Enterprise Resource Planning (ERP) software can be defined as customizable, standard application software which includes integrated business solutions for the core processes
(e. g. production planning and control, warehouse management) and the main administrative functions ( e. g. accounting, human resource management) of an enterprise.
In order to configure and use ERP software efficiently, components like implementation tools (procedure model, reference information models, customizing guidelines, project management software), workflow functionality, tools for the development of add-on modules and system administration, and office suites are usually embedded.
ERP software, which also includes integrated solutions for the management of transactions with business partners, especially Supply Chain Management and Customer Relationship Management, is called extended ERP software. Currently, the main ERP vendors are Microsoft Dynamics, SAP and Oracle Applications.
The above pragraph proves that more and more business units are acknowledging ERP as a strength. But before this strength becomes a habit, how do we measure and monitor ERP interms of its efficient implementation as well as a balanced approach to undertake that!
This is where an independent agenda of Balance Scorecard comes into action, which is initiating its effort in strategising ERP implementation with a balanced approach. Besides the traditional financial measures, the Balanced Scorecard accounts for a wider range of ERP effects (Martinsons
et al. 1999) as it consists of four perspectives:
financial, internal processes, customer, and innovation and learning.
Thus, it also includes non-financial and less tangible aspects such as implementation and response time or the degree of ERP-supported business functions. Each of the four perspectives includes various key indicators. The different indicators are linked according to cause-effect relationships.
The assumption is that the Balanced Scorecard addresses exactly two main tasks of ERP management.
First, the Balanced Scorecard helps to transfer visions into strategies and in the final phase into a running business which conforms to the business objectives. This is of high importance for the process of migrating from the business strategy into an ERP strategy and finally in the product specific approach for the selected ERP software.
Second, the optimization of the usage of the ERP software requires continuous controlling of the system usage. It should be stressed that this approach is not a typical Balanced Scorecard application. More often the Balanced Scorecard evaluates the performance of an enterprise or a department.
Later in the next update on the balance scorecard procedure,We would like to update you on finer features of the application...
Write to us back on similar ... policing applications on ERP which could be used to keep a WATCH on effective usage of ERP.