CHAPTER 1

INTRODUCTION TO ERP

A whole organization's essential business activities can be integrated and managed with the help of
enterprise resource planning (ERP), a complete software system. It makes it possible for data to move
easily between several departments, including supply chain, production, finance, human resources, and
sales. Modules for accounting, inventory control, customer relationship management (CRM),
procurement, and production planning are commonly available in ERP systems. ERP facilitates
departmental collaboration, increases productivity, streamlines operations, and improves decision-
making by combining data and processes into a single platform.

An enterprise resource planning system can be compared to the glue that holds a huge organization's
disparate computer systems together. Without an ERP program, every department would have a system
that was tailored to perform particular duties. Each department still has its own system when using ERP
software, but all of the systems may be accessed from a single application via a single interface.

What Is the Function of ERP?

ERP programs facilitate easier information sharing and communication between the various
departments and the rest of the business. It gathers data regarding the operations and conditions of
several divisions and makes it accessible to other departments for beneficial use.

ERP programs combine data about production, finance, distribution, and human resources together,
which can help a company become more self-aware. An ERP solution can remove expensive duplication
and incompatible technology since it connects the many technologies utilized by each department of a
firm. Accounts payable, stock control, order tracking, and customer databases are frequently integrated
into a single system through this method.

How Does It Work?

Over time, ERP has changed from traditional software models that relied on manual entry processes and
physical client servers to cloud-based software that can be accessed remotely via the internet. The
platform's creator firm is often in charge of maintaining it, while client companies pay to use its services.

Companies choose which software to utilize. After that, the customer rents a server from the hosting
firm, and both parties start working to integrate the client's data and procedures into the platform. All
data is gathered on the server and made instantaneously accessible to anyone with authorization to
utilize it once all departments are integrated into the system. Metrics, graphs, and other visual aids that
a client may require to assess the performance of the company and its departments might be included
in reports.
OBJECTIVES OF THE STUDY:

1. To understand Enterprise Resource Planning in Organizational Planning

2. Identifying an Recommending how ERP will increase the efficiency of organization
3. Evaluate employee productivity will helps in Implementation of ERP.

To Understand Enterprise Resource planning in organizational performance:

 ERP (enterprise resource planning) systems are essential for improving company performance
since they offer the following major advantages:

Streamlined Processes: By connecting different departments and functions within an

organization, enterprise resource planning (ERP) solutions simplify business processes. This
integration eliminates manual labor, cuts down on duplication of effort, and boosts overall
operational effectiveness.

ERP systems ensure data integrity and consistency throughout the company by centralizing data
from several departments into a single database. Decision-making and reporting in real time are
made easier by this one data store.

Enhancement of Decision-Making: ERP systems give management fast access to precise and
current information, allowing them to make well-informed decisions. Organizations may
recognize patterns, predict customer needs, manage inventory levels, and react quickly to
shifting market conditions when real-time data is available.

 Enhanced Cooperation: By offering a single platform for information sharing and activity
coordination, ERP systems facilitate cooperation between several departments. Improved
teamwork, goal alignment, and communication are fostered throughout the organization via this
collaboration.

Effective Resource Allocation: By offering insights into resource consumption, capacity planning,
and demand forecasting, ERP systems assist businesses in effectively allocating their resources.
This optimization optimizes the utilization of available resources, minimizes waste, and lowers
expenses.

Customer Satisfaction: By expediting order processing, cutting lead times, and improving
product quality, ERP systems help businesses increase customer satisfaction. Organisations may
establish enduring relationships and satisfy customer expectations by optimising their product
and service delivery.
 Compliance and Risk Management: ERP systems assist businesses in efficiently managing
business risks and adhering to legal regulations. By lowering the possibility of non-compliance
and associated fines, these systems offer instruments for monitoring and enforcing compliance
with industry standards, legal requirements, and internal policies.

In conclusion, ERP systems improve organizational performance through data centralization,

 process optimization, decision-making facilitation, cooperation, resource allocation
optimization, improved customer satisfaction, and regulatory compliance. Organizations may
increase their productivity, flexibility, and competitiveness in the fast-paced corporate world of
today by utilizing ERP technology.

