With the rapidly increasing developments in the technological field, business organizations have stood a better chance of reaping the benefits of these developments. The concept of technology has been a vital factor in the success and sustainability of businesses in the contemporary society. This makes it essential for every business organization to ensure that it adopts the most current technology so as to ensure its competitiveness. This phenomenon has been facilitated by the aspects of liberalization and globalization, whereby the world has been transformed into a global village thus leading to stiff competition in the business arena. Based on this phenomenon, Enterprise Resource Planning (ERP) has been one of the technological developments in the business world, whereby it has led to tremendous advantages and efficiencies in business operations. ERP integrates external and internal management of information across the entire organization. In this regard, ERP ensures smooth coordination within the various aspects of business which includes sales, manufacturing, service, accounting among other departments of a business organization. ERP adopts integrated software that ensures facilitation of smooth flow of information within all business functions both within and outside the organization. Based on these insights, ERP stands to yield magnificent benefits to business organization thus enhancing the attainment of business objectives alongside boosting its profitability. This paper will explicitly discuss and analyze the implications of ERP implementation in IKE, Dubai.
IKEA group is the leading furniture retailer in the world, whereby it deals with home accessories, appliances and ready-to-assemble furniture. The company operates in more than 38 countries and has more than 313 stores. Most of the business operations of the IKEA, Dubai are in Asia, Australia, Europe and North America. Information from the IKEA, Dubai shows that the company deals with more than 12,000 products. The company has a very potential market, whereby its websites records more than 470 million visitors per year. Another import note regarding IKEA, Dubai is the aspect of workforce, whereby the company has an overwhelmingly high workforce. This phenomenon makes it difficult for the company to operate without the adoption of modern technology. Based on the company's stable financial status, it has impacted remarkable efforts in the adoption of modern technology in its operations. This is very evident through its prioritization of a successful implementation of ERP through the use of Lawson Software. The IKEA group stands to benefit enormously from the implementation of ERP in its operations (Ptak and Schragenheim 2004: 82).
Implementation of ERP has significant advantages to the IKEA, Dubai in that it will help in solving most of the operational inefficiencies being faced by the company. As indicated by Shields (2001: 123), ERP helps in the solution of many problems which might have plagued large organization and more so in the contemporary society. To begin with, the aspect of accounting efficiency in large organization is one of the most outstanding benefits a company may gain from the implementation of ERP. In this regard, IKEA, Dubai has a potential chance of benefiting from an efficient accounting system. Adoption of ERP will help in the integration of revenues, profits, costs, sales among other financial information. This will help in granular and explicit representation of the figures thus helping in monitoring and analysis of the company's operations. Based on the enormous size of the IKEA group, various accounting problems had plagued the company over the years. The company's large size and overwhelming performance has led to high circulation of funds in form of sales, costs, and profits thus leading to difficulties in computations (Waldner 2002: 13). Nevertheless, the implementation of ERP will help in solution to these accounting problems once and for all. This will in turn lead to efficiencies in the company alongside lessening the management process.
In the field of production, ERP helps a company to be in a position to improve and alter its manufacturing process. With the adoption of ERP, it becomes possible for the company to be able to determine how a product will be manufactured. ERP offers the company a chance to install a dating structure/system that helps in the monitoring of the manufacturing process. In this regard, the system will help to detect and notify when a product should be updated. With this in mind, a better track concerning the products. Based on this aspect, the issue of quality standards will be effectively maintained. As outlined by (Shaul and Tauber 2010: 1), ERP ensures that a dating structure that is implemented to monitor the production of products signals the status of a product. This gives the company a chance to know when improvements or other changes are necessary. In relation to this phenomenon, the IKEA, Dubai will stand to benefit in that it will be able to maintain a high quality standards for its products. This will not only lead to attraction of more customers but also lead to profitability and sustainability of the business (Shaul and Tauber 2010: 1).
Hamilton (2004: 45) postulated that, ERP is a vital security element that is potential of helping a business organization to meet all its security expectations. In this regard, ERP ensures that the issues of industrial espionage and embezzlement of funds are countered. All accounting crimes that may erupt in a company are efficiently countered through the adoption of ERP. This scenario is achieved through the integration of all accounting functions and systems within a company. ERP integrates the costs, revenues and profit information as well as sales of an organization. By so doing, accurate monitoring and detection of all accounting systems becomes possible. This helps the management of the company to easily detect any malpractices in the accounting systems. With this in mind, IKEA group will be put in good position of ensuring accountability and transparency in its accounting systems. By so doing, the issue of embezzlement of funds alongside other financial crimes in the company will be countered (Wallace et al 2001: 79). In this regard, the profitability of the company will be boosted since the loss of funds which might have earlier been experienced will be a thing of the past (Hamilton 2004: 45).
