The effect of implementing a full function Erp Essay


Enterprise resources planning ( ERP ) systems can be regarded as one of the most advanced developments in information engineering ( IT ) . With the increasing involvement of many organisations in traveling to process-based IT substructure from functional, in the hereafter the ERP systems will go most widespread IT solutions.A critical research issue one in the Fieldss of direction and accounting decision-making on cardinal issues of research inquiries the accounting information system ( AIS ) with the organisational demands for information communicating and control. AIS is defined a processes fiscal information and supports determination everyday occupations to pull off of organisational activities and context of coordination as a computer-based system.

The chief aims of the survey were to analyze the function and intent of Enterprise Resource Planning ( ERP ) Systems and Accounting Information Systems ( AIS ) . The survey besides found that the benefits and drawbacks for companies implementing ERPs and the major deductions were identified for AISs every bit good as how AISs was affected by after the execution of the full ERP system.

We Will Write a Custom Essay about The effect of implementing a full function Erp Essay
For You For Only $13.90/page!

order now

Role and intent of Enterprise Resource Planning ( ERP ) systems

In this universe, many organisations were utilizing Enterprise resource planning ( ERP ) systems. This is because Enterprise Resource Planning ( ERP ) package is available for any concern. Normally the most company are sing to utilize the ERP system into their concern because within company in different it helps to pass on all information. It simplifies a concern procedure and automates the concern procedure. It makes it easier to accomplish the aim.

When a company is turning up, it needs a package bundle to do it easy to command the concern. And the ERP package is suited for it because it link together the disparate maps for illustration gross revenues and selling, human resources, and finance and accounting, into a individual system environment. A company can do a right determination in a short clip.It is really easy for you to maintain path whatever where you are at which countries. ERP package for you to maintain traveling, it makes it simple and easy apprehension, so that a concern can run the procedure with smoothly and expeditiously.At the organisation degree, ERP ‘s effectual function to guarantee answerability.

This will do one know that ERP is non merely meant to simplicity enterprise operations but take portion in a major function in general development of an organisation.

Perceived benefits and drawbacks for companies of implementing ERPs

ERP system will assist you to bring forth a better merchandise and cut down the costs, notice what ‘s go oning in all country of your concern, make smarter determination, acquire the right client at right clip, maintain the promises you make to the client.ERP system will assist to better the truth of information, facilitates communicating within houses, save clip and lower costs. Therefore ERP systems applications enable companies to increase their productiveness and efficiency. The move to enterprise resources planning has given a company a strong foundation for excellence in its nucleus concern maps and the support it need for its overall growing scheme as it continues to spread out internationally.ERP system will supply accurate information for the user.

For illustration when a client places an order it can easy make the other portion which is affected by the order. This application helps as a consequence concerns to easy pull off their twenty-four hours to twenty-four hours operations.The supply concatenation direction systems are another utile systems application which helps concerns to pull off relationship with their providers. These systems help supply accurate information between providers and companies. It besides helps companies to acquire the right sum of merchandise and take it to put of ingestion with no much clip and most significantly at a really low cost.

The ERP package needed to accomplish strategic penetration, addition productiveness, and respond flexibly to alter markets to vie improved. The rise in mechanization of accounting, consolidation and coverage, and working capital direction processes has eliminate excess systems for fiscal coverage. ERP supports fiscal, work force and operations analytics, every bit good as consolidated fiscal and statutory coverage ; planning, budgeting, and prediction, scheme direction and scorecards, and hazard direction. The employees can finish all their occupation maps efficaciously and expeditiously with entree the critical information, applications, and analytical tools.

For case, Deloitte direction is required to analyse the public presentation of the company on hebdomadal footing. The studies required for direction ‘s use are such as undertaking acquisition, engagement direction, incident direction and service-level understanding direction. The individual in charge in finance section merely need to snap a few buttons in order to bring forth those studies subsequent to the customization of SAP map to the demand of the several professional service supplier to minimise the clip in bring forthing the needed studies.

Page 3

The use of SAP has improved the public presentation direction of the company.

Employees are required to make bearer planning by SAP online prior beginning of the each fiscal period. Goals are sets and outlooks from company are clearly delivered to employee. With SAP public presentation direction faculty, employees are besides required to execute engagement rating after completion of each battle. The record is maintained online for rating intent. Evaluation will be done at the terminal of the fiscal period.

Appraisal of the consequences of rating of the staff is restricted to the several staff ; her counsellor and the battle director for tracking intent. With the prompt communicating and proctor of the employee ‘s advancement, the direction is able to better the public presentation of the staff and later, the public presentation of the professional service house.

Drawback of ERP

Purchase and implementing ERP will be really expensive and time-consuming, with many high profile illustrations of issues with undertakings traveling significantly over budget or clip, or both. The major participants in the market have developed a position for necessitating immense resources including external advisers to implement an ERP system and acquire it working, non to advert the cost of brand alterations to the system or merely keeping it.

( beginnings: hypertext transfer protocol: // )For illustration, based on harmonizing to ‘As One ‘ scheme, Deloitte Malaysia has to pass a batch of money to implement an ERP system. The ERP normally is epicurean ; a little company can non to afford the cost.

It needs to take more than one twelvemonth to implement it they can besides take long clip to put in and can even lend to a loss of occupations. The size of the company and the ERP systems such as SAP, the costs of new ERP systems could run from $ 50 million to $ 100 million depending on chosen.By the manner, the internal control for ERP will be more make tighter than old accounting information system.