Importance of the study:

 The impact of Enterprise Resource Planning (ERP) systems on firms is broad and involves
different aspects of operations, management, and strategic decision-making, which makes them
important to research. There are a number of reasons why ERP system research is important:

Operational Efficiency: Organizations can increase productivity and efficiency by streamlining

their operations, getting rid of duplication, and making the most use of their resources by
knowing how ERP systems work and how they link various business processes.

Strategic Decision-Making: ERP systems offer analytical tools and real-time data insights that
facilitate well-informed decision-making at all organizational levels. Organizations may fully
utilize their data and analytics capabilities to make strategic decisions that propel growth and
competitiveness by studying ERP systems.

 Organizational Performance: By investigating ERP systems, businesses can assess how ERP
adoption and deployment affect a range of performance indicators, including market share,
customer happiness, cost savings, and revenue growth. Organizations may optimize the return
on their ERP investments by knowing the elements that lead to ERP success.

Corporate Behavior and Change Management: The implementation of ERP systems frequently
necessitates substantial adjustments to corporate procedures, culture, and staff positions.
Organizations can traverse the challenges of ERP implementation and acceptance by looking
into ERP systems, which can provide insight into organizational behavior patterns, successful
change management tactics, and resistance to change.

 Competitive Advantage: Organizations look for methods to set themselves apart and obtain a
competitive edge in the cutthroat business world of today. When implemented well, ERP
systems can give businesses a competitive edge by allowing them to innovate procedures, adapt
swiftly to changes in the market, and provide greater value to customers.

 Compliance and Risk Management: ERP systems are essential to an organization's ability to
manage risks, comply with regulations, and protect its data. Organizations can detect and
reduce possible risks related to data breaches, system failures, and non-compliance with
industry rules by studying ERP systems.

Strategic Alignment: ERP systems facilitate the alignment of different organizational divisions
and functions with the broader strategic aims and objectives of the company. Organizations can
 promote synergy and coherence throughout the company by ensuring that their ERP strategies
are in line with their larger business objectives by researching ERP solutions.

 Continuous Improvement: To keep up with evolving business requirements and technological

breakthroughs, ERP systems need to be optimized, updated, and improved continuously.
Investigating ERP systems can reveal best practices, new trends, and creative solutions that spur
innovation and continual development inside businesses.

Theorotical framework of ERP

 The Enterprise Resource Planning (ERP) theoretical framework incorporates multiple viewpoints
from the fields of management, information systems, and organizational behavior. An overview
of ERP's theoretical foundations is provided below:

Systems Theory: The theory of systems, which sees organizations as complex systems made up
of interconnected pieces, is the foundation upon which ERP systems function. The
interconnection of various organizational processes and functions is emphasized by systems
theory. ERP facilitates coordination and synergy throughout the business by acting as a tool for
managing and integrating various interrelated processes.

 The firm's resource-based view, or RBV: According to the RBV viewpoint, a company's distinct
resources and competencies are the source of its competitive advantage. Organizations can use
ERP systems as a strategic resource to increase their capacity for strategic alignment, effective
decision-making, and operational efficiency. Organizations can maximize resource allocation and
improve overall performance with ERP integration.

Information Systems (IS) Theory: The foundation of ERP systems is theory, which studies how
businesses use technology to accomplish their goals. Information systems' support and
enablement of organizational processes is emphasized by IS theory. ERP systems improve
organizational performance and efficiency by making it easier to gather, store, process, and
distribute information across multiple functional areas.

 Organizational Change Theory: Changing company processes, roles, and organizational

structures are only a few of the organizational changes that ERP installation frequently
demands. The theory of organizational change offers valuable perspectives on overseeing and
assisting with organizational changes. In order to overcome resistance, encourage user
adoption, and guarantee successful implementation, ERP projects need to employ efficient
change management techniques.

 Contingency Theory: According to this theory, organizational procedures have to be dependent

on the particular environment and context. Depending on the goals, industry, size, and culture
of the organization, different ERP deployment methodologies may be used. In order to enhance
success, Contingency Theory emphasizes how crucial it is to match ERP initiatives with
 organizational needs and contextual circumstances.

Business Process Reengineering (BPR): To increase productivity and effectiveness, ERP systems
frequently need reengineering or revamping business processes. The fundamental redesign of
processes is encouraged by BPR principles in order to get rid of inefficiencies and improve
performance. Organizations can embrace best practices backed by the ERP system, standardize
workflows, and streamline operations by implementing ERP.

