Enterprise system can be defined as the large- scale application software packages that help an organization in its business processes, information flows, reporting and data analytics. These systems offer a number of benefits to the organization such as reducing the manual input of data and minimizing the information technology cost (Waring, Wainwright & Skoumpopoulou, 2016). These systems have the capability of replacing various independent systems that process data for the particular function of the business. The report focuses on the contribution of the enterprise system to the performance of the business. The report also highlights the factors that drive the businesses to adopt supply chain management along with the needed change management concerns through which enterprise system can be adopted successfully.
Impact of Enterprise System on Organizational Performance and Its Measurement
Organizational performance is greatly impacted due to enterprise systems. The communication of firm- wide information is facilitated by an enterprise system on business performance to the managers. When such information is available with the managers, they are capable of making accurate decisions at the accurate timing which enhances the organizational performance. Enterprise system also assimilates the internal business process of an organization in the areas of production, sales, custom logistics, and finance, etc.
which assists in bringing improvement in the quality and efficiency of customer service, production, and distribution (Weichhart, Molina, Chen, Whitman & Vernadat, 2016). Furthermore, the enterprise system brings uniformity in the organizational culture by ensuring that the same processes and information is used by all the individuals in the organization. Such uniformity improves the organizational performance over a period of time (Giachetti, 2016).
Enterprise system also brings a reduction in the costs involved in IT support staff, transaction processing, hardware, software, etc. This cost reduction leads the organization towards improvement in performance. The implementation of the enterprise system in an organization ensures that all the departments perform their functions in harmony with the other departments. Moreover, an enterprise system also reduces the time needed for document processing as the results are easily available in a single click. Moreover, information visibility and transparency are facilitated by the enterprise systems within an organization which assists different departments in the smooth performance of their operations. In this way, organizational performance is automatically improved (Lech, 2014).
There are a number of complexities in measuring the contributions made by the enterprise system to the organizational performance. The use of a number of measurement models can assist in measuring the contributions. Such measurement models include priori model in which success is measured under five dimensions namely system quality, satisfaction, information quality, individual impact and organizational impact. Another measurement model is revised model in which the results are assessed under four quadrants namely individual impact, information quality, system quality and organizational impact. The impact of the enterprise system on the performance of the organization can be measured under these dimensions (Hazen, Boone, Ezell & Jones- Farmer, 2014).
Other than making the use of models, the contributions can also be measured through other criteria such as higher customer retention rates, repeated and higher sales, better public image, and high sales conversation rates. The performance can also be measured in the context of the organization’s position as compared to the rivals. Efficiency and flexibility in responding towards the dynamic environment can also be used as criteria for the measurement of enterprise system’s contribution to the organizational performance (Chang, Kuo, Wu & Tzeng, 2015).
Key Drivers or Factors behind the implementation of Supply Chain Management System by Businesses
With the passage of time, businesses are showing greater reliance on the suppliers. However, procurement constitutes the basic requirement of every business. There is a need for the effective management of contracts, regulation, supplier relations, and information as almost every requirement of the organization is associated with the supplier. An effective supply chain management system is needed by businesses so that a smooth supply chain can be ensured and best value can be realized from the amount spent by them on suppler analysis of performance, cost, and risk (Feldman, Shah, Chapman & Amini, 2016).
There are a number of drivers for the acceptance of supply chain management system. The contractual obligations can be easily accomplished with the help of supply chain management system. It also assures the maintenance of continuous supply and avoidance of delivery disruptions. It also ensures the incorporation of quality techniques within the organization through which improvement in the operations is facilitated. In other words, quality assurance acts as the principle driver for the implementation of supply chain management systems by companies. These systems also help in finding an optimal way for shipping through which costs can be brought down to the lowest possible level. The success of the business is ensured when these systems facilitate quick and accurate shipping of the orders (Al- Jabri & Roztocki, 2015).
Management of inventories becomes easy with the help of supply chain management systems as it includes inventory buffer levels that are determined on the basis of historical trends. Also, it minimizes the holding costs and assists the organization in flexibly meeting the customer demands. The implementation of these systems helps in managing the legal liabilities faced by the businesses. The risk is mitigated by ascertaining the potential of failures in advance with the help of supply chain methodologies (Hugos, 2018).
These systems can also be linked with other business software which can improve collaboration with the partners and can offer the opportunity of keeping the shareholders informed. Businesses are also driven to adopt supply chain management systems as it performs a number of tasks such as quotation, reporting, forecasts, etc. Lastly, these systems assist in ensuring higher level of customer satisfaction by providing right products to the right buyers at the right time. In other words, it improves the profitability of the business (Fredendall & Hill, 2016).
