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Enterprise Resource Planning Systems

Student Name :Saleh ALsahli

Student ID :S3405440

Table of Contents

1. Introduction……………………………………………………………………………3

2. Advantages of ERP systems…………………………………………………………..3

3. Disadvantages of ERP Systems………………………………………………………4

4. Conclusions…………………………………………………………………………….6

1. Introduction:

The Enterprise Resource Planning System is also called as ERP system, which helps an organization in managing its resources by integrating all the departments together. The ERP systems allow the business organization to share information across all the departments, which can improve the efficiency in the operations. The different modules of ERP system are used in different departments, and all the information from all the departments is shared across the business organization, which integrates the whole organization, (Magal, Word, 2011). The database management system stores information of all the departments, which can be accessed by other departments in real-time. For example, the information entered by sales department can be accessed by manufacturing department, and required manufacturing activities can be undertaken instantly.

2. Advantages of ERP systems: Some of the advantages of using an ERP system by a business organization are as follows:

·
Easy tracking of organizational resources:
The organizational resources across all the departments can be tracked easily. Therefore, the resources can be provided to the departments where it is required. The ERP system allows the data of all the departments to be managed from a centralized location, therefore, the resources can be tracked easily and quickly, (Srivastava, Batra, 2010). Thus, the resources can be moved effectively within the organization.

·
Improved efficiency:
The ERP systems improve the efficiency in the operations. The overall operations improve, and the resources are utilized effectively, which contributes to improved efficiency. The operations of the organizations are conducted without any delays, as the data is transferred instantly; therefore, it contributes to improved efficiency. With an effective ERP system in place, the organizational resources can be utilized effectively across the organization, thereby improving the efficiency in the operations of the organization, (Srivastava, Batra, 2010).

·
Synchronized information system:
One of the advantages of ERP systems is that the information system is synchronized and integrated, as information flow between all the departments is dependent on one another. The information systems used by different departments like marketing, accounting, Finance, HR, etc; all are synchronized as different modules in one ERP system. By using the ERP system, there is no need to use other separate information systems for other departments, (Magal, Word, 2011). It can also be said that all the departments are synchronized using an ERP system.

·
Provides real time information across the organization
: One of the advantages of using an ERP system by an organization is that the flow of information across the organization is in real time, which makes it easier for the organization to share the information with other departments. There is no need to manually share the information of one department with another, as it can be accessed by all the departments in real time; therefore, it is likely to improve the effectiveness of the information system, (Wagner, Monk, 2008).

·
Improved data security:
The data is managed from a centralized location; therefore, it is easier to manage the data, which improves data security. There is no need to store the organizational data at different location, which ensures that the data of all the departments is stored and managed from a centralized location, which is helpful in improving data security, (Srivastava, Batra, 2010).

3. Disadvantages of ERP systems: Some of the disadvantages of using an ERP system by a business organization are as follows:

·
Difficult in customizing:
The ERP systems include inbuilt modules, and the business organizations will have to use the modules with available features. However, these modules can be customized according to the requirements of the organization, but customization is very difficult. Moreover, customizing the ERP system can increase IT costs, and may also lead to ineffectiveness, (Wagner, Monk, 2008).

·
Highly expensive:
The ERP system is highly expensive, and it requires huge amount to implement an ERP system. Therefore, the benefits of ERP system can be availed only by spending huge amount, and small and midsized businesses may not afford highly expensive ERP systems, (Wagner, Monk, 2008). The ERP system requires higher amount to be invested, so that the organization can benefit from it.

·
Implementation issues:
Implementing an ERP system in a business organization can be very difficult, as there can be various implementation issues, such as data migration, data security, higher costs, etc. ERP system requires effective implementation, so as to be able to effective. Purchasing an ERP system is just not enough; the benefits can be availed, only if the ERP system is implemented effectively. Therefore, it is likely that there could be higher implementation issues.

·
Need for training of employees:
The ERP system can be used by the employees, only if they are provided required training. Therefore, the business organization needs to provide training to all its employees, which eventually increases the costs of training the employees. Moreover, the business organization may need to hire specialist, for managing the ERP system, as regular maintenance of ERP system is also required, (Simon, Webster, 2010).

·
Information is shared across departments:
The information of one department is shared with other departments instantly, and there is no security. The confidential information, which is to be kept confidential, is also shared across all the departments. Therefore, the real time information sharing by using ERP system can be considered as its disadvantage, as there is no privacy, (Wagner, Monk, 2008).

4. Conclusions:

Thus, it can be concluded that the Enterprise Resource Planning systems can be highly beneficial for the business organizations, as there are various advantages of using ERP systems. At the same time, there are some of the disadvantages of using the ERP system, but the advantages far outweigh the disadvantages. Thus, the ERP system can be highly beneficial in integrating information system of the organization, and improving efficiency. The implementation issues can adversely impact the implementation of ERP system, and its effectiveness. Moreover, the employees need to be adequately trained, so as to be able to use the ERP system effectively.

5. References

Magal SR, Word J, (2011), “Integrated Business Processes with ERP Systems”, Publisher: Wiley; 1st edition (August 9, 2011).

Simon P, Webster B, (2010), “Why New Systems Fail: An Insider’s Guide to Successful IT Projects”, Publisher: Cengage Learning PTR; 1 edition (February 23, 2010)

Srivastava D, Batra A, (2010), “ERP Systems”, Publisher: I K International Publishing House (February 15, 2010).

Wagner B, Monk E, (2008), “Enterprise Resource Planning”, Publisher: Cengage Learning; 3 edition (February 4, 2008).

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