Summary:

Through the integration of fundamental business processes, the simplification of operations, and the
provision of real-time data insights, enterprise resource planning (ERP) systems dramatically improve
organizational performance. ERPs promote productivity, cross-departmental cooperation, and cost
savings by automating processes, enhancing data accuracy, and facilitating improved decision-making.
They also guarantee compliance, enhance scalability, lower risks, and enable better customer service. In
the end, ERP systems enable businesses to grow sustainably, maximize resources, and adjust to change
in the fast-paced corporate world of today.
CHAPTER 2
Review of Literature:

1. Framework for Technology, Organization, and Environment (TOE):

Writers: Fleischer and Tornatzky

Justification The TOE framework looks at how organizational, technological, and environmental
aspects interact to affect how new technologies, like ERP systems, are adopted and used. To
understand why firms implement ERP systems and how they incorporate them into their
operations, it takes into account aspects including organizational capabilities, technological
preparedness, and external environmental factors.

2. Theory of Institutions:

Authors: DiMaggio and Powell

To comply with institutional norms, expectations, and demands, firms may use specific
practices, such as the use of ERP systems, according to institutional theory. ERP systems can be
adopted by organizations for a variety of reasons, including signaling legitimacy, gaining social
acceptance, and conforming to industry standards and expectations.

3. View Based on Resources (RBV):

Writers: Barney, Wernerfelt

Justification The RBV places a strong emphasis on how internal resources and competencies
contribute to competitive advantage. When it comes to ERP systems, businesses make use of
their own assets, including trained personnel, data infrastructure, and process expertise, to
successfully adopt and operate these systems. The significance of utilizing ERP systems to
improve organizational skills and strategic advantage is emphasized by the RBV perspective.

4. Theory of Diffusion of Innovations:

Authors: Everett Rogers

Justification: The Diffusion of Innovations hypothesis investigates how innovations—such as ERP

systems—proliferate and become ingrained in businesses and society. It analyzes elements that
affect the rate at which ERP systems are adopted and diffused throughout enterprises, including
perceived relative advantage, compatibility, complexity, trialability, and observability.
 5. Theory of Contingencies:

Authors: Woodward, Lawrence, and Lorsch

Justification According to contingency theory, how well an organization's features mesh with its
surroundings determines how effective its practices are, including the deployment of ERP. It
implies that enterprises must customize their ERP strategies to match their particular contexts,
structures, and needs, and that there is no one-size-fits-all method for implementing ERP.

5. Theory of Structure:

Authors: Anthony Giddens

Justification: Structuration theory studies the dynamic interactions that occur between people's
activities and the structures in which they are embedded. Within the framework of ERP systems,
structuration theory facilitates comprehension of how people's behaviors and interactions both
influence and are influenced by the structures inherent in ERP deployment procedures. It
highlights how human agency and social institutions interact recursively to shape ERP adoption
and usage in businesses.

6. Theory of Social Networks:

Writers: Burt Granovetter

Justification The linkages and exchanges between the participants in social networks are the
main focus of social network theory. Social network theory examines how social influence,
communication, and information sharing within organizational networks affect the uptake, use,
and dissemination of ERP technologies in the setting of ERP systems. It highlights how social
relationships, routes of communication, and network configurations influence ERP adoption
choices and results.

7. The Theory of Agency:

Authors: Jensen and Meckling

Justification The principal-agent connection between owners or shareholders (principals) and

managers (agents) of a company is the subject of agency theory. Agency theory examines how
the objectives, motivations, and interests of various stakeholders affect choices about ERP
adoption, deployment, and use in the setting of ERP systems. In order to optimize organizational
value from ERP investments, it tackles concerns about information asymmetry, conflicts of
interest, and processes for harmonizing stakeholder interests.
8. Theory of Adaptive Structuration:

Authors: DeSanctis and Poole

Justification Adaptive structuration theory makes use of information systems research and
structuration theory to comprehend how technology is adopted and used in organizations. It
looks at how people and organizations modify and repurpose technology-mediated structures—
like ERP systems—to suit their purposes and environments. The iterative and reflective
character of technology-mediated interactions is emphasized by adaptive structuration theory,
which also underlines the significance of continuous negotiation and modification in
determining ERP deployment and results.
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