Reflect on the readings for this module as well as those from previous modules when you consider this module’s discussion question. In your response, take into account the time constraints on modern businesses in terms of time to market and demand for innovation. As an aside, and not as part of the assignment, you may wish to consider how your answers would or would not change if you were considering a craftsmen-type or vertically-integrated business.
Based on the above information and on your reflection of the readings for the course, respond to the following:
- If continuous improvement is the key to remain competitive, then why do firms codify so many processes into enterprise resource planning (ERP) systems?
- Does this limit innovation and if so, how can that risk be reduced? If you were an ERP vendor what would be your perspective?
Enterprise Resource Planning
Many companies have been working on improving their processes through the introduction of the ERP system in the organization. Continuous improvement is a key in remaining competitive in the job market. The following are the reasons why a company might choose to codify their process to the ERP system.
- Different soft wares and different processes in the organization need to be harmonized. It enables the software to be integrated so that the processes can be located in one database. This process is beneficial since it stores the information safely and accurately and saves on time as the data is stored in one place. This helps the business to even grow faster.
- It helps one to access information easily. It helps to monitor the processes in the company. For example, if you want to know the average sales margin in the company, it would take a very short time to get the info from the ERP system other than a manual system. It offers operational efficiency(Holland&Light, 1999).
- It provides security as not everyone is allowed to have access to the system. This is because passwords are employed in the system and thus personal information is protected.
- It enables the supervisors to be able to evaluate the performance of other employees easily since they can gain access to the system at any time(Holland & Light, 1999).
- This system saves on cash since different departments don’t have to buy and maintain their own systems as they have access to one common system. The finances that could have been used to buy these softwares can be used to make other improvements in the company (Karsak, & Ozogul, 2009).
How the ERP limits innovation
ERP system limits the participation of the users in implementing projects. This is because the users are trained exhaustively thus making their practical experience in implementing the ERP projects very law. This limits innovation. This can be changed by allowing the trainees to have their hand on projects that have to be implemented(Wang, & Chen, 2006).
In decentralized organizations with desperate systems and processes, it is often difficult to achieve the ERP implementations.
ERP system is normally locked to a single vendor. This makes it harder for any upgrades to be done. The company can thus find it hard to maneuver their way round their services. This makes it hard for change and improvement. This can be solved by making it open for several vendors so as to avoid monopoly and also to welcome more ideas from other vendors(Karsak, & Ozogul, 2009). Alternatively, the vendor can program the system to allow for changes from the organization’s staff once they feel they have a better idea to improve the service offered by the system.