Effect of Enterprise Resource Planning (ERP) on Management Accounting
Enterprise resource planning
(ERP) systems are becoming commonplace. In addition to their implementation in
large enterprises, they are now implemented in many mid-sized organizations. ERP
systems offer three major benefits: (1) business process automation; (2) timely
access to management information and (3) Improvement in the supply chain via
the use of E-communication. Other benefits include information visibility,
decreased costs, faster period-end closes, greater market responsiveness,
better control over reverse logistics and others.
One group that is severely
affected by the ERP systems are the management accountants. Management
accountants are typically responsible for accumulating and tracking costs, to
preparing budgets and performance reports. Current evidence points to management
accountants using traditional software (such as spreadsheets) for budgeting,
activity-based costing (ABC), balanced scorecards and other performance management
techniques independent of, rather than integrated with ERP systems, despite
many of these tasks having already been included in current ERP systems.
It is commonly accepted by the
business world that information technology should be viewed as more than just
an automation of business processes; information technology can fundamentally
change the way business is done. Many organizations, therefore, seek to improve
their competitiveness by utilizing advanced information technology, such as ERP
systems.
The significance of the impact of
the ERP system on the role of the management accountant is related to the
success of the system implementation. The more successful implementations
resulted in dramatic changes to the nature of their role whereby the management
accountant becomes a business adviser who takes proactive steps to aid the
various executives and decision-makers. If the project team is appropriately
selected, the project implementation plan is properly designed, the issues are
clearly communicated and the process is meticulously executed with appropriate
support, organizations will have a better likelihood of overcoming
process-and-technology-related issues to deliver the project with minimal
problems.
Management accountants should be
involved in ERP implementations from the start. They should be recognized as
key members of the project team. Research shows that where this is not the case,
projects are less successful and the management accountants find their roles considerably
less manageable as a result.
