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Part I 89

1597

Business Proc

90. Business Process Automation

Edward F. Watson, Karyn Holmes

Integrated enterprise-wide information systems

(EwIS) are a class of customizable packaged busi-

ness software applications that have replaced

arrays of disparate legacy systems in organizations

around the world. EwIS have been the catalyst for

the reengineering and automation of core busi-

ness processes that has led to organization-wide

transformation across most industries in corporate

America. Chief among this category of packaged

business software is enterprise resource planning

(ERP), the back-ofﬁce suite that was embraced

by many industries in the 1990s as a cure for

legacy system ailments and impending year-2000

(Y2K)disasters.ERP is considered a product of

the evolution of an earlier manufacturing plan-

ning system referred to as manufacturing resource

planning (MRPII). Whereas MRPII was focused on

the factory planning environment, ERP incorpo-

rates enterprise-wide functionality and therefore

is used in virtually all industries. ERP has en-

abled organizations to streamline, automate, and

commoditize their business processes, leverag-

ing best-of-industry practices, quite signiﬁcantly

over the last 15 years. Two other packages that are

attributing to this phenomenon are customer

90.1 Deﬁnitions and Background ..................1598

90.1.1 Anatomy of an ERP System ............1600

90.1.2 ERP Implications ..........................1602

90.1.3 ERP Evolution ..............................1604

90.2 Enterprise Systems Application

Frameworks .........................................1606

90.2.1 Customer Relationship

Management ...............................1606

90.2.2Supply Chain Management ............1607

90.2.3e-Business ..................................1608

90.3 Emerging Standards and Technology......1609

90.3.1 Services Concept...........................1609

90.3.2Competitive Landscape .................1609

90.4 Future Trends.......................................1610

90.5 Conclusion ...........................................1611

References ..................................................1611

relationship management (CRM) and supply chain

management (SCM). In this chapter we review

EwIS in a historical context as it has developed

over the years and discuss the most important

characteristics of EwIS todayaswellashowwe

expect this ﬁeld to evolve.

Enterprise-wide information systems (EwIS) are power-

ful software packagesthat enable businessesto integrate

a variety of disparate functions [90.1]. As pointed out

by Davenport [90.2], EwIS terminology evolved from

the more widely used term enterprise resource planning

(ERP). ERP systems, as originally deﬁned, represent

the back-ofﬁce of the corporation. EwIS tend to refer to

a more generic structure that represents any enterprise

application that integrates multiple business functions.

The ERP market experienced explosive growth in the

USA duringthe 1990s,due in large partto alittle known

German software company namedSAP – headquartered

in Waldorf – that delivered to the US market ERP soft-

ware of the same name.

In the early 1990s, SAP took the USA by storm, de-

livering the ﬁrst comprehensive, real-time ERP system

on a client–server platform. Having a well-engineered

product and selling the product to C-level executives

as a business transformation-enabled solution while

Y2K issues were imminent were the necessary ingre-

dients to catapult SAP into the market-leading position.

Other vendors, through acquisition and organic growth,

scrambled for market share. PeopleSoft, the leading hu-

man resource management system, and Oracle, well

Part I 90

1598 Part I Home, Ofﬁce, and Enterprise Automation

known for their leading database management system

and less known for their business accounting software,

both slowly evolved to offer more comprehensive so-

lutions. By the turn of the century, hundreds of ERP

vendors surfaced to serve all types and sizes of private

and public organizations.

This chapter is broken down into four main parts.

The second section, immediately following this ﬁrst

section, describes the business environment when ERP

came to the US market in the early 1990s. It then

deﬁnes the key characteristics of ERP that have es-

sentially deﬁned the new class of standard software

applications referred to as enterprise-wide informa-

tion systems. ERP implications are then discussed

since ERP is not simply a software package. Finally,

EwIS systems do not stand still, and it is impor-

tant to understand how they will continue to evolve.

