The Impact of Implementing a New ERP System on a Global Multinational Business Analysis of Sources

Analysis of Sources

Beheshti, Hooshang. "What Managers Should Know about ERP/ERP II?" Management Research News, vol. 29, no. 4, 2006, pp. 184-93.

This article aims at examining the impacts of EPR and the important issues that managers should consider before implementing the system. The research design applied in this study is based on extensive literature analysis and the author’s professional experience. The work discusses that ERP systems improve the organizations’ competitiveness by enabling them to generate timely and accurate data throughout their operations. Additionally, Beheshti points out that the system provides up to date information to the decision-makers, and employees, as well as investors. According to this paper, the system requires significant investments and time to implement. The piece of writing has highlighted considerable information from both academicians and practitioners. Nevertheless, it does not provide solutions to the challenges faced by the managers during the process of application. Therefore, it is the research gap that needs to be fulfilled.

HassabElnaby, Hassan, Woosang Hwang, and Mark Vonderembse. "The Impact of ERP Implementation on Organizational Capabilities and Firm Performance." Benchmarking: An International Journal, vol. 19, no. 4/5, 2012, pp. 618-33.

The research aims at examining whether the ERP system affects organization’s business strategy as well as its capabilities and, subsequently, the performance. Precisely, the authors seek to understand the mediating effects of business capabilities and policies on firm performance and ERP system implementation. The study used secondary data collected over 400 organizations and their tests variable relationships. It finds that ERP is far much effective when the business has a suitable strategy in place. According to the authors, a business strategy enhances higher levels of financial performance. The paper will be useful in the current research in that it will help understand the effects of cybernetic controls on a company. Nevertheless, the work does not offer solutions for the negative impacts of ERP systems; hence, this issue requires thorough research. 

Lee, DonHee, et al. "The Effect of Organizational Support on ERP Implementation." Industrial Management & Data Systems, vol. 110, no. 2, 2010, pp. 269-83.

The purpose of this research is to identify a model to examine the effects of organizational support on behavioral intention regarding the ERP implementation based on the Technological Acceptance Model. A survey questionnaire was used to collect data. A total of 700 questionnaires are distributed to users in both small and large scale businesses in Korea, and 209 responses are used for the analysis. The authors find that organization support is critical in perceived usefulness and ease of use. Moreover, is positively linked with the technology acceptance model. However, since the data was collected from various sizes of firms, the respondent training might be of different levels, thereby bringing the diversity. The data from the article will be useful in that it will help to understand the need to emphasize the user satisfaction in the implementation of ERP. At the same time, a study on the most suitable ways to enhance organization support on the ERP system will also be helpful.

Qutaishat, Fadi Taher, et al. "The Effect of ERP Successful Implementation on Employees' Productivity, Service Quality, and Innovation: An Empirical Study in the Telecommunication Sector in Jordan." International Journal of Business and Management, vol. 7, no. 19, 2012, pp. 45-54

The research aims to identify the impacts of ERP systems implementation on the employees’ service quality, productivity, and innovation. The data used was collected from 129 workers based on Jordanian telecommunication organization. The hypothesis was tested using descriptive statistics and structural equation. The study showed that there is a significant effect on employees’. Surprisingly, it impacted not only innovation and service quality but also productivity. This result is attributed to the lack of suitable training. The research will be useful in identifying the importance of training courses to help the workers understand the changes that come with the ERP system. However, the work does not cover the specific training programs that firms can apply to their employees including their strengths and weaknesses. Therefore, research on the particular types of training suitable for such systems will be helpful. 

 Trimi, Silvana, et al. "Alternative Means to Implement ERP: Internal and ASP." Industrial Management and Data Systems, vol. 105, no. 2, 2005, pp. 184-92.

The study aims to discuss relative advantages and disadvantages of internally operated ERP and the possible future alternatives. The design used was thorough research of previously published papers dealing with ERP. This article reviews the negative sides of the system from a managerial perspective. The findings show that the organizations need ERP systems to withstand competitive forces in the environment. Additionally, the results recommend that companies should focus on a thorough review of the pros and cons of various alternatives before deciding to implement them. The paper is important because it points out the weaknesses of EPR rather than glorifying its functions. Nevertheless, the fact that the discussion is based on the managerial perspective does not necessarily reflect the views of other stakeholders, and hence, there is a gap that needs to be filled through research.

