Enterprise Resource Planning is a computer-based system used for integrating internal and external information management in an organization and it encompasses manufacturing, accounting, services, and sales among other sectors in the organization. The system automates all these activities using an integrated computer-based application. It promotes to ensure the multilateral flow of information in every business function within an enterprise. In addition, it enables companies to link with their international stakeholders. The system makes it possible to use a variety of hardware as well as enabling network configurations that allow its database to store data. In the United Arab Emirates (UAE), the ERP System is used in supply chain management, manufacturing management, customer relationship management, operations management, financial management among other applications (Raqmiyat, para. 3).
Application of ERP system in UAE
ERP System is used in the management of an organization to deliver pre-built and important performance indicators, scorecards, trends as well as formatted reports in real-time which help in making better and more informed decisions.
Firms in UAE use the ERP system to carry out comprehensive control of all the financial data as well as a process within an organization. The financial management processes include managing recurring revenue, budgeting and budget management, managing fixed assets, revenue recognition, and managing general ledger, receivable as well as payable accounts.ERP System enables real-time sophisticated planning and budgeting while providing continuous financial management solutions to every business strategy in the organization.
It is used in cash management which includes multi-currency transactions as well as reporting real-time data on changes in monetary value in various stock exchange markets. It is used in allocating finances within the functional units and business processes in the organization as well as in preparing and reporting financial statements of the organization. The ERP System also helps in consolidating the financial resources of the organization. The system also enables secure access to an organization’s financial performance in real-time and allows the organization’s extended financial team to access the operational measures as well as the latest financial performance of the organization (Fleet Management Limited, para. 4).
ERP System has been used in many firms in the UAE to align the human resource management system with the organization’s business processes through training of the employees. It is used in recruiting employees whose job skills and talents are in line with the organization’s business processes by analyzing each individual’s job skills. It is applied to reduce the cost of human resource management by using an integrated system that stores employees’ data in the organization’s database and relays employees’ periodic updates in real-time allowing for more efficient management of employees’ information.
ERP System helps improve employee satisfaction through efficient management of incentive compensation as well as in time tracking for every employee in the organization. It is used in managing employees’ benefits allowing EACH employee to choose the investment options for his or her retirement benefits while still working. It is also employed in managing and reporting the expenses in human resource management as well as in managing the payroll system within the organization. The payroll system is built on a self-service portal to allow access to every employee at any time (Raqmiyat, para. 1).
ERP System is also used in supply chain management to manage inventory and order entry as well as in fast-tracking order-to-cash processes while at the same time improving quote accuracy. It is used in supply chain planning, managing purchases, and supply schedule. It is also applied in product configuration, an inspection of goods as well as in the processing of commissions and in claim processing. Generally, ERP System helps improve the speed at which orders are made and received (Abdallah and Albdari 23).
In large companies in UAE, ERP System has been used to automate information management in manufacturing processes. ERP Systems are used to integrate communications to all equipment in the plant floor and to also integrate the sources of the plant floor data thereby relaying the required information to the plant’s database and hence improving efficiency in manufacturing processes. It is also used in managing the billing of materials needed for the manufacturing processes as well as in work and production planning and scheduling, quality control, and manufacturing flow control. It is used in performing cost management which involves activity-based costing as well as in workflow management and in product lifecycle management (King Fahd University of Petroleum & Minerals, para.1).
ERP System has also been applied in project management for some major project activities in the UAE (Abdallah and Albdari, 19). It has been used to decide on the scope of the projects through the use of scope management procedures to prevent constant project scope changes. It is applied in defining and controlling project scope. It is also used in staffing the right individuals for the project.
It is used to identify the critical missing skill in the project considering the interface to be built and therefore help get the right person or team for the implementation of the project. The ERP System is also applied in scheduling technical as well as management reviews and in monitoring the progress of each phase of the project (Trepper, para. 4-13). ERP System is also used in costing, billing, and managing the expenses involved in the project processes.
ERP technology is also used to manage customer relationships in many firms in the UAE. It is used in call centers to achieve better customer handling by providing the automatic lead selection to the call center technology thereby improving efficiency in productivity and customer satisfaction. It is employed in implementing and managing virtual call centers as well as in managing cloud computing centers.
ERP System is used in managing the sales and marketing processes particularly in analyzing various important market dynamics such as marketing demographics among many others. It is applied in managing customer contacts through its database as well as in managing customer services in service industries. ERP System provides customers, suppliers as well as employees with various self-service interfaces by relaying the organization’s services to websites (Fleet Management Limited, para. 34).
In the UAE, ERP System is also used to manage universities. According to King Fahd University of Petroleum & Minerals (para. 6), over 800 post-secondary campuses apply ERP systems to manage their operations. The ERP system for campus management is designed in Microsoft technology and offers financial solutions, human resource management as well as advancements in student services. Among the universities in the UAE which have been able to align their administrative, as well as their academic business processes using the ERP System, include UAE University, American University of Sharjah, Zayed University among others.
Challenges faced in Application of ERP System in UAE
Effective application of ERP systems in most firms in the UAE has always encountered serious challenges. The cost of purchasing and implementing an ERP System requires substantial finances from the organization considering that other significant decision criteria have to be made. Such decisions include aligning the functionality of the ERP System with the business processes of the organization; the future-proofing of the technology as well as the underlying infrastructure which is the available network system and database to enable the company to effectively adopt e-commerce. According to Abdallah and Albadri (p.19), the adoption and successful utilization of the ERP System in the UAE has been seriously affected by the internal and external infrastructure of most organizations in the UAE.
Most firms are also faced with the problem of inadequate expertise to help implement and manage the complex processes of the ERP System particularly in processes that are unique to particular businesses. ERP System requires that those involved in the implementation processes perform their jobs differently understand the detailed user requirements and be able to review the functionality of the system to achieve its functional best-fit. Adequate technical expertise is lacking to efficiently achieve the implementation of the system in most firms in the UAE. Application of the ERP System requires comprehensive knowledge and competency which enable a holistic life-cycle approach in managing the ERP System (Abdallah and Albadri 19).
The complexity of the ERP System makes management of projects very difficult especially when the expertise is lacking since it involves management of the human resource, technology as well as business processes in the organization. The combination of software applications and the vast hardware system involved makes it difficult to identify the technological portion employed in the implementation process.
Thus it requires that the manager possess both the technical expertise and business knowledge and skill required in the application of the ERP System. However, this is often lacking in most firms making the adoption of the system costly as firms have to hire consultants and depend on external expertise. Besides, for the implementation of an ERP System to be successful, it requires a higher degree of data integrity that most firms in the UAE may not have achieved. Implementing an ERP System requires that the inventory records, routings, formulas, bills of materials among other data be complete, accurate, and to be properly structured (Martin 97).
Managing the risks associated with the application of the ERP System has also posed serious challenges to most firms in the UAE. Integration of untested technology with the ERP System may have potential failures as most firms lack the technological expertise to evaluate the prospective risks as they only rely on advice from the consultants to find the potential risks. Besides, many firms are not willing to outsource IT services and instead, are cutting down their budgets in order to survive during the financial crisis making the implementation of the ERP System very difficult (Raqmiyat, para. 13).
ERP System has been used in various business processes in many organizations as well as in government institutions in UAE. It has created efficiency in most business operations particularly in ensuring quality production and customer satisfaction. However, inadequate expertise and low infrastructural systems pose a great challenge to the complete adoption of the system in most companies. This implies that more training and expansion of the infrastructural network are needed.
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