The third main section presents the enterprise sys-

tems application framework and brieﬂy describes two

of the other most signiﬁcant EwIS applications on

the market today: customer relationship management

(CRM) and supply chain management (SCM). The

fourth main section provides a brief overview of the

emerging services industry from the enterprise sys-

tems perspective. Finally, the fourth main section looks

brieﬂy at future trends of which practitioners and re-

searchers should be aware. This chapter ends with

a brief conclusion and a reference list of the signiﬁcant

readings that were used to write this chapter. Related

information can also be found in Chap. 54 on Pro-

duction, Supply, Logistics, and Distribution; Chap.86

on Enterprise Integration and Interoperability;and

Chap.88 on Collaborative e-Work, e-Business, and e-

Service.

90.1 Deﬁnitions and Background

Much has been written about the emerging information

economy and the challenges corporations around the

world face in their quest to shed their legacy systems

and processes and transform themselves into lean, ag-

ile, and responsive organizations[90.3]. Sincethe 1970s

and 1980s, global competition has threatened the ex-

istence of many, if not most, companies in the USA,

and management and business consulting organizations

have prospered during these times. The search for ex-

cellent business practices that would pave the path to

success, a concept popularized by Peters and Waterman

in [90.4], led many executives to look for a silver-bullet

cure. A paradigm shift, driven by information technol-

ogy (IT)-enabled radical change, took place in the way

companies competed and were managed. Traditional

push – or make-and-sell – strategies, tied to the annual

budget cycle were replaced by radically faster, real-

time, sense-and-respond, pull strategies [90.5]. Firms

learned that they could no longer lead the competi-

tion by forecasting customers’ needs and then planning

the year’s production using inventories to match sup-

ply and demand. Instead, they had to rely on real-time

information to evaluate the needs of each customer con-

tinuously. In fact, it was often necessary to anticipate

unspeciﬁed needs, and then quickly fulﬁll these needs

with customized products and services delivered with

unprecedented speed. This shift froman industrialecon-

omy to an information economy was accompanied by

a simultaneous shift in power from the producer to the

(information-empowered) consumer.

During this time, signiﬁcant emphasis was placed

on organizational improvement initiatives such as total

quality management, continuous improvement, bench-

marking, and employee involvement [90.6]. A com-

peting change paradigm suggested that continuous

improvement was not sufﬁcient to make signiﬁcant ad-

vances towards performance excellence and that deeper,

systemic change was required [90.7]. Business process

reengineering (BPR), a term coined in the 1980s [90.8],

provided the means by which an organization could

fundamentally change its core business processes and

transform itself into a lean, globally competitive, struc-

ture. In order to do this, companies were forced to

place intensefocus on their customer, and to deﬁne their

core processes based on those, and only those, activities

that collectively added value to their internal and ex-

ternal customers. Business processes were streamlined

and built around core competencies and capabilities. As

we discuss in this paper, an important catalyst for the

reengineering and streamlining of back-ofﬁce business

processes was ERP.

The emphasis on the core business processes [90.9,

10] of the ﬁrm was not easy for most organizations.

Redeﬁning the work of an organization based on the

customer, instead of on the organization, was a new

way of thinking. However, this exercise was necessary

in order to clean up years of building systems on top

of systems on top of (legacy) systems. An intense fo-

cus on the customer became the essential ingredient to

success [90.11–13].

Part I 90.1

Business Process Automation 90.1 Deﬁnitions and Background 1599

With this quest towards efﬁcient and effective

business processes under way, organizations quickly

realized the challenge of institutionalizing these im-

portant process changes. Organizations quickly adopted

a multidimensional perspective on these transforma-

tion initiatives: people, process, and technology. The

foremost signiﬁcant hurdle to change was the orga-

nization’s ability and readiness to implement change,

the people (also known as, organization) dimension.

