A New Dynamic Framework for Managing ERP Development and Enterprise Strategy

Introduction

Enterprise Systems (ESs) have progressed over the last fifty years as a result of constant interaction between changing business requirements, technological maturity, and organizational structures (Wortmann, 2000). Perceptive people in both enterprise management and information systems suggest that there is soon going to be available a truly integrated technical solution for Enterprise Resource Planning (ERP) systems (Chorafas, 2001), that will make the newly conceived ‘virtual value chain’ and the e-marketplace concepts a reality (Rayport & Sviokla, 1995; Porter & Millar, 1985). As recent trends in business and technology have focused on inter-organizational collaboration and information system that enhance them (Banker et al., 2010), many companies recognize the critical interdependencies that exist among the firms, suppliers and customers, which cannot be described in terms of simple contractual exchanges, but involve the interactions and network effects with appropriate new enterprise paradigms and information technology. The importance of such inter-firm (i.e. intra-enterprise) relations has been recognized by the structural concepts of vertically integrated enterprises (Lynch, 2003; Joskow, 2003), extended enterprises (Powell, 1990; Davis & Spekman, 2004), virtual enterprises (Byrne & Brandt, 1993; Goranson, 1999), business dynamic networks and strategic alliances (Todeva, 2006; Reuer, 2004) and in the related technical support systems such as web-based Service Oriented Architecture (SOA), Platform as a Service (PaaS), and Software as a Service (SaaS) (Bass & Mabry, 2004; Torbacki, 2008; Candido et al., 2009). Particularly, the enterprise here is defined as “…an entity including partnerships or associations that can be made up of parts of different companies”. Although some arguments concern the core competences that affect the design and management of the enterprises structures (Binder & Clegg, 2006), the “interconnectedness” of intra-enterprise governance is criticized as there lacks sufficient consideration and contribution to the impact of ERP systems on future enterprise strategies and vice versa. In addition, since current prevailing ERP systems are not able to support virtual enterprise structures, we propose a contingency term called “ERPIII” in this chapter to describe such future agile enterprise management systems.

This research study is important because of the increasing competitive and dynamic business circumstance are forcing modern companies to improve their competencies by incessantly learning and re-engineering to adapt to rapid changes around highly complex supply chain in the era of globalization. Along with the emerging multi-national virtual networks, more importance has been attached to the inter-organizational network, “agile enterprise” and “agile manufacturing” capabilities (Pal & Pantaleo, 2005; Cummins, 2009; Vazquez-Bustelo & Avella, 2006), in order to continually evolve and optimize the strategic international trade and operations. As consequence, advisable enterprise management strategies and advanced information technologies (e.g. ERP systems) would play as the active tools to enhance intra-enterprise performances, increase the customer-driven markets share and high flexibilities in product/service and business processes, shorter global manufactured product life cycle, narrow niches, handle diverse environmental conditions, and create value within the context of globalized world (Palaniswamy & Frank, 2000). This chapter, therefore, delivers a new dynamic framework for managing ERP systems development and enterprise strategies concurrently.