Enterprise Resources Planning Systems

Introduction

Enterprise resources planning (ERP) systems are gaining momentum in the modern business world due to their efficiency and relevance in the present-day business environment. An ERP is a standardized information system that integrates organizations’ “business functions around a common database and standardized processes that are configured to fit the needs of the user organizations” (Tenhiälä & Helkiö, 2014, p. 149). ERP became a common tool for companies in the 1990s, replacing an earlier practice called manufacturing resources planning (Mohadab, Khalene, & Safi, 2017). In ERP’s initial stages, mainly large enterprises used these systems, but small and medium-sized organizations are currently emerging users of such business components. The market for ERP products is competitive in that large providers as well as smaller vendors or even start-ups are offering these products and services. This paper includes a brief overview of the ERP market.

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Major Providers and Open Source Systems

As mentioned, ERP systems cover all the business operations that companies may have, meaning that these systems handle significant volumes of data that are updated regularly. Large software companies have become key players in the market as they have the resources to develop sophisticated products and provide a wide range of associated services (Mohadab et al., 2017). Some of the major providers of ERP systems include Oracle, Microsoft, IBM, SAP, Sage, Infor, and NetSuite. These companies offer various products that are customized to meet the needs of their clients; they also provide assistance in implementing the systems and training staff. However, the prices for such products and services are high, with the result that predominantly multinationals and large enterprises deal with these operators. However, the most recent trends suggest that major ERP providers are starting to target smaller companies in response to high market competitiveness (Kapp, Latham, & Ford-Latham, 2016). In this endeavor, a considerable challenge that these key players must address is the availability of open-source systems.

Open source ERP has open code and can be accessed online free of charge. These products can be downloaded easily and are modifiable by users (Mohadab et al., 2017). Some of the most popular ERP systems among small and medium-sized organizations are Odoo, Openbravo 3.0, and Dolibarr. In comparison to commercial ERP, free products are affordable: users are not required to purchase any license, and organizations can use a system for free or at a reasonable price. For example, the provider of Odoo, a modular resource, offers later versions with modules that are included at a certain price. Open source products are as flexible as commercial systems, making them attractive to customers, especially those operating in a dynamic business environment (Nowak & Kurbel, 2017). Mohadab et al. (2017) also stressed that open source applications enable companies to take complete control over these systems. Thus, ERP can be easily modified and adjusted to the needs of a company addressing certain challenges and trying to attain specific goals.

Major Beneficiaries

Notably, ERP is beneficial for almost every firm, irrespective of size or market segment. As seen from the discussion above, large, small, and medium-sized organizations use these systems to ensure their proper functioning. A primary premise for the successful use of ERP is the correct selection of the product (Omar & Gomez, 2016). It has been acknowledged that ERP should fit the organization’s goals, structure, and even culture. In terms of market segments, companies operating in different spheres can optimize their operations with the help of ERP. For example, Mohadab et al. (2017) asserted that the implementation of ERP systems could be beneficial for higher educational establishments. At the same time, it is important to note that decentralized organizations can find it difficult to implement these systems.

Recent Trends in the Market

Cloud-Based Systems

The ERP market is evolving at a high pace, making it essential to trace the major trends in this sphere in the effort to choose the most appropriate product. One of the latest trends in the extensive use of cloud-based products, an approach that is heavily used by multinationals having to ensure effective data sharing among their numerous and geographically distant divisions and departments (Nowak & Kurbel, 2017). In addition to large companies operating in different locations, cloud-based ERP can be beneficial for small and medium-sized organizations as well. This option enables companies to reduce costs without compromising data security, which is essential in the modern business world.

Mobile Solutions

Mobility is another trend associated with the use of an ERP system, as this factor provides additional opportunities for businesses. Mobile ERP ensures the connection of mobile devices to the entire system of the enterprise (Omar & Gomez, 2016). Such mobile devices include the possibility of using a tablet or a smartphone. These systems are gaining increased popularity due to the limitless opportunities they offer to companies, allowing employees to collect and share data at any time and place, saving time and money. However, it is important to add that these systems are characterized by certain limitations as some have interfaces that are difficult to use.