Implementation-related challenges are discussed later

in the chapter. The process dimension presented dif-

ﬁcult challenges as companies had to look inside and

identify their core processes. Prior to this time, most or-

ganizations did not think in terms of business process,

but instead focused on their performance as deﬁned

within their functional ﬁefdoms. Quite some time tran-

spired before corporations fully appreciated the concept

of process, deﬁned as a set of organized activities that

collectively add value to a (internal or external) cus-

tomer. In fact, companies learned that most business

processes crossed functional boundaries, were not eas-

Supplier

relationships

Purchase

requisitions

Raw materials

procurement

Customer

contract

Customer

order

Availabilty

checking

Delivery

picking list

Billing Credit

A/R

Production

plan/schedule

Production Inventory

management

Warehousing

Credit

checking

Customer serviceSales Accounting

Shipping

Purchase

orders

Receiving Invoice

verification

A/P

Checks

Acounting

Procurement dept.

Suppliers Customers

Procurement cycle

Fulfill demand cycle

Order to cash cycle

Fig. 90.1 High-level integrated business processes

ily adopted bythe hierarchical organization, and clashed

with function-oriented incentive systems.

Figure 90.1 illustrates three core business processes

that are well-known and understood today: order-

to-cash cycle, fulﬁll-demand cycle, and procurement

cycle. Throughout the 1980s, many companies sought

this holy grail of business process deﬁnitions inde-

pendently. There was little success at industry-wide

collaboration to achieve best business practices. As ev-

ery company designed new business processes, they

were ultimately challenged to determine how to best

implement their new processes. The answer most often

was less than optimal as they tied together best-of-breed

business applications, spanning multiple computing

platforms, or built new applications speciﬁc to their

needs. The ERP systems introduced to corporate Amer-

ica in the 1990s, as discussed in this chapter, brought

to market best practice repositories, built on years and

years of experience. And the best way to institutionalize

these new processes was through the third dimension of

change: technology.

Part I 90.1

1600 Part I Home, Ofﬁce, and Enterprise Automation

As we look back to the pre-1990s, we see that ad-

vances in technology and corporate computing were

also being made. A signiﬁcant development that trig-

gered the growth in the EwIS market was client–server

technology [90.14]. Client–server systems were not

based on a single technological innovation, but rather

very different development currents in various areas

of data processing were united. In particular, progress

in the areas of hardware technology, networks, system

software, user interface,multimedia applications,object

orientation, and software development tools have con-

tributed to this breakthrough. While companies sought

to transform their organizations and shed themselves

of years of inefﬁcient processes and procedures, they

were equally anxious to migrate away from their ex-

pensive mainframe computingplatforms in order to ﬁnd

a lower-cost, ﬂexible computing environment.

While these advances in the business and technol-

ogy worlds evolved, another very important concept

was also picking up momentum: the use of standard

application software [90.15]. Advocates of standard

software believed that business processes must be de-

termined independent of the standard software products

in order to ensure that business applications are based

on business criteria and not on technology platform

availability. In this manner, an IT-enabled business

transformation effort could be driven by corporate strat-

egy instead of by technological constraints [90.16].

From the EwIS arena, we look ﬁrst at the ﬂagship

ERP system that has been the catalyst for so many

business transformation initiatives. We look at what

it is and how it enabled business process automation,

from the packaged software perspective. We then look

at two systems (i. e., CRM and SCM), similar in con-

cept but focused more on a company’s outwards-facing

processes.

90.1.1 Anatomy of an ERP System

An ERP system represents a grand concept and has

been perhaps most effectively deﬁned by SAP AG in

an early (1996) company presentation illustrated in

Fig.90.2. In this illustration, the honeycomb structure

emphasizes the modular layout of the functional ap-

plications as well as the anticipation of always adding

or enhancing functionality over time. At the heart of

ERP is a common, relational database making all com-

pany data available in real time to any authorized

user and linking activities across these applications via

workﬂow. An ERP system can be characterized by

a number of attributes that are generally common across

all EwIS: comprehensive functional modules; business-

process-oriented, common, and relational databases;

open standards; best business practices; packaged soft-

ware; business information systems standards; and

conﬁgurable, common-development-platform, complex

workﬂow capabilities. These attributes are deﬁned for

ERP below.

