It is implied that almost all larger organisations have already implemented and completed ERP however the ERP market is still showing progressive growth (Pamatatau 2002). More than 50% of the large enterprises in the U.S., Europe, and the Asia Pacific region including Australia already have ERP systems in place, and more medium-sized enterprises are
embarking on ERP system implementation (Forrester Research 2005). With over 60 percent of the Fortune 1000 companies penetrated, major ERP vendors are increasing targeting small- and medium-sized enterprises (SMEs) to generate new customers (Bingi, Sharma & Godla 1999; Piturro 1999).
ERP systems have traditionally been used by many industries such as manufacturing, retailing, aerospace, and government sectors while they have recently been implemented in
60 the finance, education, insurance, retail, and telecommunications industries (Chung & Snyder 2000). A report from Stedman (1999) by Computer Economics Inc. stated that 76 percent of manufacturers, 35 percent of insurance and healthcare companies, and 24 percent of
government sectors already have an ERP system or are in the process of installation.
These systems currently become important infrastructure for many organisations. Suggested by Chen (2001), organisations chose and deploy ERP systems for a variety of benefits and strategic reasons. Many researchers believe the growth in the uptake of ERP systems is due to several business needs to:
Streamline and improve business processes
Better manage IS expenditure
Meet competitive pressures to reduce costs
Increase responsiveness to customers and their needs Integrate business processes
Provide a common platform and better data visibility, and
Use a strategic tool in moving toward electronic business (Davenport, Harris & Cantrell 2003 ; Markus, Petrie & Axline 2001; Somer & Nelson 2001).
Thus, many expect that the most important development in the corporate use of IT has been the usage of ERP systems (Davenport 1998). Hedman & Borell (2002) indicated that ERP systems are in most cases implemented with the goal to improve strategic, organisational, business, management, operational, IT-infrastructure, or decision-making aspects of the organisation. Many studies have concluded that ERP systems can bring benefits in
operational efficiency, reduce costs to organisations and enforce a discipline of best practice and consistency (Edwards, Peters & Sharman 2001; Marbert, Soni & Venkataramanan 2001; Van Everdingen, Van Hillegersberg & Waarts 2000). For example, Escalle, Cotteleer &
61 Austin (1999) suggested that potential benefits include drastic declines in inventory,
breakthrough reductions in working capital, abundant information about customer needs and wants, along with the ability to view and manage the extended enterprise of suppliers, alliances, and customers as an integrated whole.
Moreover, based on previous research, ERP serves numerous functional areas in an integrated fashion, attempting to automate operations from the application of BIDSA, SCM, CRM, financial and cost accounting, human resources, and almost any other data oriented
management process (Newell et al. 2003; Ng & Ip 2003; Ragowsky & Somers 2002). Thus, it is implied that ERP is now considered the standard system upon which many enterprises are operating their business (Lengnick-Hall, Lengnick-Hall & Abdinnour-Helm 2004).
Despite the support current ERP systems provide for process coordination and data integration, most of them – especially legacy ones – lack advanced decision support capabilities, resulting therefore in decreased company competitiveness. Davenport (2000) suggested that decision-making capabilities should act as an extension of the human ability to process knowledge management systems with the classical transaction-based systems, while Carlson and Turban (2002) claimed that the integration of smart add-on modules to the
already established ERP systems could make standard software more effective and productive for the end-users.
Regarding decision support capabilities, Davenport, Harris & Cantrell (2004) suggested that ERP can enable BIDSA through integrating, optimising, and informing that can affect data integration, standardisation of strategic processes, and providing context-rich information to support decision-making respectively. However, the usefulness of BI relies largely on the
62 data infrastructure (Gartner 2003). ETL and data warehouse (e.g. SAP13’s data warehouse) have an important role in business intelligence (McDonald et al. 2002; META Group 2004). Holsapple & Whinston (1996) reported that one key characteristics of any decision support system including a data warehouse is to encompass a component of the decision maker’s domain, and to achieve various tasks and possible valid conclusions for various situations.
For example, SAP data warehouse technology is known as “Business Information Warehouse” (BW). Stein & Hawking (2002) performed analysis of SAP’s Australian customers and identified BW (data warehouse) as the most common solution implemented post core ERP. The META group’s research found that 56% of SAP customers who had implemented three or more modules planned to implement BW in the next two years. This group increased to 63 percent when customers have implemented five or more modules (Schlegel 2004).
However, SAP can accomplish more strategic solutions that rely on BW in a specific business domain to assist decision-making. For example, CRM analytics support the decisions
associated with customers in terms of marketing, sales, and service. These use information captured and applied to a pre-stored scenario, and much of the required information is supplied via the BW solution (McDonald et al. 2002). BW plays a role as the extractor, integrator, and repository for this data.
Thus, the development of ERP has resulted in the development of a broad range of “bolt-on” solutions. Accordingly, the solution built upon the underlining data contained within ERP and providing extended functionality to assist with more strategic decision-making is
13
System Application Product (SAP) is defined as a “business software as comprising enterprise resource planning and related applications such as supply chain management, customer relationship management, product life-cycle management, and supplier relationship management” (SAP 2008).
63 “business intelligence”. Concluded by Luftman, Kempaiah & Nash (2006), business
intelligence is one of the top five applications and technology developments as key issues for IT executives in many firms. It is implied that business intelligence (BI), is a currently effective decision support application in terms of being an add-on application in creating “intelligence” of information, and system capability plays a crucial role in strategic decisions for an ERP user organisation. For example, Galialis & Tatsiopoulos (2004) utilised advanced IT systems to effectively support the planning and management of distribution operations, and particularly, the transportation processes. The combination of an SCM application with a geographical information system14 (GIS) integrated with an ERP software resulted in their decision support tool. These are now acronyms which are familiar to most of the people interested in ERP.
As discussed above, it is clear that the role of IT, especially BIDSA, has increased in importance to many businesses including firms implementing ERP. However, for many companies today, the question is not whether ERP is needed but rather what kind of system is needed? IT/IS/ICT including BIDSA are considered as an important strategic decision support tool to adopt for many enterprises. Thus, an ERP perspective will be a suitable candidate for the study the adoption of “BIDSA” in business organisations.