E-commerce has become rampant in many businesses enterprises today. Development in the business sector and the need to give the customers the best service have necessitated the adoption of e-commerce by many business enterprises. E-commerce simply means trading through the internet or computer networks. With companies growing big and technology improving, the need to integrate business management practices with information technology has also increased. This has lead to the adoption of ERP in e-commerce. Enterprise Resource Planning (ERP) is software that integrates the management practices of a business enterprise with information technology (Sadagopan 2000, P.43). ERP aids the distribution and collection of information across all units of a business enterprise. It is a merge of three key components of a business enterprise that is, IT (Information Technology), Business Management Practices, and Specific Objectives of the enterprise.
Specificity of e-commerce companies
This refers to the degree of satisfaction that individuals get from e-commerce transactions. It can also be described as the extent to which e-commerce satisfies the needs of the customers. The brighter design of e-commerce in the e-commerce company derives greater satisfaction to the needs of the individuals. For instance, it gives room for product customization. Customization of products means modifying products or services to suit the needs of customers (Bajaj and Nag 2003, p.29).
Operation requirements of e- commerce
ERP importance, its advantage and potential disadvantage
Importance to e commerce
According to Sadagopan (2000), ERP is undoubtedly a very important tool in the today’s world of internet business. With the current competition in the market, internet businesses need to streamline their management practices to enable internet transactions be carried out efficiently. This is the secret to win a bigger market share. Companies dealing with internet business cannot ignore the growth in the IT industry and. It has become more applicable in business operations. There is therefore need to integrate business operations with the Information Technology. This is the whole idea of ERP.
Advantage of using ERP in E-commerce
ERP reduces the cases of fraud in e- commerce. This is because all the online transactions can be managed from a central point. This is because all the functional units of the company are integrated.
The other advantage is that ERP aids inventory tracking in e-commerce. This is because it is possible to collect all the information regarding sales and purchases in order to determine the stock balance.
ERP makes it easier to consolidate online sales from different departments for purposes of revenue computation. The departments are also able to submit their transaction report online to the relevant central department for verification (Bajaj and Nag 2003, p 34),
Leon (2001) stated that with ERP, the response to online customers’ enquiries is improved. This is because it is possible to access the customer’s data from any department in the organization. All the information regarding the customers’ sales in any department can be accessed online from a central point.
ERP also eases the process of obtaining online periodical reports. This is because all the data is accessible from a central department. This eases the process of consolidating reports for purposes of auditing.
With ERP system, communication is effortlessly done across all the departments of the organization. This becomes very efficient because the departments are controlled from one central point. The information is delivered directly from the decision maker and the chances of distortion are very minimal.
Leon (2001) stated that the performance of the company and the production level are also improved by the adoption of the ERP system. This is attributable to the efficiency of the whole company in executing internet transactions across all departments.
Potential disadvantage of using ERP for E-commerce
Despite its many advantages in e-commerce, ERP system has he following potential disadvantages:
Firstly, the implementation of the system can be very expensive. This can limit many e-commerce companies from reaping its benefits. Also with ERP, there may be limitations in the online customization of products (Leon 2001, p.54).
Lastly, to adopt ERP system, most modern e-commerce businesses may need to be restructured because most of their processes may not be supported by ERP. This means extra cost.
ERP system is very vital in any organization that deals with e-commerce. E-commerce cannot be efficient without ERP because of the risks associated with it.
Bajaj K. and Nag, D. (2003). E-Commerce: The Cutting Edge of Business. New York. McGraw-Hill. Publishing Company
Leon A (2001). Enterprise Resource Planning. New York. McGraw Hill. Publishing Company
Sadagopan, S (2000). Enterprise Resource Planning. New York. McGraw Hill. Publishing Company