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REVIEW OF INTERNATIONAL GEOGRAPHICAL EDUCATION

ISSN: 2146-0353 ● © RIGEO ● 11(4), WINTER, 2021 www.rigeo.org Research Article Role of ERP Systems in Improving Human Resources Processes

Faeq Hamad Abed Alhalboosi1 Suha Jamal Mawlood2 College of Administration& / Baghdad College of Administration& Economics / Baghdad University/Iraq University/Iraq [email protected]

Imad Ali Mahmood Al-halboosi3 College of Administration& Economics / Baghdad University/Iraq

Abstract This study investigates the role of Enterprise Resources Planning (ERP) systems in improving human resources management (HRM) processes. The rapid environmental changes led to increased demand on the ERP systems, which have changed the manual effort to technology-based processes, providing solutions focusing on the integration of all departments to achieve goals for the entire . HRM processes are mainly made up of two classes: strategic and operational HRM. An ERP system works to integrate both of them, making HRM processes more efficient, effective and feasible to provide support to the organization as a whole (inside and outside). In this article, a modest framework is proposed to describe HRM process integrity in relation to ERP systems based on a comprehensive literature review at the intersection of HRM processes and ERP. The study highlights the role and importance of ERP systems integrity in managing the HRM processes.

Keywords ERP system, HRM processes integrity.

To cite this article: Alhalboosi, F, H Y.; Mawlood, S,J.; and Mahmood Al-halboosi, I, A. (2021) Role of ERP Systems in Improving Human Resources Management Processes, Review of International Geographical Education (RIGEO), 11(4), 1667-1681. doi: 10.48047/rigeo.11.04.155 Submitted: 09-03-2021 ● Revised: 06-05-2021 ● Accepted: 14-05-2021 © RIGEO ● Review of International Geographical Education 11(4), WINTER, 2021

Introduction

Nowadays, the live with rapid environmental changes. They need to shorten the time and speed to meet the requirements of their customers. To face that, manual efforts are not enough, and technology can be used as an enabler to increase the performance, since it can provide improvements in both efficiency and effectiveness (Kimani 2013). Organizations are trying to use information systems to handle the problems of all areas in the workplace (Almgren and Bach 2014). Thus, the usage of software implementation such as Enterprise Resource Planning (ERP) systems rapidly grew in (O’Leary and 1999; Jayawickrama and Yapa 2012) since they assume an important role in providing solutions and coordinating between departments in order to obtain smooth business processes and to achieve the -wide goals. Bansal and Narula (2014) emphasize that ERPs provide support for all variations of practices in business, with a view towards enhancing productivity. These systems automate the manual effort, and result in most of the business processes to be changed right away. According to Hoch and Dulebohn (2013), the flow of information across the core functional areas in the organization (, HR, manufacturing, customer relationship, , etc.) and the flow of information among the stakeholders can be integrated with the ERP systems.This study is an effort to reveal the role of ERP systems to improve human resources management (HRM) processes. HR workflows and HR departments constitute an essential part of the organization, and they work with multiple functions (policies, practices, and activities) within the organizations. Therefore, ERP system is used by HRM units to make their decisions more efficient, effective and feasible to provide support to the organization as a whole (within and out). Therefore, to achieve that integrity, there are various ERP software tools providing HR solutions, and the most commonly used ones in HRM area are OrangeHRM, Oracle/PeopleSoft, Lawson HRM, and SAP (Michael et al. 2015).The article is organized as follows: The literature review can be seen in Section 2 which contains three sub-sections: ERP system, HRM processes, and major ERP tools for HRM. In this section, ERP concept will be discussed, the concept of HRM processes will be explained briefly and the major ERP tools for HRM will be covered. Then, in section 3, utilization of ERP systems in improving HRM processes will be discussed, and a framework is offered. Finally, conclusions are provided in section 4.