The implementation of ERP in IKEA, Dubai is also liable of enhancing efficiency in the overall operations of the company. In this case, ERP ensures facilitation of all process of an organization thus being able to ensure limitation of delays or time wastage that might have otherwise occurred without its adoption. As postulated by Loh et al (2004: 3433) ERP systems helps in cutting down the costs alongside saving valuable time. This is in consideration with procedural maneuvers and manual computation that lead to unwanted delays. The implementation of ERP ensures integration and easy coordination among the various departments within an organization. This ensures easy communication within and out of the organization thus leading to efficiency (Loh et al 2004: 3433).
ERP is a unified platform hence ensuring lack of discrepancy in the processing of information. The management and employees get easy coordination with the utilization of ERP. This would have otherwise been unavailable with the adoption of traditional communication systems. Dissemination of information from one department to another is necessitated thus leading to avoidance of any delays that might have otherwise erupted. The aspect of making financial computation and processing of transactions is facilitated (Madu and Kuei 2005: 37). With this in mind, the IKEA, Dubai will be able to benefit from increased performance and output thus being able to enhance its profitability. Efficient transactions and processing of customer data also ensure full customer satisfaction which will in turn lead to a wider and sustainable market (Madu and Kuei 2005: 37).
By adopting an ERP system, IKEA Company will be able to ensure quick attendance to customers through prompt response and follow up. This is a very vital tool for attracting and maintaining customers, thus broadening the company's market. Through quick service and processing of customers information, high levels of satisfaction will be attained. This will help in positioning the company among the customers thus placing it in a good position to win more customers. This is a vital competitive strategy that will help the IKEA group counter the forces of its competitors. By so doing, the sustainability and performance of the company in the retail furniture industry will be heightened (Lequeux 2008: 35).
On the other hand, ERP systems will help the IKEA group to ensure swift disposal of queries alongside facilitation of payments processing from customers. Timely clearance and processing of transactions will be enhanced. Based on the fact that the company deals with customers from all corners of the globe, processing of international orders will be facilitated. By so doing, the issue of time wastage or delays that may have otherwise risen up will be effectively countered. The IKEA group will be able to ensure it meets its objectives and vision of ensuring leadership in the retail furniture industry. The issue of competition which is becoming a serious threat to survival of many businesses in the global market will be adequately countered. By ensuring quick attendance to customers, the IKEA, Dubai will be able to ensure it meets the demand of the market and thus being in a position to counter any storms arising from competition (Lau 2005: 213).
ERP implementation in IKEA will make it possible for the movement of goods to lesser known areas and other rural areas. The use of ERP makes the access to remote markets a reality, thus facilitating the achievement of the company's objectives of expanding its operations. Since the IKEA operates across the globe, it will be able to ensure swift movement of products, through the adoption of efficient communication systems. This is facilitated by the aspect of easy communication and clearance of customer information. The aspect of coding products also ensures that each product or goods is send to its destination without inconveniences. On the other hand, ERP facilitates the use of the database in the organization. As depicted by Khosrow-Pour (2006: 413), ERP ensures that all unwanted ambiguity the organization's information systems are dealt away with. The management alongside all employees becomes proficient with the use of the database; this facilitates their operations thus enhancing efficiency in the organization (Khosrow-Pour 2006: 413).
The challenges faced by the IKEA group in operating in the global scene will be adequately dealt away with through the adoption of ERP. This is based on the fact that ERP helps in facilitating of global operations in that it helps in encompassing the various domestic jargons. The issues of diverse accounting standards, currency conversions as well as multilingual facilities are sufficiently addressed. As stated by Grant et al (2006:2), ERP is the best and perfect scientific and commercial epitome. This helps a business to think locally but act globally, thus being able to address the needs and expectations of all various markets. With this in mind, the IKEA group will be able to maintain a smooth touch with the local market and thus being in a position to address the various issues. In addition, aspects of data control in the organization will be adequately monitored. This will in turn add to the efficiency of the organization hence guaranteeing higher productivity and profitability (Grant et al 2006: 2).
ERP is also credited for enhancing automation in business organizations and enhancing logic business. In this regard, the concept of verticalization in the business operations is realized whereby the organization will be able to ensure standardization in its operations. Based on the enormous size of the IKEA group and the diversified operations, ERP will be an efficient intervention that will ensure standard solutions to the various problems being realized in the organization (Clemons 2006:131). Other positive implications of ERP in IKEA group include the following. Fastening the creation of reports, reduction of paper work, easy management of projects, easy and effective work control, easy access to status of goods and fast transition of products via online selling are some of the benefits of ERP to the IKEA, Dubai. All these aspects will help the IKEA group attain its objectives and realization of its goals of ensuring efficiency and quality standards (Shtub and Karni 2008: 213). This will in turn help the company in ensuring a high level of production through the efficient processes. By so doing the cost of production will be significantly reduced thus enhancing the profitability of the business.
