Enterprise Resource Planning System Analysis -TD Bank - Assignment Example

of Learning: ERP System Analysis-TD Bank 2 Vendors Vendors provide specialized and specific ERP systems and solutions making the industry more competitive. The common ERP software that are applicable in the banking industry include; Vendors on large businesses which include SAP and Oracle. The two offer ERP software for multi language, multi-facility and enterprises that are operated in billions. The other category of vendors is the Vendors on medium-size businesses which represents the largest number of ERP vendors. The ERP products falling under this category include; Oracle, SAP and Microsoft as well as other vendors that are majorly focus on the market like Lawson, Infor, Epicor, QAD, Exact Software and Sage Software. This category of vendors has been estimated to be generating more than $ 3.0 billion in the banking sector every year in Canada (Eschinger and Dominic 34) [3]. The other category of vendors which is not common in banks is the vendors serving small business such as the SaaS ERP vendor which offers ERP applications of low-cost standards in order to attract large small business segments. Vendors serving specific vertical industries provide ERP solutions to a wide range of industries such as retail, manufacturing, professional services, fashion, and non-profit organization(Eschinger and Dominic 34) [3].. The Vendors providing open source ERP solutions forms the greatest ERP market thus mostly attracts most banks to make use of it. Its open source scope has been increasing over the years and this is expected to continue increasing in the years to come. Vendors have been in the forefront in offering open source solutions to ERP systems. Despite the fact that traditional ERP systems which have already been licensed make the most part of the ERP market, the ERP open source scope has increased over the years and this trend is expected to continue in the years to come. In modern organizations, several ERP open source projects are being applied. Such projects include; Open For Business (OFBiz), Compiere, Openbravo, and Adempiere. The named applications have managed to gain a remarkable footing and have established themselves in a considerable functionality level. Despite the many ERP systems applications, the Apache, Compiere and x-Tuple remain the leading players in the ERP space. However, the TD bank settled on SAP R/3 and CM as the most suitable ERP systems applications considering its situation (Eschinger and Dominic 97) [3]. 3.0 ERP IN BANKING ERP’s cashbook mainly deals with the processing of cash as well as reconciliation that offer one of the best functionality breed among the various ERP systems. Cashbook provides a wide range of bank interfaces including (Dodds 34) [2]; 1. Bank Statement Upload: This ERP application allows banks to upload and match open invoices automatically on receivable accounts and goes further to ensure that payments are posted to the payment column of the transit accounts and manual payments reflected on the general ledger accounts. 2. Bank Lockbox Upload: lock box from any bank can be easily transferred into its Cashbook after which it is processed automatically to end up in the ERP system. This enables the banks to handle deductions, short payments, bank charges, over-pays and cash receipts for inter-companies. 3. Electronic Payment Files- Such files enable banks to conduct international payments all over the world, integrate BACSTEL-IP and find solutions to SEPA compliant. This also allows for ACH files payment. 4. Positive Payment Files- This application allows banks to come up with positive file payments across nations. 5. Direct Debit Files- ERP systems permit the creation of direct debit files from its data and upload the files into the software of the bank in question. Such files contain all the information needed by the banks in collecting money from different customer accounts. 6. Draft management Files AP & AR- These draft files comply with the local rules for banks and contain all the important draft ERP information The ERP technology has been regarded as one of the major break-through in the banking sector. This is with respect to its impact on the banking systems and operations. ERP systems have changed the face of banking making it easier, cheaper and faster. When used in banks, ERP systems allows easy negotiation among departments sharing one information system and the same system is linked the existing financial entities by an advanced electronic banking. The system also offers a control technology that is more sophisticated carrying out the normal banking procedures such as accountancy, reception, bank extracts reconciliation. ERP systems are included with quasi information online that offers the financial department of the bank with a banking reconciliations that are more advanced as the system is included with multi banking systems that are electronically operated as well as reconciliation modalities such as advanced automatic, manual and single automatic. The three modalities have increased the percentage of reconciliation to 90 % from 60% (Robert 61) [5].. Through the ERP systems, banks managements are able to achieve higher integration with its entire system and departments. This application provides an automatic data recording system and mechanizes all the new activities like interests liquidation control. The ERP system is included with an information digital processor that allows access of information at higher speeds as it is included with both the electronic banking and information networks. The System-Cash is another vital tool included in the ERP systems that is significantly used in the simulation and analysis of banking processes (Chorafas 56)[1]. Such processes include credit policies balances management permitting for financial cost reduction and