Sap Research Paper

Fundamentals of SAP

Research Paper

I. WHAT IS ERP?

There is a desire for companies to expand into more markets, to be competitive in their respective industries, and to increase revenue and profits. With economic globalization, accessibility information on a real time basis, and growing businesses in size and reach into different markets, there is a need from companies for easy access to important internal and external management information that allows users to view manufacturing, sales, accounting, etc. information all in one place. As the number of requirements for expanding businesses increase, the need for ERP systems also grows accordingly. Enterprise Resource Planning (ERP) systems are software applications that fulfill all of these needs for big companies and satisfy a myriad of requirements. By definition, an ERP system is “an advanced modern complex technology that integrates and co-ordinates almost all functional areas in the modern organization (Kholeif, Abdel-Kader, Sherer 2008).” One study found that more than 60% of Fortune 500 companies had been using an ERP system (Ferran, Salim 2008), and since then, with the impending global recession, there has been a fluctuation in the growth of ERP systems. It is clear that a system such as this is important to firms. They serve huge advantages for both large organizations that manufacture, process, distribute, and deliver items worldwide as well as small and medium sized enterprises (SMEs) that are inevitably part of a larger global supply chain, but also have a few shortcomings as well.

II. ERP: ADVANTAGES & DISADVANTAGES

There is an obvious need for ERP systems by organizations of all sizes, and with that said, there are also both advantages and disadvantages as well. For one, transaction and internal costs are reduced by the use of effective information systems. This system reduces operational costs such as production and inventory costs. For example, when it comes to order...