HR plays important role in ERP evolution

As enterprise resource planning (ERP) moves into its next evolution, human resource (HR) applications will play an increasingly important role. ERP has previously focused on integrating an organisation’s business processes, and HR management for the most part has been just another module.

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By  Zoe Moleshead Published  May 29, 2001

|~||~||~|As enterprise resource planning (ERP) moves into its next evolution, human resource (HR) applications will play an increasingly important role.

ERP has previously focused on integrating an organisation’s business processes, such as financials, supply chain, sales, manufacturing, and distribution. HR management for the most part has been just another module.

HR management has traditionally dealt with acquiring, managing and optimising employees. However, HR is evolving to become a more strategic and integral part of enterprise planning, extending to non-HR processes.

“HR management is usually not fully implemented in most organisations [which] deployed ERP systems, due to its complexity, lack of capability in HR management departments, and a lack of priority within an organisation,” comments Iftikhar Nadeem, senior e-business analyst, centre for economics & management, with Saudi’s King Fahd University of Petroleum & Minerals (KFUPM).

For HR management to develop within ERP, enterprises must realise its importance and benefits, and address the key element of ERP — integration — more comprehensively.

According to Ayman Abouseif, marketing director Oracle, Middle East & Africa, the development of HR is a natural evolution: “The transformation makes sense. People produce the goods and provide the services that fuel organisations.”

As well as recognising the importance of human capital to an organisation, HR management also enables an enterprise to maximise the cost efficiency of its employees. “The human cost is often the biggest outlay a company incurs,” adds Abouseif. “Well-managed human resources directly improve the bottom line and contribute to competitive advantage.” HR management benefits overall efficiency, both in terms of productivity and time.

“By enabling an organisation to attract, train, deploy, assess and reward its people more effectively, the HR function, as practiced by the extended community of employees, managers and HR professionals, provides dramatically extended value to the organisation,” explains Abouseif.

Increased productivity and profitability is a view that Nadeem also concurs with, “improved organisational competence, workforce stability and employee satisfaction are just some of the benefits from HR management.” But he also highlights HR management’s role in non-HR processes, “the effectiveness of all other processes including distribution, finance and manufacturing depends upon HR management both directly and indirectly.”

The core competencies for HR and its development include comprehensive integration with other business processes, and ERP modules.

Both Nadeem and Abouseif stress the importance of localisation both in terms of language, organisation and/or industry specific features. “Localisation is important for systems acceptance by end users. They should be simple, customised, flexible, integrated, and in Arabic where needed,” explains Nadeem.
Abouseif also highlights the importance of HR management localisation in relation to a country’s legal requirements.

“We understand localisation is to customise the HR/payroll modules to meet the country specific requirements, i.e. labour laws, leave calenders, working days and hours and so on.”

The wealth of HR management is yet to be fully explored, with organisations largely failing to recognise its changing role and fully exploit the benefits of HR solutions. But as Gartner Group analyst, J.Lehman explains in a report, the benefits of HR management can be applied to “any business process that involves people.”
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