SESSION 6 - Putting the enterprise into the enterprise system

Question 1

Whats the paper about?

Answer 1

• most common failure when implementing enterprise systems: firms rush to install ES without having understand of business implications  logic of system may conflict with logic of business
  –> consequence: 1) implementation fails = wasting money + causing disruption 2) system weakens important sources of competitive advantage = gobbling the firm

Question 2

Whats the problem that enterprise systems solve?

Answer 2

• problem enterprise systems solve: fragmentation of information in large business orgas
• having a fragmentation of information implies direct (storing and rationalising, rekeying data etc) & indirect (suffering of productivity and customer responsiveness; decisions based on instinct rather than detailed understanding) costs
  –> when firm systems are fragmented = business is fragmented
• ES thus steamline firm’s data flows and gives access to real-time operating information
  –> gains in productivity & speed

Question 3

What about the weightoff between system and strategy?

Answer 3

• most firms need to adapt their business to system, not other way around
• firms competing on product might be careful with ES implementation to still be able to differentiate themselves
  –> risk that generic enterprise system could dissolve sources of advantage
• firms competing on cost rather than product/service may decide not to implement ES at all
  –> implies huge investment that must be weighed against eventual savings that system produces

Question 4

What about flexibility vs hierarchy?

Answer 4

• one impact: real-time access to data allows firms to streamline management structures = creating flatter, more flexible, more democratic structures
• other impact: centralisation of control over info and standardisation of processes are characteristics more conform with command-and-control, hierarchical, uniform structures = discipline
  –> organisation can use ES systems with both goals in mind, depends on execution

Question 5

How should MNE’s deal with enterprise systems?

Answer 5

• international firms can introduce more consistent operating practices across geographically dispersed units + rapid shifts in functions due to changing demand/supply
• minimization of excess manufacturing capacity to reduce both component & finished-good inventory
• when markets are too different: firms need to have different versions (tailored) of same system in each regional unit to support local operating practices
  –> challenge: where common/where different

Question 6

Whats the role of management when implementing ES?

Answer 6

• firms with biggest problems when installing ES: those that haven’t thought through its full business implications
• speedy implementation is wise - rash implementation not = needs careful deliberation
• management needs to be directly involved in planning and implementing in ES; cannot push responsibility down to technology department
  –> only manager is equipped to act as mediator between imperatives of technology and imperatives of business