The main purpose of this paper is to investigate the major implications for a companys Accounting Information System which may be affected by ERP when the firm decides to implement a full function of Enterprise Resource Planning (ERP) system. In detail, ERP is a combination of business management practice and technology with the company’s core business processes to enable the achievement of specific business objectives. In addition, AIS is combine the study and practice of accounting with the design, implementation, and monitoring of information systems. Besides that, this paper will cover the roles and purposes for both AIS systems and ERP systems as well as perceived the benefits and drawbacks for companies of ERP system. Specifically the paper will analysis the effect of AISs when implementing a full ERP system. In addition, this paper will look at the problems cause by ERPs and the identification of major implications for AISs.
ROLE & PURPOSE OF ERP
First of all, ERP play an important role in provides centralized and integrated software to help coordinate and manage the ongoing activities of the function within the enterprise, which include, accounting, sales, finance, product planning, marketing, human resources, distribution and manufacturing. As Hernandez, (1997) said that, for many authors, ERPs are systems which enable integration of the various functions of the enterprise, to the extent that they centralize and make accessible all the information required for the various business processes that run across these functions. On the other hand, the purpose of ERP also implemented to manage those existing and prospective business policies and plans in an efficient manner under a specific strict deadlines (Shelly, Cashman &Vermaat, 2007).
Besides that, every implementation of ERP is unique and is designed to match to the implementer's various business processes. In general, the implementation of ERP system can be cost hundreds millions of dollars to create, and may take several years to implement and complete. Once the ERP system had installed to the firm, it must be customized to match the current business requirement of firm. Nevertheless, ERP system that could provide information within the organisation as analyze purpose, so that management of the organization can share information more easily. Consequently, higher effectiveness and efficiency in operations and improved customer satisfaction are the ultimate benefits derived from ERP systems (Duff and Jain, 1998; Gupta,2000).
However, ERP system is formulated in an organisation to effectively and efficiently achieve the business objective and goals of the organisation. The workflow that takes place between departments can become much more automatic, and eventually, customers are better served because the individual using the customer-facing applications will have access to every bit of information regarding each relevant process. Soh et al., (2000) research showed that ERP systems are organisation-wide systems and their implementation involves multiple stakeholders, often in geographically disperse locations. Therefore, ERP system requires data standardisation, integration of the system with other information systems and management of consultants and vendors. Figure 1 shows how Enterprise Resource Planning fits into the operations of an enterprise.
ERP
Figure 1. ERP encompasses all of the major activities throughout a business. (Shelly, Cashman &Vermaat, 2007, p731)
ADVANTAGES & DISADVANTAGES OF ERP
Further, there are a number of advantages or benefit of ERP system, which include complete integration of information system across department, and also helps to achieve better project of management, better customer services, improved work process, increase access to available date for decision making, quick response to changing business operation and market condition, reduce paper and so forth. In general, complete integration means that the information is shared rapidly and management receives a more complete and timely view of the organization through the information (Shelly, Cashman &Vermaat, 2007, p731). Once implemented the ERP system brings fantastic advantages for the company, it is due to all the systems are linked or connected together, thus all the departments can share information more easily within the organization as I mention early. In addition, better and faster reporting of the state of the enterprise leads managers to better decisions. Furthermore, ERP can also be responsible for altering how a product is manufactured (http://www.jps-dir.net/Forum/uploads/12967/Davenport_1998.pdf).
Nevertheless, with all those benefits that ERP offers, there are also a number of drawbacks as well. Perhaps one of the major disadvantages to this system is the cost of implement as well as the training cost. To implement a full function of ERP can be cost hundreds millions of dollars to install, and may take several years to complete as I mention early. Besides that, the cost drivers to training of employees are high because employees must not only learn how to use the new software, in terms of they must also learn new processes. Another biggest problems with ERP is that it is hard to customize, it must be modified to suit their needs. Thus, very few companies can effectively use ERP due to this system is difficult to use. According to Bingi et al., (1999); Kumar and van Hillegersberg, (2000) research, many large organisations have made significant investments of both time and capital to implement ERP systems, other than that, not all implementations go as well as intended.. Even when a company does begin changing the system, but they are limited in what they can do. Besides that, Mohania and Bhide (2008) claim that the information integration problem has become the biggest pain point for enterprises today. According to Mohania and Bhide (2008), the growth of organizations invariably leads to the creation of multiple isolated data sources that are disconnected from each other, leading to reduced efficiency. Furthermore, many of the integrated links need high accuracy in other applications to work effectively.
ROLE & PURPOSES OF AIS
The elementary purpose of Accounting Information System (AIS) is to collect data, process it into information and report the information which are regarding events that have an economic impact upon organisations and the communication, processing and maintenance of information to the internal and external stakeholders. This information is used for the evaluation of the financial position of the organisation and for decision-making purposes.