Literature Review

In this section, a comprehensive literature review is performed at the intersection of ERP and HRM. The study included 59 different research items from major journals, Procedia and others to provide a broad perspective, explaining the role, relationship and importance of ERP systems in HRM processes. These research items have been classified as follows: 39 researches from journals, while 2 researches are relevant with Procedia, and 18 researches are related with social networking, books, thesis and archives. This classification is depicted in Appendix 1. ERP systems, HRM processes and major ERP tools for HRM are discussed based on this core set of different research items.

Enterprise Resource Planning (ERP) Systems

An Enterprise Resource Planning (ERP) system is an integrated computer application software utilized to effectively handle the whole set of resources and processes in an organization (Bighrissen et al., 2012). Cotran et al. (2005) explain that all functional departments and processes, including warehousing, manufacturing and distribution, , marketing, HR and are integrated into one system (ERP). ERP system promotes and automates business processes operations (Motalab and Shohag 2011; Hurbean 2008). Indeed, various improvements are triggered by integrated ERP implementation as jobs become broader, and organizational boundaries begin to blur. All users can have access to all information since the authority moves to the front-line, and processes become visible and become standardized, users from multiple levels gain access to all relevant and required information (Hurbean 2008).ERP is an advanced system which provides the integration of transactions-oriented data and business functions, and it is well- proven to significantly improve the organizational performance and help the organization to build competitive advantage (Abdoulmohammad et al. 2011). Thus, this system focuses on integration tasks for all department into achieving goals for the organization (Hossain et al. 2002; Cotran et al.

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2005; Dery and Wailes 2005; Tadinen 2005; Jackson 2010; Abdoulmohammad et al. 2011; Hoch and Dulebohn 2013). As depicted in Figure 1, ERP systems are used to integrate all processes of functions regarding in the enterprise.

Front-office Back-office C Corporate S o reporting u s Financial p t p u Sales and l i m Central Manufacturing e e r r s s Inventory

HRM

Figure 1- Integration of all processes with ERP systems (Source: Hossain et al., 2002).

The main aim of implementing an ERP system is to manage and orchestrate all resources, information, and business processes from common data repositories (Devos et al. 2017). As can be seen in Table 2, an ERP system provides integrated platform to support variety of business functions (Sumner, 2014). With an ERP system; information systems can be integrated, coordination across business functions is supported, data is integrated with the same meaning across multiple functions, maintenance can become uniform and integrated, common interfaces across systems can be used, consistent and real-time information can be gotten across partners, client-server model is used, smooth and integrated business processes can be used consistently and integrated applications can be used. Table 2: Business Systems Before and After ERP System Implementations (Source: Sumner, 2014).

Before ERP After ERP Information Stand-alone systems Integrated systems systems Coordination Lack of coordination among business Supports coordination across functions business functions Disintegrated data with inconsistent Integrated data with the same definitions meaning across multiple functions Maintenance Maintenance systems which are Uniform and integrated maintenance piecemeal, inconsistent and costly costly to maintain separate legacy systems Interfaces Difficulties in ensuring interfaces across Common interfaces across systems systems Information Inconsistencies and redundancies in Consistent and real-time information information across partners System May not be state of the art Based on a client-server model architecture Processes Incompatible processes Consistent, smooth and integrated business processes Applications Isolated applications Commonly used and integrated applications

There are many benefits of ERP systems usage in an organization. Main benefits of an ERP system

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can summarized as it (Ahmed et al. 2003; Tambovcevs and Tambovceva 2013; Suhaimi et al. 2016);  Increases organizational performance by streamlining, reengineering and controlling the major business processes.  Reduces cost and time for all processes in the organization, increasing their efficiency.  Avoids manual effort and provides transactional systems, operating system.  Provides flexibility and efficiency in planning, allocation and control.  Reduces project delivery times.  Allows for users’ access to documents and reports.  Facilitates communication and data transfer of critical information.  Enhances customer satisfaction. Hence, ERP system can provide significant improvements in efficiency across an organization when implemented correctly (Mandal and Gunasekaran 2003).