Wyslocka, Elzbieta. "Results of Implementing ERP System in a Multi-plant Enterprise." MATEC, 2017, www.matec-conferences.org/articles/matecconf/pdf/2017/39/matecconf_cscc2017_04022.pdf. Accessed 17 Sept. 2018.

The article examines the organization's internal processes. Their complexity led to the diversification of the company to new plants. The design that was adopted involved a case study of the execution of Macro logic EPR systems in some multi-plant enterprises. This research is relevant as it demonstrates how the functioning of a firm was improved in the reviewed corporations. The study found that ERP is significant in achieving business continuity through easier access to necessary data from all sections of the business. EPR system was located to enable unification of different solutions while at the same time subjecting them to the individual companies. However, a successful evaluation of management effectiveness needs to consider other factors such as the change in economic categories including costs and taxes. The process creates a research gap that requires further studies.

Elragal, Ahmed, and Ayman Al-Serafi. "The Effect of ERP System Implementation on Business Performance: An exploratory case-study." IBIMA Publishing, 2011, www.ibimapublishing.com/articles/CIBIMA/2011/670212/670212.pdf. Accessed 17 Sept. 2018.

This work focuses on the effect of enterprise resource planning systems on business performance. The research involves a case study of an Egyptian SME branch of a multinational company. The design used involved SMEs interviews with top-most officials (financial, logistics, and operations managers) from a branch firm of multinational chemical industry in Egypt. The findings demonstrate that a significant achievement was realized shortly after the implementation of the EPR module. However, some of the business users admitted that a couple of merits associated with the ERP module were not fully discovered. This source is much relevant to the topic question as it demonstrates the contributing factors of ERP on business performance. However, the authors point out the inadequate applicability of the contributions regarding certain elements that require further investigations. While some literature supports the positive results of ERP implementations, other studies fail to highlight certain factors such as reduction and eliminating of errors. This fact translates that ERP program works best in particular areas of business operations. Although the study involves several officials from a single organization, there is the need for further research to establish the effectiveness of ERP adoption.

Zarzycka, Ewelina. "Implementation of an ERP Package and Its Effect on the Management Accounting System: Author's Research into Enterprises in Poland." EconStor, 28 Dec. 2011, www.econstor.eu/bitstream/10419/147051/1/736246398.pdf. Accessed 17 Sept. 2018.

This article is aimed at determining if the adoption of the ERP package leads to any significant transformation in the enterprise’s management accounting systems. Also, the author establishes whether new, modern management accounting tools and methods are discovered. The paper bases its evidence on conducting six case studies to measure the impacts of ERP on management accounting and its practices. A successful analysis of six accounting firms did not demonstrate crucial changes in their relevant management accounting systems. Although the data was collected from only six firms, other previous findings are consistent with the fact that EPR systems have some inadequacy on positively impacting the nature of management accounting in an enterprise. It is astonishing to find that even after introducing the ERP module in their management accounting, all the companies indicated that the system added more complexity rather than lessening the work. Some also decided to resume with their traditional methods. Nevertheless, further research is necessary as factors that determine changes in management as accounting are dynamic, and thus, results may be evolutionary rather than revolutionary.

Almgren, Khaled, and Cristian Bach. "ERP Systems and their Effects on Organizations: A Proposed Scheme for ERP Success." ASEE, www.asee.org/documents/zones/zone1/2014/Student/PDFs/6.pdf. Accessed 17 Sept. 2018.

This article seeks to elaborate the effects of ERP systems on organizations. The research involves a detailed systematic review of the previous sections, journals, and books to collect and analyze important findings regarding the factors that contribute to ERP systems. A case study checks the effects of implementing the ERP. However, the authors report that the adoption of the system brought about significant challenges including the mechanical problems and technical issues. This article is beneficial as it categorizes the impact of ERP into two significant groups, namely, managerial and operational effects. Generally, the authors of seem to be biased as they address only the adverse effects of ERP implementation and do not provide substantial evidence to measure its final impacts. As such, there is a research gap which requires to be filled. 

