Gaining A Competitive Advantage Through ERP Essay

, Research Paper

Organizations today confront new markets, new competition and increasing customer expectations. Thus today’s organizations have to constantly re-engineer their business practices and procedures to be more and more responsive to customers and competition. In the 1990’s Information technology and Business Process re-engineering, used in conjunction with each other, have emerged as important tools which give organizations the leading edge. The efficiency of an enterprise depends on the quick flow of information across the complete supply chain i.e. from the customer to manufacturers to supplier. ERP (Enterprise resource planning) systems, have been a major information technology that has been used by businesses today, in hopes of gaining a competitive advantage. But this advantage seems only plausible if the implementation is coupled with process re-engineering, as well. ERP is an enterprise wide system that integrates primary business applications, including all areas and levels of an organization. All the applications in an ERP suite share a common set of data that is stored in a central database. It aims to serve as a backbone for your whole computing business, integrating key business and management processes to provide a sky-level view of much of what’s going on in your organization. A typical ERP system provides applications for accounting and controlling, production and materials management, quality management, plant maintenance, sales and distribution, human resources, and project management.In the 1990s, most companies have experienced business process re-engineering and implemented ERP or other packaged software. ERP is difficult to implement. Often, firms adapt their business processes to the ERP system, rather than the other way around. This translates to using business processes similar to those of competitors and losing competitive advantage. Moreover, ERP systems only address the needs of part of the enterprise, creating islands of automation and a need for integration that requires considerable effort. A typical ERP system gives you an 80% solution. You must still implement the remaining 20% to fit your enterprise needs. In the end, you will pay more for customizing this last 20% than for the entire ERP application. It is not unusual for companies to spend millions of dollars to implement an ERP system. ERP requires the re-engineering of a company’s process and culture. With solutions like SAP you must change your operations and processes to match the logic of the ERP package. ERP must be integrated with the rest of the IS environment. They must build the infrastructure that ties their new ERP package with their existing mainframes, DBMSs, data warehouses, Web servers, and email systems.Thus a proper implementation of the system will provide a competitive advantage, based on the company integrating the system with its own processes to make it unique, and the cost and time put in will be offset by the benefits of the system. The first step in a successful implementation project is gaining a solid understanding of ERP systems and benefits in relation to your own business expectations. Now it is up to the company to take the implementation to the extent of fitting in with their business processes. Many competitors will have an ERP system but it is useless if it is not integrated with the company’s business processes. Its like any tool, you must know how to utilize it for it to be an asset, but first you must evaluate the tool to see if it will fit in with your business, as every business is unique. Some important points to be kept in mind while evaluating an ERP software include: 1) Functional fit with the Company’s business processes 2) Degree of integration between the various components of the ERP system 3) Flexibility and scalability 4) Complexity; user friendliness 5) Quick implementation; shortened ROI period 6) Ability to support multi-site planning and control 7) Technology; client/server capabilities, database independence, security 8) Availability of regular upgrades 9) Amount of customization required 10) Local support infrastructure 11) Availability of reference sites 12) Total costs, including cost of license, training, implementation, maintenance, customization and hardware requirements.There are many ways that an ERP system can help an organization if used right. First, an organization’s operating costs can be reduced. An ERP system integrates all parts of an organization so that it has more control of its operation. Also, an ERP system increases the organization’s time efficiency. Since all the parts are now connected and integrated with each other within an ERP system, people use less time to perform tasks. Moreover, people now have more and faster access to their information, which improves the time and resources for decision making. For now, having an ERP system means increased information availability for the organization that means that the organization can access information quickly and easily. Furthermore, organizations often have different types of software integrated within them. An ERP system consolidates all the software into a simple system. Software consolidation is another main advantage of an ERP system.Not only does an ERP help organizations to manage their tasks more efficiently, it also provides advantages to some specific industries. For the manufacturing industry, an ERP system provides better delivery service for the orga