Human (HRM) processes

Human resource management (HRM) focuses on planning, utilizing and controlling employees to achieve organization objectives (Mehmood et al. 2011; Mondy and Martocchio 2016). This means staff need to be managed to achieve the goals, with all the necessary long-tem policies and practices. As can be seen in Figure 2, organizations need to link their strategic-level decisions with HRM department. Their philosophy, vision, mission, and policies are to be arranged in a hierarchy to lead to effective HRM practices (Ramaraju 2015).

Key Decision- Maker’s philosophies

Visionary Long-term Concepts of Organization

Organizational Mission and Goals

Organizational Policies

Human Resource Policies

Human Resource Management Practices

Figure 2 Organizational Philosophy and Vision (Ramaraju, 2015).

Based on this philosophy, Figure 3 shows the representative main processes in relation to HRM for an enterprise.

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HRM Strategic Organizational Strategy for Other HRM Strategy; Vision,

Operational HRM Policies for Other Organizational Policies

HRM Practices

Pre-Hiring Post-Hiring  and  Compensation, design, Hiring  Safety,  Human resource   Training and planning development,

Figure 3 - Framework of HRM Processes

This compact diagram developed by the authors shows that HRM has line authority within HR department and staff authority with other departments in the companies (Dessler 2013). Besides, HRM has the dual function of organizational management. It supports the organization’s strategy, and represents and advocates for the employees (DeCenzo et al. 2010) by strategic and operational HRM (Batti 2014). These functions lead to HRM policies, which are guiding HRM areas and practices for reaching an organization’s goals and objectives (Demo et al. 2012), including human resource flow, reward systems, and work systems (Beer et al. 1984). In compatibility with strategic goals and policies, operational HRM practices are put forward in order to manage the related processes of job design, recruiting and selection, training, performance appraisal, and compensation (Hansen et al. 2017). In this context, Cabrera and Cabrera (2003) believe that HRM assumes the following main roles of strategic partner, change agent, administrative expert, and employee champion in order to manage the strategic focus, processes (Hard Aspects), people (Soft Aspects), as well as Day-to-Day/operational focus. Therefore, HRM is an area of critical importance for an organization, since it directly deals with employees, the most valuable resource for an organization, at all temporal levels. It is also noteworthy that HRM is as critical as other processes within the organization, since it is also exposed to sustainability, technology and globalization challenges and affect the competitiveness of the organization.

Major ERP tools for HRM

In practice, various well-proven software vendors offer ERP tools for HRM. Based on Michael et al. (2015) there are four mainly utilized tools for HRM in relation to ERP: Orange HRM: is a software/tool which a powerful human resources tool used by many small or midsize organizations (Pande and Gomes 2013; Simaanya 2014). It is considered to be the well- known open source Human Resources Management (HRM) tool with a rich set of features. It is robust with other versions, such as Orange HRM Open Source , Orange HRM Professional and Orange HRM Enterprise (Majeed and Özyer 2016). It has many benefits such as providing functions that correspond to systems administration, personnel information management, leave employees, time sheets, attendance, recruitment, and (Ibrahim et al. 2014; Agarwal et al. 2014). Oracle/PeopleSoft: Kurtz (2005) mentions that Oracle/PeopleSoft include eight enterprise products: enterprise tools and technology, supplier relationship management, supply chain management customer relationship management, , management, service automation and campus solutions. , and. Adams et al. (2008) explain that 1671 © RIGEO ● Review of International Geographical Education 11(4), WINTER, 2021 enterprise products maintains record and communicates with who needs; tracks all aspects of the Human Capital needs; helps organizations track the non-core business processes which have been outsourced and aids in the executive decision-making process. Lawson HRM; this system integrates human resources and self-service applications into one user interface with single sign-on capability, management and information, workforce planning, and prepare time and attendance (Gale 2012). SAP (System Application Products): a worldwide leader in ERP solutions, enabling business processes improvement and integration (McCann and Grey 2009; Berdie and Osaci 2012). Its HRM solution enables overall performance improvement, organization (Hashim et al. 2012), supporting workforce planning, benchmarking, workforce process analytics and measurement, simulation and strategic alignment (Kapoor 2010). Hence, various giant software developers integrate HRM functionality into their business suites.

