What is an ERP system?

Discuss about the Importance of ERP System for an Organization.

Enterprise resource planning increases the efficiency of the overall organization by integrating different business processes. It integrates the applications through which the organization collects, stores, and manages the data collected through different mediums. The ERP software integrates and continuously updates core business processes by developing and maintaining a common database.

The ERP system keeps a record of the major business resources such as purchase orders and payrolls. The data stored in the system is shared across various departments. The ERP system facilitates the information flow between different departments and manages the information flow to the external stakeholders (Ram, Wu & Tagg, 2014). Currently, most of the large business organizations are using ERP system due to its immense benefits. There are several characteristics of the ERP system such as it is an integrated system, operates in real time, it develops a common database to support all the system and integrate the application with the data. There are several functional areas of the ERP system such as finance accounting, human resources, manufacturing, supply chain management and, customer relationship management. In the present case, a not-for-profit organization, Chris and Patricia’s legal support is planning to implement an ERP system in the organization to increase organizational efficiency (Sun, Ni, & Lam, 2015).

The organization was founded by Chris, a retired High Court Judge and his daughter. He was awarded for providing legal support to the local community. The cost associated with providing free advice is compensated by the donation made by the local donors. Several people from the major cities of Australia, such as Melbourne, Sydney, and Brisbane contacted for the assistance in the legal services. Currently, the organization has the strength of 30 lawyers and 18 administrative staff. All the staff members are willing to offer services to the needy people. The company has recently acquires the donation of $100,000 as a lump sum amount and $25,000 each year for the next 10 years. The company also has 50 volunteers, who work at the three branch offices and manage the books and records of the organization. However, with the increase in the size of the organization, the company is finding difficult to manage the records of the organization.

In the present case, ERP system can be used to record the details of the client and the services offered to them. A computerized system will help the organization in recording the transactions and generating reports for the various services offered to the lawyers. It can also be used to analyze the data such as peak time, pending cases, list of clients, and the contact details of the lawyers and the clients. In this regard, the present report sheds light in the importance of ERP system for the organizational change (Bintoro, Simatupang, Putro, & Hermawan, 2015). It also provides rationale for the need of change in the organization, different business processes, various considerations in the successful implementation of the project and the positive management of change within the organization.

Benefits of ERP system implementation in non-profit legal organizations

There are several reasons, which cause organization change within the business organization, such as crisis, performance gaps, new technology, and identification of new opportunities. The external crisis or events can drive the need of change within the organization. The performance gaps are another major issue, which motivates the business organizations in implementing change within the organization. If the current processes and operations are unable to achieve the goals and objectives of the organization, the organization needs to implement change within the organization. Other than that, the introduction of new technology can make the business processes more efficient and economic. Introducing change within the organization can also assist the organization to increase its competitiveness. Structural change is another challenge, which motivates the organization to implement change. The management of the organization can change the manner in which they organize the business (Saez, 2017).

In the present times, most of the large and medium business organizations are using ERP system to manage the information flow within the organization. It is an efficient and competent method to manage the flow of information within various departments of the organization. It is difficult to collect all the information generated within the organization and manage the information flow within the organization (Hsu, Yen & Chung, 2015). In CPLS, the organization needs to records the details of all the lawyers, their advice to the clients, their past cases and proficiency, and the information related to the clients. Precisely, the company wants to record the details of lawyers, their names, addresses and the bar councils where they have registered. It is quite difficult to manage all this information on the manual records. The founders of the company are also finding it challenging to manage the records in a reliable manner.

It can be perceived that the current practices of the organization to keep a manual record of the clients and the lawyer data is inefficient to manage the operations of the organization. Other than that, the organization is wasting several resources (administrative staff) to keep and record the data. It can be efficiently managed by implementing the computerized system. The organization will be able to manage the overall system with the significantly limited amount of resources.

The current business processes of the organization are manual. The organization has recruited 18 administrative staff for the clerical work, recording, and maintaining the data. The organization has 30 lawyers who have different proficiency, and are registered at different bar councils. The organization has to record data pertaining to different lawyer, such as their contact information, their registration number, their registration to one or multiple bar councils and past cases. Other than that, they also have to record the data related to the pending cases, new cases or applications filed (Sun, Ni & Lam, 2015). The recording of the customer data is also important for the organization. There are several administrative staff members, who collect and maintain this data. Currently, one of the staff member conducts the process of filing, another assistant places the files, and records at a safe location and other staff members verifies whether the information filed is correct.