Wieder, Bernhard, et al. "The Impact of ERP Systems on Firm and Business Process Performance." Journal of Enterprise Information Management, vol. 19, no. 1, 2006, pp. 13-29.

This article aims at examining the impacts of various factors of ERPS implementation and use of company performance and business process success. The investigators make use of ERPS adoption, history, and extension with SCMS as independent variables. On the other hand, the study integrates KPIs for supply chain performance as independent variables. Compared to other sources, it is the first empirical research conducted to determine the impact of several aspects of ERPs implementation on business processes and overall firm performance. Total of 2,170 Austrian companies from Australia were interviewed. The results significantly different compared to the findings of the recent sources which showed a disparity between the ERP users and non-users. Also, no performance difference was noted at the supply chain level or the overall firm level. The article is very crucial as it provides a new and diverse insight at the effectiveness of ERP in business process performances.

 

Introduction

In a turbulent and uncertain environment, businesses are expected to develop capabilities and resources to maintain their competitiveness. A firm has to provide products and services in the right place and time with minimum cost. Therefore, many companies are introducing ERP (Enterprise Resource Planning) systems to remain profitable. One way they can achieve a competitive edge is by conducting activities in a coordinated manner. ERP helps to integrate procedures and at the same time improve the quality of different areas simultaneously.

Furthermore, it is known for advancing production levels at low costs; hence, controlling the entire enterprise becomes easy. An essential function of ERP is that it avails information in real time to make decisions and prognostics of the firm.

Additionally, the system is dominant in processing organizational financial data. With enterprise management module, managers can perform essential strategic planning and at the same time keep an eye on daily operations and fluent communication with the investors. Nevertheless, it is important to consider that ERP takes time to show its impacts on the corporations as implementation requires significant business structural changes. This review will address the effect of the ERP implementation on the organization, examine management and employees’ opinion on its advantages and disadvantages, identify the benefits and drawbacks in the workplace, and make recommendations to improve its effectiveness.

Effect of the ERP Implementation on the Organization

According to Trimi et al., ERP system can be termed as a companywide centralized information system that brings together all aspects of a business (189). An organization that has its primary operations under one application roof makes its operations easy for both the employees and the managers. The combination is beneficial to the organization in the sense that it helps it to quickly react to competition and opportunities, flexible product configuration, tighter supplier chains, and reduced inventory. An organization that has effectively implemented an ERP such as Earth Grains Co. reports improved productivity, management information, and happier customers (Trimi et al. 184).

Similarly, in Par Industry Moline, the delivery performance is said to have moved from 65 percent to 95 percent with lead time reducing from six to two weeks. IBM storage system was able to reprise its products within five minutes unlike in the past when it took at least five days. Additionally, the shipping time was reduced drastically from twenty-two to three days. Credit checking process which was 20 minutes is currently seeking three seconds only.

Trimi et al. further explain that the modern ERPs are designed with open client architecture and real-time features where a client can process information remotely (185). Their input ripples the whole supply chain process is enabling all the employees of the company to access the same information almost simultaneously. ERP systems such as SAP/R3 are the most known for technological and methodology advancement enabling them to crunch data. Such systems besides integration also enhance re-engineering and change of business culture.

According to Lee et al., various business trends are contributing to ERP systems popularity. Such patterns include mergers, legacy disaster as well as acquisitions (270). The major disadvantage with the legacy system is that it cannot handle dates beyond the 2000 century.  Nevertheless, with ERP, companies can integrate far-flung outposts together with the supply chain activities. Regardless of language and border barriers, the integration enables data sharing within the country and overseas.  In the efforts to achieve uniformity across the national wide, companies they are seeking applications and systems that can run across their units.

Furthermore, ERP systems are helping organizations to eliminate their legacy systems which are not in Year 2000 Compliance. Sometimes it is economical to eradicate the dinosaur system rather than fixing them. AlliedSignal Turbocharging Company had over 120 legacy systems that were inefficient and caused the IT costs and the time to fill placed orders to rise. The company is anticipating a payback period of twenty five million in two years. At the moment, the firm is already reaping the benefits of ERP implementation in its first site. Activities that used to take a week to complete are done within a day.

