Enterprise Systems: How They Evolved
The software is one of the foundations of the present-day world and the human way of living. The world of business also is highly dependent on software, and in the recent years has embraced Internet-based technologies to gain a competitive edge and increase efficiency. An enterprise software may be defined as software-based solutions utilised by an organisation to benefit one or more of its stakeholders (Brown, 2012). This report is focused on enterprises and how the software has transformed the paradigm of running a business. The discussion will cover the benefits reaped by organisations by moving to enterprise systems. Also, a background will be laid reaching up to this study. Some consideration will be given to any challenges faced by the end-users of enterprise systems, and hoe the Internet has enabled new possibilities in enterprise systems.
Business is an organisation in which money is expended to produce products and services, which are then sold to customers for profit (business, n.d.). A company manages people in the form of employees, labour, managers, and investors. A business also manages suppliers, buyers, raw materials, and a lot of other processes to achieve the goals of producing its goods or providing its services while reducing expenses and increasing profits. As we can imagine, the complexities and the effort required to maintain a business increase with the size of business. A mom-and-pop general store may make do with a pen-and-paper approach, but when we consider businesses of increasing sizes, not only does the workload of running it increases, but new processes and regulations come into play. Such processes and regulations do not exist for smaller or unorganised businesses. Since this report is about enterprises, by which we mean larger organisations than smaller ones (Rouse, 2005), we have to consider departments, interactions among them, interactions with outsiders, and the requirements of legal and regulatory compliance – all of which are mandatory to be able to run a perpetual business. Some of the roles include manufacturing, services, sales, purchases, accounts, stocks, maintenance of machines, human resources (Trivedi, 2016). Also, another requirement in the present-day world is the speed at which everyone involved expects and wants the data and information to move from one place to another, sort of an integrated approach. As an illustration, no for-profit company can afford to tell its customers that their information is being awaited from some other department of the company and that the customers contact again after a few days. In today’s globally competitive world of complex business practices, this ability to provide the right information at the right time to the right people is proven to reap significant rewards for large and small-to-medium-size enterprises (SME) (Hossain, Patrick and Rashid, 2002). This discussion leads us to our next section, where we explore the scenarios in existence before the enterprise systems, which are also known as Enterprise Resource Planning (ERP) software. Later we will see how enterprise systems only provide the software facilities (common central database, unified interface) to enable transparent integration of modules and the flow of information.
Challenges of Enterprise System Implementation
As discussed earlier, a business requires many roles to fulfil on an ongoing basis before it can produce the goods or services to sell to customers. These areas of operations can also be called functional areas. These functional areas include marketing and sales, supply chain management, accounting and finance, human resources. Now, under these and other broad categories a variety of narrower business functions. Those business functions are unique to a functional area. Traditionally, business functions in one functional area have remained isolated from one another. This thinking is evidenced in the way business schools offer their courses. However, the functional areas are not able to meet the goals of the organisation all by themselves. They need to interact with one another, be aware of the progress in another department, and so on. The functional areas are thus interdependent.
As a reflection of the traditional thinking, the older pen-and-paper system of running a business was in the form of separate silo-like departments. The result was a duplication of information, manual effort required in syncing a change across all departments which had a copy of that data, and so on. Such was the case with the predecessors of enterprise systems – Material Requirements Planning (MRP) and Manufacturing Resource Planning (MRP II) (Taylor, 2011). Computerisation of the business world happened before ERP, but it was in the form of islands of functionality and silo-like like databases. Efficient and seamless transference of data as well as a true single state of data enterprise-wide was still not a reality (Jain, 2009) (Hossain, Patrick and Rashid, 2002). It was ERP that brought in transparency and a single shared database coupled with a consistent user interface among the departments of an enterprise.
Thus, increasing competition in the business world, coupled with the benefits to be reaped from the seamless integration of functional areas of the firm were the reasons that led to ERP’s development and implementations.
We open this section by claiming that enterprises systems will not lead to improvements in organisation’s functioning overnight (Hossain, Patrick and Rashid, 2002) and that the success or failure of an enterprise system implementation is primarily about the people (McTigue, 2013) (Baldwin, 2001).
Enterprise systems are a revolution rather than evolution. They are by design intended to uproot the entire paradigm of isolated islands of functioning to bring in interconnectedness and interdependence. The issue is that for such a significant change, the employees may not be aware. They may not be aware of the extent of the changes that will happen on the due date. They may not be aware of the new operating procedures. Alternatively, during the initial plans, if the company chooses to ignore the employees (who would be using the new system), the employees may not even be aware that plans are in the offing for a software and operations overhaul.
The Role of the Internet in Enterprise Systems
Humans are resistant to change, and will often intentionally ignore the big picture for their vanity. This human factor is one of the challenges faced by the organisation. However, from the end user’s point of view, even genuinely motivated employees require training (Invoicera, 2016). The company may be wanting in the effort, time and management of training the staff for the oncoming changes and how to operate in the new system. As an illustration, some managers are in the habit of adding additional workload to an employee’s schedule without taking off existing responsibilities. Understandably, this lowers the employee morale and possibly an unfounded dislike for the new system.