Comprehensive Functional Modules

ERP systems consist of the core (back-ofﬁce) business

applications of four basic functional areas: ﬁnancials,

operations and logistics, sales and marketing, and hu-

man resources.

Business Process Oriented

An important idea behind ERP is that the system must

support company-wide business process activities, as

deﬁned by the company. These activities typically span

many functional areas; for example, a typical customer

order management process would consist of presales

activity, sales order processing, inventory sourcing, de-

livery, invoicing, and payment [90.17,18].

Common and Relational

The problem that ERP systems are designed to solve is

the fragmentation of information in large business orga-

nizations. A common database facilitatesthe integration

of thisinformation intoa singleinformation silo.A rela-

tional database organizes records into a series of tables

linked by common ﬁelds [90.19].

Open Standards

The business applications are independent of theoperat-

ing system and the hardware platform. Thus, a business

has the freedom to choose the business application, in-

dependent of the operating system and the hardware

platform.

Best Business Practices

Best business practices describe a documented collec-

tion (i.e., repository) of business processes that have

been accumulated over time from the experiences of

many businesses within an industry and across many

industries. Best practices are typically technology en-

abled, but they may describe work activity that is

independent of technology as well [90.18].

Packaged Software

ERP describes a class of software that is packaged, yet

customizable, and is available from ERP vendors. This

is one-stopshopping for the user, as a single vendor may

Part I 90.1

Business Process Automation 90.1 Deﬁnitions and Background 1601

offer the complete back-ofﬁce packaged business suite.

This is not to say that a company cannot develop their

own system that has ERP characteristics.

Business Information Systems Standards

Packaged software forces business information systems

standardization. Examples of where standards exist in-

clude data types, organizational types, user interfaces,

software development, application interfaces, and re-

porting.

Conﬁgurable

ERP software requires the expertise of business pro-

cess experts in order to conﬁgure the system to support

company-speciﬁc processes and data. ERP vendors

have gone to great extremes to provide template solu-

tions for smaller companies with, relatively speaking,

standardized processes.

• MRP • Purchasing

• Goods movement • Invoice verification

• Inventory mgt. • Warehouse mgt.

• Vendor evaluation

• Purchasing information

• Payroll • Workforce planning

• Time mgt. • Plaining admin.

• Travel expense actg. • Organization mgt.

• Benefits • Personnel planning

• Recruitment

• Personnel administration

• Sales support • Inquiries

• Quotations • Orders

• Shipping • Invoicing

• Sales information

• General ledger • Accounts receivable

• Accounts payable • Cash management

• Financial controlling

• Financial assets management

• Intercompany accounting

• Consolidation

• Foreign currencies & taxation

• Cost element actg.

• Cost center actg.

• Activity based costing

• Activities & services costing

• Order and project actg.

• Technical asset. m

gt.

• Investment control

• Traditional asset actg.

• Investment mgt.

• Funds mgt.

• Resource mgt.

• Quality control

• Time mgt.

• Automate business processes

• Supports all modules

• Result of the ICOE's

industry-specific

functionality

• Sales planning

• Production planning

• MRP/MRP2

• Forecasting

• Capacity planning

• Production activity

• Costing

• Project management

• Quality planning

• Quality inspection

• Quality control

• Quality documentation

• Quality information

• Maintenance & inspection planning

• Processing of plant maint. orders

• Mg

t. of completion confirmations

• History mgt.

• Plant maintenance info.

Sales &

distribution

Financial

accounting

R/3

Central repository

of information

Controlling

Fixed

assets

mgt.

Project

system

Workflow

Industry

solutions

Materials

mgt.

