AIS, Chapter 2, enterprise resource planning (ERP) system
A disadvantage of an ERP system
Amount of time required.
An advantage of an ERP system
An ERP provides an integrated, enterprise-wide, single view of the organization's data and financial situation. Storing all corporate information in a single database breaks down barriers between departments and streamlines the flow of information.
A disadvantage of an ERP system
Changes to business processes. Unless a company wants to spend time and money customizing modules, they must adapt to standardized business processes as opposed to adapting the ERP package to existing company processes. The failure to map current business processes to existing ERP software is a main cause of ERP project failures.
A disadvantage of an ERP system
Complexity. This comes from integrating many different business activities and systems, each having different processes, business rules, data semantics, authorization hierarchies, and decision centers.
A disadvantage of an ERP system
Cost.
Typical ERP modules include:
Customer relationship management—sales and marketing, commissions, service, customer contact, and call center support
An advantage of an ERP system
Customer service improves because employees can quickly access orders, available inventory, shipping information, and past customer transaction details.
An advantage of an ERP system
Data input is captured or keyed once, rather than multiple times, as it is entered into different systems. Downloading data from one system to another is no longer needed.
Typical ERP modules include:
Financial (general ledger and reporting system)—general ledger, accounts receivable, accounts payable, fixed assets, budgeting, cash management, and preparation of managerial reports and financial statements
Typical ERP modules include:
Human resources and payroll—human resources, payroll, employee benefits, training, time and attendance, benefits, and government reporting
An advantage of an ERP system
Management gains greater visibility into every area of the enterprise and greater monitoring capabilities. Employees are more productive and efficient because they can quickly gather data from both inside and outside their own department.
Typical ERP modules include:
Manufacturing (production cycle)—engineering, production scheduling, bill of materials, work-in-process, workflow management, quality control, cost management, and manufacturing processes and projects
An advantage of an ERP system
Manufacturing plants receive new orders in real time, and the automation of manufacturing processes leads to increased productivity.
Typical ERP modules include:
Order to cash (revenue cycle)—sales order entry, shipping, inventory, cash receipts, commission calculation
An advantage of an ERP system
Procedures and reports are standardized across business units. This standardization can be especially valuable with mergers and acquisitions because an ERP system can replace the different systems with a single, unified system.
Typical ERP modules include:
Project management—costing, billing, time and expense, performance units, activity management
Typical ERP modules include:
Purchase to pay (disbursement cycle)—purchasing, receipt and inspection of inventory, inventory and warehouse management, and cash disbursements
A disadvantage of an ERP system
Resistance. Organizations that have multiple departments with separate resources, missions, profit and loss, and chains of command may believe that a single system has few benefits. It also takes considerable training and experience to use an ERP system effectively, and employee resistance is a major reason why many ERP implementations do not succeed.
Typical ERP modules include:
System tools—tools for establishing master file data, specifying flow of information, access controls, and so on
An advantage of an ERP system
The organization gains better access control. An ERP can consolidate multiple permissions and security models into a single data access structure.