Fo r mo re o n crm and bi systems and the empo wering

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Unformatted text preview: set o f pro grams that manage an invento ry and po int-o f -sale system to update a single set o f data that tells ho w many pro ducts a f irm has to sell and ho w many it has already so ld—inf o rmatio n that wo uld also be used by the f irm’s acco unting and f inance systems to create repo rts sho wing the f irm’s sales and pro f its. Firms that do n’t have co mmo n database systems with co nsistent f o rmats acro ss their enterprise o f ten struggle to ef f iciently manage their value chain. Co mmo n pro cedures and data f o rmats created by packaged ERP systems and o ther catego ries o f enterprise so f tware also make it easier f o r f irms to use so f tware to co o rdinate pro grams between o rganizatio ns. This co o rdinatio n can lead to even mo re value chain ef f iciencies. Sell a pro duct? Deduct it f ro m yo ur invento ry. When invento ry levels get to o lo w, have yo ur co mputer systems send a message to yo ur supplier’s systems so that they can auto matically build and ship replacement pro duct to yo ur f irm. In many cases these messages are sent witho ut any human interactio n, reducing time and erro rs. And co mmo n database systems also f acilitate the use o f BI systems that pro vide critical o peratio nal and co mpetitive kno wledge and empo wer decisio n making. Fo r mo re o n CRM and BI systems, and the empo wering ro le o f data, see Chapter 11 "The Data Asset: Databases, Business Intelligence, and Co mpetitive Advantage". Figure 9. 5 An organizat ion’ s dat abas e management s ys t em can be s et up t o work wit h s everal ap p licat ions bot h wit hin and out s ide t he firm. The Rewards and Risks of Packaged Enterprise Systems When set up pro perly, enterprise systems can save millio ns o f do llars and turbo charge o rganizatio ns. Fo r example, the CIO o f o f f ice equipment maker Steelcase credited the f irm’s ERP with an eighty-millio n-do llar reductio n in o perating expenses saved f ro m eliminating redundant pro cesses and making data mo re usable. The CIO o f Co lgate P almo live also praised their ERP , saying, “The day we turned the switch o n, we dro pped two days o ut o f o ur o rder-to delivery cycle.”A. Ro binso n and D. Dilts, “OR and ERP ,” ORMS To day, June 1999. P ackaged enterprise systems can streamline pro cesses, make data mo re usable, and ease the linking o f systems with so f tware acro ss the f irm and with key business partners. P lus, the so f tware that makes up these systems is o f ten debugged, tested, and do cumented with an industrial rigo r that may be dif f icult to match with pro prietary so f tware develo ped in-ho use. But f o r all the pro mise o f packaged so lutio ns f o r standard business f unctio ns, enterprise so f tware installatio ns have pro ven dif f icult. Standardizing business pro cesses in so f tware that o thers can buy means that tho se f unctio ns are easy f o r co mpetito rs to match, and the visio n o f a single mo no lithic system that delivers up wo ndro us ef f iciencies has been dif f icult f o r many to achieve. The average large co mpany spends ro ughly $ 15 millio n o n ERP so f tware, with so me installatio ns running into the hundreds o f millio ns o f do llars.C. Rettig, “The Tro uble with Enterprise So f tware,” MIT Slo an Management Rev iew 49, no . 1 (2007): 21–27. And many o f these ef f o rts have f ailed disastro usly. Fo xMeyer was o nce a six-billio n-do llar drug distributo r, but a f ailed ERP installatio n led to a series o f lo sses that bankrupted the f irm. The co llapse was so rapid and so co mplete that just a year af ter launching the system, the carcass o f what remained o f the f irm was so ld to a rival f o r less than $ 80 millio n. Hershey Fo o ds blamed a $ 466 millio n revenue sho rtf all o n glitches in the f irm’s ERP ro llo ut. Amo ng the pro blems, the bo tched implementatio n prevented the candy maker f ro m getting pro duct to sto res during the critical perio d bef o re Hallo ween. Nike’s f irst SCM and ERP implementatio n was labeled a “disaster”; their systems were blamed f o r o ver $ 100 millio n in lo st sales.C. Ko ch, “Nike Rebo unds: Ho w (and Why) Nike Reco vered f ro m Its Supply Chain Disaster,” CIO, June 15, 2004. Even tech f irms aren’t immune to so f tware implementatio n blunders. HP o nce blamed a $ 160 millio n lo ss o n pro blems with its ERP systems.R. Charette, “Why So f tware Fails,” IEEE Spectrum, September 2005. Manager beware—there are no silver bullets. Fo r insight o n the causes o f massive so f tware f ailures, and metho ds to impro ve the likeliho o d o f success, see Sectio n 9.6 "Understanding Techno lo gy beyo nd the P rice Tag: To tal Co st o f Ownership (TCO) and the Co st o f Tech Failure". K E Y TAK E AWAYS Application software focuses on the work of a user or an organiz ation. Desktop applications are typically designed for a single user. Enterprise software supports multiple users in an organiz ation or work group. Popular categories of enterprise software include ERP (enterprise resource p...
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This document was uploaded on 01/31/2014.

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