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Chapter 9 Achieving Operational Excellence and Customer Intimacy: Enterprise Applications 369

9.1 ENTERPRISE SYSTEMS

A round the globe, companies are increasingly becoming more
connected, both internally and with other companies. If you run
a business, you’ll want to be able to react instantaneously when a
customer places a large order or when a shipment from a supplier
is delayed. You may also want to know the impact of these events on every
part of the business and how the business is performing at any point in time,
especially if you’re running a large company. Enterprise systems provide the
integration to make this possible. Let’s look at how they work and what they
can do for the firm.

WHAT ARE ENTERPRISE SYSTEMS?

Imagine that you had to run a business based on information from tens or even
hundreds of different databases and systems, none of which could speak to one
another? Imagine your company had 10 different major product lines, each
produced in separate factories, and each with separate and incompatible sets of
systems controlling production, warehousing, and distribution.
At the very least, your decision making would often be based on manual hard-
copy reports, often out of date, and it would be difficult to really understand
what is happening in the business as a whole. Sales personnel might not be
able to tell at the time they place an order whether the ordered items are in
inventory, and manufacturing could not easily use sales data to plan for new
production. You now have a good idea of why firms need a special enterprise
system to integrate information.
Chapter 2 introduced enterprise systems, also known as enterprise resource
planning (ERP) systems, which are based on a suite of integrated software
modules and a common central database. The database collects data from many
different divisions and departments in a firm, and from a large number of key
business processes in manufacturing and production, finance and account-
ing, sales and marketing, and human resources, making the data available
for applications that support nearly all of an organization’s internal business

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