Production

planning

Human

resources

Plant main-

tenance

Quality

Manage-

ment

Fig. 90.2 Enterprise resource planningper SAP(after company presentation 1996) (ICOE– Industry Centerof Expertise)

Common Development Platform

ERP systems are expandable by various means, besides

conﬁguration. First, it is typically possible, though not

recommended, to modify the source code. It is also

possible to extend the software functionality with third-

party application modules and then to link the modules

to the ERP system. Finally, ERP users may link the

software to third-party software packages in order to

incorporate more sophisticated or specialized function-

ality.

Complex

The downside of ERP systems is that, by their very na-

ture, they are somewhat complex. One consequence is

that it is very difﬁcult, especially during the software

evaluation period, to determine the extent to which an

ERP system can represent your business process with-

out actually implementing the process in the software.

Part I 90.1

1602 Part I Home, Ofﬁce, and Enterprise Automation

Also, similar to the leading ofﬁce productivity software,

Microsoft Ofﬁce, there is a lot of overhead such that

most users use less than 5% of the available functional-

ity.

Workﬂow Capabilities

This refers to the automation of business processes

within the enterprise system. Workﬂow capabilities

permit users todeﬁne event-drivenroutings, createauto-

mated in-boxes and prioritized cues, allow background

queries to take place with notiﬁcation to the user, and

more generally, to streamline processes.

ERP vendors have accumulated perhaps the great-

est collection of industry (best) business practices in

digital repositories. In fact, these repositories have be-

come a formidable competitive advantage for the major

vendors, speciﬁcally, SAP. ERP systems have evolved

quickly and as this market is saturated one can see the

offerings of each major vendor start to converge such

that they (i. e., SAP and Oracle) have more in common

in terms of functionality and features than they have

that’s different.

90.1.2 ERP Implications

The impact of ERP on business in the 1990s was

profound. ERP was recognized as the most important

development in the corporate use of information tech-

nology in the 1990s, even though the Internet received

most of the media attention [90.2]. Many believed that

“most white collar jobs – as we know them – will dis-

appear as we get the ERP/enterprise resource planning

– etc. – ‘stuff’ right” [90.20, p. 3]. One popular man-

agement guru, Michael Hammer, lectured around the

globe on the importance of treating an ERP implemen-

tation as a major business transformation in demand of

strong C-level leadership, instead of as an IT initiative

delegated to the IT department [90.21]. Hammer’s re-

search identiﬁed factors critical to the success of ERP

implementation in an organization:

•

View ERP as a business transformation initiative

(i.e., not a technology initiative)

•

Lead the ERP initiative from the C-level (i.e., pas-

sionate, focused leadership)

•

Give the ERP initiative a high priority relative to all

corporate initiatives

•

Ensure that the ERP initiative has solid project man-

agement and change leadership.

One of the major challenges presented by an

ERP system is the need to standardize on technol-

ogy and on business practices [90.2, 22]. In the purest

sense, ERP enables complete standardization of (best)

business processes and technologies, as illustrated in

Fig.90.1. However, many companies could not initially

reach this hurdle, as reported by Fortune magazine

in 1998 [90.23]. Besides implementing ERP to han-

dle order management, production planning, materials

management and ﬁnance, VF Corp custom developed

or used separate software suppliers to augment ERP

such as warehouse control (custom), product develop-

ment (Gerber), micromarketing (Marketmax, Spectra,

JDA software, and custom), forecasting (Logility), and

capacity planning (i2). As companies decide to add ad-

ditional softwareto manage their special circumstances,

they inherently choose to take on more costs associated

with interconnectivity, data integrity, and maintenance,

for example.