Case study: Chris and Patricia’s legal support

All these processes invest the resources of the organization in a significant manner. Although there are significant donors, who support the operations of the organization, the finances of the organization are quite limited. Therefore, it is important that the organization implement a computerized system, which collects, and record all the pertaining information is a cost-effective manner. An ERP system can assist the organization in developing such a system. The ERP system will be implemented on the best practices, which means that it is designed as per the interpretation of the vendor to perform the business processes in the best manner. The ERP data connects the real-time data and the transaction data in several manners (Tarhini, Ammar & Tarhini, 2015). The ERP system also integrates the data between different departments or sources. In the current system, the company needs to implement a system for managing different operations. It is a single platform, which supports the growth of the organization by supporting different functionalities, which are required by the business organization. There are several functionalities requires such as financial management, HR, time, budgeting, billing, and expense management. As a result, the company eliminates the requirement to deploy different business system required for different tasks of the organization. However, the integration of the system is a challenge, which increases the cost of technology (Harwood, 2017). The organization need to conduct compatibility check and upgrades the system, which creates a seamless organization environment. The implementation of the system will eliminate the cost of system license, maintenance and the support cost of multiple solutions.

The ERP has a business rationale, as the law firms not only provide professional services but they need to manage different activities in a limited budget. With the limited budget, the organization has to assure that all the operations are conducted with the highest level of efficiency. The ERP system makes the change so that it can address the cause and increase the agility of the system. The business management system offers several capabilities, which are based on the best-adopted practices in the industry. These practices can be used to increase the efficiency of the firm to deliver according to the customer needs and marketplace requirements. The ERP system is suggested as per strategic goals of the organization such as increase in revenue, intervention to new market, increasing efficiency, and reducing the overall cost to the organization (Phillips, 2015).

With an ERP system, the organization will only require one or two personnel to manage the system. It can reduce the human resource requirements and the organization can spend these resources in other system or approaches. The lawyers can themselves feed all the personal information. The information related to the case and the customers can be stored by appointed personnel. In the implementation of ERP system, the organization will need service personnel, who maintain the services of the organization.

Organizational change for successful ERP implementation

The business process management (BPM) is a part of the operations management in which various methods are used to identify, model, enhances, and automate different processes for the business operations. Business process management enhances the performance of the business organization by managing all the business processes in an integrated manner. In BPM (Business process management), different business processes are considered as an important asset which should be improvised to enhance the efficiency of the organization. There can be different categories of business processes. They can be structured, repeated, or variable.

In this approach, the focus is on the business processes, in which they should be comprehended, managed, and developed to deliver high value product to the customers. It is similar to total quality management and this approach should be supported through technology. In this management discipline, the business processes are categorized into design, modeling, execution, monitoring, and optimization. In the process design, the existing processes are changed or adapted so that they can be optimized. The process flow should be properly represented; there should be enough alerts and notifications, operating procedures and service level agreements. The overall aim of this phase is to develop a correct and efficient process design (Pelphrey, 2015). The processes can be between human-to-human, system-to-system, or human-to-system. The modelling develops the theoretical design with consideration to different variables. The business process execution refers to the execution of different business processes manually or automatically. In monitoring, the system keeps track of different business processes so that the information can be filled in transparent manner. The performance of all the business processes can be evaluated. The information stored in the system can be used by the customers as well as the suppliers so that the connected processes can be improved. The extent of information monitoring depends on the evaluation of the business objectives and the goal of the system designing.

The business process reengineering is used when the processes are quite complex and inefficient. It is used when the business process optimization is not achieved and the current processes are not yielding the desired output.

In the current organization, the recording and the maintenance of employee (volunteer) data and the customer data is the most significant business process. Currently, all the data handling is done manually which increases the resource consumption in the organization. The organization currently has 18 personnel to handle the administrative tasks and the operations of the organization. The current process is time-consuming and waste resources in abundance. However, the re-engineering process is used by the organizations to increase the efficiency and the productivity at the work (Kapp, Latham, & Ford-Latham, 2016). In the present, the organization should focus on developing the operational intelligence (OI) solutions to develop operational intelligence, which delivers accurate and real-time information.

Different business processes under ERP system

In order to optimize the current processes, the organization should implement cloud-computing based ERP system. As the size of the organization is small, it does not require to design or buy a database. It can rent a cloud-computing based ERP system to reduce the overall expenditure. The organization avail the services of various cloud-service providers, which can reduce the operational cost drastically. The cloud system will be used to save the data in the database. The ERP system will collect different aspects of organization management; it includes finances, human resources, and customer relationship management in each of the different departments of the organization. Specific personnel will be appointed who will enter the information into the system (Atkinson, 2013). The ERP system will streamline the operations of the different departments of the organization. The employees of one department can access the information of other department in case they need it. For instance, the accounts manager can access the monthly compensation or remuneration before finalizing then monthly pay of an employee.

