Enterprise Resource Planning software is the best of the
best technology that can be implemented for firms nowadays wanting to have
their business events and information standardized. That should not and will
not be breaking news to anyone; but is it possible for that software to become
obsolete in the near future?If asked to anyone business savvy, you may get a chuckle or a discerning stare if you bring up a topic like this because it seems to be unfathomable due to its capabilities and the most-advancement ERP systems’ peaking performance. But everything must come to an end and meet its match, right? For example, Wells Fargo had complete belief that Pony Express would be the future of the secure mailing service, but they nearly lost everything when domestic travel improved with motorized vehicles, so ERP systems have the chance to “meet its maker” too, right?
According the University of Maryland’s BMGT326 Accounting Systems Professor, Jodell Johnson CPA, she sees no foreseeable
demise of the software, but only the possibility that one system becomes
obsolete over another due to un-updated software changes. But can standardization
be a setback for a firm at today’s competitive level? With her expertise in the
information system and accounting field, Professor Johnson confirms there is a particular circumstance where it can be a nuisance, and is also able to weigh in
upon other concerns as well.
Professor Johnson
exclaims firms cannot become too standardize, only too automated
With a primary role of standardizing all the information
a firm receives, or in other words placing in the same database to be sorted
for the different modules, ERP systems give firms that opportunity to avoid
data repetitiveness and potential data inaccuracies. However, everything has
its drawbacks. Professor Johnson believes that it is possible for a firm to become too standardized and lose some of its competitive edge,
but only through complete reliance on the technology. “Taking the human thought
process out of it” is the culprit, says Professor Johnson, and should be avoid
for optimization of the software.
Consistency is the goal when ERP systems are implemented,
but there is a place for human analysis alongside this. Computers cannot accurately determine whether certain activity like determine whether a restock of inventory is necessary because current demand trends are not a readily available data input for ERP systems. They simply can’t analyze to that extent just yet, and Professor Johnson says that it’s necessary for the two
to work hand-in-hand, where optimization is impossible without this
relationship. Regardless of whether this relationship is implemented or not,
the value of ERP systems as a whole is highly recognizable; but this value
is not the same for each individual, obsolete systems, however.
Individual ERP
systems need upgrades, like all advanced technology eventually does
As inferred in the brief clip above, Professor Johnson
sees the positives of ERP systems, but also includes a potential flaw that may arise in relying upon the software
too much. Computers doing all the work may seem very appeasing at first, but it
is this laziness that can cause your business to be operating below its true
potential. On the same note, ERP systems may become a lightning rod for
internal issues if the system is outdated as well, as to be expected. Apple
provides one of the most sophisticated software for organizing and purchasing
digital music with iTunes, but it did not achieve this status through its first edition
of the software. It is constantly updated, bugs are fixed, and code is
rewritten to address the previous issues to make the product better, and ERP
systems are no different.
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| Bar graph displaying the prevalence of each firms' response as to why they replaced their ERP system |
Knowing when to upgrade an ERP system may be on an
arbitrary timeline, but it is something a competitive firm must do to keep up
with the latest, more optimizing software/systems. The bar graph here displays
the statistics for the various reasons as to why firms choose to change ERP
systems, based on a 2011 ERP Solution study done by Mint Jutras.
Note that firms were able to provide more than one reason in the poll, and the data shown is the prevalence of each motive for each individual firm (i.e. 51% of the firms stated that “seeking more functionality” was the main focus for replacing their current ERP system, while an inclusive 44% said “outdated technology”).
Note that firms were able to provide more than one reason in the poll, and the data shown is the prevalence of each motive for each individual firm (i.e. 51% of the firms stated that “seeking more functionality” was the main focus for replacing their current ERP system, while an inclusive 44% said “outdated technology”).
Due to constant anxiety to be as updated as possible, this
aspect of ERP systems seems to be another dissuading factor as to why a firm
should have an ERP system, when the negative effects of relying heavily on the
ERP software is considered. Thus, why not do away with the system entirely to
save time updating the software and money by saving the often-large sums of
money spent on the ERP system?
Accounting Systems
Professor cements that ERP systems are absolutely necessary due to timeliness
of documentation
Although it’s settled that standardization is necessary
for firms to become the best they can be, if automation is at a reasonable
amount, and that updates on the software are paramount to optimum
competitiveness, this does not give conclusive information that ERP systems are absolutely necessary to do this standardization for us. Professor Johnson says it herself:
“companies get into trouble when they automate too much, and take the human
aspect out,” so why can’t we just “crunch the numbers” ourselves to optimize the
human aspect?
In a later interview, Professor Johnson highlights that this would be an unwise choice to make due to the amount of time it would take for us to document simple business activity by switching back to paper documents and handwriting everything. She explains that ERP systems inject a timeliness aspect into our day-to-day operations, and without it, we would return back to a time where information is no longer instantaneous (ergo, a regression of business operations).
In a later interview, Professor Johnson highlights that this would be an unwise choice to make due to the amount of time it would take for us to document simple business activity by switching back to paper documents and handwriting everything. She explains that ERP systems inject a timeliness aspect into our day-to-day operations, and without it, we would return back to a time where information is no longer instantaneous (ergo, a regression of business operations).
So what innovation will further improve the functionality of the ERP systems here to stay?
So it is surely affirmed that the systems are necessary
because how else will business activity truly progress if we are still
recording transactions and creating financial statements on paper? It’s a
digression of business, in short, and ERP systems’ long-run benefits heavily outweigh
the short-term negatives it presents. So the real question is: what’s the next
innovation that will increase ERP systems’ functionality? One innovation was suggested by Professor Johnson through the usage of data tags, such as those found in YouTube videos and Twitter
hash tags, which allows for increased ease of locating data. Although it is something brilliant and new, this is just an
idea in its most basic format. That’s the beauty, however. In the business world we live in
today, ERP systems can only prosper through improvement from here, so let the innovators rejoice at
the software’s firm grip on daily business operations.
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