Previously businesses have been functioning as an organizational structure which had separated the functional fields; therefore each functional field has separated the departments. In this way, every department is completely isolated from other departments. For instance marketing and sales might be separated from supply chain management. Thus, we might conclude that what happens in one department is not closely related to other departments. These departments are interdependent, each requiring data and information from others.
Enterprise Resource Planning (ERP) is one the latest technologies that many organizations have undertaken. ERP system is an enterprise-wide package that integrates all necessary business functions into a single system with a shared database. These software packages can be customized up to a certain limit to the specific needs of each organization. ERP was characterized as the most important development in the corporate use of technology in the 1990s. Unfortunately, many ERP projects have not been effective enough and hence have been unable to achieve all the results envisaged. As the cost of an ERP implementation project is very high, it is critical for an organization to make the project a success and start obtaining benefits out of it as fast as possible.
But what is it that makes an ERP implementation project successful is important to be explored. This study aims to help enterprises successfully implement ERP system by defining and categorizing the benefits in implementing ERP system.
The practice of consolidating an enterprise’s planning, manufacturing, sales and marketing efforts into one management system.ERP automate the tasks involved in performing a business process.
BENEFITS OF ERP SYSTEMS APPLICATION
Implementing an ERP class system is a very big business challenge. The basis for the smooth implementation of ERP systems is: the employees’ engagement and the modern approach of the management, quickly getting acquainted with the software and appropriately using it in day-to-day work. The biggest obstacle against the ERP use, however, is financial, especially among small and medium-sized enterprises. Nevertheless, more and more entrepreneurs are beginning to implement the ERP systems because they see numerous benefits of their application.
- shortening the time necessary to reach the recipient,
- better order management,
- cost reduction,
- customer service improvement,
- information integration between the company’s departments,
- improving the efficiency of procurement processes,
- distribution or production processes improvement,
- economic and financial situation improvement,
- enhanced staff skills,
- increased data security,
- automation and unification of data,
- current access to information,
- increase in goodwill.
Table 1. Benefits of ERP implementation (number of respondents 30)
According to the above presented benefits of the ERP systems implementation, current access to information, profitability increase, productivity growth, are of primary importance. The ERP systems facilitate the storage of the company’s personal data and significantly simplify the staffing employees’ duties related to the payroll management, timekeeping, or the appraisal process.
ERP systems allow for faster and more effective control of the company’s changes, which is particularly important with the omnipresent free competition, and constant economy and regulatory changes, etc. The use of ERP systems, however, can yield significant benefits and a relatively quick return on investment. According to a survey conducted by CapGemini among the CRM systems’ users, 61% of the surveyed companies have paid back their investment costs in less than 24 months, and for 17% – in less than 12 months.
Evolution of ERP
ERP SYSTEMS’ CHARACTERISTICS
The beginning of ERP systems dates back to the late 1980s and early 1990s. However, in the history of development of the information systems supporting management in the area of resource planning, the following basic steps are distinguished: Inventory Control systems (ICs), Material Requirement Planning (MRP),
Manufacturing Resource Planning systems (MRP II),
Enterprise Resource Planning systems (ERP),
Enterprise Resource Planning (ERP II) allowing for the company’s Internetworking.
EU funds have played a major role in recent years. One of the programmes was the 8.2 Innovative Economy Operational Programme in the years 2007-2013, supporting the implementation of electronic business, especially among small and medium-sized companies. Thanks to the support of the EU, many entrepreneurs have implemented the ERP system in their companies. According to the presented data, the global market of the ERP systems in 2012 amounted to about $24.6 billion.
The Polish ERP market is still relatively small – only about 2% of the European market – but it is still estimated by professionals as developing. In order for the ERP system to function properly and provide the necessary information, it must be tailored to the company’s structure. For this purpose it is important to know all the processes taking place in the enterprise and to determine which processes will be included in the ERP system.