Perhaps the most interesting observations the au-

thors have made from talking to many consultants and

practitioners over the past decade is that a company

must ﬁrst acknowledge that their limited IT resources

should not be spread across the costs associated with

developing and customizing the entire enterprise appli-

cation suite. Instead, it is prudent to look at (roughly)

80% of a company’s core business processes as be-

ing amenable to standardized business processes using

packaged software (e.g., ERP) and industry best prac-

tices. The remaining 20% of processes provide the

company with a more manageably sized opportunity

to create or strengthen a competitive advantage by per-

haps customizinga softwaresolution around it. Industry

best practices, available as business process templates

by ERP vendors, have been provided by software ven-

dors but are actually built upon the cumulative learning

of these vendors who have worked with their industry

clients. Ultimately, ERP implementationenables a com-

pany to build seamless business processes, integrated

within the enterprise and across enterprises.

Since ERP ﬁrst gained popularity in the USA, ad-

vocates lauded the integration features whereas others

argued for the best-of-breed approach of knitting to-

gether the best application packages from the best

vendors. This latter group criticized ERP, claiming

that one single vendor could not deliver the best of

everything. Advocates of ERP would argue that in-

tegration of good applications is preferred, and that

standardization of the 80% of processes (while de-

veloping customized approaches for the other 20%)

will strengthen the value proposition of the initiative.

This concern over integration and best-of-breed has

sparked the debate over the emerging service-oriented

Part I 90.1

Business Process Automation 90.1 Deﬁnitions and Background 1603

architecture approach discussed later where vendors

promise to deliver comprehensive best-of-breed func-

tionality (services) in a completely integrated and open

manner.

ERP initiatives are typically rationalized as the

most prudent approach to automate and streamline the

back-ofﬁce business processes by leveraging best busi-

ness practices and packaged EwIS software. Whereas

the earliest companies saw ERP as a way to quickly

move from a dysfunctional legacy system, or to avoid

Y2K disaster, more recent implementations have been

able to learn from the experiences of others and take

a more carefully calculated approach to achieve spe-

ciﬁc business beneﬁts. A study led by Davenport and

sponsored by Accenture [90.24] found speciﬁc beneﬁts

resulting from ERP initiatives across diverse industries

such as: improved decision making, improved ﬁnancial

management, improved customer service and reten-

tion, ease of expansion/growth and increased ﬂexibility,

faster, more accurate transactions, head-count reduc-

tion, cycle time reduction, improved inventory/asset

management, fewer physical resources/better logistics,

and increased revenue. Shang and Seddon devel-

0 2 4 6 8 10 12 14 18

People 62%

Process 16%

Technology 9%

Knowledge assets 3%

Issues/obstacles until now

(%)

Change management

Internal staff adequacy

Project team

Training

Prioritization/resource allocation

Top management support

Consultants

Ownership (of benefits and other)

Discipline

Program management

Process reengineering

Stage/transition

Benefit realization

Software functionality

Application portfolio management

Enhancement/upgrades

Data

Reporting

Fig. 90.3 ERP issues prior to going live

oped a more comprehensive framework for assessing

and managing the beneﬁts associated with enterprise

systems (ES) [90.25]. This research identiﬁed ﬁve di-

mensions of ES beneﬁts:

•

Operational beneﬁts

•

Managerial beneﬁts

•

Strategic beneﬁts

•

IT infrastructure beneﬁts

•

Organizational beneﬁts.

Studies such as these have helped many executives

rationalize the ERP initiatives for their organizations. In

fact, the same rationalization has been adopted by not-

for-proﬁt organizations in government and education

industries.

ERP implementation involves the automation of

business transactions and this typically requires signif-

icant change to how work is done and how decisions

are made. It has been shown that the key challenges

when implementing ERP and forcing business process

change lie in the organization, not the technology. The

results from a study conducted by Deloitte Consulting

in 2003 reﬂect this idea. The study also concluded that

Part I 90.1

1604 Part I Home, Ofﬁce, and Enterprise Automation

people-related issues continue to dominate after the im-

plementation is completed as well.

