IT Management assignment report writing help analysis on: ERP Systems and its methods
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EXECUTIVE SUMMARY
ERP is a trend which is in great use now-a-days in a number of companies. It helps us in the free flow of information throughout all the departments in the company as well as the departments outside the company. Each and every company has its own set of plans or ideologies in the ERP system and helps in the proper integration of different information to bring up a single and solid information source. The basic idea behind preparing this report is to make everybody aware of the importance of integration to companies in various forms. There are a number of issues which occur due to lack of integration and a whole lot of issues are discussed here in detail and to overcome those problems there are various methods as well. A discussion related to the benefits a company can incur out of implementing this ERP is also mentioned here in the report. Finally, to have a clear understanding of ERP, its benefits, issues arising in the company due to lack of ERP and what methods and procedures a company adopts to deal with those issues, two cases of the company- Rolls Royce and Sony Corporation have been discussed here in detail in this report. The case study tells us about the old systems of work company had adopted earlier and the problem or the shortcomings emerging out of those systems. Then it tells us about the ways and means adopted by ERP to overcome the specific issues in each company and then the smooth working of the company.
INTRODUCTION
The term ERP was first introduced by Gartner Group, in 1990. ERP deals with planning the resources in an enterprise. The main function for which ERP systems are designed is to integrate business functions and allow data to be shared across many boundaries and divisions within the company (Zaveri, 2012). It is mainly a computer based software system which is used by a number of companies to manage all the organizational resources which is being used in the company. It helps the different departments to mingle amongst all to work upon a single unified data which is very authentic in nature. Both, small and large companies use it various purposes. This term includes a wide range of activities which helps a business in managing its important part into a whole lot. The main purpose of the ERP process is to maintain a free flow of information among all the departments inside the boundary of the company as well as to manage the same function outside the organization as well. ERP software applications can be used to manage product planning, parts purchasing, inventories, interacting with suppliers, providing customer service, and tracking orders. It also works as an important tool for the finance and human resources department of a business firm. We should keep in mind that this is not some kind of software, this is an ideology. By collaborating different functions of a company together into one single large integrated system, it provides a number of opportunities for growth and increased productivity. Enterprise Resource Planning is the latest solution which information technology has provided to business application. The ERP solutions works on streamlining and integrating different processes and in the same way information flows in the company to make different resources of an organisation, namely men, material, money and machine to work as a whole. It is common database which supports all the applications and operates in almost real time, without relying on periodic updates (Tarn, Yen and Beaumont, 2002).
The difference between the successful, fast growing company and the average company is the know-how of small things in the organization. At some point of the lifecycle of an enterprise, the need of such a system becomes inevitable. As the company grows, its control on the different departments becomes more and more difficult task and here an integrated solution, like ERP software, comes out to be really helpful (Davenport, 1998).
There are various functional areas which are very well covered by an ERP system. Namely, Financial Accounting, Management Accounting, Human Resources, Manufacturing, Project Management, Supply Chain Management, Customer Relationship Management (Shepherd, 2011).
ERP systems are that they are built on a single comprehensive database to share information across the enterprise. Most companies have more than just an ERP system and many also want to exchange information and documents with trading partners. Since internet has become an important part of our personal and professional lives, so, different organizations find that a strong web presence allows them to increase number of customers and sales through those customers and current customers (Magal and Word, 2011).
METHODS
Earlier organizations were using legacy system in their work method which was an old method, technology and computer system or application program. There was no method to integrate the working of the business organization and different issues were arising out of this legacy system which took into concern the people, process and application. The owner of the organization did not see any reason to change it. Retraining on a new system was thought of to be costly in time and money. Also, it required constant availability, so it could not be taken out of service. Many did not understand the way it worked. (Wagner and Monk, 2008). Organization is supposed to learn the importance of integration and the way it works for them. Due to the lack of integration, the flow of information could be slow in its processing. If there is no proper integration, the need for interfaces between different software is required. Without the knowledge and proper implementation of integration, different departments in a single organization develop their own computer system, each system working separately using its own data and applications required for the same. Then the departments were supposed to be dependent on each other for the transfer of important information. Output from one department was the input for another department to be processed upon. Without proper use of integration, the combination between different data of different department could not be carried out easily and correctly. This was one of the main basic problems which occurred out of the lack of integration process. The information does not enter from a proper single source if it is not being integrated with different components required. The information is supposed to flow from a single source and should be able in such a way that it allows management to view the status of the organization’s working scenario. Without the help of integration, it becomes difficult for the management to take decision on a faster basis for the smooth functioning of the organization. Since a single source helps us in reducing the duplicate data, we should try to integrate its working. This all work was done manually so it became slow and unreliable. A number of mistakes occurred which led to the additional problems and complications accruing out of it. Wrong and complicated data travelled through different departments of the organizations (Wallace and Kremzar, 2001).
So these are the basic problems which occur due to the lack of integration and interrupt the free flow of the working of the different department of the organization in concern (Latamore, 1999).
