Reason For Implementation Of Erp

Published Date: 02 Nov 2017

ABSTRACT

The main purpose and objective of this paper is to investigate and evaluate how Enterprise Resource Planning (ERP) is used by the banking industry as an Information Technology strategy in their various business strategies in order to remain competitive and up to date in their market sector. The paper also looks at the adoption rate of ERP by the banking industry and how successful or unsuccessful the implementation of ERP has been as regards to meeting the industry’s requirements and ultimately bringing about customer satisfaction. The reason for the choice of topic of the paper is to better understand how ERP helps the banking industry to improve their business and increase their customer base.

KEYWORDS – Enterprise Resource Planning, Banking Industry, Information Technology, Business Strategies, Customer Satisfaction.

INTRODUCTION

Research Background

Enterprise Resource Planning systems have been described to be the most important and valuable development in corporate use of Information Technology (Davenport, 2000). It is believed that in recent times, ERP systems have become extremely important in the development and operations of modern businesses. Also noted was the rapid growth of the ERP market from a downturn in the year 2000 to $9.5 billion in the year 2006 with expectation to shoot up exponentially in later years. According to Roses, Kalb (2011), a study by the ARC Advisory Group in 2009 predicted that the world wide market for applications was expected to have a growth of up to $43 billion by 2011 which denotes a compounded annual growth rate of 8.3 percent over the next 5 years. As cited in O’Leary (2000), ERP systems possess several tangible and intangible benefits that are critical and essential to the growth of business organisations including the banking sector.

In the world today, the different banks in the banking industry are faced with constant rapid change and also stiffer and tougher competition from their numerous competitors due to emerging technologies in all aspects of their business functions. The most competitive banks in the sector have become increasingly more efficient, customer centric and flexible; in other words, banks that are not in tune with emerging technologies are left behind and find it very difficult to compete in the global market, (Wu, 2011).

Research Objective:

The aim of this paper is to investigate the role of ERP on the business processes of banks in the UK and study the impacts of successful and unsuccessful implementations.

Enterprise Resource Planning (ERP):

Introduction to ERP

Enterprise resource planning; now a days are part of every organization as they contain highly integrated solutions as they meet information system. Due to this attraction many investigation and study has been done on ERP system. ERP has become essential information system and most of the world’s leading companies agree with that as there is growth in the economy. Software industries are at profitable areas as ERP market is increasing day by day. Definition of ERP differ from technical view to holistic view but they do not contain major difference as major business are implemented are operational, technical, financial or strategic.According to Olson(2004), In ERP due to quicker information response time the interaction between enterprises has been increased, financial and operating cost has been reduced and there is improvement in communication and interaction between customer and suppliers.

Definition of ERP

Enterprise resource planning is an integrated enterprise wide software package which is used to support a broad range of tree or major working areas using a modular structure. Another definition by Rosemann(1999) is ERP system is customisable, standard application software which includes combined business solutions for the essential processes and the main administrative function of an enterprise. Gable (1998) defines it slightly differently as a complete package software solution which pursues to integrate the complete range of business processes and functions acceptable to present a holistic view of the business from single information and IT architecture. ERP can be evaluating the resource of an enterprise like materials, manpower, machines, methods, money and marketing in command to stay competitive in a globalised economy (Siriginidi 2000). Each unit of ERP is specific in business process, many companies goes for ready made packages that are easily available and meet the needs of their industry. There are many ERP vendors/software developers available but the main competitors are JD Edwards, Baan, People Soft, SAP, and oracle(O’Leary, 2000).

Characteristic of ERP

The characteristic of ERP are

ERP are elastic and provide best business practices

The modules must be included and offered seamless data flow among the modules, increasing operational transparency through standard interfaces.

Modular design compromise many separate business modules like financial, manufacturing accounting.

Use of common database management system (DBMS)

High cost is involved in the system

Time requirement in tailoring and configuration set ups for being included within organisation’s business functions

This is real time modules with online and batch processing capability

Reason for implementation of ERP

According to Umble et al(2003), the environment in business has changed severely, organisation faces many problems due to constantly increasing competitions, increasing customer requirements and expanding markets. All these have increased pressure on companies to decrease the total costs in whole supply chain, make bigger the choice of product, cut down throughput times, better customer service, improve quality, give more precise and reliable delivery dates and efficiently coordinate global demand, supply and production. So far as the business world moves closer to a completely combined model and competitors continue to enhanced their capabilities, so as to remain competitive organisation must upgrade their own business practice and procedure. Also, the significant in house information which companies used to protect must be shared with their suppliers, customers and distributors, and the function within the organisation must enhance their capability in order to produce and communicate timely and accurate information. For all these objectives to be met, organisations are turning into ERP systems (Umble et al 2003).

The main reasons that have brought a fast growth in the implementation and use of ERP system include the following;

Technical reasons

The requirement for a common platform and the change of existing information technology infrastructure.

The incongruity of several information systems.

Operational reasons

Data visibility

Process improvement

Reduction in operating cost

Strategic Reasons

2000(Y2K) compliance

Globalisation of business.

Making better responsiveness of customers.

Upgrading organisation’s performance and decision making.

Benefits of ERP

Normal the benefits of ERP are as follows;

It provides integrated, enterprise wide common tools and processes.

It minimizes costs by improving enterprise efficiency through computerisation.

It contains the entire skill of managing the extended enterprise of supplier and customer as integration.

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