future scenarios simulation by varying the interest rates, policies conditions on credit and exchange rates. The processes also simulated both long term and short term transactions that involved investments, financial payment and collections forecasts. (Chorafas 72)[1] Chorafas, Dimitris. Integrating ERP, CRM, Supply Chain Management, and Smart Materials. New Jersey: Auerbach Publications, 2007. Print ( A flow diagram indicating the information integration using ERP system) 3.1 Bank (TD BANK CANADA) TD Bank business model is out to accomplish a profitable, long-term growth through coming up with the best delivering value and franchises to its shareholders, customers and the entire community it is serving. The bank has maintained this approach for a long time because it is adaptable in addition to being simple and has resulted to winning records. The focus of the bank is on reliable and steady retail earnings which has proved its worth by clearly paying off as more that 90 percent of the its adjusted profit normally comes from the banks retail platform (Robert 75) [5]. This profit ends up shielding the bank from the volatility witnessed across the world following sovereign debt issues (Robert 76) [5]. Some of the strategies that enable the bank to prosper even in times of very low interest rates include its domestic retail banking. The bank has also opened out its strategies to insurance which it believes helps its operations to outperform. Personal banking has also resulted to a mature and stable secure business lending when it comes to real-estate (Sheikh 62)[7]. To continue with this trend, the bank has organized its structure in a way that the bank attracts and increases the client assets, it has expanded its businesses which are advice-based and direct investments as well as keeping its focus on preserving, building and transitioning wealth for its institutional and retail clients. In addition, the bank has made use of modern technologies such as e-business and web services to reach out to more customers and improve its services delivery (Sheikh 62)[7]. The bank has continued to increase its market share in the United States through lending high quality goods to businesses and customers in this rich market. The bank strategies are also committed to be part of the drivers of the United States economic recovery process through doubling it’s lending on small business as well as positioning its franchise in the best market place. The TD’s Wholesale banking has been able to diversify business models that are client focused which has proved to be strong enough to withstand harsh market environments thus delivering returns on the capital invested with more than 25 per cent annually (Norris and James 23)[4]. SGA Lists. TD Bank. Toronto: University of Toronto Press, 2000. Print. ( a map on locations where TD bank is in operation) 3.2 Describe the system (legacy systems) that was used before transitioning to ERP market conditions. Before the bank settled for ERP systems, it made use of other technologies which despite not being the best, they still earned the bank a remarkable market coverage. The bank’s system by the was operated on Enterprise Technology Solutions (ETS) which was the main integration tool to its technological services and solutions as it offered its services to its customers and other businesses (Chorafas 39). [1]. Ranging from the bank’s simplest ABM transactions to the most complex ones involving global deals, this type of information technology played an important part in its daily operations as well as its strategies that were long-term. The ETS cut across the Infrastructure Technology Solutions, the Technology Information Security and Risk Management and Solution Delivery Services (Chorafas 47). [1]. The TD bank at some point introduced an integration project that made use of botched computers (SGA 34) [6]. This introduction hampered the operations of the bank as it slowed down its ability to have customer information updated normally yet the inclusion was aimed at making the process easier and faster. The result was that debits and credits took much longer to reflect on customer accounts thus account balances on the affected accounts appeared different for some period of time. The situation gave the bank a hard time is assuring its customers that the money in their accounts was safe and that it had come up with measures of resolving the problem. Some of the progress made was prioritizing direct deposit processing. The bank also had to a sure the affected customers that any fees as well as overdrafts incurred by customers as a result of the disruption would be settled. Those behind the introduction of the system claimed that the overall system integration was successful only for some speed-bumps in its final stages to come up. This was explained by the complexity and size of the project. Following the above problems, the bank needed a system that would serve as a permanent solution and one that would ensure a smooth integration amongst its systems and departments (Word 79) [8]. 