RESULTS
So, to overcome these different numbers of issues, ERP is taken into account. It combines all the different data used by different applications and eliminates the need for interface between softwares (Sharma and Godla, 1999). The main work of ERP is to unite various departments throughout the organization with the help of one single software package. Furthermore, this information could be utilized in a number of ways. It is just a single system with a large well developed database which is there to run all the parts of the business organization and overcome with all the problems arising out of the lack of integration. The legacy system into account was old and was not able to meet the current technical requirements. It was also not at par with the other organizations. So to overcome these various problems, a new system in term of ERP were introduced which was very well able to eliminate the labour intensive manual processes of work. It helped in collection of data in a more better and fast way. Critical business processes concerning all the different departments were streamlined in proper sequence of activities. This resulted into a single database which was much more integrated than the earlier multiple and disconnected one. With this functional specialization, users were able to have a great access to their personal data which helped them in making their own reports and manipulating it as and when required. The self service for the use of data increased to a large extent. This helped in a better and timely work by people in various departments and their dependency on the work of other people from other or the same department reduced to a very noticeable extent. There are various types of ERP programmes available in the market which a company can use, according to its own needs and requirements. When there is a lot of work done to be carried on by the business organization, ERP works as a very handy or easy to use process. It tells us what is presently going on in the company and what is required to be done for the betterment of the organization as it works as the solid backbone of the organization in concern. It works in a legitimate and transparent manner with each and every data available in the company. Also it takes care of the sensitive and protective data to be secured by multiple security system (Leon, 2007). With the help in the optimization of manufacturing and distribution processes carried on by the company through ERP, company is also able to look forward for new business opportunities available in the market to be grabbed by them in proper time. The ERP program takes care of a number of issues prevailing in the organization. Namely, it could be Financial, Supply Chain Management, Manufacturing, Projects, Human Resources, Customer Relationship Management, Data Warehouse, Reporting, Data Mining, etc (Roman, 2009).
ERP applications provide several benefits including solutions to the problems of legacy systems, reduced development risk, increases global competitiveness, and business efficiency.
DISCUSSION/INTERPRETATION OF RESULTS
ERP develops the quality and efficiency of the business organization by handling the internal working in a smooth manner. When inputs are given in a proper manner, a well developed output is formed which in turn benefits the company in different ways. A single system is introduced to maintain the workflow in a single integrated manner. It gives a great support to the senior level management to come out with a rational decision making which would enhance the working of the organization. IT presents them with a combined picture of sales, inventory and receivables. It helps the organization to be more flexible and rigid in nature at the same time. It enhances the technology used with the proper efficiency. It enhances the integration of information. ERP helps in the proper coordination and communication among various functional departments and helps in easier work flow. This integration in turn helps various departments to share the common database. It also minimizes the risk of loss of any confidential data in use by applying tough network security models. Also, in case of a system crash, it provides the company with an efficient and effective method of data recovery. It helps in reducing the cost of production, marketing costs inventory control cost, etc. by providing different kinds of training. Inventory cost it also reduced, with the help of better planning, tacking and forecasting of requirement. It helps in the reduction of paper work and provides online format for fast and quick storage of information and retrieval at the same time. It also improves customer satisfaction because of on time delivery.
CONCLUSION
Though it takes a lot of investment in its initial stages but once it is installed in the organization, it reduces the cost of operations on a remarkable basis. But for this purpose it requires proper training because the work method involved here is far more complex than other software method. There are various training firms which teach the employee about this software. With these functions in the organization, the productivity improves on a higher level. It comes up with a better facilitation of day-to-day routine management work.
One other important benefit of ERP is that it helps in improving the international operations of the business firm by supporting a variety of tax structure, different currencies of the world, varied language, which makes it a truly international software accepted by all.
RECOMMENDATION
Effective and efficient forecasting, planning and scheduling in the correct order is the fundamental work of the ERP in order to achieve a whole lot amount of productivity through its help. ERP gives us a competitive advantage on others to run the business in a more effective, efficient and responsive manner as compared to others. It gives a structured support not only to the CEO of the company but people working in sales, marketing, purchasing, finance, logistics etc department of the company as well. So, out of all the benefits incurred by an ERP system, the main benefits are: Improved and enhanced technology for the any organization to work technologically at pace with others, a prominent increase in the efficiency and effectiveness of various processes carried out in the organization and a proper and correct integration of valuable information.
CASE STUDY
1) Implementing ERP in Rolls Royce
The study deals with the problems arising out of not having an integrated system and then investing the issues posing as a problem and finally overcoming those issues or, in other words, shortcomings, with the help of the implementation of ERP in the company. It deals with the introduction of the company, status of IT sector before and after the implementation of ERP. Here the ERP program which is introduced is the SAP. Rolls Royce is one of the top leaders in the world providing automobiles to be used on earth level, i.e., land, in water, i.e., in sea and also in the air. It occupies a strong position in the global market with products used in defence aerospace, marine, civil aerospace and energy etc. Its revenue goes in millions of rupees and has an enormously huge customer base.
