Define Enterprise Resources Planning System (Er Ps). Critically Evaluate The Statement " Erps Are Useful For Management Accouting And Enhance Decision Making".

2683 words - 11 pages

Executive Summary:Enterprise resources Planning (ERP) systems have become a vital component of successful businesses and organizations. Although ERP systems are difficult to implement and use properly and effectively, they still provide significant benefits to all kinds of businesses since they have the ability to centralize corporate data and improve the efficiency and effectiveness of their business processes and managerial decision-making. The ERP systems are part of the management accounting system (MAS); it could strengthen an organization's competitive positions in a rapidly changing marketplace. However, since the ERP systems are not perfect, the MAS has to be tailored to the internal and external environment of the organization simultaneously. This essay briefly defines the ERP systems and describes their benefits and drawbacks. It then identifies the relationship between MAS and ERP systems. Finally, it discusses whether the organisation being designed around the MAS or the MAS being tailored to the internal and external environment of the organisation.Introduction:Over the last decade, Enterprise resources planning (ERP) systems have emerged as an essential tool so as to obtain the competitive advantage for most businesses. ERP systems are defined as management information systems (MIS) that integrate primary business applications, including all areas and levels of an organisation. (Wikipedia). Typically, ERP systems consist of applications for accounting and controlling, quality management, production and materials management, sales and distribution, project management and hunman resources. (Loadstone, 2003). MAS is a system of measuring and providing operational and financial information. ERPS and MAS are interrelated and have a close relationship. As "ERP is at its essence a data management tool"( Schuster & Brock, 2004, p.2) therefore, it can be said that ERP is a tool of MAS in order to give businesses a competitive advantage.The implememtation cycle of an ERP system is about organisational change.It is a multi-disciplinary effort and characterized as a complexity, uncertainty and a long time scale.(Harwood, 2003, p.1). The cost and time are very imporatnt issues for an organisation to consider when implementaing an ERP system.( Granlund and Malmi, 2002, p.304). However, a proper implementation of the system may provide many benefits, depending on the organisation integrating the system with its own business processes.An ERP system has many advantages in helping organisational management accounting systems. It integrates all parts of an organisation's management processes and each application within an ERP system shares a common set of data and files that is stored in a central database. (Olson, 2004, p.4). Concequently, it may increase the competence and accruracy of the data so as to provide better financial perofrmance and enhance competitive position.(Hayes, Hunton and Reck, 2001). In addition, an ERP system can increase...

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