The corporate arena is quite dynamic as such; organizations often seek for means of improving the efficiency of processes. These strategies may at time involve the introduction of innovative ideas and incorporation of technological operations into the businesses (AL-mashari, 2010, p. 11). The success of these improvements plays a crucial role in determining the extent to which they are finally incorporated into the key organizational models. In this report the role of enterprise systems in enhancing organizational performance and how this mode of performance can be measured is analyzed. At the same time, the report discusses the drivers towards an organization’s decision to adopt supply chain management systems. It finally highlights the necessary change management considerations to be put in place before an organization adopts an enterprise system.
An enterprise system can be defined as large scale application software which is incorporated into a large organization to aid in supporting business processes, enhance the flow of information, aid in data analysis and compilation of reports. Enterprise systems therefore have a direct impact on the performance of an organization (Andriopolulos and Dawson, 2009, p 23). The efficiency of these systems easily translates into enhancement of organizational performance in a number of ways.
To begin with, an enterprise system improves efficiency of operations within the organization due to a considerable reduction in the number of errors during the implementation of procedures (Augustine, 2008, p2). This is because the entire network of operations is computer monitored hence making it easy to detect loopholes and avert looming danger. In connection with the efficiency, the operation costs are greatly reduced. This therefore gives the organization more room for expansion and improvement since the available resources can be directed for investment in other areas.
Secondly, ES aided approaches improve performance by inducing self efficiency in addition to the reduction of work load. The systems can be channeled to perform a number of procedures at the same time which in turn reduces the work load at the organization. This contribution is mostly felt when the installed ES replaces a procedure which was previously managed manually through human effort (Bentley and Whitten, 2009, p19). Reduced work load therefore implies that the rate of production is enhanced within a shorter of period of time due to the effectiveness of the processes.
With the improved effectiveness in procedures and the eventual increase in production, an organization is likely to experience a better return on investment. The increased production rate implies that an organization is able to increase the contact level between the consumers and its products. This does not only stabilize the market but also improves sales which is in turn beneficial to the organization. In addition, due to the fact that monitoring is computer aided, it is easier for the organization to see and monitor the operations. This gives room for adjustments especially in areas which are noted to be less effective. Such improvements eventually have a direct impact on the performance of an organization (Bhattacherjee, 2007, p23).
Enterprise systems have a special way of helping an organization’s management to have a better grip on the core organs. This in turn improves the level of governance and the effective control of each of the components of the organization. For instance, the effective control of the human resource fraternity has positive impacts on production which in turn enhance the return on investment (ROI). Additionally, the improved interaction with the consumers leads to better company-consumer experiences. This makes it easy to enhance proper customer satisfaction which has a direct influence on their retention and hence the stability of the market. It therefore follows that the successful installation and implementation of an enterprise system in an organization has a direct impact on the performance of the organization (Bidgoil, 2015, p 344).
Measuring Contributions
In order to establish the impact of ES approaches on organizational performance, various evaluation approaches can be used. For instance, financial analysis can be used to evaluate the effectiveness of an enterprise system. In this case, the organization is required to closely monitor its financial position before the incorporation of the system and after its installation. In case the post installation analysis indicates a better financial position, this is an indication that the ES has led to positive contributions to the organization. However when the analysis reveals losses and a decline in the financial strength then the organization may need to revert to other ideas or overhaul the whole process (Chesbrough, 2010, p233).
Time analysis can also be used as a tool to analyze the contributions. In this case, the duration or processes is monitored in order to establish the difference in time taken to complete procedures when using the enterprise system and when using other approaches. It can be deduced that using Enterprise systems leads to shorter production durations due to improved efficiency. Time therefore serves as an effective tool for measuring the contributions of enterprise systems to organizational performance (Edmiston, 2010, p50).
There are various types of Enteprise systems; a good example is the supply chain management system. This can be described as a system installed by an organization with the specific aim of controlling the movement of goods right from the point of origin to the final consumers. There are various aspects which may drive an organization into adopting a SCM system. Some of these have been highlighted below.
First of all, inventory management is a crucial aspect in operations management within an organization. With proper inventory management, there is an inevitable flow in other logistics with an added ample space of financial accountability which in turn reduces unnecessary operation costs. SCM systems play a key role in improving inventory management. It therefore implies that in cases where inventory management is proving to be a major threat to the organizational performance, the management may choose to install the SCM system.
Secondly, the SCM system can be used to boost customer service. It is a fact worth noting that consumers always want the right products which flow in line with their needs and preferences availed to them at the right time, conveniently and the right prices. A supply chain management system would be pivotal in monitoring the flow of these processes hence ensuring that the consumers get the very best and remain satisfied at all times (Fox and Murray, 2014, p23). This is because through the system, the organization is able to have direct interactions with the clients hence obtaining their feedbacks with respect to service delivery. These responses can in turn be used by the organization to identify the areas that need the necessary adjustments in a bid to improve consumer service.
The third driver is the issue of operation costs. In a situation where an organization incurs a lot of costs in operations, it would be necessary to come up with a system which enhances the reduction of costs. A SCM system just like any other enterprise system has a special way of improving efficiency in the operations within an organization. For instance, the supply chain procedures, the process of flow of products from the company to the final consumers is made not only faster but also effective (Hope, 2009, p34). The reduction in delivery time has a direct influence on the operation cost. This is because when products take a longer route and period of time to reach the consumers; more costs are involved in such operations. Additionally, a better system reduces the costs of purchasing the raw materials. With the right supply chain management system in place, an organization is able to identify and monitor the right producers and suppliers especially of raw materials. This allows them to obtain the necessary materials at affordable prices an aspect which eventually boils down to a reduced cost of production (Johnson and Kagermann, 2008, p45).
