Enterprise Resource Planning or ERP is one of the most advanced and useful accounting software which is used worldwide in different organisations. The primary objective of using this accounting software is to manage the information and details related to the accounting of the organisation. The ERP system provides an integrated management of the information related to the accounting and several business processes (Bansal, 2013). The primary function of the ERP is to collect, store, manage and interpret data from several business functions. It also helps to keep the track of resources like production capacity and raw materials. It also maintains the flow of information between the organisations’s managing body and the external stakeholders.
In this report all the features related to the ERP system are given with details. The ERP system is used by several multinational large organisations and the small organisations have also started to use the accounting software more increasingly. The ERP is system is completely different from the traditional accounting software and for that reason it also creates many disadvantages and issues to the employees who are already used to the conventional accounting software. All the disadvantages and advantages are also included in this report.
Background of ERP
The ERP system was mainly developed during the decade of nineties. Due to several sudden changes in the economy and with the introduction of the Euro the ERP system iwas introduced by several organisations in their accounting system (Bull et al., 2016). The ERP system then started as the backup of the traditional accounting software and it was also applied in case of several office uses like customer relationship management. ERP was also introduced in the main economic system as the e-business, e-governance and the e-commerce were integrated later on. With the introduction of the real time response in the ERP system it started to grow drastically and several organisations throughout the world started to use the ERP system (Chen, Liang & Hsu, 2015). In recent days ERP is used in customer relationship management, supply chain management.
Characteristics of ERP
- The main characteristics of the ERP system are given below.
- ERP is an integrated system which provides all the features for managing the accounting of an organisation from a single platform.
- The ERP system is used for operating in real time. Real time response basically provides the idea of responding in a faster way and in a more simple way.
- ERP is consisted with a common database which can afford all the applications.
- ERP has a continuous outline of the modules are of feel across nature.
- The main system of the organisation is designed with the integrated system of several software and the IT based operations.
Application of ERP system in various functional areas
It is used in the accounting management system. The accounting management system consists several functions like budgeting, cost management, costing and activity based costing.
The ERP system is used in different finance and accounting systems including the cash management, general ledger, payables and financial consolidation.
The ERP system is successfully implemented in managing the human resources (Chen, Kim & Yamaguchi, 2014). The human resource department of the organisation is one of the key departments which provide the utility of the human skill. Several functions like recruiting, training, diversity management and retire and pension plans are organised by this department and the ERP system helps to maintain the whole system more successfully.
ERP is also successfully implemented in the manufacturing process of an organisation by managing several functions and departments like engineering, work orders, bill of materials, scheduling, capacity, quality control and the workflow management (Chiu et al., 2014).
Another important fields of application of the ERP system is that the Supply Chain Management. There are several functions which are included with the product configuration, purchasing, inventory management, work breakdown structure, claim processing and the warehousing (Dan, 2014). These functions are done with real time response due to the implementation of the ERP system.
ERP is also used successfully in the order processing technique. From getting the order from the customer to selling the product to him there are lots of stages which are done in a moment in today’s market due to the application of the ERP system (Hoch & Dulebohn, 2013). The functions like order to cash, credit checking, order entry, pricing and available to promise and the inventory management, sales commissioning and the sales analysis are being advanced in terms of real time due to the application of the ERP system.
The customer relationship is one of the key factors for the organisations and the application of the ERO system is also used to manage the customer relationship.
ERP is also utilised in advancing several data services like the self service interface which is used for the customers.
Components of the ERP system
There are several components of the ERP system which make it more advanced in terms of efficiency and functionality (Hollensen, 2015). The key components of the ERP system are given below.
Software: The software which is used in the ERP system is popularly known as the accounting software. The primary requirement of the system is that it manages all the data related to the investment of the organisation (Hunton, Wright & Wright, 2015). This software is designed on the basis of the client server technology. In this technology the client and the server are considered as the different entity. The transaction is done when the client computer sends the data and the server computer receives the information from the user. In this way the database is considered to function from the centre of the organisation and the distribution of the resources are based on the interface between the organisation and the stakeholders.