 

Employee Opinion on the Advantages and Disadvantages of a New ERP Implementation

Research conducted by Qutaishat showed that there is an organization impact on the productivity, service quality, and innovation among the employees (47). Workers’ performance and productivity are important issues for the managers as their primary objective lies within to get the most out of the staff. They are the greatest assets of the organization and their opinions on various developments of the company are of importance. In the today’s competitive world, much emphasis is put on their productivity. One way of ensuring their high productivity is availing information promptly. Integrated technologies such as ERP are the modern tools that are exciting to the employees. 

On quality, it is one of the identified strategic components of competitive advantage that enhances the products and services quality. Employees are significant drivers of an organization, and the system that excites them increases their chances to discover new things.  Many factors are known to cause poor quality in companies that cannot afford modern and advanced systems. Some of these problems include poor inventory management, difficulties in allocation delays, inadequate human resource management, and early interventions (Qutaishat et al. 47). The introduction of IT systems in quality management has dramatically improved quality awareness among employees.  Consequently, better products and services are produced, and the quality costs are reduced as well.

Innovation is the ability to create and exploit ideas for improvement. It is a critical competitive advantage and a significant trend among firms. The type of change is characterized by the organization capital, human resource capacities, products, and procedures that are considered new in a particular company. The research on impacts of application of IT systems on innovation has remained sparse. Nevertheless, as much as the use of technology plays a significant role in the success of the companies, it does not mean that those with the best techniques are the best performers in the market. This state can be explained by the fact that other actors contribute to the degree of innovativeness such as size and capability of employees. One distinct characteristic of those companies that have successfully used technology is that their employees are well versed with their systems (Qutaishat et al. 48). Once they can effectively use the methods, their innovation levels subsequently improve.

The main advantage that concerns the employees on ERP is that it has led to laying-off many of their colleagues. This system enables one person to handle several activities thereby replacing a considerable number of workers. They expressed their fear that they risk losing their jobs to the system. Additionally, they pointed out that adopting it can be hectic and strenuous. Sometimes, they are over-pressured by their managers to cash up quickly while they have no background experience. Furthermore, a minor mistake committed by a single employee can cause huge loses that are in turn blamed for them.

Management Opinion on the Advantages and Disadvantages of a New ERP Implementation

According to Qutaishat et al., the use of ERP is viewed differently by various managers. They feel that challenges and benefits are to some extent dictated by the reasons why the businesses choose to use the ERP (48). Research has indicated that a unified ERP system lowers the IT related expenses to a great extent through reduced management, staff, infrastructure, and licensing costs. Additionally, managers have pointed out that a single system is more cost-effective in that it lowers training demands as ERP requires learning one system instead of multiple individual applications. The system also brings the workers together to achieve a common goal as they work under the same application roof.

ERP enhances total visibility by availing data for both the staff and the managers. The latter can monitor the inventories any time they want in the comfort of their offices. The system enables managers to control inventories, consignments that are in transit and those yet to be delivered at a click of their computers (Lee et al. 276). Understanding inventory levels help in controlling working capital, and subsequent long-term business plans aiming at success are taken into consideration. Data availability at a centralized location brings about collaboration at various management levels. Complete visibility helps managers to conduct inter department’s processes with maximum efficiency. As a result, a decision can be made in confidence as the users are sure they have a complete picture of the entire organization.

ERP implementation means that the firm's departments have a single and unified reporting system for all the processes. A centralized source of information enables generation of reports and analytics at any time (Beheshti 192). Such technologies help managers to carry out their duties such as comparing functions among departments without necessary using multiple spreadsheets and emails. Besides the standard operations, many ERP packages come with Business Intelligent Services in their software. The BI functionality has been critical to the managers as it helps them develop analytical insights. Subsequently, they are in a better position to identify strengths and weaknesses in their operations and improve them.

Conversely, ERP comes with its challenges. First, one of the most significant disadvantages is the direct cost. Up front cost of the implementation can be too high for firms, especially the medium-sized businesses. The entire process of planning, testing, customization, and configuring is too expensive (Beheshti 190). Therefore, companies should be keen on the cost of labor and deployment time required. The companies should apply a realistic timetable to determine if the project is worth investing. If wrongly handled, customization aimed at competitive advantage can be injurious to the business. It should be done adequately to avoid over-customization or under-customization.