Utilization of ERP systems in Improving HRM processes

In table 1, it is observed that most of the researches used a theoretical approach to explain the relation between ERP system and HRM (Dery and Wailes 2005; Yang 2009; Jackson 2010; Dorel and Bradic-Martinovic 2011; Li et al. 2011; Hoch and Dulebohn 2013; Diop et al. 2013; Agarwal et al. 2014; Bansal and Narula 2014; Ahlawat 2016), while some researchers suggested an analytical approach more complex to show the deep relation between the variables (Tadinen 2005; Shahzadi et al. 2014; Khoualdi and Basahel 2014; Ali et al. 2015; Raja and Gayatri 2016). Therefore, based on most of the researches, this section will focus on a theoretical approach to explain the intersection of ERP system and HRM processes. ERP system is very effective in handling the different functions for organizations (material purchase and inventory handling, order tracking, data related to receivable and payables, warehousing, HRM, production, transportation, ledger maintenance etc.), (Shahzadi et al. 2014). Related with the topic, Dery and Wailes (2005) explained that ERPs enable the automation of HRM processes, passing many traditional servicing features to business units and line managers, thereby reducing the time spent by the HR managers for administrative and compliance activities. It is also emphasized that ERPs support the integration of HR processes into corporate strategy. This means, ERP is very widely applied in HR departments (Dorel and Bradic-Martinovic 2011), and HR functions are becoming fully integrated with the operational aspects of business (Tadinen 2005). Bansal and Narula (2014) mention that ERPs helped in making HRM processes simpler, efficient and smarter, with quick availability of decision making data. Jackson (2010) highlighted that the enterprise-wide integration of operational HR administrative activities via the use of ERP systems lead to instant information, reduced cycle times, and improved productivity. Therefore, ERP systems have tools which improve entire set of HRM processes. These tools are considered as an HRIS (Human Resources Information System), referring to a software package generally coming as either a stand-alone package or part of an ERP system to handle a variety of HR functions in an organization (SparkKD 2013). Generally, HRISs have functionalities to automate the HRM processes given in Figure 4 below: As can be seen in Figure 4, these tools work at strategic and operational levels in relation to all the areas for HRM explained up to so far. HR department needs these tools to link within and across organizations for running efficient and integrated processes activities (Monk and Wagner 2013). For HR processes, main inputs include: personnel forecasts from all functional units and skills data from users; whereas outputs include: employee training and certification with skills database, regulation compliance, and employee evaluation and compensation. Hence, ERP tools help HRM processes by offering organizations and their employees the ability to actively participate in the HR “self-serve” activities such as:, entering, reviewing and updating personal information, accessing to benefit information, updating and reviewing benefits selection, completing and submitting expense reports and travel requests, automatic routing of approval requests and informing, applying for training, skills upgrade or for other jobs within the company, and seeking or informing managers about professional development opportunities (Jackson 2010). This means, ERP tools are used by HRM to make its processes more efficient, effective and smooth for the benefit of the entire organization. Sadrzadehrafiei et al. (2013) explain that ERP tools have many benefits for HRM processes in different dimensions, as given in Figure 5;

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HRISs

Strategic HR Analysis Integration

Personnel Knowledge Development Management

Communication Forecasting and and Integration Planning

Records and Compliance

Figure 4 Automation of working HRISs according to Obeidat (2012).

Strategic benefits: Improve employee performance management Improve learning, training and development

Tactical benefits: Facilitate business learning, Better resource management, Improve decision making capability, Improve the interaction between business units, Centralise the administrative activities, Greater ability to deploy new information systems functionality, and Improve the performance of the industr

Operational benefits: Improve the information accuracy/speed/quality/ and availability, General information integration, Talent management analytics, and Real time data access across multiple sites

Figure 5 Benefits for ERP tools toward HRM processes based on Sadrzadehrafiei et al. (2013).

