Use Of Enterprise Systems By Complex Organizations
Today’s organizations depend fully on the information technology, because through it businesses are able to provide information to their customers. Information technology refers to a process of studying, developing, and implementing through the support of information systems. Information technology has made organizations to consider technology as a corporate resource, because it is an important tool for conveying their information to all targets (Hayles, 2007). In order to ensure improvement in the efficiency, it is imperative for organizations to use business application software. The main sources of strategic enterprise information include enterprise resource planning (ERP), customer relationship management (CRM), and supply chain management.
Enterprise Resource Planning (ERP)
Enterprise Resource Planning refers to integrated software systems that organizations use in managing their internal and external resources. These resources include financial resources, physical assets, materials, and staff. An enterprise resource planning system is very crucial in facilitating the flow of information between different departments in the organization, and then linking to the outside stakeholders like customer and supplier systems. According to Nobel (2010) the main reason for implementation of an ERP system is to bring different functions of the organization together to form a single system environment, which will ensure efficient running of operations.
ERP has a lot of benefits to organizations. One of the benefits is that it helps employees to work more efficiently, because it removes the barriers that are mostly common between business units. Secondly, it ensures improvement in financial compliance to the set standards, and reduces risk. Thirdly, it boosts customer service in that it provides a single source for billing and tracking of relationship. Fourthly, it provides a global view of real-time data that facilitates addressing of concerns in organizations proactively and makes improvements. Lastly, it leads to the automation of core business operations such as procure-to-pay process and lead-to-cash.
IT cortex conducted a research on the companies that have implemented ERP systems to determine their success. More than half of the surveyed companies that had implemented the systems responded that the project fell short of their expectations (Firestone, 2003). It is very unfortunate that many organizations have not learnt lessons from the mistakes committed by their counterparts. Organizations like Nike and Hershey admitted publicly that they failed miserably in their implementation of ERP, and they incurred huge financial resources in the process. The failures encountered in the implementation are as a result of organizations being unable to fully prepare for the four most important implementation failures (Filipe and Cordeiro, 2009). First is that many organizations are not able to allocate sufficient resources that are needed to implement ERP project. To complicate the problem further, the implementation of the project is often left to consultants who are not familiar with the particulars of internal processes.
Secondly, is lack of specialized knowledge because the intermediary companies involved in selling ERP solutions are not in a position to provide customization. In addition, finding the cheapest solution may invite more problems.
The third reason is the resistance to change experienced from staff. ERP systems have core structure which cannot be changed, and this functionality makes the operations of a company to halt, thus losing employee confidence and their effectiveness.
Fourth reason is the selection of an inadequate solution. In the industry we have many manufacturers each providing a solution that has different structure and content accessibility. Thus, the selection of the solution that is not in line with the existing processes leads to the creation of larger gaps, and this increases risk for failure.
Nonetheless, there is a new generation of ERP systems known as Agresso Business World, which is less costly, improves efficiency, and enables organizations to make changes to it even after implementation.
Customer Relationship Management (CRM)
Customer relationship management refers to applications that help organizations in taking care of their current and future customers. CRM ensures that the interaction between the sales, marketing and customer service teams of organizations, and the customers are all controlled at one point. This application allows an organization to make the best decision, because of the availability of accurate and up-to-date information about their customers (Firestone, 2003). The purpose of CRM applications is to bring down costs and increase the profit by improving customer satisfaction, loyalty, and support. It acts as a central point where all data sources within an organization are brought together as well as those from outside the organization, thus giving a clear picture about each customer of the organization. Therefore, the customers that face employees in the departments of sales, customer support, and marketing are able to make quick and informed decision on everything.
There are many benefits of CRM systems. First is that data is stored at one place and this makes it easy to access by all members of the organization. This facilitates communication between the employees of the organization and the customers. In a situation when one of the marketing staff is on holiday, the marketing team can access information about his customers and take over from where he left without affecting customer relationship.
Secondly, CRM brings about a high level of customer satisfaction, because the customers develop a feeling of being part of a team than just a mere sales statistic. The resulting sense of partnership makes the customers happy, tempting them to come back for business and refer a new customer to the place.
Thirdly, CRM systems store detailed information about each customer. Information stored includes the orders that were previously requested by customers, correspondence, responses of surveys and marketing emails. The accessibility of this information is very significant, because it brings about improvement on the speed and quality of customer service. This gives employees ample time to direct their efforts on other priorities such as sales, and marketing.
However, the desired results might fail to come from the implementation of a customer relationship management (CRM). There might be lack of commitment to implement the project from the people working in the company. The system is a customer-focused approach and therefore, to adapt to it there must be a cultural change in the organization. The lack of commitment from the staff of the organization could compromise the relationships with customers leading to dissatisfaction and revenue loss.
The existence of weak leadership makes it hard for the smooth implementation of CRM. It is important for management to provide guidance and leadership, and emphasize on customer focus on every project to be initiated, and if the project does not look good to the customers, it should be abandoned. This will necessitate going back to the drawing board to come up with an excellent solution.
Supply Chain Management (SCM)
The concept of supply chain management is based on two main things. The first thing is that every product reaching the final stage, which is the consumer, is as a result of concerted efforts of various organizations. Supply chain is a collective term referring to those organizations involved in the movement of goods and material.
The second thing is that supply chains have been into existence for quite a long time, but the funny thing is that most of organizations are concerned with what is taking place within their parameter wall. Only a few organizations have the knowledge about the whole process of activities that a product must goes through before reaching the final consumer (Firestone, 2003). This leads to a disorganized and less effective supply chains. Thus, SCM system is very important in that it results to maximization of customer value and achievement of sustainable competitive advantage.
There are many benefits linked with supply chain management. It reduces the lead times to a customer and improves planning and forecasting. In addition, it saves costs and maximizes efficiency. Costs saving result from the reduction of inventory across the supply chain.
Nonetheless, the supply chain management also has its drawbacks. The implementation of SCM requires calls for investment time and money. It is imperative for an organization to have understanding about marketplace and business environment, such as the needs of customers and their demands, supplier options and competition.
The second limitation of the SCM is that outsourcing to foreign countries with aim of saving money could cause uproar from the media and customers. Organizations value outsourcing because it provides cheap labour from abroad and this could elicit negative reaction from the public (Filipe and Cordeiro, 2009). The public view outsourcing as abuse of human capital from another country because companies offer unfair wages and provide unsafe working conditions. Companies like Nike have found themselves under the mercy of media from allegations about child labour and poor working conditions for its workers in a shoe plant located in Vietnam.
In a nutshell, the use of enterprise systems by complex organizations is inevitable. Enterprise systems are application software packages that provide support to business processes and information flows as well as providing easy and efficient reporting and analytical tools for speedy decision making. They are very important in that they make companies to save costs and maximize profit and without them, business operations cannot go smoothly.
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