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Implementing Enterprise Resource Planning (ERP)

Updated on July 6, 2016

Introduction

Managerial Accounting is a discipline that entails the provision of useful information to internal management to facilitate rational decision-making. These are personnel involved in the day-to-day running of the business. Managerial accounting aims at supplying internal managers with relevant financial information, unlike financial accounting that provides external users with similar information to permit the judgment.

ERP; organizational strategies

Source

Information that is obtained by managerial accountants comprise of:

• Cost data for the entire business goods and services. This information is significant to the management, as it becomes the benchmark for evaluating and setting prices of products.

• Financial budgets, they show the financial plan of the entity over a particular period.

• Production summaries; these contain lists that compare budgets and the actual cost of production incurred by the entity. They also summarize the variances between the estimated costs and the actual cost.

• Revenue information; this information helps managers make decisions about the next period incomes and sales volumes.

• Demand and supply data; this helps the management in assessing whether they satisfy the market needs entirely. In management accounting, this type of information is used to plan and control the activities of the enterprise. Businesses are accustomed to the traditional managerial system in an attempt to gauge the overall efficiency of internal operations. However, in the last years, there have been many developments in these accounting policies.

Forms and launch of ERP

The new forms include balanced scorecard ABC costing. For instance, many businesses adopt ABC technique as it is useful in pinpointing the cost drivers of a company. On the other hand, the scorecard method is unable to isolate the bottlenecks causing deviations between the budgeted and the actual sales. With a good accounting system, the decision makers can identify areas of internal weaknesses as well as loss through such loopholes.

The launch of Enterprise Resource Planning (ERP) renewed a flaming issue among businesses. The reason behind the conflicts is the gap that remains unfilled by the ideologies developed by ERP dealers with exact and concrete requirements of a company. According to Marquit (2015), results from previous researchers show that at least twenty-five percent of ERP implementations miscarry while at most eighty percent overrides the budget. As ERP vendors struggle to deploy and maintain their customers, ERP specialists copy their model strategies. As a result, it is important to consider relearning to make sure that ERPs are practical in businesses.

Proper planning

This is achieved during the analysis and planning stage. In ERP, planning and analysis are the fundamental elements because they pinpoint the business needs. It also defines a hypothesis of the expected solutions. According to Marquit (2015), there are no standard techniques for planning, but consultants can provide some help in the implementation stage. Caution is observed at this point because the implementation of an ERP resolution is an expensive task. A lot of money, time, and energy is required during the process. To reduce these costs, all employees ought to work as a team. The duration of implementation is influenced by many factors such as business size, and the scope of process changes. However, the longer the planning phases, the higher the chances of succeeding in implementation.

Formulating a rational solution

A perfect ERP model becomes the basis for one’s business and it can be customized to fit personal desires. This stage requires a maximum commitment to draft feasible business solutions. Besides, it requires a dynamic team, for example, when there is a boom the team should respond to the change swiftly. It is worth noting that poor scaling of an ERP might cost your business a lot of money.

Smartness in Maintenance and Lifecycle Management

To complete the project, the ERP should be treated as a living thing. Besides, attention must be devoted to the project. It should often be upgraded to ensure it is up to time. Management of the project lifecycle is essential in this issue since it is expected that the ERP will evolve simultaneously with the business. To facilitate implementation, the team should always be conscious. The program needs to be updated now and then, especially when switching to a different line of production.

Differentiating between Outsourcing and In-House IT Department

It starts by defining the capabilities of your business. After that, it is good to determine whether there is an in-house department to oversee deployment and maintenance. If an in-house department is absent, organizations on how to outsource those services should be executed.

Finding the Right Tools

This project is customizable thus allows the management to plug in some components to increase usability and compatibility with other programs.

Conclusion

Sometimes the project may fail, therefore calling for a new solution. In the case of ERP solution failure, it is important to adopt an ERP that will boost growth and simplicity. Coming up with the right ERP strategy may take some significant time. Therefore, the management should ensure that all shareholders are included in the decision-making process. An active cooperation of both parties provides that a concrete solution is achieved that pushes the business to a higher level. Managerial accounts should ensure that all the necessary procedures are adopted in the planning, formulation of strategies and implementation of the projects. By doing this, there will be some degree of confidence about the success of the projects ongoing.

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