In the following assignment I will outline what Enterprise Resource Planning is and the costs and benefits frequently associated with the system. I will then go on to write a case study regarding a major company which has implemented an ERP system, providing a detailed account of the costs and benefits which arose as a result. I will start this case study with a brief contextual background of the company. Literature review
The purpose of Enterprise Resource Planning, or ERP, is to effectively integrate all departments and functions within any given business onto one computer system. If implemented appropriately, ERP should serve the needs of these departments by centralising any required information, making it easily accessible and vastly improving interdepartmental communication. A good ERP system should serve all levels of an organisation, from senior managers to production workers, with information being provided independently and made readily available by and to said levels. Typically, the benefits of implementing ERP include improved communication, better visibility, integration of all departments, and business process reengineering often resulting in a strategic advantage over competitors. Communication across different areas of a business is improved because information has become centralised, eliminating any “information islands” as data is made easily accessible and readily available to those who require it. The reliability of said information is also improved, as appropriate sources can be confirmed. It can also be guaranteed that information and data is both sent and received by the right people/departments, with feedback being provided by both parties; this can greatly improve the time it takes to make decisions within a business, which in itself is an advantage over competitors. It is this coordination of departments which vastly improves a businesses ability to deal with any problems in its supply chain; if any area of the business was being hindered by or had an issue with another, for example, ERP would ensure fast, easy communication between these two departments and each could present their dispute to their respective management, who could then make a well-informed decision in regards to solving any problems within the business after observing the information provided through ERP. This is business process reengineering. When a business can quickly and effectively solve any problems in its operations it becomes a great deal more efficient as a result of increased flexibility; a direct result of coordinating all areas of a business collectively and closely. This is the main benefit of using ERP (a culmination of the numerous other benefits), businesses become able to make decisions and adapt more quickly than their competitors. However, as with anything else, the implementation of ERP has certain drawbacks. These include the fact that ERP is very expensive to purchase and is equally costly to customise, this often results in management being reluctant to invest in ERP. Aside from the initial cost of purchasing the system, ERP has to be customised so as to work as effectively as possible within any given organisation. As expertise on ERP is limited and customisation requires both specialised skills and knowledge it is very expensive and often time consuming. There are also costs associated with the maintenance of an ERP system, as changes/adaptations must be made in order to ensure the system remains effective and relevant. Of course, a business will always have the option to design its own system, although the costs associated with this are also high due to the specialised skills that are required. Another frequent drawback is management, employees or both being resistant to change within the business, and refusing to or disliking having to use ERP. While this can be overcome with training in order to familiarise employees with the new system, (even with training it often takes time for...
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