Enterprise Systems are application packages which allow an organisation integrate their entire IT system together. In essence, company-wide access to required business knowledge becomes available, rather than independent systems which don’t talk to each other and duplicate data, or manual input of data to reports & spreadsheets. They support the business processes and flow of information in an organisation, while also enabling easier reporting and analytics within the company. The final goals being efficient running of the company, increasing work quality, saving employee time, and possible reducing costs.
At this point many would think ‘Sounds good, but why would my business need it?’
Let me give you a real-life example. My Dad was looking for to purchase some Potash for his fruit trees recently. He rang around the local garden shops & agricultural stores to find the best price-by-weight. One particular store was about half the price of the others, and even though it was 10-miles further out of town, he considered it worth the drive. (Considering we were only talking €8 for 2.5kg versus €8 for 1.2kg it might not have been a decision I would have made!)
Decision made, he drove the extra ten miles to the agricultural store. He ordered his Potash, paid for it, was issued with an Invoice & receipt, went down to the store to hand in his invoice, and was told they had none in stock! He then had to return to the Reception area, get a refund for the purchase he wasn’t able to make, then leave for another store. Not a happy customer.
If we look at the interactions that took place between customer and retailer, how many places could we have made the interaction better?
- Original phone call. Could the retailer have checked the stock level?
- Reception. Invoiced & Paid for stock not available.
- Store. Could stock have been ordered earlier?
- Accounts. Purchase & Return for stock not available.
- Customer Service. How likely is this customer going to return again?
- Reputation. I'm not mentioning the company here, but my Dad is in his chats ...
Now let’s look at the scenario where the company had an Enterprise system in place. In this case all the companies information would be stored on one database, this would include stock levels & pricing. The person who took the original phone call could have seen the stock levels at the time they were checking the price. As a result they could have informed my Dad they didn’t have the stock in place, and he wouldn’t have had an wasted drive & the bad customer experience.
An even better result would be that the company had agreed minimum stock levels saved in the system, say 10 bags of Potash. When the 10th last bag in stock is sold, the system automatically sends through an order to their suppliers, and the cash accounts would reflect the order. No interaction required by the store staff to log a low stock level. And more importantly, no customers turned away unhappy. In addition, the managers of the store would always have available analytics on the use of the product, and be able to perfect the minimum stock levels for each product to ensure they don’t have too much stock to hand at all times.
Sounds like a better system all round ?!
An Enterprise System is essentially a centralised database, and a number of software modules which integrate together. All the different divisions of the company write to the database. This data is then available for the other software modules to use within the organisation.
In our picture above the Sales Forecast from the Sales & Marketing department can inform the Production Schedules for Manufacturing & Production department. This in turn will inform the Material requirements, which require financing from the Finance & Accounting department. All of these conversations require no passing of paper reports between department.
Company Management can obtain point-in-time information on company operations as required.
- Increases Operational Efficiency
- Up to date information available for managers to make better decisions.
- Enforcing standard procedures & data standards across the enterprise.
- Better supply line information -> Manufacturing through to and back from sales/ delivery.
- Built-in analytics to identify company proficiency.
- Cost Savings
Enterprise Systems for large vendors include SAP NetWeaver & Oracle Fusion. With options available on the market for Small & Medium companies, or those who want to use cloud services.
All systems include customisable tables, so you can customise the system to the way your compnay works, e.g. you can organise by location, product range, etc. If the customisable tables are not enough to get the system to work the way you want it to, you could code changes to the system. However, this is inadvisable. Firstly because there are tricky systems to change – you could affect other areas without knowing. But Secondly these applications are built around best practice principles, and you should look at your business processes first for change.
I think enterprise systems are brilliant. Having one reliable and accurate source of company data is the Holy Grail for somebody who has worked with multiple legacy systems. However, there in lies the major problem I see with these – legacy systems & the willingness to do away with old systems. It’s fine for a small company who want to grow into the future – not too much data or too many business processes to bring across from old systems. Or even for major multi-national companies with money behind them, e.g. Coca-Cola switching to a SAP enterprise system to leverage their buying power for raw materials (Laudon & Laudon, 2014, pg 372). However, if your company has been around for a while, you probably have a number of systems, and business processes in place. Are you willing to spend the time & money doing a full analysis of their systems? Identifying what can go, what needs to change, and what is absolutely required for your company going forward? Only then can you even think about switching to an enterprise system. If you’re not going to take this on board fully, I see it as wasted money, as inevitably, any system will be customised to the point where it no longer functions as well as it can do.
Second major issue to be looked at is security & data access. This is obviously a general concern for all IT systems. However, it’s worth spending extra time considering the Security Policy of Enterprise Systems. In a case where HR had their own Personnel databases, they could control who had access to employee records in-house. In an Enterprise system, the Personnel data is held on the centralised database. This means Identity Management needs to be put in place to identify who can have access to which data, and what level of data access they can have, e.g. Read, write, or update access. The concern I would have is that you’ll need somebody who knows how to customise this access on the staff. Meaning the company needs IT resources or else pay for consultants to do the customisation. This is an extra cost that needs to be taken into account going forward with Enterprise Systems.
Overall, Enterprise systems seem a logical way to look after a companies data & provide great advantages to an organisation.
Laudon K & Laudon J. (2014) ‘Management Information Systems: Managing the Digital Firm’ Pearson, Edinburgh.