The last driver is the need for a better financial position. Enterprise systems help in controlling the flow of finances within an organization. The allocation of funds to aid the various processes is carefully managed to minimize losses and improve accountability. A SCM system has a special way of improving cash flow. When the processes are sped up, the sales happen pretty quickly leading to immediate gains by the company. At the same time, the system reduces the use of fixed assets like plants and warehouse which would otherwise be expensive. Furthermore, the SCM system improves the profit leverage of an organization. All these factors end up placing the organization in a better financial position. In a nut shell, the SCM system comes with a number of advantages (Mesly, 2017, p34). These good attributes act as the main drivers which cause managers to adopt the system.
The adoption of enterprise systems is often accompanied with a number of changes hence calling for the right change management strategies. As such, there are specific considerations which the managers ought to put in place before adopting the systems. The first consideration is the aspect of cost implications. It would be important for the change managers to forecast the cost that would be associated with adopting the system. The verdict ought to be such that the adoption of the system should not be accompanied with extra high cost implications as this may end up placing the company in a bad financial position.
Secondly, there is the aspect of resource availability. It would be important to note the available resources and facilities within an organization before establishing whether they would comfortably accommodate the intended transition associated with the adoption of the system. The available facilities for instance enough rooms, good infrastructure and qualified personnel ought to be able to support the new system without having to experience extreme adjustments. Such adjustments may take a toll on the organization especially in cases where major processes have to be halted in a bid to accommodate the transitions associated with the new enterprise system (Motiwalla and Thomson, 2009, p25).
The other important consideration would be the impact that this change is likely to have on the workers. It is a fact worth noting that the adoption of these systems lead to replacement of manual systems with machine aided procedures. This implies that some of the workers within the organization are likely to lose their jobs and position. It is highly likely that these workers would offer the greatest resistance to the adoption of the system. It would therefore be important for the managers to adequately prepare the workers for the change by highlighting the urgency and need for the change.
Introducing an enterprise system is also likely to have a direct impact on the flow of processes within an organization. This leads to changes in production rates, quality and duration of delivery. It is therefore important to consider the intended impacts that system may have on the final quality of the products as well as the distribution processes. The market of the products remains an integral part of the organization hence maintaining its stability is key (O’Brien and Marakas, 2011, p24). It would therefore be important to come up with a system which is likely to improve the quality of the final products, effectiveness of production and efficiency of distribution processes. The expected change therefore should have positive impacts on the organization’s market dominance.
Conclusion
This report adequately highlighted the key role that enterprise systems play in enhancing organizational performance. By effectively controlling the flow of processes, ES lead to improved efficiency and effectiveness in the organizational processes. The systems reduce production costs while place the company in a better financial position. Appropriate ES adoption gives the management a better control of the organization. The report also revealed a number of factors which create the need for adoption of ES especially in the concept of supply chain management. The need for better organizational performance, good financial positioning, improved inventory management, reduced operation cost and proper customer management are some of the aspects highlighted as the drivers to the adoption of SCM systems. The report finally reveals the factors that are necessary for consideration before adopting the enterprise systems. To adequately manage the change that would come with adopting the ES, there is need for the organization to consider the cost implications, resources and impact on workers.
References
AL-mashari, M. (2010) ‘A Process Change Oriented Model for ERP Application’, International Journal of Human Computer Interaction, 16(1), p1-11.
Andriopolulos, C. and Dawson, P. (2009) Managing Change, Creativity and Innovation. New York: Sage Publications.
Augustine, N. (2008) ‘Reshaping an industry: lockheed martin’s survival story’, Harvard Business Review (July-August).
Bentley, L. and Whitten, J. (2009). System Analysis & Design for the Global Enterprise. New York: SAGE
Bhattacherjee, A. (2007) ‘The Impact of ERP Capability Implementation on Business Process Outcomes: A Factor Based Study’, Journal of management Information Systems, 24(1), p23.
Bidgoil, M. (2015) The Handbook of Technology Management: Supply Chain Management, Marketing and Advertising, and Global Management. Hoboken, New Jersey: John Wiley & Sons
Chesbrough, H. (2010) ‘Business Model Innovation: Opportunities and Barriers’. Long Range Planning, 43(2–3), p354-363.
Edmiston, K. (2010) ‘The Role of Small and Large Businesses in Economic Development’. Economic Review. 1: p1–93.
Fox, W. & Murray, M.N. (2014). “Do Economic Effects Justify the Use of Fiscal Incentives?”. Southern Economic Journal. 1(1), p23.
Hope, J. (2009) ‘The Relationship Between Employee Turnover and Employee Compensation in Small Business’, Small Business Research Summary. 3(1), p1–44.
Johnson, M. and Kagermann, H. (2008) ‘Reinventing your business model’. Harvard Business Review, 86(12), 50.
Mesly, O. (2017). Project feasibility – Tools for uncovering points of vulnerability. New York, NY: Taylor and Francis.
Motiwalla, L. and Thomson, J. (2009) Enterprise Systems for Management. New York: Prentice Hall.
O’Brien, J. and Marakas, G. (2011) Developing Business/IT Solutions. In Management Information Systems. New York, NY: McGraw-Hill/Irwin.
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