The Impact of Enterprise Systems on Business Value

The Impact of Enterprise Systems on Business Value

Sanjay Mathrani (Massey University, New Zealand), Mohammad A. Rashid (Massey University, New Zealand) and Dennis Viehland (Massey University, New Zealand)
Copyright: © 2009 |Pages: 15
DOI: 10.4018/978-1-59904-859-8.ch010
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Abstract

A significant investment in resources is required for implementation of integrated enterprise systems as technology solutions while the effectiveness of these systems to achieve business value remains unclear and empirically largely unexplored. Enterprise systems integrate and automate business processes, but unarguably, the real business value can only be achieved from improvements through the transformation of enterprise systems data into knowledge by applying analytic and decision making processes. This study explores a model of transforming ES data into knowledge and results by comparing two case studies that examine the impact of enterprise systems information on organizational functions and processes leading to realization of business value.
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Business Benefits

The justification for adopting ES centres on anticipated business benefits from the ES. To receive benefit from an ES, there must be no misunderstanding of what it is about, its usability, and, even more importantly, organizational decision makers must have the background and temperament for this type of decision making coupled with the right quality of information (Donovan, 1998). Many researchers have evaluated benefits from ES investments (Cooke & Peterson, 1998; Davenport et al., 2002; Deloitte, 1998; Donovan, 1998, 2001; Hedman & Borell, 2002; Ittner & Larcker, 2003; Shang & Seddon, 2000; Yang & Seddon, 2004). These studies have found that ES’s are designed to help manage organizational resources in an integrated manner. Furthermore, the level of integration that is promoted across functions in an enterprise closely relates to the primary benefits that are expected as a result of their implementation. After adoption, improved business performance should produce both operational and strategic benefits (Irving, 1999; Jenson & Johnson, 2002; Nicolaou, 2004).

Key Terms in this Chapter

Supply Chain Management (SCM): Software systems for procurement of materials, transformation of the materials into products, and distribution of products to customers, allowing the enterprise to anticipate demand and deliver the right product to the right place at the right time at the lowest possible cost to satisfy its customers.

Business Process Re-Engineering (BPR): Rethinking and redesign of business processes to achieve performance improvements in terms of overall cost, quality and service of the business.

Enterprise Resource Planning (ERP): Software systems for business management that integrates functional areas such as planning, manufacturing, sales, marketing, distribution, accounting, finances, human resource management, project management, inventory management, service and maintenance, transportation, and e-business.

Return on Investment (ROI): A performance measurement used to evaluate the efficiency of an investment. ROI is calculated as the annual financial benefit (return) after an investment minus the cost of the investment divided by the cost of the investment the result being expressed as a percentage or a ratio.

Knowledge Management (KM): The creation, organization, sharing, and flow of knowledge within and among organizations.

Customer Relationship Management (CRM): Software systems that help companies to acquire knowledge about customers and deploy strategic information systems to optimize revenue, profitability and customer satisfaction.

Conceptual Framework: A basic conceptual structure built from a set of concepts to outline possible courses of action or to present a preferred approach to solve a complex research problem.

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