widely adopted or used in manyorganizations especially in the developing world.Rajapakse & Seddon marked some challenges thathinder the effective implementation of ERP inorganizations in developing countries. They found thathigh cost of installing and maintenance and the lack ofknowledge regarding how these systems operate areamong the most common challenges that impede theimplementation of these software systems.30Hong and Kim found that the cost of ERP systemsinstallation and implementation is high, it is verycomplex and it requires long time to train individuals onhow to use it. In addition, it needs professionals to dealwith them as they have many features and onlyprofessional can identify which features are necessaryfor the business processes.31 The architecture of ERPsystem may conflict with the business processes of theorganization which leads to the inability of achievingstrategic goals the organization seek to achieve. Also,installing and implementing these systems may requirechange in the organizational structure and patterns ofdoing things; this may cause the ambiguity of the rolesperformed by employees.326. Discussion and ImplicationIn the current era, all organizations around the worldseek to improve their business processes and adoptmany technological solutions in an attempt to enhancetheir competitive advantages and to be part of the globalwork environment; these factors provide opportunitiesto present many different types of enterpriseinformation software packages. ERP systems are specialmodels of information systems aimed at integrating allPublished by Atlantis PressCopyright: the authors173
ERP Systemsbusiness processes and information flows in one centralpackage with easy to access to all stakeholders. ERPsystems have proved themselves to be effectivemechanisms to improve productivity, sustaincompetitive advantage, develop business processes,enhance work performance, increase profitability andrevenues and ensure quality in all processes, productsand services provided by the organization.33It is recommended that for organizations to have theability to overcome the different challenges and risksassociated with using ERP systems in managing theirbusiness processes, some points shall be taken intoconsideration. For the problem of lack of consistency orharmony between the requirements of ERP system andthe real needs of the business processes; organizationsshould tend to business process reengineering as amechanism to cope with the new system requirementsand maximize the benefits of using it in differentorganizations depending mainly on redesigning allprocesses in accordance with the system requirements.34For the problem of lack of control over businessprocesses, it is recommended that organizations musthave specialized committees to help mangers andleaders in making sound decisions regarding the flow ofprocesses within the work environment. While theproblem of cost is considered among the most commondiscussed topics in the literature regarding the obstaclesof activating ERP systems in organizations; we can saythat this problem can be solved if organizations havespecialized enough financial resources to fund thesesystems, specializing financial resources must be doneat the early stages of the project (during the planningphase) to ensure that no financial crises will be occurredwhile conducting the project. It is very useful here touse cost – benefit analysis to estimate the amount ofmoney needed to employ the software in theorganization and estimate the probable benefits that mayresult from employing it.Regarding the problem of complexity of these systems,it is recommended that organizations may haveprofessional specialists in the field of informationtechnology who have the ability to deal with thetechnical requirements of these systems and trainemployees on how to tackle the problems linked to theuse of these systems. To effectively do that within thework environment, strong relationships should beestablished between technical specialists and employeesto ensure effective transfer of knowledge and upgradeemployees' skills and capabilities in dealing with thesecomplex systems. Here, we should mention thatspecialists shouldn't only have the technical expertisethat enables them to deal with the system, they shouldalso have effective communication skills that enablethem to interact with all employees through appropriatelanguage they can understand regarding the nature ofthe system and the problems that can be associated it.If employees show some resistance to the new systems,it is recommended to held training sessions, seminarsand workshop to help employees identifying the natureof these systems and the different benefits associatedwith using them within the work environment,consequently they can show positive attitudes towardsthese systems and become motivated to try to operatethem. It is useful to stress the importance of updatingthe ICT infrastructure of the organization periodically toalign with the different expectations and needs of thetechnological advancement.7. ConclusionERP systems have proved themselves to be veryefficient systems that can be used by differentorganizations specialized in different fields andservices. Although there are many challenges that couldhinder the effective implementation, these challengescan be well managed overcome by taking certainprocedures by the management team in order to ensuremaking full use of these systems in the organizationsand achieving the expected benefits from using them.Management and leadership within differentorganizations must train their teams on employingtechnology in different activities and processes tofacilitate doing work, improve the efficiency of differentprocesses and manage the work place environment moreeffectively.Conflict of InterestThere are no known conflicts of interest.Published by Atlantis PressCopyright: the authors174
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Business Process Management Journal, 16(2), 209-225.Published by Atlantis PressCopyright: the authors175
2. Emergence of ERP ERP system can be dated back to standard inventory control packages designed to handle traditional inventory processes without addressing the finance and accounting area.13 The late eighties and early nineties has witnessed the emergence of new software systems known as ERP targeting mainly large complex business
Then, MRP II extended to ERP systems [5], [8], [9]. Table 1 depicts the evolution of ERP systems. TABLE I. ERP EVOLUTION [5] Year Chronology 2009 ERP Cloud 2000s Extend ERP 1990s ERP 1980s MRP II 1970s MRP 1960s IC There is no single critical factor that can guarantee the success of the ERP system.
ERP ERP Components ERP Key Resources Multiprocessor End Users :Peripherals Key Components OS Platform. MS-SQL IBM-DB2 DBMS System Traffic Monitoring Remote Access Software:End Users DBA Business ERP Functional Areas ERP and Virtualization. ERP virtual machine (VM) server technology MissionCritical Hardware Virtualization .
Enterprise Resource Planning (ERP), failure factors, EAI issues, integration problems. I. Introduction Over the past 10 years, there has been a significant trend towards the use the packaged applications; among the main popular packages are Enterprise Resource Planning (ERP) solutions. ERP is a software infrastructure with the aim of improving
ERP MAS 90, Sage ERP MAS 200, and Sage ERP MAS 200 SQL. This manual also contains information and troubleshooting tips on the configuration of the various operating systems and environments in which the Sage ERP MAS software is supported. The instructions contain detailed technical information on the configuration ofFile Size: 1MB
SAP ERP For the purposes of this document the term SAP ERP is used generically and can refer to either SAP S/4HANA or SAP ERP 6. When needed, SAP S/4HANA or SAP ERP 6 are refered to specifically. SAP ERP 6.0 SAP ERP 6.0 Refers to the required SAP ERP 6 and EHP level that is supported by this solution
Modern ERP (MERP) chapter Global Bike (GB) BY WEEK MERP Chapter 1: Introduction to ERP Systems MERP Chapter 2: ERP Technology MERP Chapter 3: ERP and Business Process Redesign MERP Chapter 4: Process Mapping MERP Chapter 5: ERP Life Cycle: Planning and Package Selection MERP Chapter 6: ERP
ERP & CRM Data Analytics & SCM . CRM vs. ERP: What's the Difference? 3 CRM Use Cases. What is ERP? Enterprise Resource Planning Software or a System that - Integrates functions - Streamlines processes - Manage core business 5. Legacy Systems 6. ERP -Key Takeaways How does ERP create value? Integrated Database
Challenges and Benefits of ERP System and Non-ERP System Integration in a Developing Country . Mohamed. YJ Ahamed α, Muneeb M. Musthafa σ& Faiz MMT Marikar . ρ E A. business functions such as finance, logistics, and . bstract-nterprise Resource Planning systems (ERP) have emerged as solutions oriented to manage organization s
