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CREATING BUSINESS VALUE AND
UNDERTAKINGSTRATEGIC TRANSFORMATIONS WITH
ENTERPRISE SYSTEMS:
TOWARDS A FRAMEWORK
Presented by: Jyoti Arora
Vikramaditya Shukla
Sayantan Nandi
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Abstract
The paper tries to look into the adoption of Enterprise-
Systemsto go beyond being a mere IT platform;
To analyze potential for creating business value and
enabling strategic transformations in the firms thatimplement them;
Proposing a holistic framework to explain the above;
Suggesting how this framework is intended to be
validated with empirical evidence;
And explain contributions of the research to academia
and industry.
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Introduction
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Doubts??
Putting these systems in place involve investments of
millions of dollars and significant periods of time
and human effort, is it really worth it?.
Also now focus has shifted from how to get
Enterprise Systems up and running as an IT
platformto
how to realize the promised benefits from these
systems after adoption.
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Business Transformation
Business Transformation: to align people, processesand technology intimately to the strategy of the
organization, and to develop new strategies.
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The IT advantage
InformationTechnology, has thepotential to play a
significant role in suchinitiatives.
Adopting EnterpriseSystems have recentlybecome the best betfor adopting firms.
Led to the growth of
Large, MNs, blue-chipConsulting firms to carryout business
transformation.
Also all Vendors ofEnterprise systems
claims to enhance andequip their software tomeet business objectives
at all times.
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But are the tall claims of Vendors &
Consultants really true and do Enterprisesystems actually add value to the business?
Leading to the research questions
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a) enablecreation of
business value
b) facilitatestrategic businesstransformations?
How can the adoption of Enterprise Systems in
large organizations??8
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Proposed Framework
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A. Process Model
To discuss the process or the how of the above
phenomenon.
This part of the framework looks at the adoption of
Enterprise Systems as an ongoing process, and not a
one-off project.
The Various steps of the model are:
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(a). Corporate/Business strategy framed
The process described in the framework can be said
to begin with a clearly defined corporate/ business
strategy for an organization.
The underlying functional-level strategies that are
of key importance here are the Operational,
Marketing and Growth Strategy of theorganization.
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(b). Invest in ES
The strategy drives (among other investments) the
adoption of Enterprise Systems.
There can, and almost always will be, initiatives
other than the adoption of Enterprise Systems that
are driven by the strategy, such as employee
development and rewards restructuring, buildingorganizational culture and so on.
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(c). ES in Place
The process shows that investment in Enterprise
Systems leads to the Enterprise System being set up
in the organization and this could be as a result of
initial implementation, enhancements, additional
components, upgrades and so on.
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(d). Use ES as a platform
With the Enterprise Systems in place, the organizations should use
this System as a platform to do the following:
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Integrate: harmonize the data andprocesses within the organization as
well as beyond the boundaries.
Optimize: standardize theprocesses by aligning them with
best practices or modify/ enhanceprocesses.
Informate: provide access to realtime data and the capability to
analyse the internal organizationalperformance; and aid decision-
making.
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(e). Operational excellence enabled by
adopting Enterprise Systems
Core Operational Benefits: benefits such as Reduction in
Cycle Time , Cost reduction, Quality Improvement ,Customer satisfaction, lower inventory levels.
Infrastructural Benefits: benefits such as IT maintenancecosts reduction, reduction in data entry errors, flexible ITinfrastructure, cheaper upgrades creating Business Value
Managerial Benefits: better control on operatingprocesses and hence making better decisions, thus
increasing operating margins.
Operational excellence is achieved by organizations via
benefits :
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(f). Innovation enabled by adopting
Enterprise Systems
Product/Service
Process
Market
Alliances
The adoption of Enterprise Systems enables the firm
to innovate along the following dimensions:
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(g). New Strategic Opportunities enabled
by Enterprise Systems
Determine profitdrivers , grouped by
business units, to come
up with a newcorporate strategy;
Leverage a baseplatform with built-inprocesses for multi-
country accounting andreporting to framegrowth strategy by
going global;
Shifting to a low-pricestrategy enabled by
dramatic improvementin process efficiency
from an optimisedplatform; and so on.
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(h), (i), (j), (k)
These processes shows that with the execution of ES-
enabled operations and ES- enabled Innovation,
Operational Excellence is achieved and Innovation
is undertaken by the organization.
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(l). Continue Execution
The process then shows that whatever the path
taken (i.e. operational excellence and/or
innovation), the organization needs to continue the
execution of that path for a given timeframe.
This is essentially executing the existing strategy of
the organization enabled by the adoption of thesystems.
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(m). Strategy Realised
Strategy is realized by the benefits that enable
the firm to be in a position to compete better and
grow as a firm.
Strategy is realized by executing the ES- enabled
operations and/or innovation for a given period.
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(n). Identify & Assess
On the other hand, identification of new strategic
opportunities can be done with the capability
provided by the ES platform
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(o). Strategy Reshaped
When the strategy is reshaped, the process
feedbacks into itself to lead to more investments
(like additional components, upgrades etc.) on the
Enterprise System as well as other initiatives takento execute this reshaped strategy.
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This framework attempts to identify the role of
Enterprise Systems as a particular form ofinformation technology in shaping the business
strategy with Enterprise Systems-enabled innovation
as the driver.
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B. Variance Model
This seeks to explain the causal relationship
between some of the constructs of the framework.
The discussion in the process model above also
leads to the development of the following
hypothesis:
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Hypothesis A
The more that adopting firms have used their
Enterprise Systems to integrate, the greater the level
of operational excellence
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Hypothesis B
The more that adopting firms have used their
Enterprise Systems to, optimise, the greater the level
of operational excellence
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Hypothesis C
The more that adopting firms have used their
Enterprise Systems to informate, the greater the
level of operational excellence
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Hypothesis D
The more that adopting firms have used their
Enterprise Systems to integrate, the greater their
capability to undertake Innovation
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Hypothesis E
The more that adopting firms have used their
Enterprise Systems to optimise, the greater their
capability to undertake Innovation
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Hypothesis F
The more that adopting firms have used their
Enterprise Systems to informate,the greater their
capability to undertake Innovation
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The framework proposes the different possibilities
organizations can avail by adopting the EnterpriseSystems to achieve business benefits & to transform
themselves, with a goal to better execute their
existing strategy or reshape their strategies for
success.
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EXPECTED CONTRIBUTIONS OF THE
PROPOSED STUDY
Results of this study will be of significant relevance to themanagement of large organizations who have adopted orcontemplating to adopt Enterprise Systems, to appreciatehow they can create business value and transform their
business by investing in Enterprise Systems.
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(Contd.)
Provide a new holistic theoretical framework onhow the adoption of Enterprise Systems canenable business value creation and strategic
business transformation in large firms.
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(Contd.)
Provideadditional
evidence ofwhether theadoption of
EnterpriseSystems
enable firmswith
a.)capability tooptimise, informate,integrate
b.)operationalexcellence
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Conclusion
The paper discussed a key topic of interest to both
the contemporary business world as well as
academia in the fields of IT and management. The
work introduces a new perspective into how business
value can be created using a technology called
Enterprise Systems and how this technology can be
used to enable strategic transformation of the
organization .
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Please go ahead with your queries
Thanks a Bunch!