Earlier, when ERP was not introduced in the company, Rolls Royce was using 1500 legacy systems which were very difficult to be used for the purpose of decision making and assessment of the work performance. The systems were difficult to be maintained and developed and were expensive at the same time. It was also not able to provide accurate, consistent and accessible data that was required at proper time for effective, efficient and timely decision making and performance measurement. Because of these obsolete systems work environment at Rolls Royce was badly affected and all departments were working without being in contact with each other. To overcome this problem of legacy system, another system called MERLIN (Mechanized Evaluation of Resources, Logistics and Inventory) was introduced. Though it was capable of working but it was very easy to manipulate it manually and it also had the difficulty in communicating with another manufacturing system, which at that time was IBIS (Inventory Based Instructing System), an older manufacturing system. Because of the old legacy system, it was not easy for Rolls Royce to establish direct online contact with customers, partners and suppliers at the same time or individually. Also, it was not sufficient enough to keep abreast with the changing business environment. So the company was having trouble in all kinds of system it was implementing in the company.
Finally, the company thought of implementing ERP system in its working department. And it did this by forming a collaboration with EDS (Electronic Data Service).The IT department of the company was outsourced to EDS, which means that EDS was to be held responsible for the development of the IT system of the company as well as providing adequate IT resources to the company. This ERP project constituted a management team of specialist from the external outsourcing company EDS. This step was basically taken in order to allow Rolls Royce to concentrate its effect on its main areas of expertise- which was aero engines. Since EDS had earlier experience within the aerospace industry sector, so it was chosen. It also undertook the responsibility of employing specialist consultants. It has the specialised SAP consultants. Along with the project team, each OBU (Operational Business Unit) had its own ERP team which was responsible for the implementation of changes in work and training at the same time. Implementation of this project came up with problems in three areas – Cultural, Business and Technical.
In cultural areas, some functions and processes did not get complete acceptance as the legacy system had once. In business area, ERP was very rigid to be adapted to be used in the workflow process. Technical problem was mainly to deal with the accuracy of the data.
To overcome these problems ERP Pilot was introduced along with Sap3. It dealt with the user authorization problem. Values between the system behaviour were corrected, comparisons regarding data were done. MRP controllers were introduced. Also “Go Live’ process was introduced. After all these steps were taken, the problems were resolved.
2) ERP Implementation in Sony Corporation
Sony Corporation is a multinational corporation with its headquarters in Mintao (Japan). It is one of the leading companies in the manufacturing of electronics, video, video games, IT products, etc to be used by the consumers and for the professional use as well. The parent company is the Sony Group and Sony is the electronics business unit of the large group. It works in a creative and innovative manner to improve the quality of life at present and for future generation as well. There were different problems arising out of not implementing the integration. There was lack of proper communication and co ordination across and through different division in the company. Access of product was very slow which resulted in decentralisation of work. All this in turn also resulted into increased cost to the company. After a careful, in depth and thorough study of the existing system in the company, Grape City chose to find out the relevant solution through Microsoft Commerce Server and Microsoft SQL Server technologies. Microsoft Commerce Server offered various important components for establishing and expanding online customer based businesses. It provided with the set of the entire product range catalogue, its ongoing administration and personalization. Apart from this it provided with customer authentication, targeted content and promotion of product based on the demand of customer, their behaviour towards it and the pricing policies and strategies designed for it. Whereas on the other hand, Microsoft SQL Server provide us with an OLAP (Online Analytical Processing) and RDBMS (Relational Database Management System) which ultimately helps us in facilitating better decision making.
This ERP system through Microsoft Commerce Server helps in the proper managing and publishing of product catalogues. With the help of this function, the effort and time required to maintain and modify the website was reduced to a noticeable extent. It greatly helped in any kind of modification required in the product features, price, etc. The flow of business workflow is also done in a proper manner. The backend order processing activities such as payment processing, inventory control, order, etc were very easily done with the help of SAP ERP program. Since the website dealt with the Sony’s confidential sales and marketing database through CRM and ERM along with managing customer’s personal and payment information at the same time, a high level of security was also required, which it was incorporated with. So this system allowed Sony to understand their customers’ behaviour and gain knowledge about the marketing area according to which their sales and marketing team people can make plan to improve the working of the business.
These methods resulted in many advantages for Sony Company and now it was able to attract more visitors to the website and they were somehow directly or indirectly encouraged to shop online by providing a more personalized experience. A centralized management system was enabled which helped in the active involvement and effective monitoring by the administrators. All this was done within a very less amount of time.
The company took care of its Marketing Mix, Product Mix and SWOT analysis in an effective way to improve the quality of its product which was being made available to the customers for purchase.
This strategy was first adopted by Sony Corporation and others followed Sony. It helped Sony to come up with innovative ides once its product gets out dated in the market and launches it when the market is ready to accept it. R & D department worked in the advertising area and sales increased as a result. So, 10% of the profit incurring out of sales activity were invested in R & D department for coming up with better technological innovation and creativity in the product line and in turn removing the obsolete ones for the company.
So by adopting these methodologies and systems Sony Corporation has made a customer base for itself which is a satisfied a lot. This is very clear from the expansion which Sony has made in the market.
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