The lawyers can also access the portal to analyze the pending cases and proficiency of other lawyers. The lawyers will be able to ask the assistance of other lawyers, if they are finding difficulty in the present case.

The change management is the process of managing the process of change within the organization. In the change process, there are several resistances to the successful implementation. The moat significant and the primary barrier is the resistance posed by the human resources of the organization. People resist change as it disturbs their comfort level. The employees have to learn new skills and new technology. Moreover, they are also afraid of what lies in future. It can be critiqued that it is important for the management of the organization to implement strategies for managing change within the organization.

The management should develop a communication plan, which fosters positive feeling towards the change. In this regard, the organization should develop a communication plan, which states the requirement of the change process and how it is going to benefit in the future. The employees or the volunteers should be clearly communicated that the change will increase the convenience of the employees and they can conduct their work efficiently (Reiss, 2012). Other than that, the organization should also initiate training process so that the employees can easily operate the new system.

The ERP management system is an expensive system; therefore, it is important that the organization should successfully implement the system in the organization. In the present section, a few recommendations are made for the successful implementation of the project:

• Attaining Upper Management Support:

Considerations for positive change management

It is important to attain the support of upper management for the successful implementation. Although information about detailed configuration is not important; however, they should be aware of the changes and financial planning. It will be beneficial in release of monetary funds.

• Compact/ Pre-configured Solutions:

Several ERP vendors provide pre-configured products to SMEs and other companies, which has every other requirements. The companies can run integrated key processes. These pre-configured ERP systems are designed specifically for different industries. The developments of such systems are easy; therefore, they can be easily used by the company.

• Hosting Options

The ERP vendor offers different hosting options to SMEs and companies. The companies are offered provision of building and maintaining infrastructure to run the system. However, the software cost is a major component of the total investment. The company can save the cost by using cloud services as the hosting option. The vendors provide all the services, including infrastructure, hardware, software, and resources. The company can also demand additional functionalities, which depends on innovative business functions. However, the system should be analyzed if it is compatible with the allied products and system of the organization (Venkatraman & Fahd, 2016).

• ERP Consultation Process

In the ERP implementation, the consultation process takes before and after the implementation of the system. The ERP consultation should be fcussd on communication effectiveness. Ineffective communication results in lacking understanding of user’s needs, goals, and aspiration, which undermines implementation of the ERP system. The implementation of the ERP system is time-consuming which can create conflicts between the users. The effective management of conflicts is important for the long-lasting collaboration between the users. In the successful implementation of ERP system, there should be seamless and proper information flow between the vendors and the consultants. With the increased level of knowledge, the companies can exploit new technology and use the system to the full potential (Maditinos, Chatzoudes, & Tsairidis, 2010).

Conclusion

CPLS (Chris and Patricia Legal Services) is not-for-profit legal services. Through word of mouth, the organization has expanded its services to the major cities of Australia. The company has increased its operations and over the years, recruited various lawyers from various specialty to provide services to the customers or the clients. The clients of the company are poor people who are not able to afford legal services of the country. With the increase in operations, the company as recruited over 30 lawyers and 18 administrative staff members. It has increased the human resource expenditure of the organization. The company can implement the efficiency of the organization and reduce its expenditure on the human resource by implementing an ERP system (Grabot, Mayere, & Bazet, 2008). It is an integrated application, which streamlines the operations of various departments. It uses a common database and all the sections of the organization it for the management of information. In large or medium-sized organizations, ERP system is very important for the seamless flow of information between various departments.

The company can use a cloud-based ERP system for increasing its efficiency. Personnel will be required from each department to enter the information into the system. Other than that, cloud-based services will reduce the cost to the organization. The organization will only pay a rent for the hosting requirement and will not need to implement additional infrastructure for the services. It will also need to implement training services for the users so that they can easily adopt the system. Once the system is installed, the users will easily operate it. It is important that before the designing of the system, the vendor conduct a need analysis, in which the needs of the organization is identified.

References

Saez, A. (2017). What Are the Causes of Change in an Organization? Biz fluent. [Online]. Available at: https://bizfluent.com/info-8230942-causes-change-organization.html [Accessed on: 13 January 2017].

Phillips, G. (2015). ERP mustn’t be seen as a PMS swap out in the legal sector. Legal IT Professionals. [Online]. Available at: https://www.legalitprofessionals.com/legal-it-columns/7592-erp-mustn-t-be-seen-as-a-pms-swap-out-in-the-legal-sector [Accessed on: 13 January 2017].

Maditinos, D., Chatzoudes, D., & Tsairidis, C. (2010). Factors affecting ERP system implementation effectiveness. JEIM, 25(1), pp. 60-78.

Venkatraman, S., & Fahd, K. (2016). Challenges and Success Factors of ERP Systems in Australian SMEs. Systems 4(20)