Enterprise Resource Planning (ERP)

Bayu Sutrisno

Student of Informatic Engineering at STMIK Sinar Nusantara.
Keep moving forward and thinking out of the box, but I don't even know where the box is. Hehe

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Enterprise Resource Planning (ERP)

word composition of the concept ERP (Enterprise resource planning)

Discussion about Enterprise Resource Planning (ERP)

Enterprise Resource Planning is a software package equipped with integrated application to be applied widely in an organization. ERP is including in Transaction Processing System (TPS) and completed with functional integrated information system.

Enterprise Resource Planning Application is consisting function of accountancy, finances, human resources, marketing, and logistic. Enterprise Resource Planning application in accountancy is involving about modules of general ledger book, account receivable, account payable, fixed assets, cash, and cost accounting. Enterprise Resource Planning Application in finances is involving about modules of portfolio analysis, risk analysis, credit analysis, assets management, leasing, and real estate management. Enterprise Resource Planning Application in human resources is involving about modules of recruitment, payroll system, personal management, employee development, and compensation management. Enterprise Resource Planning Application in marketing is involving in customers or public relations, order inquiries, and order processing. Enterprise Resource Planning Application in logistic is involving in production planning, material management, and manufactory management.

Package of Enterprise Resource Planning is different with others commercial packages. The differences are:

  1. Modules of Enterprise Resource Planning integrated with general basic data. For example: if there are Sales Order transaction in a division, the result will give impact toward basic data for others modules for example it will impact on accountancy, logistic and delivering modules.
  2. Modules of Enterprise Resource Planning was designed according to business process that following value chain process or supply chain process.

Benefit of Enterprise Resource Planning

Last research showed if there were seven benefits for purchasing at Enterprise Resource Planning packages. Three benefits related toward business questions, two benefits related toward information technology and one benefit that related between business and information technology and another benefit related with maintenance fee that connected with year-turn problems in 2000.

Three benefits related toward business, i.e.:

  1. Data integration caused increasing of data access to other business unit, other function, processes and organization.
  2. Provided other methods to do business through business process reengineering toward process orientation and decrease business process cost.
  3. Provided global abilities by provide globalization through general business process and international class.

Two benefits that related with information technology, i.e.:

  1. Benefit in purchasing not in developing. The achieved benefit is faster process, cheaper price, and better abilities and performance of the packages
  2. Benefit of information technology engineering can be used to save more cost.

A benefit that related between business and information is flexibility benefit in using client server system that simple to be developed according with growth of business point.

There are two purposes of organization in purchasing of Enterprise Resource Planning, i.e.:

  1. Applying value chain activities, that is an activity start from the logistic of raw goods, logistic of finished materials, sales and marketing and after sale service.
  2. Supporting functional business activities that involving in accountancy process, finances, human resources, and others functions.

There are three points’ purposes of organization in purchasing of Enterprise Resource Planning that explained below:

  1. Data integration is the main point that is looked by the purchaser of ERP packages either with value chain activities purposes or with functional business activities. Although both of the activities need the data integration, data integration in more important for the purchaser with value chain activities purposes.
  2. Global abilities rated higher for the purchaser with value chain activities purposes than the purchaser with purpose in supporting functional business activities.
  3. Benefit that related with information technology and year transition of millennium is rated higher for purchaser who supporting functional business activities if compared with the purchaser with value chain activities purposes.

Weakness of Enterprise Resource Planning

Beside of benefits that gained from Enterprise Resource Planning, there are some weaknesses of ERP that need to be noticed. The weaknesses are:

  1. Implementation of ERP is too difficult, because of the application that should be integrated and organizations should change their ways in doing business. The difficulties in implementation of ERP and added by the resistance to change from personal who affected because of business changing process.
  2. Implementation fee of Enterprise Resource planning that too expensive and it is not affordable enough for some organizations, because it can reach million dollars for the packages.
  3. Organization only thinks about the big benefits of the Enterprise Resource Planning implementation, but not they are not ready and they do not have any good preparation for the employee
  4. Other problem is the personal or member or employees that suddenly burdened with bigger responsible but they are not well prepared either mentally or abilities or skill.

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