Date: 14th April, 2008
Week 3
Q.3 If an organisation has business processes that do not match any commercially available ERP, should the organisation adopt an ERP? Provide factors for and against and suggest other possible considerations that would factor in your reasoning.
My response:
It is not necessary that the business process of an organization will have to match the ERP systems offered in the market. However, if it is the case then it is not very easy for to decide whether to adopt an ERP or continue operation without it. Usually adopting an ERP system provides an organization with many benefits which are not possible without the help of ERP. But, if an organization’s operating process does not match with the ERP systems currently available then there are only two options that the organization will have to choose from. One of these is, re-engineering the business process and the other is customizing the ERP system according to the needs of the business if the organization really wants to adopt an ERP system and this is the most difficult decision to make for an organization as there are advantages and disadvantages resulting both from the business re-engineering and ERP system customization.
Advantages:
A business can still adopt an ERP system even if its’ operation process does not match with the ERP systems offered. As discussed before, one way of doing that re-engineering the business process to suit the ERP system.
1. The leaders of ERP system providers like Oracle seldom apply the best practices method for designing an ERP system. The best practice method simply means the best possible way of performing a process. The ERP vendors do it from their experience from the past and making judgment on the business size, operation process and the needs mentioned by the organization. However, best practice method applied for an ERP system can add speed to business process, reduce cycle times and save money to the organization by inventory reduction and all together result in generating more profit for the business compared to when ERP was not adopted.
2. An ERP system can provide a business with a feature of data sharing which is very important for the decision makers of a business. The decision maker can access all the data related to the business and avoid waiting for other departments to respond.
3. ERP systems also allow business to work under a real-time environment, which is quite helpful for time factors related information update within the business. This reduces errors occurring from wrong information provided to the people involved with the business. For an example, if a product has been sold and if it was the last item left in the stock, soon the item is sold the ERP will show item no more available to all users and save them making the mistake of selling the item again.
4. People outside the business but related to it can access information according to their level of importance and they can also receive quicker responses than before with that feature being present.
5. ERP system keeps business up to date with its inventory and helps it to get rid of them quickly which results in greater profit for the business.
Disadvantages:
When it comes to re-engineering a business process there are risks involved with it as well. Business process re-engineering can limit a business process in flexibility. To suit an ERP system a business might need to compromise with a change in the process which they were doing in a better way before. On the other hand, if an organization prefers to customize an ERP system rather than changing its’ business process and builds an “in-house” system it can be very time consuming and expensive.