Benefits and Drawbacks of ERP Implementation in the Workplace

Modular makeup is one of the most significant advantages of ERP as it contains various applications in its platforms that the business can use according to its need. These applications are designed individually and uniquely such that a firm can choose the one the works best for its operations and requirements. The implementation is designed according to the company’s need (Lee et al. 276). Customization involves software implementation on two or more platforms, namely, on premise and through a cloud. The former requires real software purchased and installed on all computers and servers, while the latter demands the software bundle handled utterly off-site by the service provider.

The second advantage of ERP is that it improves customer’s service. Even though the clients might be unaware, they benefit from ERP through centralized and streamlined information. The sales and marketing teams are in a better position to build and maintain the company’s customer relations (HassabElnaby, Hwang, and Vonderembse 615). One major challenge to business is to acquire and keep their customers as long as possible. The recent and updated ERP systems support the e-commerce thereby placing a company in a better position to handle placed order and client interactions.

ERP systems offer guaranteed data security to the business. They enable users to share information from various departments such as customer service, marketing, sales, and business development. With such collaborations, it is important to control who accesses and edits the data. Data security is highly considered in ERP and is achieved by allowing only a single input system. One causes of data conflict are merged sources, nevertheless; a single repository can enhance security accuracy and consistency.

In comparison with manual data processing approaches, ERP offers high-quality data. The improvement can be attributed to the advanced underlying processes used to develop the data (HassabElnaby, Hwang, and Vonderembse 620). Data processed by the ERP system is often free from errors and omissions as the system largely eliminates human inputs which are the primary source of mistakes. As a result, the user can be confident that the information they are using is integrated and reliable. With suitable data, businesses can make crucial and effective decisions.

According to Lee et al., improved supply chain management is another plus for ERP (280). Companies that deal with physical inventory and production of goods benefit from the system in some ways. First, it improves lead times and on-time deliveries across the supply chains. Secondly, ERP enhances demand forecasting, procurement, and inventory management. A well-managed supply chain is a competitive edge of an organization because it increases innovation and reduced cost.

ERP comes with high demands for specialized skills that require the organization to use a lot of finances for training. As a result of poor skills, the system is underutilized or mishandled hence causing significant errors. Other companies assume the importance of data security and the way the obtained data can be used to benefit the firm. The efficient use of the system highly depends on the skills of the employees. Some management assumes that they can cut cost by avoiding training to operate with previous skills. Due to it, they face more complex challenges that they had before (HassabElnaby, Hwang, and Vonderembse 620). Some businesses have even risked closing by mishandling the systems. Inexperienced managers may propose changes in the system with the aim of synchronization, but they end up causing confusion and low productivity. Experienced employees are in a better position to identify the critical points of the system to increase its productivity.

The next disadvantage of ERP is the fact that most companies experience difficulty and rigidity in using the system to a specific workflow that may result in business failure. Moreover, the previous knowledge on database administration by the technical team and clients sometimes leads to confusion (Lee et al. 270). Due to the high cost involved in purchasing and implementation, it becomes challenging for companies to switch to other alternatives even if it is not working out for them. Additionally, some company policies of not sharing departmental information can be another problem in using ERP systems (Lee et al. 277). Such barriers often contribute to low employee’s morale, poor communication, and the execution of duties. Compatibility issues are shared between various legacy systems of business partner

The Implication of ERP Implementation in Multi-Plant Businesses

A well planned ERP program enables easier management of top business operations. Managers can easily generate facts and provide information needed to make important decisions. Regarding the advancement of information technology and business processes carried out in operational management, production, retailing and marketing are interpreted. As such, it becomes easier to predict events within the company such as budgeting and quality management (Wyslocka 2).

Regarding the rapid competition and fluctuation in profits, most organizations chose to optimize the production processes. The entire organization acquires significant benefits since the macro logic ERP system provides data related to other sectors of management such as personnel, finance, and logistics. Such kind of integration of information results in well-organized production reports and records while ensuring optimal utilization of company tools and equipment. In other words, ERP component enables functional support across all levels of production. Besides, the information gathered in Macro logic ERP Modules such as sales, logistics, and personnel can be easily accessed by various departments of the company.

