Strategic advantage through the implementation of enterprise resource planning systems.

Abstract

Enterprise Resource Planning (ERP) systems claim to provide organisations with an integrated Information Technology (IT) solution that can be used as an effective business tool with real-time information of all business transactions at the managers' fingertips. ERP software attempts to integrate all departments and functions across a company onto a single computer system that runs off one database and can serve the needs of all the different departments in the company. The investment in an IT solution that will provide strategic information to aid in strategy formulation and decision-making should be part of strategic planning. In short, the ERP system should add to a company's strategic advantage. The challenge to an organisation is to use ERP to leverage opportunities in the competitive environment in order to create value. If a resource view is taken of ERP systems, strategy theory describes the way that an organisation should go about achieving strategic advantage. The IT resource in itself cannot be the basis for competitive advantage in a manufacturing industry. The resource is available to all competitors. The nature of ERP systems however supports the creation of distinctive competences in the organisation through organisational learning. The enhanced capabilities of the organisation, combined with its superior resources form the basis of distinctive competencies that in turn lead to value creation through the advantages created. The test for strategic advantage is to evaluate the strategic options or choices against consistency, consonance, advantage and feasibility. The model for evaluating strategy can also be applied to the planned ERP implementation or to enterprise systems already implemented. This model is based on strategic evaluation and support the process of continuous evaluation and change to respond to triggers in the competitive environment the organisation operates in. In order for ERP systems to add value in the organisation, their implementation must satisfy the strategic evaluation criteria, and continuous business process improvement will follow subsequent evaluation in order to adjust to the changing environment.