Trends in Enterprise Systems AACSB Standards: Systems and Processes Enterprise Resource Planning…
Trends in Enterprise Systems
AACSB Standards: Systems and Processes
Enterprise Resource Planning Systems are massive software packages that run almost every aspect of a business. From accounting to human resources to supply chain management, they integrate all information to give management a clear picture of the actions and status of the company. Integration is key with ERP. For example, as an order is placed within a company, production/supply chain schedule is updated, a finance department credit check is initiated, accounting records are automatically updated with shipment of the goods, and an invoice sent electronically. For all departments, the common central database is the one source of correct data. Each user has a consistent interface to the software and all data is available in real-time.
ERP systems, as they are commonly known, have been around since the late 1990s. Since that time, ERP systems have evolved, changed, and been disrupted by other technology. Through these changes, companies are challenged to get goods and services faster and cheaper to their customers than ever before. Whatever system is used, it must be robust, stable and able to fulfill this competitive challenge.
One disrupter to the traditional ERP system is a Software-as-a-Service enterprise system. SaaS delivers the software to the client via the cloud. In traditional ERP, the software is hosted in-house. Forrester Research released a recent report on SaaS ERP saying “the shift to SaaS will accelerate over the next three years and become the preferred deployment option for many types of businesses. For large enterprises, adoption will be more restrained near-term, but solutions are maturing quickly, and we will see significant adoption at scale for complex businesses within five years.” (PC mag) Although the low cost of entry may be attractive for companies to consider SaaS ERP, it depends on the number of users in the organization. SaaS is highly scalable, but most software requires a pay per user, so if the company has a large number of users, it might be advantageous to keep the software in-house. Costs are predictable, but in the long run, it might be more expensive than an in-house ERP. In addition, security could be a concern with SaaS. Although ERP software is somewhat standard, little customization can be done when using SaaS ERP. In general, small to medium businesses might choose SaaS ERP because of the cost and accessibility, whereas a larger company wishing to do some customization and keeping control over their data may choose in-house ERP.
Other trends or disrupters to traditional ERP are on the horizon. Artificial intelligence, AI, is taking a significant role in accounts payable with ERP. Automating invoicing involves the system matching invoices to payments and only alerting a human when there is an exception. Although Excel is still a pervasive financial tool, companies are beginning to realize that ERP systems can provide a consistent set of numbers superior to rogue spreadsheets. “We used to use some spreadsheets and staff effort on our revenue recognition. Our month-end close took up to thirty days,” says Elliot Woo, controller at GoGuardian, which offers Chromebook management solutions that keep students safer online. “When we adopted an ERP for the first time this year, we started to close our books in a week.” (Harpham 2018). Another future disrupter is blockchain within ERP. For example, Samsung has estimated that it could save up to 20% in its supply chain by adopting blockchain. The shipping company Maersk is linking up with IBM for further work in blockchain. The ERP provider SAP is working with pharmaceutical and produce companies to create an automated blockchain supply tracking system.
Critical Thinking Questions:
- Research how ERP vendors are integrating blockchain in their software. What are the advantages?
- Enumerate the advantages and disadvantages of cloud-based ERP (SaaS ERP). Consider the choices for a small/medium company versus a large multi-national corporation.
- Write down the steps that an AI accounts payable system in an ERP would perform.