As the world economy continues to integrate and pressures of global competition increases, manufacturing firms have been trying to find ways of reducing operation costs, inventory levels as well as developing ways of improving customer service. Enterprise Resource Planning system is one of those ways that firms have been using to make significant strides. These include improvement in customer service, reduction in manufacturing costs and improvement in product scheduling.
However, ERP systems have experienced a significant evolution whereby the technological aspect was introduced. As a result, ERP systems that are computer-based were invented. Modern ERP systems used today have witnessed the incorporation of new technologies which include Software as a Service (SaaS) and cloud computing. All these have impacted the ERP systems differently (Agrawal, 2007)
The impact of technology on ER systems
Software as a service (SaaS) is a method through which a software vendor delivers computer programs to the users through the internet. The customer does not need servers and infrastructure as the computer application he uses is hosted by the service provider.
Cloud computing is an information processing model whereby computing capabilities that are administered centrally by a service provider are delivered as services to a variety of users (Velte et al, 2009). ERP systems have benefited significantly from these developments as explained below. First, the ordering processes can be done at any time within 24 hours particularly because internet services do not require someone to personally be there to take orders (Hamilton, 2003).
Secondly, abstraction, which is a critical foundation of cloud computing has enabled firms that previously could not install ERP systems due to related costs to be able to have the system running no matter where they are situated. Both SaaS and cloud computing have provided customers with a large database where they can be able to compare alternatives before making transactions. In addition, the use of ERP systems with technology has seen an increase in efficiency and effectiveness. This is because the expertise of how the system is run has been shifted to the vendor. Therefore, the shortcomings related to the lack of expertise are covered (Hamilton, 2003).
There are disadvantages of these technologies in the ERP systems. The first customization cannot be achieved for individual customers. The fundamental intention in the design of this technology is to serve several clients by using one software application instance. Therefore, different software versions cannot be developed and kept for individual particular individual clients.
This is because the vendors provide a shared platform hence they can only offer a standardized offering. As a result, businesses have been finding it hard to differentiate their business services from those of competitors. In addition, customization has increased costs to the client and the vendors as well as complex coding processes that most clients would not wish to go through. However the period before technology, it was easy to define and meet customer’s specific requirements. This is because the organization had all the control over the ERP system which currently is shared by service providers (Meer, 2005).
The introduction of ERP systems was accompanied by several benefits to business organizations. However, the subsequent incorporation of technology has been characterized by mixed results. To some level, efficiency and effectiveness have been achieved in the use of ERP systems with technology. On the other hand, customization has not been achieved. This is because the configuration of an ERP system only allows several clients to receive the same service collectively.
Agrawal, D., Candan, K. S. and Li, W. (2011). New frontiers in information and software as services: Service and application design challenges in the cloud. Heidelberg: Springer.
Hamilton, S. (2003). Maximizing your ERP system: a practical guide for managers. New York, NY: McGraw-Hill Professional.
Meer, K. H. (2005). Best practices in Erp software applications: Accounting, supply chain planning, procurement, inventory. Lincoln, NE: iUniverse.
Velte, T., Velte, A., Velte, T. J. and Elsenpeter, R. C., (2009). Cloud computing: A practical approach. New York, NY: McGraw Hill Professional.