Gaining a competitive advantage through ERP
Gaining a competitive advantage through ERPOrganizations today confront new markets, new competition and increasing customer expectations. Thus today’s organizations have to constantly re-engineer their business practices and procedures to be more and more responsive to customers and competition. In the 1990’s Information technology and Business Process re-engineering, used in conjunction with each other, have emerged as important tools which give organizations the leading edge. The efficiency of an enterprise depends on the quick flow of information across the complete supply chain i.e. from the customer to manufacturers to supplier. ERP (Enterprise resource planning) systems, have been a major information technology that has been used by businesses today, in hopes of gaining a competitive advantage. But this advantage seems only plausible if the implementation is coupled with process re-engineering, as well.
ERP is an enterprise wide system that integrates primary business applications, including all areas and levels of an organization. All the applications in an ERP suite share a common set of data that is stored in a central database. It aims to serve as a backbone for your whole computing business, integrating key business and management processes to provide a sky-level view of much of what’s going on in your organization. A typical ERP system provides applications for accounting and controlling, production and materials management, quality management, plant maintenance, sales and distribution, human resources, and project management.
In the 1990s, most companies have experienced business process re-engineering and implemented ERP or other packaged software. ERP is difficult to implement. Often, firms adapt their business processes to the ERP system, rather than the other way around. This translates to using business processes similar to those of competitors and losing competitive advantage. Moreover, ERP systems only address the needs of part of the enterprise, creating islands of automation and a need for integration that requires considerable effort. A typical ERP system gives you an 80% solution. You must still implement the remaining 20% to fit your enterprise needs. In the end, you will pay more for customizing this last 20% than for the entire ERP application. It is not unusual for companies to spend millions of dollars to implement an ERP system. ERP requires the re-engineering of a company’s process and culture. With solutions like SAP you must change your operations and processes to match the logic of the ERP package. ERP must be integrated with the rest of the IS environment. They must build the infrastructure that ties their new ERP package with their existing mainframes, DBMSs, data warehouses, Web servers, and email systems.
Thus a proper implementation of the system will provide a competitive advantage, based on the company integrating the system with its own processes to make it unique, and the cost and time put in will be offset by the benefits of the system. The first step in a successful implementation project is gaining a solid understanding of ERP systems and benefits in relation to your own...
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