Implementing enterprise systems is not always a simple and straightforward process that automatically increases efficiency. In fact, companies encounter various problems when attempting to install enterprise systems that can turn into a nightmare.
Some of the blame for failures of enterprise systems lies with the technical challenges of implementation. These systems are costly and complex, requiring large investments of money, time, and expertise for installation. However, the main reason enterprise systems fail is business related: companies fail to reconcile the technological imperatives of the enterprise systems with the business needs of the enterprise itself.
At the core of an enterprise system is a single comprehensive database. When new information is entered in one place, related information is automatically updated. Despite its capacity to integrate, an enterprise system is not flexible. It is a generic solution that does not always fit with each enterprise’s individual characteristics. See the illustration below for a graphic view of an enterprise system.
An enterprise system, by its nature, imposes its own logic on a company’s strategy, organization, and culture. It pushes a company toward full integration even when a certain degree of business unit segregation may be in its best interests.
Some degree of enterprise system customization is possible. For example, because the systems are modular, companies can install only those modules that are most appropriate to their business. However, the system’s complexity makes major modifications impracticable. As a result, most companies installing enterprise systems will need to adapt or even completely rework their processes to fit the requirements of the system.
Because an enterprise system is a generic solution, problems arise when the company’s competitive advantage derives primarily from the distinctiveness of its products. For companies that compete on cost rather than on distinctive products or...