Enterprise systems (ES) to support the business processes

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Enterprise systems (ES) aim to support the business processes of an organisation across any functional boundaries that exist within that organisation. They use Internet technology to integrate information within the business and with external stakeholders such as customers, suppliers and partners. The main types of enterprise system are enterprise resource planning (ERP) which is concerned with internal production, distribution and financial processes, customer relationship management (CRM) which is concerned with marketing and sales processes, supply chain management (SCM) which is concerned with the flow of materials, information and customers through the supply chain, and supplier relationship management (SRM) which is concerned with sourcing, purchasing and the warehousing of goods and services. Other types of ES include product lifecycle management (PLM), financial management and human capital management. Figure 6.1 shows a selection of enterprise applications available from the SAP software vendor.

The main reason for implementing an ES is explained by Figure 6.2. It compares an Enterprise application with the previous company arrangement of separate data silos and applications (sometimes known as ‘information islands’) in different parts of the company. The problem of information silos arose as BIS selection became devolved, with the endusers in individual departments making their own BIS purchasing decisions. This often led to separate BIS applications from different vendors in different departments, often with poor data transfer between applications.

Characteristics of an enterprise system
An enterprise system (ES) is characterised by a cross-functional process view of an organisation. The ES will contain a set of defined business process designs, or process blueprints, covering areas such as procurement, production and fulfilment. The second  major characteristic of an ES is that it uses a centralised database structure that enablesintegration of data across the organisation.

The benefits of the ES approach include:

•  integration of organisational processes resulting in increased efficiency and quality of customer service;
• the defined business process blueprints contained in the ES can be used as a template for a BPM initiative  
• better sharing of information within the organisation due to integration of modules leading to better decision making and a more agile organisation;
• simplified support and maintenance through a single supplier rather than dealing with many legacy systems;
• use of ‘best-of-breed’ ES solution applied by other companies. These are applications offered by vendors that are seen as providing excellent functionality within their area of application. These solutions are usually specific to one process and have evolved from departmental applications, for example a procurement system.

The main disadvantage of ES systems are:

•  high costs charged by suppliers for what is a large complex system;
•  implementation of the major organisational change required by these systems – a major planning, training and development effort is needed to successfully introduce a system that will radically change both the information systems and business processes of the organisation;
•  the business usually has to change its processes or way of working in order to fit the ERP process blueprint. For example, the ES supplier SAP has over 1000 detailed business activities defined in its model, such as ‘post an accounting entry’. Thus competitor companies can mitigate competitive advantage gained by implementing an ES by also implementing the same system using the same process designs. In addition, the use of ES standard process designs may inhibit innovation in developing new ways of undertaking business processes.

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