When considering the organization and consumer relationship, the author noted that the use of software enhances the construction of proposals that meet the client’s needs, maintaining strong networks to promote future campaigns (Wyslocka 3). These activities allow the logistics department to analyze the cost and profitability of sales processes. However, this is opposed to the use of ERP where management of sales processes enables the companies to increase the efficiency of their trading activities.Wyslocka (3), indicated that improved trading activities are equivalent to shorter sales cycles, and improved ability to predict the market and more straightforward analysis of sales and delivery.

Examples of Implementation of EPR Module in Multi-Plant Businesses

A notable company that has benefited from the implementation of ERP is the Industry Group, a prominent global company that deals with the carrying out projects involving machinery and equipment in the mining industry. Starting with higher ratings from the trusted customers to reduced IT costs, the Industry Group has remarkably improved the implementation of financial management processes. Besides, its strategic planning led to a 20% productivity growth and 30% production increase.

Secondly, the Atlas Group is another company that has long adopted the ERP System to improve Human Resource management and payroll without interfering with other private companies (Wyslocka 3). It was noted that the ERP system was able to centralize the HR and Payroll while at the same time maintaining the Atlas Group own, much logic.

While considering the case Polonia Logistyka Company, its recent diversifications have led to the breakdown of its initial IT systems and adequate flow of information from one transport destination to another. Besides, the implementation of ERP, the company has been able to execute it’s remote across many regions of the world. The visualization mechanisms permit better vehicle loading, optimization of transport routes and therefore reducing the overall transportation costs.

The Effect of ERP System Implementation on Business Performance

Ahmed and Ayman indicated that ERP systems reduced the company’s overall production cost, promoted business operations and provided ideal information administration (2). It was also found that proper utilization of ERP system can lead to better use of time, as quick servings of products to the clients are made easier by ERP Systems. Similarly, many customers are fulfilled by the manner in which their ordered products are delivered.

However, some scholars tend to differ with the fact that ERP improves a company’s performance. According to the Author, there might be the significant difference between the initial and after implementation state. For example, some investigators argued that business that specializes in service provision prefer the use of ERP for effectiveness purposes rather than efficiency. In this case, the production cost may not be as relevant them compared to quality business procedures and quality of information. This translates into a negative impact where efficiency and productivity measurements appear to be futile (Ahmed and Ayman 3).

Although the previous articles have concluded that ERP causes a positive impact to the overall business, some findings in this article suggest that it is only a few areas of the company that is directly affected rather than the entire organization’s system. Similarly, other studies conflicted with the hypothesis that the implementation of ERP leads to abundant financial benefits. For example, Wieder et al. (14) confirmed that there was no difference between the ERP users and Non-users regarding economic benefits.

Other studies in the same article indicated that changes associated with the implementation of ERP occur gradually. It takes about 2 to 3 years for the benefits to materialize. This is due to the period made by the employees to adopt the new system which may cause delay depending on the personnel’s’ experience. As a result, the Literature recommended that this is not the right time to evaluate the project’s productivity as it would lead to inaccurate results.

Moreover, an interview with an IT, financial, logistics, and operations managers of Clemco Company indicated that the implementation of ERP resulted in increased business performance after eight years of its adoption. Some of the remarkable achievements included: improved production lead times, improved time management, reduced errors and quality information, successful business extension and high production levels (Ahmed and Ayman 4). However, there was less reduction of job errors even after the integration of the ERP. This is because EPR is automated in such a way that it only allows more of capturing and storing data instead of determining faults in them. Also, it was decided that the overall time taken to produce a single item study, it is right to say that the adoption of ERP System plays a significant role in transforming the business failed to reach the expectations while using the ERP systems. Other indicators were partly exhibited which calls for more assessment of the efficacy of the ERP systems in multi-national businesses.

The EPR Effect on the Management Accounting System

This study faced a significant drawback after the evaluation of six enterprises. The results indicated that the adoption of ERP failed to exhibit noticeable changes in their management accounting systems. In this regard, the earlier hypothesis that stated that; a well-planned introduction of ERP system results into new, innovative solutions for management accounting cannot be confirmed.

For the first two enterprises, a unique budget was prepared to create awareness of the necessary information of new corporate owners and to maintain the proper utilization of management accounting tools and approaches (Zarzycka 84).

