1. Define and explain the benefits of enterprise systems with suitable examples.
“Benefit: something that is advantageous or good; an advantage…” American Psychological Association (APA) n.d.
Motwilla and Thompson (2012, pp. 15 – 16) cite both system and business benefits that can arise from successful implementation and use of enterprise resources planning (ERP) systems.
System benefits describe internal benefits a company may experience; such as integration of data and applications, improvements in maintenance and support of ERP arising from centralised IT staff, enhanced security of data and applications and consistency that arises from a common user interface.
While business benefits described by the duo tend to pertain to external activities and the interaction between these external factors and the ERP system. For example, they mention: an increasing responsiveness (of the organisation) to environmental factors that may impact the organisation; linking and exchanging information in real time with supply chain partners, increasing efficiency; easily accessible real time information allows for ability to provide better customer service; business processes are improved, as during the implementation they’re scrutinised, re-engineered and enhanced to better engage with the ERP system.
It’s difficult to ascertain, from an outsider perspective, the advantages gained at an internal (or systems) level by any ERP implementation. Business benefits though can be readily obtained from a variety of sources. The following lists each benefit and provides a real world view of these benefits.
- An increasing responsiveness (of the organisation) to environmental factors that may impact the organisation; things that pertain to growth and maintaining market share.
‘Company B’, a shoe manufacturer, implemented an ERP system to decrease both enquiry and order response and delivery times. Their AS/400 system was not agile enough to respond within the timeframe customers now expected a response in. This change in customer preferences made itself known through a decline in market share; providing impetus for the company to upgrade their ERP system. They successfully implemented their ERP and have benefited by being able to respond to customers in a timely manner, regaining their market share. (Motwani, et al. 2002).
- Real time information sharing helps collaboration between units and improves efficiency with supply chain partners.
- Efficiency of business processes are enhanced due to the re-engineering of business processes.
Nestle USA achieved these benefits (and savings of over $325 million) when they introduced their ERP system; the following exert explains:
“Most of these savings came in the area of supply chain improvements, specifically demand forecasting. “The old process involved a sales guy giving a number to the demand planner, who says, ‘Those guys don’t know what the hell they are talking about; I’m going to give them this number’. The demand planner turns [that number] over to factory, and the factory says the demand planner doesn’t know what the hell he’s talking about. Then the factory changes the number again. With SAP in place, common databases and business processes lead to more trustworthy demand forecasts for the various Nestle products. Furthermore, because all of Nestle USA is using the same data, Nestle can forecast down to the distribution centre level” (Worthen, pg. 4).” (Dieringer, 2004).
In this instance, collaboration, efficiency of the supply chain and business processes were all enhanced by the introduction of the ERP system.
- Better customer service due to quicker information flow across departments.
Mar-Bal, Inc., a manufacturing company, have been able to achieve improvements in customer service after implementing their ERP solution. Order delivery, invoice generation and delivery are now automated processes providing consistent and timely delivery to customers (not previously the case). Instead of multiple phone calls needed to track a delivery’s progress, customer service representatives now have access to this information via a smartphone app, making response to this oft enquiry instantaneous. These simple actions increase the level of perceived customer service and allow the customer service representatives more time to deal with other enquires.
2. In relation to your assignment 1, the annotated bibliography, find an article that you can write an annotation on. Prepare a draft annotation, citing the article, in your blog.
Motwani, J Mirchandani, D Mandan, M & Gunaseekaran A 2002, ‘Successful implementation of ERP projects: evidence from two case studies’, International Journal of Production Economics, vol. 75, no. 1/2, pp. 14 – 16.
This journal article examines the implementation of Enterprise Resource Planning (ERP) software projects and the impact different implementation methods have on an individual company’s success using a comparative analysis of real world cases. Both business process change theory and escalation theory are used as a basis of discussion; with an aim to identify practices that tend to reap a successful implementation. Context of the discussion centres on environmental conditions for change and the ability of the organisation to manage change.
This article will provide evidence to support the case study by assisting in identifying causes of failure as well as providing information on business process change management and tactics/approaches.
References
Dieringer, D S 2004, ERP implementation at Nestle, Viewed 07th November, 2014, http://www.uwosh.edu/faculty_staff/wresch/ERPNestle.htm
IQMS 2014 IQMS finds a quarter of a million dollars in savings for Mar-Bal, Inc. Viewed 07th November, 2014, http://www.iqms.com/company/mar-bal/index.html
Motiwalla, L F & Thompson, J 2012, Enterprise systems for management, Pearson Education, New Jersey.
Motwani, J Mirchandani, D Mandan, M & Gunaseekaran A 2002, ‘Successful implementation of ERP projects: evidence from two case studies’, International Journal of Production Economics, vol. 75, no. 1/2, pp. 14 – 16.
American Psychological Association (APA) n.d. Dictionary.com unabridged. Viewed 07th November, 2014, http://dictionary.reference.com/browse/benefits
COIS12073: Enterprise Systems (Term 3, 2014) 