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Chapter 1 • Introduction to Enterprise Systems for Management 15

successful in aligning and integrating accounting, finance, human resource, and manufac-
turing technologies by aligning business processes with information processing logic and
in transforming these organizations from pure hierarchical structures to matrix and other
hybrid or flexible organizational structures. Thus, even though e-Business caused a lot of
disruptions in business, ERP helped these businesses survive by allowing them to adapt
quickly to these disruptions.
3. Finally, the early focus of e-Business was on communication (e-mail), collaboration
(calendaring, scheduling, group support), marketing and promotion (Web sites), and
electronic commerce. These can all be considered front-office functions that involve user
and/or customer interactions. In contrast, the focus of ERP systems was mainly on data
sharing, systems integration, business process change, and improving decision making
through the access of data from a single source. These functions can all be considered
back-office functions helping the operational efficiencies of employees, vendors, and
suppliers. For example, e-commerce, which facilitates selling of products online, requires
tremendous back-end support, namely, fulfillment of the online order. This task can be
efficient if an organization has an ERP system in place.
The above reasons show why these two technologies have successfully cohabitated in
organizations for the last decade, thereby refuting the earlier claims that one will replace the
other. Even in intranet applications, the functionality is one of ERP applications only, and it is
delivered via Internet-based protocols. Today, both technologies are evolving toward a single
model in which ERP vendors provide e-commerce and e-Business modules as part of the system.
In future, e-business Web site implementation will become a part of ERP implementation.

Benefits and Limitations of ERP
ERP systems require a substantial investment from an organization in terms of cost, time, and
people. These investments can run into millions of dollars over several years and involve
hundreds of people from the organization. No organization will be willing to invest a huge
amount of resources unless the benefits outweigh the costs. The benefits and limitations of ERP
can be looked at from a systems and business viewpoint; similarly, like other IT projects, the
returns can be tangible and intangible, as well as short term and long term. The management
within an organization that implements an ERP system has to account for the benefits and
limitations of this system from all viewpoints and focus on the big picture to justify the huge
investments in this system to the stakeholders. A strong commitment from management is
critical for the success of ERP systems. This commitment will not be internalized unless a
thorough analysis of benefits and limitations is communicated.
The system benefits and limitations of ERP systems are as follows:
•Integration of data and applications across functional areas of the organization (i.e., data
can be entered once and used by all applications in the organization, improving accuracy
and quality of the data).
•Maintenance and support of the system improves as the IT staff is centralized and is
trained to support the needs of users across the organization.
•Consistency of the user interface across various applications means less employee training,
better productivity, and cross-functional job movements.
•Security of data and applications is enhanced due to better controls and centralization of
hardware, software, and network facilities.