Transactional database: This refers to the rate of work done through the database and the transaction is considered as the unit of the work which is done within the database management system (Jaber et al., 2015). Exchanges in a database situation have two principle purposes. Firstly to give solid units of work that permit remedy recuperation from disappointments and keep a database steady even in instances of framework disappointment, when execution stops totally and numerous operations upon a database stay uncompleted, with hazy status. Secondly to give segregation between programs getting to a database simultaneously it is also required.
People: the ERP system is to be utilised in an organisation by the employees and the most important thing is the learning for the employees (Jeong, 2013). Before the application of the ERP system all the employees were used to the conventional and traditional accounting system and they should be taught about the new features of the ERP system and the basic concept related to the system.
Management: The management of an organisation is responsible for making all the works done in a proper way and in case of accounting it is also very important for the organisation to manage the data related to the organisation (Leon, 2014). That is also applicable with the ERP system and the ERP system is also consisted with a powerful management feature.
Preparing ERP for the organisation
The challenges could be identified with the framework, business process, foundation, preparing, or absence of inspiration (Li et al., 2016). It is along these lines pivotal that associations altogether dissect business forms before they execute ERP programming. Examination can recognize open doors for process modernization (Niederwieser et al., 2016). Research shows that danger of business process crisscross is diminished by:
- Linking present events to the organisation's technique
- Breaking down the viability of each procedure
- Understanding of the existing mechanized arrangements
ERP can be executed with the help of associations which are decentralised. It may require relocating some specialty units before others, postponing execution to work through the vital changes for every unit, potentially decreasing joining or redoing the framework to address particular issues (Seethamraju, 2015).
A possible inconvenience may be the receiving standard procedures can prompt lost upper hand. While this has happened, misfortunes in one zone are frequently balanced by picks up in different territories, expanding general upper hand.
Extension and Data migration
Extension is the process of connecting the ERP system with any third party software. The basic data and the features can be accessed through several interfaces and the features of the extension can be republishing, collecting the data of several transactions, scheduling and advanced planning and the transmission in real time and the managing facilities.
The process of moving, cropping and reconstructing the data is from a present ERP system to different system is called the data migration technique (Shaul, L., & Tauber, 2013). It has several features like identifying the information and to find out the amount of time in which the data is to be migrated. It is an important feature as it is designed according to the plans and leads to success.
Advantages of the ERP system
There are many advantages of using the Enterprise Resource Management system and among those the primary advantage is that the cost and the time taken by the organisation are decreased significantly (Tai, Huang & Chuang, 2016). The accuracy and the response speed both are increased. The transparency of the whole organisation is increased to the employees and as well as to the stakeholders. The functions which can be improved by the implementation of the ERP system are given below.
- Inventory optimization and sales forecasting
- Tracking of the orders
- Matching of the purchase orders
- Sequential record of the data related to the transactions.
- The main purpose of ERP is that it can increase the productivity and quality in terms of the business aspects.
- ERP creates a equivalence among the different stages of leadership.
- ERP creates a more usable organisation which can easily adjust with the changes in a better way. It also makes an organisation more organised and adaptable to several work situations.
- ERP can increase information security. A particular control outline, for example, the classification given by ERP outlines, provides permission to associate the capacity to all the more effortlessly assure organisational data which is not bargained.
- ERP provides increased possibilities to cooperation. Data takes many important significance in present venture. Reports, sound, structures, and video, messages and documents. ERP provides a cooperative platform for providing representatives possibility for utilising more energy working together on content in alternative of facing the need to absorb information by arranging in different shapes in disseminated outlines.
- The customization of the ERP system can be a real issue.
- Without proper switching the system can have a more amount of expenses and cost.
- The previous employees who are not friendly with the ERP system may face some issues regarding the interface of the system.
From the above discussion it can be concluded that ERP system is one of the most important and advanced system in the field of accounting management. IT has lots of advantages and disadvantages which are implemented in several organisations in order to get a well arranged, faster and cheap accounting management system. It cancel outs the need to match up with several changes among the multiple systems. It makes all the information related to the accounting software more transparent and it also brings more fairness and reliability in the system. It also provides the platform for coding and naming the products. It provides a comprehensive enterprise view and it actually helps to access the real time data. This system is also used in increasing the security of the information and the many8 multiple system can be achieved by using an single integrated system. The ERP system provides a centralised business information system which provides the following advantages.
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