Similar to best business practices, ERP software

vendors today have very well-established implemen-

tation methodologies, tools, and templates available

for ensuring successful implementations. The imple-

mentation process itself is very well understood and

standardized, and leverages best implementation prac-

tices based on years of implementation experience

in hundreds of companies across virtually all indus-

tries. Implementation methodologies have key project

phases associated with them. SAP’s implementation

methodology, for example, has ﬁve phases: project

preparation, business blueprint, realization, ﬁnal prepa-

ration, and go-live and support. Each phase has very

detailed work packages and clear deliverables. These

methodologies alleviated many project-management-

related challenges. Expectations are clear and easier to

manage. Communications is speciﬁc and timely. Work

activity is easier to manage and control as project man-

agers utilize computer-aided tools to better coordinate

and control the vast resources and activities associated

with the project. Finally, the costs associated with an

ERP implementation depend greatly on how much is

invested in organizational change and subsequent busi-

ness process reengineering, change management, and

training. However, for perhaps a typical implementation

one can view the breakdown of costs to roughly be as

follows: 15% software costs, 30% hardware costs, 40%

consulting fees (i. e., business process reengineering,

software conﬁguration, change management), 15% per-

sonnel (i.e., nonproductive time spent working on the

project, or in training, or learning curve related),and un-

fortunately, the remainder which is typically something

less than 2%, would go towards training (i.e., end-user

training as well as training to develop a core expertise

around software development, systems administration,

and software conﬁguration).

90.1.3 ERP Evolution

The ERP concept evolved from manufacturing resource

planning (MRPII), but the concept was so compelling

that it quickly expanded beyond its manufacturing roots

into industries such as ﬁnancial services, government,

education, utilities, and retail [90.2]. Until January 1,

2000, there was so much hype around Y2K compli-

ance that not too many organizations looked at ERP

issues beyond Y2K. One 1998 study sponsored by De-

loitte Consulting [90.26] suggested that there would be

a second wave of activity surrounding ERP. The study

conﬁrmed that going live with ERP is not the end.

Rather, going livewas viewedas thebeginning of ajour-

ney toward continuous improvement, innovation, and

agility. The ﬁrst Wave referred to the business process

changes associated with implementing ERP. The sec-

ond wave, on the other hand, referred to the actions that

are taken after going live that help organizations achieve

the full potential of ERP-enabled processes (i. e., pro-

cess optimization). A separate study conducted in 2002

and sponsored by Accenture again emphasized the im-

portance of viewing ERP as continuously evolving. The

study suggested that organizations seeking to capture

the original promise of enterprise solutions must fol-

low a logical path to integrate, optimize, and informate

as:

•

Integrate – unify and harmonize enterprise solu-

tions, data, and processes with an organization’s

unique existing environment, and use the systems

to better connect organizational units and processes,

as well as customers and suppliers.

•

Optimize – standardize most processes using best

practices embodied in enterprise solutions software,

mold and shape processes to ﬁt the unique strate-

gic needs of the business, and ensure that processes

ﬂow and ﬁt with the systems themselves.

•

Informate – organizations informate by transform-

ing enterprise solutions data into context-rich in-

formation and knowledge that supports the unique

business analysis and decision-making needs of

multiple work forces.

Davenport, in an earlier study [90.27], pointed out

that, following their ERP implementation, many com-

panies had trouble realizing the promised beneﬁts.

Complete beneﬁt realization could take one, two, three

or more years. But also, Davenport pointed out that, in

order to fully realize the beneﬁts of ERP, companies

must ﬁgure out how to use the data to support business

decisions.

Implementation of ERP does not ensure that the

ERP system will be used properly or that the ERP sys-

tem will lead to value. At the turn of the millennium,

studies found that, although many organizations justi-

ﬁed their implementation of an ERP on the basis of

better decision-making and management processes, few

had taken full advantage of the information provided by

the system [90.27]. ERP systems were clearly a catalyst

for operational process improvements through the sim-

ple alignment of business processes and streamlining

of information throughout the organization. However,

the business world was slow to recognize the potential

Part I 90.1