Essay Example: Enterprise Resource Planning Risk Mitigation

Enterprise Resource Planning is an advanced technological program installed by an organization to give them a competitive advantage over others. The system does this by performing the following functions to an organization; process automation in that the organization does not use manual processes to complete a task. It also offers enterprise analytics that allows the top management to monitor the financial progress of the organization. Also, the system also provides an integrated customer relationship management that enables the organization to meet customer needs and help in the acquisition of new customers (Gupta and Kohli, 2006). There is also a new function of risk management which is known as a risk assessment framework that enables the organization to be successful in implementing the system. Risk assessment framework aid the organization to identify and aid in mitigating the risks identified.

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Enterprise resource planning helps the organization to identify and mitigate risks. The risk factors which the organization is faced with include: controlling of who has access to the information of the organization. The organization is also met with the risk of financial management in the organization to reduce misuse of funds in the organization. Regulatory compliance is also a risk factor that many organization faces and end up being fined or charged extra than required. The organization is also exposed to the risk of natural disasters which come unplanned and cause significant loss to the organization. All these risk factors need the organization to implement a successful enterprise resource plan system to help in addressing the risks (Bradford & Florin, 2003). The organization is also faced with risk factors when implementing the enterprise resource planning system which includes: training of organization personnel on how to use the system. Technological obsolescence also causes risk in the system. Outsourcing during the development requires the organization employees to learn the new skills hence posing as risk. However, the implementation of the enterprise system to the organization serves a higher purpose compared to when the organization does not have the operation.

The enterprise resource planning system helps the organization to address the risk of unauthorized access to the organization information. The system does this by using applications such as exact macula that allows the organization management to control who has access to what kind of information in the organization. The use of passwords and usernames helps the organization management to ensure that only authorized personnel access information and also tracking who accessed the system at what time and what they did. Other than securing information the system also provides that the organization has a good records management system and reduces the chances of human error in the transaction. The system performs automated inventory and order management that enables the orders to be automatically entered into the organization, and there is no need for manual paper works in the organization.

Using cloud computing technology the enterprise system enables the organization to manage the risk of natural disasters. It ensures that even though the organization physical structures are destroyed the organization information are kept securely in a different location. The cloud also enables the organization to successfully manage the supply chain which is usually a tiresome task in the organization. The organization can conduct information sharing with the participants of the supply chain of the organization; whereby the suppliers can be alerted early when a massive demand is needed and help in quick delivery and enhancing customer satisfaction in the process (Saini et al. 2011).

Compliance management by the ERP system enables the organization to be in line with the regulatory requirements in the industry. The system does this by ensuring that the general organization processes are ISO certified to provide that the service or product is of the required quality. Enterprise resource planning system conducts the monitoring of organizational processes to ensure that they conform to the regulatory requirements of the industry and the government at large. By providing that the organization is compliant, it enables the organization to evade unnecessary fines and fees which in the long run boost the reputation of the organization.

Enterprise resource planning aids the financial management of the organization. Through the use of the automated record system, the organization can evade embezzlement and fraud activities. The system also enables the organization to use demand driven material requirement planning and hence allows the organization to know what to demand and manage their stock well (Kurbel, 2016). ERP provides a platform for the suppliers and the organization for negotiating freely. It further enables the organization to track the progress of suppliers and know who to retain and who to exit; this is possible since it gives insight information on all the participants of the supply chain and gives early warning in case of disruption.

Poor decision making is the highest risk in any enterprise, using ERP organization can make right decisions. It provides the organization with the information that is trustworthy and free of biases since the information provided is obtained from the accumulated knowledge throughout the processes (Moon, 2007). ERP system enables the organization to track the performances and know the areas that require change and the areas which the organization is doing well. Since the system integrates all components of the organization into one, it is easy for the organization to access all information in one place. The use of business intelligence in the ERP helps in forecasting of the future scenario in the organization which in turn helps in the decision-making process.

References

Bradford, M., & Florin, J. (2003). Examining the role of innovation diffusion factors on the implementation success of enterprise resource planning systems. International journal of accounting information systems, 4(3), 205-225.

Gupta, M., & Kohli, A. (2006). Enterprise resource planning systems and its implications for operations function. Technovation, 26(5-6), 687-696.

Kurbel, K. E. (2016). Enterprise resource planning and supply chain management. SPRINGER-VERLAG BERLIN AN.

Moon, Y. B. (2007). Enterprise Resource Planning (ERP): a review of the literature. International journal of management and enterprise development, 4(3), 235-264.

Saini, S. L., Saini, D. K., Yousif, J. H., & Khandage, S. V. (2011, July). Cloud computing and enterprise resource planning systems. In Proceedings of the world Congress on Engineering (Vol. 1, pp. 681-684).