Despite the numerous advantages and benefits brought by the implementation of ERP in the IKEA Company, various limitations are liable to crop up. To begin with, the implementation and execution of ERP in the organization is very costly and will end up adding to the operational costs. Exorbitant and voluminous investment of money and time is required in implementation of ERP. This will mean that the financial stability of the company will be significantly affected. The huge sum of money required in the implementation of the ERP may mean a stoppage of other beneficial projects by the company. This will in turn affect the overall performance of the company thus impacting negatively on its profitability. As indicated by Jozic (2010: 23), the amount of money required in the implementation and running of the ERP is looming on the management. In this case, the outlay is not guaranteed of the much speculated benefits that may emerge from the project. This phenomenon creates a lot of suspicion regarding the cost efficiency of the process. Despite that the project may be cost efficient in the long run, it stand to be very costly in the short run thus liable for causing financial constraints in the company (Jozic 2010: 23).
ERP implementation in IKEA may negatively affect the competitiveness of the company in the market. This is in consideration to the fact that most of the ERP vendors do not allow alteration of the ERP software structure. In this regard, the ERP software structure will be standardized among all business organizations in the market thus making it difficult to compete. Based on these phenomenons, the competitiveness of the IKEA, Dubai may decrease thus affecting its competitiveness of the market. As outlined by Jacobs and Whybank (2000: 32), the limitation of the ERP vendors to avoid alterations to the ERP software structure leads to lack of innovation among the business units thus limiting competition. By so doing, the IKEA Company may stand to lose or fail to improve since the innovations it is making through the use of ERP are the same as those adopted by other organizations in the market. This phenomenon will make it difficult for customers to make differences regarding the services offered by the various business organizations (Weldner 2002: 37). This is in reference to the fact that the efficiencies of the different players will be nearly standardized.
The technical support required by ERP system is under question based on the speculated cost of operations. As outlined by Head (2005: 52), a high skilled manpower is required to enhance the operations of the ERP. This calls for additional training and upgrading of the skills of the existing workforce so as to make the new innovations useful. The company will also be liable to recruit new personnel to deal with the new systems, based on the sophisticated skills and knowledge required in the operations of the ERP systems. In this case, the company will encounter increased costs and inconveniences that will affect the overall output and profitability. Based on these insights, it's evident that the IKEA Company may face significant losses from the implementation of the ERP (Head 2005: 52).
Significant time wastage is likely to be experienced in the IKEA Company following the implementation of ERP. This is based on the time required in training and orienting employees on the use of the ERP systems. This will mean large numbers of employees will shun down their regular duties to undertake the training. With this in mind, the levels of output by the company will significantly decline. This will in turn be reflected in fallen profits and revenues of the company (Harwood 2004: 102).The issue of information theft and illegal violation of privacy to information systems is likely to occur. This phenomenon is likely to be induced by the rapidly advancing technological developments, whereby competitors may easily track the information of the company. Sophisticated computer supported devices and software have been devised which have the potential of assisting in the monitoring and tracking the information of competitor companies (Vaman 2007: 204). With this in mind, the security of information in the IKEA Company will be compromised thus threatening the competitiveness of the company.
Conclusion
In summary, the extensive discussion and analysis of the implications of ERP implementation in the IKEA, Dubai has shown that the company stands to enjoy enormous benefits. With the increasing competition in the global business platform, there is inevitable need to adopt the most efficient business strategies. This phenomenon makes the use of ERP in IKEA, Dubai very profitable. In this regard, ERP systems in IKEA, Dubai stand to increase the overall efficiency of the business operations, thus promising higher output and profitability. On the other hand, the issue of communication, data transfer, and transaction processing alongside transfer of information will be efficiently addressed by the ERP systems. This will only facilitate attainment of efficiency and quality standards but also help in pulling in new customers. The aspect of accountability and transparency will also be improved thus enhancing the profitability of the company. This is in reference to the fact that the issue of embezzlement of funds in the organization will be avoided thus limiting the operational costs. Nevertheless, implementation of ERP in IKEA, Dubai may lead to negative implications. For instance, the cost of operation is likely to increase thus threatening the profitability of the company. By weighting the advantages and disadvantages of ERP in IKEA, Dubai, it's evident that the new systems will be profound benefit to the company.
