Putting the Enterprise into the Enterprise System

Enterprise Systems are software packages, offering solutions for integration of basic business function information such as financial data, marketing and sales figures, human resources, and logistics; in one database, reachable throughout the company’s departments. Thus, enterprise systems help organizations to defrag and transfer vast amounts of data.

The preceding legacy systems used to store the data locally; therefore the information is fragmented and may be conflicting with the data from other departments and branches. For instance, the marketing information has to be integrated with the sales figures, whereas sales information has to be integrated with production plans (on the basis of demand), and production plans should in line with the financial plans while finance department should share those data with the marketing department. Consequently, the transferring of those data, (including the communication distortions) is creating time lags between the order for production and the delivery to the last consumer/customer. Not only that, because of diversity in the viewpoints of the departments, numbers be interpreted in different ways, thus the overall strategy can fail in the organization. Enterprise systems can link all the basic functions, and offers information flow in the organization within and between departments.

When the situation is evaluated on a global basis, a corporation having branches in many countries, a solution for integration, sharing, updating of data is required throughout the company. With the enterprise systems, a branch in Austria can reach to the financial information in US center, the data is transformed into the national currency, Euro. An order abroad can be carried out at the production facilities without any time lags, or bureaucratic transaction which only require the approval, can be carried out in national languages.

The ERP systems put a pressure on the whole organization. Although the modular system, they are complex enough for making major changes, so the basic functions should be adapted in a way that ERP systems require. Whole culture has to be changed because now the mid-managers tasks’ are performed by the software. This also changes the organization which used to more centralized and vertical. Every sub-department can reach the information, hence, decide more autonomously. However, on the basis of information, the ERP systems may create a more command and control style organization. Because after the implementation of ERP systems, there is a clear and stricter way to carry out the function, the way ERP software requires. In the light of those changes, the strategy should be reviewed and changed. So rather than bugging the codes and making changes in the software, the organization itself should be modified.

Doubtlessly ERP systems are not without their drawbacks. First of all implementing ERP systems are not cheap. Rather than the price of the software itself, the modifications on the software, training process and efforts to adapt organizational culture and strategy is expensive. Thus for a small firm or a company competing on the costs, ERP may not be the most ideal solution. In addition the organization may not be ready for the changes that ERP systems impose. For instance, the organizations unique functions can expire because of ERP solutions, since the system provides more generic functions. In addition to losing the competitive advantage by unique functions, organization may not be ready to decentralization (organization getting flatter) or oppositely the autonomy acquired on the departmental level with the help of enterprise