Compliance Issues

One recent trend related to the wide utilization of ERP is a focus on compliance issues. Companies of every size are operating in different countries, making it critical for them to comply with the regulations to be found in different markets (Kapp et al., 2016). Properly selected ERP systems can help organizations to address this goal. ERP providers are currently trying to develop products to meet the needs of their customers and to come up with effective solutions.

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Customer Relationship Management

As mentioned, ERP systems tend to embrace all the operations of a company; however, customer relationship management (CRM) has previously received little or no attention. The latest ERP approach incorporates CRM operations, enhancing the productivity and competitiveness of organizations (Kapp et al., 2016). E-commerce companies and small or medium-sized organizations are likely to benefit more from the integration of CRM as relationships with customers define the development of these enterprises. Clearly, large businesses should also ensure the effective integration of these systems to maintain their leading positions or even to remain competitive.

Automation

Finally, companies have always aspired toward optimization of all operations and processes, and automation is regarded as key to achieving this goal (Kapp et al., 2016). ERP systems enable organizations to increase the level of automation, especially in terms of documentation. ERP systems free employees from the need to develop invoices or reports manually, saving time and reducing the rate of errors that can often undermine the performance of departments and entire companies.

ERP Disadvantages

The advantages of the use of ERP, as mentioned, are evident in that they ensure the visibility of all processes and their proper management. Nevertheless, ERP systems are also associated with certain limitations. Although companies can now access free ERP applications or buy the most recent versions at low prices, the cost of ERP use is still high (Kapp et al., 2016). Apart from buying the product (or downloading it from the Internet), it is essential to customize, test, and implement it, which can require a certain amount of funding. Implementing ERP is also a lengthy process: it can take as long as three years to develop a system that is properly customized and completely functional. Moreover, the proper functioning of ERP systems is associated with the involvement of all or at least most of a company’s employees. Therefore, staff training is necessary, and this is associated with the investment of time and funds. Finally, it can be difficult to choose the most appropriate ERP system, and an erroneous choice may result in considerable loss of time and money.

Conclusion

On balance, it is necessary to state that despite some disadvantages, ERP systems are the future of the business world. Companies have already acknowledged the benefits of using ERP applications that ensure effective management of all their operations. ERP systems are evolving rapidly, and vendors now offer a variety of products and services that can meet the needs of any company irrespective of size, location, or market segment. It is clear that one of the most influential factors contributing to the successful implementation of ERP is the selection of the most efficient product. This challenge is likely to become less pronounced as researchers address significant attention to the matter and develop various frameworks that can be applied in different settings.

References

Kapp, K. M., Latham, W. F., & Ford-Latham, H. (2016). Integrated learning for ERP success: A learning requirements planning approach. New York, NY: CRC Press.

Mohadab, M. E., Khalene, B. B., & Safi, S. (2017). Enterprise resource planning: Introductory overview. In 2017 International Conference on Electrical and Information Technologies (ICEIT) (pp. 1-4). Rabat, Morocco: IEEE.

Nowak, D., & Kurbel, K. (2017). Understanding the flexibility of cloud ERP software. In Innovations in enterprise information systems management and engineering (pp. 135-146). Hagenberg, Austria: Springer.

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Omar, K., & Gomez, J. M. (2016). A selection model of ERP system in mobile ERP design science research: Case study: Mobile ERP usability. In 2016 IEEE/ACS 13th International Conference of Computer Systems and Applications (AICCSA) (pp. 1-8). Agadir, Morocco: IEEE.

Tenhiälä, A., & Helkiö, P. (2014). Performance effects of using an ERP system for manufacturing planning and control under dynamic market requirements. Journal of Operations Management, 36(1), 147-164. Web.

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