Enterprise Resource Planning system (ERP) is an integrated software that centralizes the organization's business functions such as accounting, procurement, marketing, and logistics thus improving workflow. ERP originated from the manufacturing model referred to as Economic Order Quantity, that later transformed to Manufacturing Resource Planning that which were all paper based. Technological advancements led to the integration of business functions such as accounting, supply chain management, and all departments, which is now the Enterprise Resource Planning system (Magal, & Word, 2011). Classification of the ERP system can be based on the industry specifications such as automotive, education, manufacturing, and hospitality. Additionally, there is operation based ERP such as, On-Premise ERP which is used on a worksite, Cloud-based ERP that is globally accessible through a cloud host, and Hybrid ERP, which combines the On-Premise and Cloud-based features.
In addition, there has been improved workflow through the real-time streamlining of the business operations by the integration of departments. Also, data collection, analysis, and reporting have been made easier, enabling a faster decision-making process. Moreover, data records can be stored securely and be used to forecast business proceedings. Furthermore, there is a reduction in operational and management costs in comparison to a decentralized system ( Shang & Seddon, 2000) . Additionally, the ERP system brings collaboration in departments, enhancing teamwork. The use of ERP system enables an organization to have a competitive advantage in the market.
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However, the installation of the ERP system can be costly for an organization. Additionally, the system may fail due to the employee's lack of skills or poor training on the system operations. Also, ERP efficiency may decrease where departments fail to share timely information. Furthermore, implementing the ERP system changes the organization's culture, which employees may be reluctant to. Therefore, it is essential for organizations to consider all the pros and cons before implementing ERP systems.
References
Magal, S. R., & Word, J. (2011). Integrated business processes with ERP systems . Wiley Publishing.
Shang, S., & Seddon, P. B. (2000). A comprehensive framework for classifying the benefits of ERP systems. AMCIS 2000 proceedings , 39.