The newly established ERPs failed to recognize the use of modern and innovative solutions supporting cost accounting, budgeting or measurement of production but all respondents admitted the quality of information improved after the establishment of ERP. It also reduced the time used to retrieve data and analyzing results. Other positive effects include the automation of various functions and processes and therefore giving the staff an opportunity to pay attention to other important means. Based on the above findings, we can conclude that the EPR integrated the company’s management accounting methods and tools instead of renewing them again.

Moreover, the other three organizations employed their former accounting approaches while the sixth decided to adopt the traditional standards of absorption. All the respondents agreed that their accounting tools needed renovation even after the introduction of the ERP. Many argued that there was a considerable burden to them, therefore, leaving them with less innovative skills (Zarzycka 90)

.           Similarly, the cost that accompanies the adjustment of ERP along with the workload in the controlling department discouraged managers from adopting these systems.

The study demonstrated the adverse changes that manifest after implementing the ERP system including the inability to proceed with further execution of information. As such, we can conclude that the adoption of ERP does not create innovative procedures but instead it makes new changes more complex. This can be described by the fact that the moment installation of the system takes place and all technical problems are addressed, any other project that would demand further changes and redesigning and may not be implemented (Zarzycka 93). However, we can only believe in this conclusion after revisiting the same enterprises after several years. Nevertheless, further research is necessary as factors that determine changes in management as accounting are dynamic, and thus results may be evolutionary rather than revolutionary.

ERP Systems and their Effects on Organizations: A Proposed Scheme for ERP Success

The article involves a case study conducted in Water Corporation Company, where ERP was deployed following extensive training of Employees. However, the system was not successful as it led to an increased breakdown of information. As a result, the author feels that ERP systems can significantly contribute to an organization’s performance, but with one condition (proper implementation). Failure to implement this system appropriately can only cause more74 harm than good in an organization. The effects of ERP can be categorized into managerial effects and operational effects (Almgren, Khaled, and Cristian 87).

First, the authors suggest that the maintenance of ERP system demands more revenues after initial installation. This is against the managerial goals of minimizing costs. Other than cash, the implementation of ERP consumes a considerable amount of time and often leads to love quality production and the company loses its position in the market.

The author gives an example of a Chinese company known as PharmaCo which made great loses in 2000 after installing the wrong Oracle products. The top management officials were the one to blame as they made the final decision of purchasing the ERP products from a dishonest vendor (Almgren, Khaled, and Cristian 93). In this sense, a slight mistake such as failing to adopt the right EPR system may lead to heightened risks.

Operational effects are led by technical problems associated with fault transfer of data from one system to another. Such an event may leave a company in a pathetic state after the loss of important information. A good example is that of the Cosmetician china based cosmetic company that launched its ERP system, only to transfer data without fully translated into the Chinese language. Besides, the reporting format was not compatible with that of Chinese finance. Eventually, the company lost money to a cruel vendor. 

Lastly, it is evident that the EPR system consists of both positive and negative effects on a business. While proper implementation of the system leads to positive results, the poor installation may cause loss to the company.

The Impact of ERP Systems on Firm and Business Process Performance

According to the recent examples of accounting research on the influence of ERPS concerning the Company’s performance, significant ideas on the same topic which was previously not researched is provided. All the approaches seem to harbor similar features in that: They use only aggregated available and independent data to assess performance. Secondly, they rarely distinguish between the entire business performance and firm’s process performance, and lastly, the solely dependent variables used in their studies are ERP implementation and the date of adoption (Wieder et al. 3).

This study assessed 2,170 Australian companies, followed by a telephone survey, and many findings came into being. Firstly, the study failed to establish the difference between the ERP users in the Control group. The difference was not evident even at the supply chain level or the overall business level. However, it is true that the longer the ERP, the higher the performance levels. According to the authors, the general results tend to differ from the previous evidence which confirmed that there exist some remarkable differences in economic merits between those firms that implement ERP and those who don’t.

In contrast, it was revealed that organizations that adopted the system of ERP perform dismally in their supply chain process; in no doubt, the authors contended that ERP users failed to performance, both in the short and long-term and was unable to achieve peak performance.   The Author confirmed that according to their analysis, ERPs users would experience some elevated performance levels at both the critical business process level and firm level (Wieder et al. 14). Again, it is important to note that the extent to which a company performance grows depends on the degree of experience with ERP.

