Enterprise Systems: Should They be Modified?

Christina McClenaghan National University May, 2013

Abstract Enterprise systems are designed to manage large volumes of data in order to support business processes, workflows, analytics and reporting in spread out or complex organizations. An enterprise system helps managers and other key stakeholders to make better decisions by pooling data from across the enterprise. When an organization chooses to implement an enterprise system for data management should it choose to also modify the tools based on the needs of end-user groups or seek to have one standard platform? Soh, N., et al, argue that in a multi-stakeholder environment enterprise system implementation will enact separate control functions based upon the needs of the stakeholder group (2010). Our textbook addresses the fact that too much customization for an already complex business system adds to the already high costs of implementation (Laudon, K., Laudon, J., 2012).

Enterprise systems are valuable because they allow organizations to manage their data to optimize business processes and integrate the organization. Enterprise systems also allow for the standardization of business processes and improved analysis and use by ensuring that each part of the organization is working from the same data sets. In the research article, Managing Diverse Stakeholders in Enterprises Systems: A Control Portfolio Approach, Soh, C., et al. seek to address how the presence of multiple stakeholders influences a control portfolio, where controls are defined to be the actions taken by the controller that explicitly state the wanted behaviors and outcomes (Soh, C., et al., 2010). Controls will also be set to measure or evaluate the behavior or outcomes of the controlee and to set rewards for meeting those outcomes, or define the penalties for not meeting the stated objectives (Soh, C., et al., 2010). Previous research has suggested that standards within a project control portfolio are generally applied to the whole project team, or that standards for the end-users of an enterprise system should all be the same. Soh, C., et al., seeks to add to this by stating that in addition to the controls applied to all team members, individual stakeholder groups should also include separate targeted controls that are specific to the needs of the separate stakeholder groups to add additional value to the enterprise system(Soh, C., et al., 2010). Leadership at various levels ensures the success of control implementation not only for the team as a whole, but for the individual stakeholder groups. Soh, C. et al., states that principal controllers are responsible for overseeing the work and effectiveness of subordinate controllers (2010). This is similar in concept to organizations management where a Chief Executive Officer (CEO) may drive the high level expectations of the organization and then have various levels of management below such as directors, managers and supervisors where each are responsible for ensuring that directives and expectations set by leadership are met.

The study concluded that in large, complex multi-stakeholder portfolio projects, a central controller should be in place to provider leadership and identify members of stakeholder groups who would have subordinate controller roles. Allowing specific team groups to develop their own unique sets of controls that meet the information and data needs of the individual team groups will add value to the enterprise system as a whole. The principal controller, or leadership of the organization should be aware of all of the controls that are being initiated, provide support for controls that must be enacted across stakeholder groups and make sure that the individual controls are in line with the needs of the project as a whole (Soh, C., et al., 2010). Where Soh, C. et al. takes a firm stance that the customization of an enterprise system can add value when it is able to better meet the needs of individual stakeholder teams, K. Laudon and J. Laudon note concern for altering the controls within an enterprise system. While they concede that enterprise systems are powerful tools for standardizing data processes and enhancing the decision making capabilities of management, implementation of enterprise systems also requires businesses to make fundamental operational and technical changes (Laudon, K., Laudon, J., 2012). Firms may experience operations issues and even losses in revenue and time then first implementing enterprise applications because not enough time was paid to understanding how the implementation may change workflow processes (Laudon, K., Laudon, J., 2012). Cost incurred when changing from one supplier to another, known as switching costs, should also be taken into account. If the organization is relying on a single vendor to implement the enterprise application it could be very costly to switch if the vendor is not meeting expectations. Conversely, there may also be high costs associated with using a single vendor for an enterprise system if the organization will become dependent on the vendor for application or technology maintenance (Laudon, K., Laudon, J., 2012).

Customization of the enterprise system can add value when it meets the needs of individual stakeholder groups within the project team. To ensure that the organization will not have too many problems related to the implementation of an enterprise system an appropriate amount of research time must be allocated to understand how the business uses data and how this change could possible impact workflow. It may even be necessary to plan to reduce workload for the time immediately following implementation in order to allow the organization time to adjust. It could also be beneficial to pilot a smaller version of the enterprise application before an organization wide roll out. When issues can be addressed early on in the process and leadership can provider clear and concise instruction to subordinate controlee teams, customization of the enterprise application would stand to add value and enhance decision making abilities.

References Laudon, K., Laudon, J., (2012). Management Information Systems: Managing the Digital Firm (12th ed.). Upper Saddle River, NJ. Pearson Education, Inc. Soh, C., Eng Huang Chua, C., & Singh, H. (2010). Managing Diverse Stakeholders in enterprise Systems Projects: A Control Portfolio Approach . Journal of Information Technology. 1-16. Retrieved from http://docs.business.auckland.ac.nz/Doc/Managing-diverse-stakeholders-in-enterprise-systemsprojects-A-control-portfolio-approach.pdf