Enterprise Resource Planning


Enterprise Resource Planning (ERP) is integrated and packaged software systems linked to a common database, handling basic corporate functions. It attempts to integrate all departments and functions across a company into a single computer system that serves different departments’ particular needs such as planning, manufacturing, accounting, distribution, sales, human resource, inventory management, service and maintenance, transportation and e-business. ERP can be viewed as a software solution that addresses the enterprise needs taking the process view of the organization, to meet the organizational goals tightly integrating all functions of an enterprise. (Cited in kong Jia Hui 2005).
Today, many public and private organizations worldwide are implementing ERP systems in place of the functional legacy systems that are not anymore well-compatible with modern business environment. However, according to Kroenke (2008), the process of moving from functional applications to an ERP system is difficult and challenging. Additionally, ERP as an integration of hardware technology and software has a very high investment value, the switch to ERP system is expensive and it requires development of new procedures, training and converting data. However a larger capital investment on ERP does not always give a more optimal return value to the company.
The implementation of ERP has become a challenging task to many organizations in the world. It involves the analysis of current business processes and the services they provide, their handling through bought software rather than designing an application system from scratch and internal control activities necessary to keep the system functioning at all times. The target is integration of middle and lower senior management functions, keeping in mind that business processes are complex (Cited in Japhet Stephen Mtuveta 2013).
Most of the organizations these days have large complex operations for which manual tracking becomes extremely difficult and some are in a new phase of transforming the way they handle their operations, while some others already have legacy systems which intend to do the job. Gardiner Els and Van Vossel(2011).As a result of its benefits, ERP has become an integral part of business intelligence for organizations by giving managers an integrated view of business process(Cited in GoeunSeo, 2013).
When ERP is successfully implemented, it promises significant business breakthrough doing away with inconsistent data, incomparable formats, and uncooperative applications. It reduces operating costs, increases productivity and improves customer services and inventory control. ERP is “integrated instead of fragmented”. Umble (2003) stated that ERP allows organizations to have a more convergent view of real-time information by integrating processes across functional departments; and it also provides organizations an enterprise database where “all business transactions are entered, recorded, processed, monitored and reported.” In addition, it increases departmental corporation and coordination.
Implementation of ERP system generally enhances productivity and working quality, since the system offers standardization and simplification in multiple, complicated operational procedures across the company (Nah et al., 2001). Moreover, information can easily be transferred, shared and exchanged among users who are working at different business divisions (Amoako-Gyampah, 2007; Kemp and Low, 2008).
The following are potential benefits of ERP system: improved coordination across functional departments; increased efficiency in doing business; reduced operating costs (lower inventory control cost, lower production costs, lower marketing costs, lower help desk support costs); facilitation of day-to-day management; rapid access to information for decision making and managerial control; and support of strategic planning(Sited in Dimitrios Maditinos, Dimitrios Chatzoudes, Charalampos Tsairidis 2011)
Most companies started the ERP project in such a rush without second thought. However, the ERP project is not as easy as people imagine to control. Scholars sought the causes of ERP failures. They claimed that the failures of ERP are due to the poor implementation planning. Umble (2003) stated that the main reasons are (1) poor planning and/or poor management, (2) change in business goals during the project, and (3) lack of business management support. Kensner(1988) claimed that the “true winners” are those organizations that are “far-sighted enough to manage the introduction of new MIS products and services as part of their long-term strategic planning process.” Barker and Frolick (2003) claimed that if the company wants to yield the benefits of the ERP, “it must first develop a plan for success”. The quality of the strategic planning has direct impacts on the implementation result. How the strategy is developed will affect the outcome of the implementation. The smooth and successful information systems implementation needs careful thinking, precise planning and negotiations with departments and divisions from a strategic viewpoint (Sited in Konk Jia Hui 2005)
Many countries, especially the developed ones have benefited the advantages of ERP systems by highly adopting these systems since early 1990s. Developing countries are now adopting ERP systems like the developed ones. But, regardless of the ERP systems advantages and benefits mentioned here, developing countries like Ethiopia have not yet adopted and benefited much from such integrative information solutions which are usually suited for organizations with large size businesses or services (Sited in Sintayehu demeke 2014).
Therefore, this research is targeting to study the challenges and opportunities in implementing Enterprise Resource Planning in Messebo cement factory that has adopted Microsoft dynamics SL ERP system.

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