Since an enterprise system fundamentally interconnects all the functional areas of a company, this may lead to loss of the specificity in operations of some departments. As an illustration, a data warehouse may be producing reports which may be too complicated for one department while too simplistic to be of any use for another department (Westrup, 2005).
Technology may change, but humans do not (Greengard, 2016). There will always be some people who will try to use the enterprise systems implementation as an excuse to satisfy their vanity by dragging their feet, sabotaging the effort, complaining without reasons, and in general pollute the minds of their fellow employees (McTigue, 2013). Sincere employees, who are understandably closer to their peers than the management, may find it difficult to go against the grain if the miscreants are allowed to ruin the environment.
Industry experts claim that ERP is primarily a change management concern (McTigue, 2013) (Radhakrishnan and Balasubramanian, 2008). Also, employees lower in the hierarchy do not have the authority beyond themselves, but they are usually the ones who will be using the new enterprise system most of the time. Thus, the management has to be aware of its role and responsibility in managing change. Such interest by management is also a sign of their commitment (Invoicera, 2016), which is essential for the success of enterprise system implementation and acceptance by the employees (Westrup, 2005).
Enterprise systems had their roots in enabling efficient back-office processes with consistent data and unified user interfaces and had rarely handled front-office tasks, leaving them to employees. The Internet has revolutionised every aspect of the human living in every country. Businesses as well as enterprise systems have benefited from this technology. The enterprise systems have improved their existing roles and explore new ones. Part of this has been enabled by the technology of Internet of Things (IoT), in which machines talk to each other, using a network like the public Internet (Wilson, n.d.). No human intervention is required, and the machines talk to each other, make decisions, and execute processes.
Benefits of Integrating IoT with Enterprise Systems
Embedding IoT sensors in machines and integrating them with enterprise systems allow the enterprise systems to keep track of machines used for manufacturing (Miller, 2014). New applications which take over some of the manual work of employees are anticipated. As an illustration, the system can track the downtime of the machines, and whenever the downtime of some machine exceeds industry average, the manager is alerted.
Better management of stocks and a leaner manufacturing are projected in this application of Internet with enterprise system (Carlton, 2015). In this scenario, point-of-sale software is connected to the warehouse, which is attached to the factory systems. Such an arrangement allows for a sale to automatically update inventory, and automatically reorder from the store. The warehouse system keep does their calculations and updates the factory. Thus this automated chain using the Internet allows for a tighter control of stocks and manufacturing.
An enterprise system which is connected using the Internet can allow end-customers to bypass human interaction with the front desk and after passing the authorization, tests perform the allowed functions themselves. Besides empowering active users, it also lowers expenses on front desk staff. Examples include banks allowing customers online access to view and transfer facilities for their accounts.
The report has thus far talked about businesses in general, the functional areas and the importance of the flow of data among the departments, and first software technologies (in the form of MRP, and MRP II). Additionally, the challenges faced by end-users in an enterprise system implementation were discussed followed by the changes and new possibilities being introduced by utilising the Internet in enterprise systems. This section of the report builds on all these discussions to enumerate the improvements and benefits derived by companies by using enterprise systems.
A hallmark of enterprise systems is a single shared database, which is accessed as per authorisations by the various functional areas of the company. This system results in instantaneous access to data (if authorised), and more importantly a single view of truth. If something is updated, it is updated throughout the organisation and any manual coordination required to sync the multiple copies of same data is eliminated. Since there is only one copy of the database (backups do not count as working copy and serve a different purpose), there is no data duplication.
A single unified view allows for faster operations by eliminating any artificial delays which are present in independent functional areas. Since there is a single database, and the software allows for alerts and notifications (in the software, mobile texts, and emails), there is no accidental complexity which would come in the way of staff discharging their duties. Thus, this speed plays its part in delighting customers with a faster and error-free completion of their requirements.
The actual state of the whole enterprise is maintained in a single database, and this allows management (especially senior management which may have access to the full database) access to the current state of the entire enterprise. They may choose to access transactional data or perform queries on historical data to get data which will enable them to make better decisions in the interests of the company.
An enterprise system is one application (which may be modular and allows for customizations), and thus provides a single point of control to enforce enterprise-wide standards. This arrangement lowers the chances of unintentional and deliberate fraud from creeping into the system. Also, the auditing of the employee actions becomes easier, since every department and actions are linked.
Conclusion
This report looks into the benefits provided by enterprise systems. A background is provided which enables the reader to appreciate the working of business, historical perspective and the challenges which the end-users (the most important link in the successful implementation and usage of an enterprise system) face. Additionally, the changes being brought by the Internet to the world of enterprise systems is explored.
References
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