3.3 Types of ERP systems used (research on SCM, CRM, EDI, E-commerce and Web service systems as well) The ERP system formed the basis that was used to determine how the banks operation functioned. For the system to succeed in the bank, it was implemented in such a way that it integrated both the back and the front office on different levels making service and product data, customer services and order management be included as part of the larger information flow (Word 48) [8]. The back office internal process of the back office that made use of ERP functionality included; order billing and management, finance and accounting, procurement, legacy applications and human resources(Word 51) [8]. In the process of ensuring that the e-application was well developed, the back-office bank processes proved very crucial. However, this didn’t mean that other enterprise systems were not important or needed by the bank. Both CRM and SCM were also needed in addition to the ERP as they all correlated. ERP stood out as a bridge to different phases in the operations of the bank. Thus was witnessed in the way the system played a core role in the creation of the banks information and services and how the system was able to manage and implement the different phases successfully (Chorafas 31). [1]. The SCM system was included in the bank as it was needed in the extension of the bank’s network in new markets through streamlining and automating transactions, communications and other stakeholders operations (IT Business Staff 2) [10]. SCM systems are best known for their management of all the operation of an entity and that’s why it was relevant and was included along the ERP system. TD’s system operations were integrated with the inclusion of the ERP system thus covered all the front office and back office processes for them to be applicable for partners, customers, employees and suppliers thus made use of SCM, CRM and ERP (IT Business Staff 2) [10]. In order for TB bank to gain most in its profits and revenue, it was forced to have its demand and supply harmonized in real time. This followed the manner in which the ERP applications had proved to be helpful in the bank’s management of the sections that were very sensitive with regards to customer’s interactions, supply operations, products tracking and goods purchasing (Monk and Bret 39)[9]. CRM was mainly used by the bank in supporting all the centric processes for customers within the bank as well as its sales, marketing and customer support (SGA 4) [6]. TD bank made use of SAP R/3 ERP system in its operation as its applications were what the bank needed most. The SAP R/3 was introduced basically to improve the communication system in the bank and this it achieved by interference reduction and the integration of the treasure system as a technological platform previously used by other Financial Functions (Monk and Bret 42)[9]. The SAP R/3 was also included in Cash Management to homogenize the treasure system process and increase its efficiency. This helped the bank to make use of its internal benchmarking as a key tool which reengineered each bank’s subsidiary making comparison with the rest developed from treasury processes and in the long run settling for the system that is most appropriate (Monk and Bret 46)[9]. This was achieved through having the entire treasury system unified allowing its processes to be homogenized and also allowed for the integration of information. SAP R/3 resulted in a close relationship following the exportation of the banking information to its accounting system from the System-Cash (Word 41) [8]. SAP R/3 was easy to implement now that the bank made use of a similar technological platform all through. The bank also applied the CM is some areas considering its centralization and deconcentrating benefits. This ERP model allowed the bank’s subsidiaries to conduct control and transaction processing such as bank reconciliation, funds transfer recoding and the control of interests liquidation. This application was used in several management facilities in the bank including financial entities negotiation, surplus investment and deficit covering (Word 44) [8]. The ERP system at large was aimed at ensuring that the banks procedures were formalized and were stricter (Monk and Bret 45)[9].  3.3 Level of adaptation & implementation The customers remained the heart of the ERP system and everywhere it was being implemented by in the bank; it was the customer’s considerations that were put first. The system was introduced and implemented in the basic and crucial sections of the bank including its front process, its infrastructure, products and services chain handling, asset category and human resources (Monk and Bret 45)[9]. The adaption was gradual in that the system was introduced in a single section, given time to stabilize then the section was used as the reference block while implementing the system in other departments. By doing this, all the sections were integrated and there was a smooth flow of information and operations in the bank (Sheikh 24)[7]. 3.4 Benefits (How ERP enabled the bank to accomplish key business objectives) & Costs Through the system, TD bank was able to achieve higher market margins, it improved both its back and front office operation and had customer relations that were better. ERP system has its greatest impact on the banks internal efficiency, supply relations and customer relations (Word 38) [8]. Through the well established network, the bank was able to realize new market opportunities, cut down on its costs in relation to service delivery and synchronized the management of the bank making it easier and cheaper (Word 39) [8]. With time, the outsourcing process of the bank had drastically reduced by more than 34 percent (Word 40) [8]. The bank managed to dominate the banking sector both locally and internationally like in the U.S. The system also enabled the bank to play a crucial role in supporting the economic recovery process (Word 42) [8]. The implementation of the ERP system by TD bank helped it redesign it processes by introducing new IT applications which resulted to radical organizational changes such as new information technologies and information system enterprise re-structuring. The system also helped the bank to have its hierarchical structure leveled, transformed its organizational culture to be one that favored innovation and played a big role in the incentives and measures implementation (IT Business Staff 1)[10]. Following the smooth integration of information, the bank empowered its employees through having the employees change their working ways, responsibilities, roles, values, norms and decision making (IT Business Staff 1)[10]. The ERP system was also used in accountancy, reconciliation and reception of bank extracts (IT Business Staff 1)[10]. The system allowed for reconciliation through decentralization of most of the banks departments taking part in payments and collections. This introduction did away with the interfaces that were characteristic of the banks departments now that they operated under a similar technological platform. Data process in the bank was also made easier as the bank saved on the expenses and time of exporting data up to the accounting system now that provided the data was recorded by the SAP R/3 module at the treasury, the data became readily available to all the departments (IT Business Staff 1)[10]. Both the treasure estimate and position were improved with the system allowing for a daily communication on the treasury position forecast giving the bank the chance to make punctual money transfers with an aim of rectifying any deficits in the treasury. In additional, the ERTP system guaranteed the bank better management with its new process that was made up of subscribed managing guarantee lines that guaranteed obligations related to the operations or work of the bank (Monk and Bret 45)[9]. The system also provided management reports that were detailed on enterprise business, bank risks, forecasts and middle balances (Monk and Bret 45)[9] Chorafas, Dimitris. Integrating ERP, CRM, Supply Chain Management, and Smart Materials. New Jersey: Auerbach Publications, 2007. Print (An image indicating the several roles assumed by an ERP system). 3.5 Describe the success/failure of the system across the business environment There has always been a holdup when it comes to the benefits or failures of the ERP system when adopted and implemented in a business environment. Some people view the system as being a costly exercise, being time consuming, calls for major changes in the working practices, systems and policies. The internal environment of a business making use of ERP systems in most cases make the implementation of ERP system difficult due to the impacts of change on technology, employees and processes (Sheikh 43)[7]. Despite the above draw backs, most businesses have successfully adopted the ERP approach in their internal integrations. Statistics has it that for every 10 entities adapting the ERP system, at least 6 witnessed better results (Sheikh 44)[7]. Last year, more than 350, 000 businesses introduced this system in their operations (Sheikh 44)[7] The ERP system has received a harsh reception is many organizations as the workers claim it leads to loss of autonomy and results in the control practices of the organizations being rigid. The result of the implementation of the SAP R/3 application in areas such as the treasury led to job content reduction thus loss of autonomy among employees in their routine decision making. The centralization achieved through the use of CM proved to be costly. CM process reengineering and its implementation in the treasury using SAP R/3 module resulted in job losses which in turn led to the employees to lose their loyalty and trust to the company (Dodds 34) [2] In the long run, this led to uncertainty among employees making them develop feelings like being impotence, anguished, and resentment (Dodds 35) [2]. The uncertainty was majorly caused by limited information offered to the employees on different changes in the organization that were taking place (SGA 56) [6]. The reengineering process limited communication within the organization thus generating resistance to the change process. The ERP system also made the participation of employees in the running of the organization to be limited as the system required some form of specialization thus additional training for them to be in a position to utilize the new system. The system did not accommodate the experience and knowledge of the employees considering the way it was designed. This to some extend also resulted in resistance coming from the employees who felt that they were not included in the changes taking place in their respective organizations (Dodds 36) [2]. Most employees proffered the old System-Cash to the SAP R/3. In organization where proper training was done to the employees before the ERP system was implemented, the employees responded positively to the introduction and supported it (Dodds 36) [2]. Such employees appreciated the superiority and advantages of the SAP R/3 as compared to the System-Cash application (SGA 27) [6]. Works Cited 1. Chorafas, Dimitris. Integrating ERP, CRM, Supply Chain Management, and Smart Materials. New Jersey: Auerbach Publications, 2007. Print 2. Dodds, Jackson. Banking in Canada. Toronto: Canadian Banker’s Association, 2005. Print 3. Eschinger, Clyde & Miklovic Dominic. The ERP explosion: the party is over. Gartner Group Commentary, Vol. 10: 90-120 4. Norris, Grant & Hurley, James. E-Business and ERP: Transforming the Enterprise. New York: Wiley, 2002. Print 5. Robert, Jacobs. Why ERP? A Primer on SAP Implementation. New York: McGraw-Hill, 2004.Print 6. SGA Lists. TD Bank. Toronto: University of Toronto Press, 2000. Print 7. Sheikh, Khalid. Manufacturing Resources Planning with Introduction to ERP, SCM and CRM. New York: McGraw-Hill, 2006. Print 8. Word, Jeffrey and Magal, Simha. Essentials of Business Processes and Information Systems. Toronto: University of Toronto Press, 2009. Print 9. Monk, Ellen & Wagner Bret. Concepts in Enterprise Resource Planning. Toronto: Thomspon Course Technology, 2008. Print 10. IT Business Staff. ‘Canada’s IT Connection.’ Business Advantage through Technology. Retrieved on May 29, 2012, from http://www.itbusiness.ca Khalid Sheikh (Author) › Visit Amazon's Khalid Sheikh Page Find all the books, read about the author, and more. See search results for this author Are you an author? Learn about Author Central Read More