It will be really complex and non flexible. Any customization or alteration must be done by ERP advisers alternatively of Information Technology section. Thus, any amendment would incur extra cost for the company.

Role and intent of Accounting Information Systems ( AIS )

Accounting Information System ( AIS ) is indispensable to all administrations ( Borthick and Clark, 1990 ; Curtis, 1995 ; Rahman et al. , 1988 ; Wilkinson, 1993 ; Wilkinson et al. , 2000 cited Zulkarnain M. , 2009 ) and possibly, every administration either net income or non profit-oriented demand to keep the AISs ( Wilkinson, 2000: 3-4 cited Zulkarnain M.

, 2009 ) .

Page 4

The term ‘Accounting Information System ‘ , the three words comprise AIS would be luxuriant independently. Accounting could be recognized into three constituents, which is information system, “ linguistic communication of concern ” and beginning of fiscal information ( Wilkinson, 1993: 6-7 cited Zulkarnain M. , 2009 ) . Information is a valuable information processing that provides a footing for doing determinations, taking action and fulfilling legal duty.

System is an incorporate entity, where the model is focused on a set of aims. “ The combination of the three words Accounting Information System indicate an incorporate model within an entity ( such as a concern house ) that employs physical resources ( i.e. , stuffs, supplies, forces, equipment, financess ) to transform economic informations into fiscal information for carry oning the house ‘s operations and activities, and supplying information refering the entity to a assortment of interested users. ” ( Bhatt, 2001 ; Thomas and Kleiner, 1995 cited Zulkarnain M. , 2009 ) . ‘Wide assortment of people that involve in the company ‘s operation within and outside the administration uses accounting information generated by this system for determination devising.

Based on input provided by operational degree directors, AIS produces monthly undertakings ‘ income statements, balance sheets and statement of alterations in fiscal place for the strategic and tactical directors to be after, control and do determination on the resources allotment. The role-played by AIS enhanced the administrations ‘ accounting maps, and add information value. The machine-controlled AIS velocity up the procedure to bring forth fiscal statements and overcome human failings in information processing. The system enhances direction of resources and the procedure of monitoring, control and anticipation of concern for better hereafter.Similarly, daily operations directors demand a broad scope of fiscal and non-financial public presentation steps. Therefore, if an AIS is traveling to let today ‘s comptrollers to supply the information concern determination shapers need, it should run into the undermentioned definition:“ An accounting information system is one that captures, shops, manipulates, and nowadayss informations about an organisation ‘s value-adding activities to help determination shapers in planning, monitoring, and commanding the organisation.

” ( Julie S. D. et al. , 1998 )This definition surely includes fiscal accounting systems, which have the primary intent of bring forthing fiscal statements in conformity with Generally Accepted Accounting Principles. However, this definition recognizes that concerns must execute a broad scope of value-adding activities ( such as production, distribution, gross revenues, etc.

) to be successful, and that the types of information needed to pull off such activities will be extended. Therefore, the range of corporate systems that are included under the AIS umbrella is much broader than the general leger system and the plans that prepare journal entries to feed it.

Understanding of how AISs may be affected by the execution of a full ERP system Identification of major deductions for AISs

ERP system alteration the fiscal accounting environment significantly as the procedures used to enter, integrate and administer such information all drastically alteration.

The recording procedure for minutess can normally be traced back to such persons as an assembly worker on an assembly line, a depot worker at a having port, or tellers scanning a saloon codification that capture the informations and trip the update procedures that form the basic fiscal accounting records. Likewise, comptrollers would no longer necessitate to build the fiscal statements, as the processs would be encoded into the ERP system in order to automatically bring forth the fiscal statements and do them available to determination shapers. Besides, the procedure for doing shuting entries and shuting out the books at the terminal of the fiscal period is going of all time more machine-controlled ( Sutton 2000, cited Steve G. , 2006 ) .Steve G.

( 2006 ) further expressed that the function of managerial comptrollers as the generators of cost studies is withdrawing in value hastily as the study coevals is automatable and there is small value in worlds making such work. Likewise, the function of the direction comptroller adds value in being able to sift through the huge information warehouses of information in order to understand forms and alterations that consequence the organisation ‘s efficiency, effectivity, and accomplishment of operational and strategic ends.The fact that direction accounting tools included in ERP system, such as budgeting and prediction do non offer such user-friendly functionality as the most sophisticated accounting package may do comptrollers confused every bit good as they concerned minor alteration ( Markus and Teemu 2002 cited Sami A. , 2005 ) , the ERP system automate and standardise existing conventional patterns within bing constructions may be secondary effecting.

However, to the full integrated prostration traditional impressions of clip and new systems were created and reproduced by conventional accounting systems, be givening organisations with less clear functional, destroyed boundaries and incorporate cardinal databases may make direction of information that needed ( Dr Paolo and Trevor 2003 cited Sami A. , 2005 ) every bit good as one individual can happen in accounting system from bookkeeping to develop several studies that are needed ( Markus and Teemu 2002 cited Sami A. , 2005 ) under this statement the alteration into direction accounting comes through a changed direction pattern and alterations in concern procedures, whereby caused by ERP system execution ( Sami A. , 2005 ) .


The universe of finance and accounting is radically altering, such as convergence of accounting criterions and greater outlook for transparence. One must be truly accurate with every determination and efficient, while following with regulative demands. In the organisation everyone needs entryway to the right information at the right clip in order to accomplish a competitory border and do certain better control of concern operations.