Overview BrainFreeze (BFZ) is a boutique ice cream manufacturer. There are two operating entities within BrainFreeze: a shop-front (that sells ice cream to the general public) and an ice cream manufac

Enterprise Resource Planning System 7

ENTERPRISE RESOURCE PLANNING SYSTEM

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Introduction

The current state of the BFZ information system implies the dire need for an integrated information system to accommodate its growth needs for process automation and increased efficiency. Security of the current information system is also an issue of concern as the company IT technicians spend most of the time trying to resolve bugs within the system. Loss of company data to hackers would have adverse impacts on the company operations and even result in financial losses. Additionally, the lack of an integrated financial accounting system and marketing systems implies the inefficiency and challenges that the company is facing in ensuring that the products are able to reach the customers more efficiently. Identifying and implementing an Enterprise Resource Planning system is recommended to ensure automation of key distribution and manufacturing processes as well as the information security of the company systems. This proposal provides a justification for the implementation of an ERP system alongside its preferred hosting solution to meet the company needs. The justification is based on scalability and cost factors.

Importance of an ERP system.

1. Reduction in the IT costs – Implementing enterprise resource planning systems will significantly reduce the costs of managing different information systems for manufacturing, distribution, marketing, financial management, staff management, and customer support. It will streamline all operations into one integrated system thus focusing the costs on a centralized system, which is cheaper in terms of software acquisition, staff training, and general maintenance (Chen et al., 2012).

2. Increased visibility – Implementing an enterprise resource planning system will allow the management to efficiently access all business processes from a single system for ease of monitoring the product flow, customer feedback, and the production process. The management will be able to track the inventory levels as well as the security status of the company information systems. Increased visibility promotes the coherence of workflows thus ensuring optimal efficiency in the shared business processes within the company (Kanellou and Spathis, 2013). It also provides important information for the decision making systems thus leading to business growth through reduction of losses.

3. Efficient reporting and planning – Unification of the business processes into a single information system will significantly improve its efficiency in reporting and planning. The management is able to generate comprehensive reports on the marketing, production, distribution, and quality management processes and apply data analytics to make important decisions.

4. Automation and customization – An integrated enterprise resource planning system is designed to meet the specific needs of a business through standardization and automation of financial and marketing reporting structures for improved efficiency. This system will allow the company to personalize the product quality and customer service to meet the needs of different markets for improved customer satisfaction (Madapusi and D'Souza, 2012). Moreover, it will allow the integration of mobile applications to improve the ordering process and automation of general production activities.

The Hosting Approach

BFZ has an option to host the enterprise resource planning system through an on-premise installation or as a cloud-based service. On-premise installation means the need to acquire all hardware and software resources, structures, and professional IT personnel to manage the system. The cost of an on-premise hosting is not feasible currently as the business is still growing. The most viable option is to host the enterprise resource planning system through a System as a Product (SaP) approach hosted in the cloud by a service provider. The cost factor in the purchase of the annual license for hosting an ERP system is expected to be $287,000 while the total annual cost of purchasing and installing the ERP system on-premise is approximately $431,000. The annual cost of cloud-based ERP hosting is approximately $181,000. On a 10-year scale, these costs translate to $4.31 million in the on-premise ERP implementation, $2.87 million in the purchase of annual license fee, and $1.81 million in the cloud-based hosting (Hedges, 2017). Considering the cost factors, it is clear that on-premise hosting is the most expensive while the Software as a Product solution is the least expensive. Therefore, it is recommended that the company implements the ERP system using SAP hosting approach not only based on the affordability factor but also for improved security and efficiency (Staehr et al., 2012). However, the choice of the service provider is an important consideration in the cloud-based hosting. There is a need to conduct adequate research to identify a professional and trusted service provider.

Conclusion

As BFZ ice cream manufacturer seeks to expand its information systems by integrating an enterprise resource planning system, it is important to consider factors such as cost, security, and efficiency in the choice of hosting approach. Since the company is still in the process of expansion, the implementation of an ERP system through a cloud-service provider is the most feasible in terms of cost and security. Cloud-based service will allow the company to concentrate more on the production and marketing processes without the need to worry about the information security and performance issues. An integrated Enterprise Resource Planning system will promote process automation, product customization, and improved efficiency in financial management and reporting.

Bibliography

Chen, H.J., Yan Huang, S., Chiu, A.A. and Pai, F.C., 2012. The ERP system impact on the role of accountants. Industrial Management & Data Systems, 112(1), pp.83-101.

Hedges, L., 2017. ERP Cost Breakdown: The Factors That Determine Pricing. Software Advice. Available at: https://www.softwareadvice.com/resources/erp-software-pricing/ [Accessed June 16, 2019].

Kanellou, A. and Spathis, C., 2013. Accounting benefits and satisfaction in an ERP environment. International Journal of Accounting Information Systems, 14(3), pp.209-234.

Madapusi, A. and D'Souza, D., 2012. The influence of ERP system implementation on the operational performance of an organization. International Journal of Information Management, 32(1), pp.24-34.

Staehr, L., Shanks, G. and Seddon, P.B., 2012. An explanatory framework for achieving business benefits from ERP systems. Journal of the Association for Information Systems, 13(6), p.424.