Organizational Change Management Considerations For Enterprise System
There are a number of changes implemented in the organization through the use of enterprise systems. The manner of performing the tasks is also changed. Enterprise systems can be successfully adopted only when certain change management considerations are taken into account. A framework is provided by the organizational change management which helps in managing the change outcomes in the introduction of new processes, organizational culture, and structure.
The use of appropriate communication strategy constitutes the key to a successful enterprise system as it will support key messages to the audiences. Opportunities and issues can be captured when employees are engaged in the organization. For this purpose, organizational readiness assessments are required to be conducted. Employee engagement, proper planning, and training will prove to be expensive but will offer a number of benefits in the long run. This will ensure that the employees do not face any problems while switching to the enterprise systems. If training is not provided, adoption of enterprise systems may become unsuccessful. Guidance can be provided by the project leaders so that exceptional work can be performed by the employees (Sedera, Lokuge, Grover, Sarker & Sarker, 2016).
Various other factors such as opportunities and risks need to be considered in organizational change management for assessing and managing them on time through the adoption of needed actions. This also involves the adoption of ways through which risks minimize and opportunities maximize while ensuring effective change management. Proper communication of information can be facilitated to the stakeholders through a communication plan. Shred vision should also be supported in the organization for the leaders by a guiding union. The leaders will decide the goals and priorities in accordance with the change. The future state of the organization will be supported through the planning of the organizational structure. Introduction of enterprise systems will affect the jobs of the employees for which they need to be prepared in advance by providing proper training (Seethamraju, 2015).
Conclusion
Therefore, it can be concluded that the enterprise system performs the role of a multi- functional information system which helps in coordinating different activities of the organization and is advantageous in resource planning of the business. Organizational performance significantly improves through the introduction of enterprise systems in the organization. There are a number of criteria for measuring the contributions of enterprise system to the performance of the organization such as customer retention rates, profits, and models like priori and revised model. This report also focused on the factors that drive businesses towards the adoption of supply chain management systems. Moreover, this report highlighted certain change management considerations which are required to be taken into account by the organizations for the effective management of the business processes.
References
Al-Jabri, I.M. and Roztocki, N., 2015. Adoption of ERP systems: Does information transparency matter?. Telematics and Informatics, 32(2), pp.300-310.
Chang, B., Kuo, C., Wu, C.H. and Tzeng, G.H., 2015. Using fuzzy analytic network process to assess the risks in enterprise resource planning system implementation. Applied Soft Computing, 28, pp.196-207.
Feldman, G., Shah, H., Chapman, C. and Amini, A., 2016. Technological, Organisational, and Environmental drivers for enterprise systems upgrade. Industrial Management & Data Systems, 116(8), pp.1636-1655.
Fredendall, L.D. and Hill, E., 2016. Basics of supply chain management. CRC Press.
Giachetti, R.E., 2016. Design of enterprise systems: Theory, architecture, and methods. CRC Press.
Hazen, B.T., Boone, C.A., Ezell, J.D. and Jones-Farmer, L.A., 2014. Data quality for data science, predictive analytics, and big data in supply chain management: An introduction to the problem and suggestions for research and applications. International Journal of Production Economics, 154, pp.72-80.
Hugos, M.H., 2018. Essentials of supply chain management. John Wiley & Sons.
Lech, P., 2014. Managing knowledge in IT projects: a framework for enterprise system implementation. Journal of Knowledge Management, 18(3), pp.551-573.
Sedera, D., Lokuge, S., Grover, V., Sarker, S. and Sarker, S., 2016. Innovating with enterprise systems and digital platforms: A contingent resource-based theory view. Information & Management, 53(3), pp.366-379.
Seethamraju, R., 2015. Adoption of software as a service (SaaS) enterprise resource planning (ERP) systems in small and medium sized enterprises (SMEs). Information systems frontiers, 17(3), pp.475-492.
Waring, T., Wainwright, D. and Skoumpopoulou, D., 2016. Enterprise Systems Adoption: A Sociotechnical Perspective on the Role of Power and Improvisation. International Journal of Systems and Society (IJSS), 3(1), pp.49-66.
Weichhart, G., Molina, A., Chen, D., Whitman, L.E. and Vernadat, F., 2016. Challenges and current developments for sensing, smart and sustainable enterprise systems. Computers in Industry, 79, pp.34-46.
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