Based on the four most frequently used software tools discussed in Section 2.3, utilization of ERP systems toward HRM processes is summarized in the Table 3 below:

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Table 3: Utilization of ERP Systems toward HRM Processes

OrangeHRM Oracle/PeopleSoft  Gives good service to HRM to  Addresses complex HRM requirements. managing personnel information.  Maintains information for each  Tracks who are leaving. employee.  Determines time sheets and  Provides solutions to quicken HR attendance for employees. performance.  Reduces the cost by choosing the  Provides solutions for a shortcut to high best employees. cost in programs HRM.  Appraisal performance for  Tracks all aspects of the HR needs. employees.  Allows providing information to other  Evolution performance for departments in order to know how effective employees. HR is in enterprise.  Integration with other departments. Lawson HRM SAP  Helps in choosing the best  Provides meaningful solutions and employees. realistic evaluations in HRM areas.  Helps in retain the best.  Provides solutions to enhance  Provides self-service for employees performance of the employees and the within enterprise. organization.  Manages (prepare and arrange)  Puts planning for employees to reduce payroll for employees. cost, measure performance, build human  Plans for employees capital.  Prepares and arrange time and  Provides solutions for issues that face attendance. employees.  Integrates with other departments in  Integrates HRM processes with other order to correctly employees track. departments.

Along with all these benefits, such systems also have restrictions that can be considered as disadvantages, which cause barriers in their implementations. Therefore, according to Beckers and Bsat (2002), various advantages as well as barriers to implementation for HRIS as part of ERP can be summarized in the following Table 4:

Table 4; Advantages and Barriers for HRISs

Advantages of HRIS Barriers of HRIS implementation  Improving HR operations toward  Lack of training increase competitiveness.  High initial cost.  Generating a variety of HR-related  Need for reports. reengineering.  Shifting from transactional  Compatibility and integration issues orientation to strategic orientation for HRM with the compny’s existing system. processes.  Insufficient information technology  Ensuring that employees are an (IT) support. integral part of HRIS.   Re-arranging the entire HR processes of the companies. Source; based on Beckers and Bsat (2002).

As it is evident, utilizing these toools are subject to all difficulties and barriers as part of ERP project implementations, and needs careful planning and control of implementation. Based on all above discussion, utilization of ERP systems in relation to HRM processes can be depicted in the framework given in figure 6:

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Organizational strategy vision, mission, goals

Strategic level for HRM supports organizational strategy

Policies ERP Users Publish guidelines for HRM System processes and activities, like policies Database for (Workdays, holiday, paydays, short/overtime, hiring, guide for performance evaluation and appraisal, and explain for

Operational level for HRM Practices Pre-Hiring; Hiring; Post-Hiring; HR planning, Job analysis and Recruitment, Selection. Compensation, Job safety, design. Training and Development, and Performance management.

ERP system work in order to; ERP system work in order to; ERP system work in order to;  Appraisal and Evolution  Addresses complex HRM  Gives information from ERP performance for employees. requirements. system database, when HRM  Helps in retain the best.  Plans for employees. works to recruit from internal.  Determines who needs training  Gives information from ERP  Allows applicants to see and development. system database when HRM work information about the new job.  Determines for whom give to job analysis and design.  Applicants can apply online by rewards.  Publishes information on one connect with tools of ERP system. tools/software of ERP system to fill job position.  Reduces the cost by choosing the best employees.

Figure 6 A framework of HRM processes in relation to ERP systems This figure explains how ERP systems integrate with HRM processes at strategic and operational levels. As can be seen from the figure, ERP system integrates with organizational strategy (mission, vision and goals) and various strategic-level HRM policies. This interaction leads to operational-level HRM practices related with pre-hiring, hiring and post-hiring HRM activities. For instance, when the organization needs to put new strategy, it needs to know information about staff, from ERP systems database, will get information about numbers, skills, experiences…etc. This information is prepared in strategic level of HRM (supporting the organizational strategy). On the other hand, if there is a new job, HRM will publish conditions on ERP systems and applicants will apply online on a tool of ERP system, and this tool will be selecting the best applicants. Hence, the modest framework suggested in the above figure highlights the integration between HRM processes and ERP systems to provide smooth, integrated HRM processes and consistency across the strategic-level decisions and operational-level HRM practices.

