IT Systems that Transform Business
The incredible rate of change and growth in the Information Technology sector has produced a difficult climate for businesses to evolve successfully. The adoption of new applications and systems such as ERP (Enterprise Resource Planning), CRM (Customer Relationship Management), MRP (Material Requirements Planning), SCM (Supply Chain Management) and virtual computing, can be highly complex requiring many layers of strategic planning (Watson & Holmes, 2009). Other examples include CAM (computer aided manufacturing), automated JIT systems and (FMS) flexible manufacturing systems (Radhakrishnan, Zu and Grover. 2008). In some instances entire business models will require redesign with implementations taking up to several years to complete.
In today’s market there are three main contributing factors that influence the need and want for business transformation – “low cost, high quality, and fast and flexible response to customer needs” (Venkatraman, 1994). However, bringing about these changes requires more than a simple budget increase for IT spending; a carefully planned analysis of the business will reveal where improvements can and should be made. The scale of these improvements varied widely. A small/less complex example is application deployment such as CAD (computer aided design) software. McKeown and Philip (2003) describe the successful transition from traditional engineering design tools to CAD software in a study involvingleading aerospace company, Short Brothers.During the re-engineering and the product development process, the evolution of the CAD and Engineering Data Management technologies were implemented successfully, showing a 30% improvement in engineering drawing productivity compared to their previous project.
At the opposite end of the scale, the deployment of an ERP system can redefine an organization. Business operating practices are completely reengineered to focus solely on its core processes and with greater emphasis on customer needs (Watson & Holmes 2009). Modern implementations not only streamline back-office processes, but aim to unite an entire company by integrating administrative, product development and technological application, making it possible to “concentrate on business rather than on administration” (Oesterle 2001). Staff using an ERP system is able to interact more efficiently with other departments through the automated delivery, acceptance, and calculation company data. The increased availability of data also allows for more in-depth statistical information about the performance of the business, influencing and benefiting decision making for related teams. The most common solutions integrate and provide (but are not limited to) the following services (Watson, E. F. & Holmes, K. 2009):
- Inventory Management & Warehousing – Provides stock level information and alerts
- Shipping and Tracking – Details status and destination of an order
- Accounting and Finance – Invoicing, Purchasing, Payroll, Credit Management
- Production Scheduling
- Human Resources – Staff management, Documentation
A real world example, as described by Radhakrishnan, Zu and Grover (2008, p 1112):
“Benetton, S.P.A, “mass customizes” products through the “Benetton information system.” This system tracks the orders, manages the capacity information, and coordinates with its retail outlets. The visibility of order and capacity information has helped Benetton improve its operational efficiency as well as economies of scope through its wider product range.”
SCM Systems can be stand-alone inter-organizational systems or an extension to an ERP system that focuses on sharing data with external companies such as suppliers, manufacturers, distributors and partners (Radhakrishnan, Zu and Grover. 2008). Key business areas such as Inventory Management & Warehousing, Shipping & Tracking, procurement and order fulfilment can all benefit from the automation of related processes when applied to outside sources. (Watson & Holmes 2009).