Recommendations and Further Studies

Based on the above analysis, some proposals could be. First, to enhance the user’s ability to use the ERP system efficiently, there is a need for the employee’s involvement in its entire life cycle. It is important because the ability or inability to use the system affects the business performance regarding productivity, quality, and innovation to a great deal. Employees’ involvement will expose them to the use and handle challenges that come along with the system.

Moreover, it will improve their confidence when using the system has been part of it since conception. They are in a better position to adopt the changes and not waste much time during the adjustment. Additionally, the workers can make recommendations on the most suitable decisions in areas that affect them. Underutilization of the system by the employees is a disadvantage to the organization as it is uneconomical.

Secondly, since there is a need for the staff to adapt to the changes imposed by technology, there is an essence for training courses to identify and explain the necessary changes that would occur once the system is fully endorsed. The company can encourage its employees to learn faster the concepts and use of the system by identifying and rewarding the adaptive technology individuals. Managers should help such persons with incentives to ensure that they make efforts to learn the use of ERP. The cost of training cannot is incomparable to a disrupted system that brings productivity into halt risking the loss of clients. Furthermore, a few well-trained employees can intern teach their colleagues such that the company does not have to spend too much on training.

Thirdly, companies should ensure they conduct the feasibility tests before they embark on acquiring and implementing the system. They should be advised by the expert on the return on the investment of the entire process to determine whether it is worth it. The firm should assess the cost of training, the time required, outsourcing specialist, and other expenses before making a final decision. Moreover, it is prudent to contact an internal specialist to monitor the system and address the challenges that may arise to avoid inconveniences and things getting out of hand. Precisely, it is prudent that a company to have an internal ERP specialist always to help the employees learn how the system works.

Nevertheless, there is a lack of ERP conducted in service offering companies such as airlines. Therefore, further research on service-based companies will be very relevant.

 

 

Works Cited

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Beheshti, Hooshang. "What Managers Should Know about ERP/ERP II?" Management Research News, vol. 29, no. 4, 2006, pp. 184-93.

Elragal, Ahmed, and Ayman Al-Serafi. "The Effect of ERP System Implementation on Business Performance: An exploratory case-study." IBIMA Publishing, 2011, www.ibimapublishing.com/articles/CIBIMA/2011/670212/670212.pdf. Accessed 17 Sept. 2018.

HassabElnaby, Hassan, Woosang Hwang, and Mark Vonderembse. "The Impact of ERP Implementation on Organizational Capabilities and Firm Performance." Benchmarking: An International Journal, vol. 19, no. 4/5, 2012, pp. 618-33.

Lee, DonHee, et al. "The Effect of Organizational Support on ERP Implementation." Industrial Management & Data Systems, vol. 110, no. 2, 2010, pp. 269-83.

Qutaishat, Fadi Taher, et al. "The Effect of ERP Successful Implementation on Employees' Productivity, Service Quality, and Innovation: An Empirical Study in the Telecommunication Sector in Jordan." International Journal of Business and Management, vol. 7, no. 19, 2012, pp. 45-54

Trimi, Silvana, et al. "Alternative Means to Implement ERP: Internal and ASP." Industrial Management and Data Systems, vol. 105, no. 2, 2005, pp. 184-92.

 Wieder, Bernhard, et al. "The Impact of ERP Systems on Firm and Business Process Performance." Journal of Enterprise Information Management, vol. 19, no. 1, 2006, pp. 13-29.

Wyslocka, Elzbieta. "Results of Implementing ERP System in a Multi-plant Enterprise." MATEC, 2017, www.matec-conferences.org/articles/matecconf/pdf/2017/39/matecconf_cscc2017_04022.pdf. Accessed 17 Sept. 2018.

Zarzycka, Ewelina. "Implementation of an ERP Package and Its Effect on the Management Accounting System: Author's Research into Enterprises in Poland." EconStor, 28 Dec. 2011, www.econstor.eu/bitstream/10419/147051/1/736246398.pdf. Accessed 17 Sept. 2018.

 

 

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