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Conclusion

In this study, the role of ERP systems in improving HRM processes are discussed. It is clearly revealed that integrity with the backbone ERP systems is a critical issue to improve HRM processes. This integrity enables smooth HRM processes with effective and efficient managerial decision- making at operational as well strategic levels.To highlight this, a modest framework is proposed under section 3. This framework is valuable in providing the integration of pre-hiring, hiring and post-hiring operational practices with the strategic aspects around a consistent database structure integrated with the ERP backbone. This integrity enables the users at different managerial levels to obtain the required support in decision-making. Undoubtedly, various ERP-based HRM tools and successful implementations are present in the literature. Still, it is frequently observed that implementation of HRM functionalities during ERP projects are generally at very late phases or totally ignored. HRM functions are continued to be performed in an unintegrated platform while many other enterprise processes are given priority during these project implementations. Unavoidably, various material-management related processes receive priority during such ERP projects. However, this should not be at a significant neglect or delay of the integration of the HRM process. Therefore the framework proposed, and this study in general, is important to highlight the need for proper consideration of the HRM processes during ERP implementations. Efficiencies that can be obtained in HRM processes by ensuring ERP backbone integrity are clearly put forward in this study. Hence, this study suggests that implementation of HRM modules or add- ons deserve proper attention and planning during ERP implementations to bring enterprise-wide efficiencies. In the light of continuously changing skill sets and HR requirements, research containing comparative implementation cases from different sectors regarding the ERP- HR integration will be valuable further research suggestions.

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Distribution of the researches based on journals Advanced Materials Research 1 American Society for Engineering Education 1 Brazilian Administration Review 1 Cambridge Business & Economics Conference 1 European Journal of Operational Research 1 Global Journal of Finance and Management 1 Harvard Business School 1 Human Resource Management Review 1 Human Resource Planning 1 Humanities and Social Sciences 1 Indus Journal of Management and Social Sciences 1 Information Systems Management 1 Institute of Electrical and Electronics Engineers (IEEE) 1 Interdisciplinary Journal of Contemporary Research Business 1 International Journal of Business and Management 1 International Journal of Computer Applications 2 International Journal of Computer Technology and Applications 1 International Journal of Economics and Management 1 International Journal of Human Resource Management 1 International Journal of Multidisciplinary Research and Development 1 International Journal on Recent and Innovation Trends in Computing and Communication 1 Issues in Information Systems 1 Journal of Academic Research in Accounting, Finance and Management Sciences 1 Journal of Enterprise Resource Planning Studies 3 Journal of Human Resource and Adult Learning 1 Journal of Management Research 1 Journal of Strategic Change (SC) 1 Journal of Worldwide Hospitality and Tourism Themes 1 Middle-East Journal of Scientific Research 1 Munich Personal RePEc Archive (MPRA) 3 Singaporean Journal of Business Economics, and Management Studies 1 Strategic HR Review 1 Swedish School of Economics and Business Administration 1 Universal Journal of Engineering Science 1 Total 39

1680 Alhalboosi,F, H Y.; Mawlood, S,J.; and Mahmood Al-halboosi, I, A. (2021) Role of ERP Systems in Improving H…..

Distribution of the researches based on Procedia Social and Behavioral Sciences 1 Technology 1 Total 2 Distribution of the researches based on Social Networking and Others ResearchGate 3 Web Sites 2 Association for the Advancement of Artificial Intelligence (AAAI) Technical Report 1 Proceedings of the International Conference on Systems 1 Proceedings of the International Conference on Computing Technology and Information 1 Management HAL archives 1 Thesis 1 Books 8 Total 18 Grand Total 59

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