Chapter 9 Summary: Achieving Operational Excellence and Customer Intimacy: Enterprise Applications

          Information technology is the hub of all of a business’s activities from finance to distribution, however, a system had to be created in order to centralize and conglomerate all of the different software and applications within a company. Enterprise systems came about to do just that. Enterprise software is built around thousands of predefined business processes that reflect best practices. Companies implementing this software must first select the functions of the system they wish to use and then map their business process to the predefined business processes in the software (Laudon 338).  Enterprise systems can help a company see a snapshot of the inflows and outflows of the company in real time, thus better equipping leadership to make informed decisions.

            A supply chain is a network of organizations and business processes for procuring raw materials, transforming these materials into intermediate and finished products, and distributing the finished products to customers (Laudon 340). A supply chain is important to the flow of business and creates the ability to use a just-in-time strategy, however, due to poor lack of communication a bullwhip effect can be created and results in an overstock of product. It makes perfect sense for a company to use supply chain software to streamline these processes and hopefully prevent the bullwhip effect. There are two types of supply chain management systems set-ups, the first is the push-based model in which items are pushed to consumers based on a projected demand and the second is the pull-based model in which the demand creates the product schedule. Implementing a supply chain management system can help a company save money, improve business processes, and increase profits.

            Another use for enterprise systems is to enhance the customer relationship. I used to work for a marketing department for a hospital in Ohio. It’s hard to market to people who aren’t sick or don’t need your services, so you instead focus on getting and keeping them as a customer. The idea is that if a patient needed a heart surgery or stitches, they would choose your hospital and doctors over another hospital nearby. This marketing strategy is called customer relationship management and IT has also created customer relationship management (CRM) systems to improve the customer relationship. CRM systems can be used for sales force automation, customer service, and marketing to improve the customer experience as well as collect valuable consumer data.
           

            While enterprise systems can change the way you do businesses, there are challenges such as expense, time for implementation, major changes to business processes, operating problems and losses, switching costs, differing definitions of organization-wide data, and finding a software that meets the needs of your company depending on size and customizations. In the end, it really boils down to what your leadership team decides is best for the company and for what it can afford. Changing the way you do business comes with a price and the question is, are enterprise systems worth that price?

Source: Laudon, Kenneth C. & Jane P. Laudon. Management Information Systems: Managing the Digital Firm 12^th ed. Pearson Hall, 2010.