Enterprise Resource Planning

Group 9: Casey McConkey, Nick Lobasso, Evan Kundrat

Brief Background Understanding

Enterprise Resource Planning (ERP) systems are a type of business

management software that easily collects, manages, and integrates large
amounts of data into a single location where it can easily be analyzed, used,
and shared.

Data is gathered from all different departments or functional areas of the

organization and all external stakeholders

Collects data for many business operations, especially inventory

management, marketing and sales, manufacturing, human resource
development, product innovation, and many more.

Visual Representation

Our Theory

We believe that implementing an enterprise resource planning system will

provide an organization with core competencies that will lead to establishing
a sustainable competitive advantage.

4 Major Drivers for Adoption of ERPs

Providing a competitive advantage

Increasing operational efficiency

Improving productivity

Satisfying external demands/needs

Competitive Advantage: Definition & Criteria

When an organizations core competencies allow it to create value for its

customers by performing key activities better than its competitors

In order to be considered a distinct competitive advantage, the organizations

core competency must have a favorable balance of being

Valuable,

Rare,

Inimitable,

Non-substitutable
(Ireland, 2012)

What Makes a
Sustainable Competitive Advantage?

The four criteria described before valuable, rare, inimitable, and nonsubstitutable must be met for several years in a row.

Having achieved these criteria for several years consecutively proves an

organization has established a sustained competitive advantage as opposed to
a few lucky years followed by a low performing year, and so on.

How Can an ERP System Provide a

Sustainable Competitive Advantage?

Brings all information and resources into one main database system

Increases information sharing

Increases collaboration between organizational departments

Increases collaboration between organization and external stakeholders

The increased information sharing and collaboration helps improve overall

efficiency in daily procedures

Makes sure work is not being done twice

Makes sure there is no delay time in the transfer of information slowing down processes

Support of Our Theory #1

One

of the first case studies we came across was in reference to information

systems and the benefits they provide organizations.
Organizations

consider ERP to be the most vital system they run, it integrates

various other software systems and creates an ability to conduct business
leveraging data and information from multiple groups within the organization
(Winthrop, 2014).

Support of Our Theory #2

Another case study discussing ERP systems in the value chain explains how
organizations receive a competitive advantage from highly structured and
organized information and communication sharing technology.

New research has shown that ERP aims at creating and adopting a system
that fits the organizations specific business processes, thereby maintaining
or increasing its competitive advantage when compared with its rival firms
(Johansson, 2010).

Counterargument of Our Theory #1

One case study collected data from before and after several firms adopted a
SAP AG ERP system and compared it to similar data of their main competitors.

It was found that companies using SAP ERP significantly improved their
inventory management, but this did not necessarily translate to increased
profitability (Goeke, 2009).

Increased operational efficiency and collaboration but not profits

However, companies can still achieve competitive advantage from increased

efficiency

Counterargument of Our Theory #2

Another case study analyzed the effect enterprise resource planning systems
has on small to medium sized companies.

The study found that ERP systems could create a competitive advantage in
delivery for small to medium enterprises by being responsive and agile to
change, but not to uncertainty (Lenny, 2007).

ERP systems were not able to control the uncertainty of the external environment
in which a organization works, therefore could not determine the effect on profits

Although once again, companies can still achieve competitive advantage from
increased efficiency

Why We Believe This Theory Is True

Overall:

Previous case studies found ERP systems to sufficiently improve an

organizations internal operations

However, different case studies also found a lack of correlation between ERP
systems and profitability

Our own research suggests that ERP systems provide organizations with many
advantages that if used to its full potential could provide a sustainable
competitive advantage

We found high rates of success after implementation of ERP systems for well
established companies such as IBM

References/Sources

Aptean. Where Software Works ERP Systems. (2014). Referenced from http://www.aptean.com/additional-crm-and-erp-related-linkspages/erp-resources-folder/erp-system-examples

Daft, R. L. (2013). Organization Theory & Design. Mason, OH: South-Western Cengage Learning.

Goeke, R. J., & Faley, R. H. (2009). Do SAP Successes Outperform Themselves and Their Competitors?. Communications Of The ACM,
52(10), 113-117

IBM. A renaissance for ERP and why it matters. (2014). Referenced from
http://www.ibm.com/midmarket/us/en/forwardview/article_ERP1_1209.html

Ireland, R. & Hoskisson, R. & Hitt, M. (2012). Understanding Business Strategy and Concepts. Mason, OH: South-Western Cengage
Learning.

Johansson, B., & Newman, M. (2010). Competitive advantage in the ERP system's value-chain and its influence on future development.
Enterprise Information Systems, 4(1), 79-93. doi:10.1080/17517570903040196

Lenny, S.C.K., & Mike, S. (2007). Could enterprise resource planning create a competitive advantage for small businesses?.
Benchmarking: An International Journal, 14(1), 59-76.

Winthrop Resources Corporation. (2014). Epicor ERP Technology Finance. Referenced from
https://www.winthropresources.com/about/tech-finance/erp/epicor.php