Understand major difficulties and problems of ES implementations and their effect on organizations. Guidelines for a successful ES purchase decisions and implementation

 "Enterprise systems ( ES ) are large-scale, integrated application-software packages that use the computational, data storage, and data transmission power of modern information technology (IT) to support processes, information flows, reporting, and data analytics within and between complex organizations."

 Transaction processing systems: Example: payroll systems and order entry system  Enterprise resource planning systems ERP  Data Warehousing  Customer Relationship Management CRM  Supply Chain Management SCM  Enterprise Content Management ECM  Enterprise Asset Management  Performance Management Applications  Others...

"It is estimated that businesses around the world are now spending $10 billion, excluding consultation fees, per year on ES"

 Dell Computer found that its system would not fit its new decentralized management model.  Applied Materials gave up on its system when it found itself overwhelmed by the organizational changes involved  Dow chemicals spent seven years and close to half a billion dollars implementing a mainframe based enterprise system, and now it has decided to start over again on a client-server basis  FoxMeyer Drug argues that its system helped drive it into bankruptcy

Some level of customization is provided through:  Choice of Modules  Configuration Tables  When the options allowed by the system aren't good enough, the company has two choices:  Rewrite some of the ES's codes  Continue using the existing system and build interface with the ES  The system's complexity makes major modifications impractical

Technological Problems Complex softwares Enormous technical challenge Large investments in: Money Time Expertise

Business Problems - Clash between system and strategy  ES are generic solutions reflect Vendor's perception of the industry best practices The logic of the system may conflict with the logic of the business which can lead to either:  The implementation will fail, wasting vast sums of resources and causing a great deal of disruption  The system will weaken important sources of the business competitive advantages. An executive of one company that has adopted SAP's system sums it up by saying, " SAP isn't a software package; it's a way of doing business"

Business Problems - Clash between system and strategy "How similar can our information flows and our processes be to those of our competitors before we begin to undermine our own sources of differentiation in the market?" An ES may be used by all companies in an industry, thus erasing their own sources of differentiation and competitive advantage. Competitive advantage drives mainly from:  Product  Service  Price

How much uniformity should exist in the way that the MNE does business in different regions or countries? Federalist Operating model :  Preserving local autonomy while maintaining a degree of corporate control.  MNE roll out different versions of the same system in each regional unit, tailored to support local operating practices. "This method of implementation trades-off some of the purity and simplicity of the ES for greater market responsiveness."

 Top management should be directly involved in planning and implementing the ES  Top management should not view the installation of an ES as primarily a technological challenge, and push responsibility for it down to their information technology departments. "Only a general manager is equipped to act as a mediator between the imperatives of the technology and the imperatives of the business." "If the development of the ES is not carefully controlled by management, management may soon find itself under the control of the system"

"The worst thing a company can do is to make decisions about a system based on technical criteria alone" A number of questions should be carefully answered before any decisions are made:  How might an ES strengthen our competitive advantages?  How might it erode them?  What will be the system's effect on our organization and culture?  Do we need to extend the system across all our functions, or should we implement only certain modules?  Would it be better to roll the system out globally or to restrict it to a certain regional units?  Are there other alternative for information management that might actually suit us better than an ES?

Start by answering a short questionnaire to define your high-level business needs. Based on your answers, detailed vendor solution data and provides a list of vendors suitable for in-depth analysis. 1. Define Your Business Needs and Choose Solutions to Evaluate Once you have a long list of solutions to compare, standard models of enterprise software features and functions to prioritize your business needs 2. Prioritize Your Requirements add the highest ranking solutions to your short list. From high-level overviews of broad feature areas to support for individual functions, detailed information about the solutions you're comparing 3. Compare and Short-list Solutions Sensitivity analysis shows you how the ranking of your short-listed solutions changes as different features and functions are deemed more or less important. 4. Analyze Short-listed Solutions in Detail At any stage of your selection project, you can quickly generate detailed reports—complete with supporting graphs and charts— that you can use to keep stakeholders up-to-date and justify your decision. 5. Report Your Findings

 Clarify your strategy before planning your ES. "Companies deriving the greatest benefits from their systems are those that, from the start viewed them primarily in strategic and organizational terms. They stressed the enterprise, not the system."  Change Organizational structures, not just computers, to address the information flow problems. "Computer Systems alone don't change organizational behavior"  Create competitive advantage with your ES  Put the right people in place  Install your Enterprise system gradually. "A speedy implication may be a wise business move; a rash implementation is not" 

This business critical ERP Over the course of time, requirements will change and one finds gaps between the original goals and needs and today’s business objectives. Two options are available. One is to continue with the status quo, and accept current performance. The positive approach is to drive more value from your enterprise by examining how Enterprise solutions could meet current business objectives, and then closing the gap to achieve the desired performance.