What is an enterprise system and how does it work? Discuss at least three (3) ways it can provide value for a company.
Enterprise systems, also known as enterprise resource planning (ERP) systems are actually a (Norton, 2009) “suite of integrated software models and a common central database (slide 9.4)” Because of the shared database, the ways the ERP integrates information within the database, accommodates and makes it available to other ERP software applications throughout a company, the ERP understandably facilitates processes. It also keeps everyone up-to-date with the current company policies, pricing, marketing strategies and consumer demands.
Obviously, this information is the result of several different departments’ work. Nevertheless, the ERP collects the information from these divisions, makes it available for the departments and workers who need it and allows these workers to use the data for their tasks and responsibilities. As Norton (2009) demonstrates, companies challenged by decreasing market shares and/or low profit margins, have achieved their goals through the accommodation of ERP system. When these companies have outdated systems or systems that might be proprietary for marketing, development or other business processes and functions, this can create data smog when integrated. Accordingly, the data might be integrated into a common database from the proprietary ones, but most of the data would be unusable or even difficult to work with in other proprietary software applications. Therefore, ERPs like SAP help businesses optimize their processes, efficacy and meet the demands of business. As Berridge (2010) contends, this has never been more critical. Since business moves faster than trends, Berridge (2012) contends that ERPS and cloud data storage accomplish many of the needs of business. In fact, Kanaracus (2012) elucidates how the speed of business, the necessity of organizational concomitant strategies and planning has encouraged small to mid-size businesses to adopt ERPs. After all, ERPs allow functionality in each department, allow the departments to perform the tasks they know best and make the knowledge based contributions to the central database repository for other use.
Using the example, Norton (2009) explicates, businesses using ERPs can make price changes known across an organization, coordinate rather spontaneous marketing and promotions and increase consumption. This, in turn, raises market shares and profitability. It moves merchandise and makes room for the next generation of products and services.
While this seems overly simplistic, ERPs are the tool that makes this type of chain reaction and organization-wide action and reaction possible. After all, marketing and sales would receive almost instantaneous notice of the pricing changes, the promotion details and other related organizational policies. Payment processing and ordering would also be notified, as would shipping and receiving. After all, the ERP would maintain the inventory and alert customers and sales when inventory was low or limited. It would also provide middle and upper managers with information about the promotion in a timely fashion. Since ERPs also have access levels built in and associative permissions relative to database access and software program access, this maintains the hierarchy of command, authority and responsibility (Norton, 2009, slide 8.4; Norton, 2009, 1.30).
For companies, ERPS streamline backoffice expenses (Kanaracus, 2010, p. 1). As Phillips (2010) contended, ERP utilization reoriented the way resources were allocated within and across the company. It granted managers to best determine where resources could be directed to optimize research and development. Much more than this, it allowed research and development to capitalize on the data obtained through other departments, rather than talking to the same three customers (Kanarcus, 2010, p. 1). This, in turn, helped the development team conceptualize, develop and manufacture products the customers in the target market wanted.
While Phillips (2010 as cited by Kanaracus, 2010, p. 1) contended that the research and development department had made tactical choices and mostly directed resources toward the appropriate investments and processes, the ERP provided them with a greater knowledgebase. This made the organization, its products and services more competitive. It also did so with less financial commitments and less man-hours.
However, ERPs also give organizations more ability to distinguish themselves in the marketplace (Kanaracus, 2010, p. 1). Although this is not solely promoted by ERPs, simply having a shared database and software programs that provide multiple snapshots of that database and the related organizational processes and progress toward objectives, allows managers the opportunity to examine the organization, step back and consider how things could be different (p. 1). By facilitating this and then providing the ways to do this, ERP accommodation can grant organizations the opportunities to distinguish themselves in the market and/or “reinvent” themselves (p. 1). For all these reasons then, ERPs help businesses challenged by fast-moving trends, growing bodies of data, incompatible software programs and databases and rising expenses.
References
Berridge, E. (2012 Jan. 12). Top 2012 IT trends: The death of trends. ComputerWorld. Retrieved January 13 2012 from
Kanaracus, C. (2010 Jan 10). Infor CEO Charles Phillip discusses software vendor’s marketing. ComputerWorld. Retrieved from 9223327/Infor_CEO_Charles_Phillips_discusses_software_vendor_s_remaking
Norton, T. (2009). Chapter 1: Information Systems in global business today PowerPoint. Management Information Systems.
(2009). Chapter 8: Securing Information Systems. Management Information Systems.
(2009).Chapter 9: Achieving operational excellence and customer intimacy: Enterprise Applications. Management Information Systems.