The Role of ERP Systems in Managing Global Businesses

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Table of Contents

Introduction
Discussion
The linkage between Global businesses
Global business units can achieve global visibility
Managing global performance
Conclusion
References

Introduction

ERP systems are computer applications and management systems that integrate various business aspects and are used to manage resources, data, and functions (Buckley & Casson, 2009). In essence, the ERP systems help to bring a seamless and robust system that supports business processes (Bouquet, Morrison & Birkinshaw, 2009).

In supporting business operations, global or multinational firms have invested immensely on ERP systems. However, varied opinions on whether ERP systems capabilities are aligned to helping global businesses needs have been donated. The other conspicuous concern relates to whether ERP systems can help multinational firms to achieve enhanced performance.

Although considerable studies have examined the role of ERP systems in supporting global firms, there is still need to research the effect of these systems on the growth of global firms (Beard & Sumner, 2004). A lot of literature has been delivered to exhibit the impact of alignment of ERP systems to virtual and international businesses.

This paper advances the contribution of the current literature on the role of ERP systems in growth of global businesses. Realizing the requirements to have accurate information, many global firms have decided to align ERP systems with global businesses from which organizational success can be achieved (Beard & Sumner, 2004).

Discussion

There is a growing acceptance of the use of ERP systems across sections of the business world, especially among businesses that seek to globalize. Proponents of ERP systems suggest that with the growing competition, businesses are supposed to develop business systems that will bolster their processes as they exploit new markets. In this paper, I seek to explore the role and the effectiveness of ERP systems in global businesses.

Arguably, ERP systems, just like other applications, may have limitations. Integration complexities and high initial investment costs are some of the outright downsides of ERP systems (Beard & Sumner, 2004). However, studies conducted on companies that have fully or partially implemented ERP systems reveal that such businesses have managed to canvas the market and penetrate external markets more easily than have businesses with traditional approaches.

The linkage between Global businesses

Global businesses are businesses that have multinational operations and transfer goods, services, information, skills, and capital across boundaries. These business formations have unique information needs because of their integrated operations in geographically dispersed business units. The need for virtual organizations to source accurate and timely information to enhance business processes has necessitated the use of ERP systems (Bouquet, Morrison & Birkinshaw, 2009).

Since ERP systems are seamless, they allow information sourcing and operating in different time zones requires global businesses to deploy enterprise systems to manage their operations. Global businesses deal with different global cultures as they move toward profiting from their operations (Bouquet, Morrison & Birkinshaw, 2009).

In the effort to compete on the global platform, businesses conglomerate to form powerful business structures. However, these business units also need information systems as frontiers of global growth. Studies have shown that ERP systems help businesses to manage diversity (Beard & Sumner, 2004). There is the need to establish accurate and timely information requirements that befit operations of global nature.

As observed, the need to outsource consolidated information is an imperative aspect that global businesses are pushed to achieve. This is where the role of ERP systems comes into play.

Clearly, the information required is massive and that traditional business strategies may fail to address challenges of accessing global enterprises (Beard & Sumner, 2004). Enterprise Resource planning systems are management systems that enable businesses to have better international coordination, collaboration as strategies in the ambit of multination a business.

The rising complexity in information needs of global businesses can be managed by the use of ERP systems due to the capacity of ERP systems to offer multi modular support system. Therefore, businesses, especially multinational and virtual organizations should envision robust capabilities suitable to manage virtual businesses. ERP systems have the capacity to offer an opportunity to arrive at tactical, operational and strategic decisions (Beard & Sumner, 2004).

Unlike traditional legacy, organizations deploying the regime of ERP systems are able to gather and utilize accurate information that can support the growth of businesses. Businesses that want to explore outside markets beyond country boundaries can decide to enter such markets through various strategies, including partnerships, alliances and mergers (Bouquet, Morrison & Birkinshaw, 2009). Whether a business decides to take either of the above penetration methods, there is need to execute their techniques via feasible ERP systems.

International organizations can use supply chains and third party businesses to approach businesses. ERP systems, according to supply chain professionals, integrate numerous supply chain units to derive business returns. In addition, businesses, with the help of ERP systems are able to support and enhance end-to-end business processes. These businesses have been found to support and coordinate business activities and track business-to-business (B2B) and business-customer (B2C) activities.

In the current global markets, manufacturers are continuously faced with challenges of dramatic reduction in sales margins alongside rising customer expectations. Being a business that seeks to have a successful supply chain system, it is arguable that global firms have the duty to embrace information visibility. The information needs of global firms are different from firms that invest in local and regional markets (Buckley & Casson, 2009).

ERP systems have been viewed as necessary ingredients in scheduling customer needs and delivering goods and services in following modern business philosophies such as Just-in-time. The ability of these business units separated by a wide geographic divide to collect customer information, analyze and disseminate the information can be achieved though implementing progressive ERP systems (Bartlett & Ghoshal, 2003).

Integrated enterprise resource planning systems have the ability to help multinationals achieve effective and efficient production and delivery of goods and services. International businesses need to deploy systems that offer high visibility. ERP systems offer an incredible opportunity for global firms to have critical insight into globally competitive platform.

ERP systems not only offer opportunities for business taking part in global operations beyond sheer management of operations. Savvy manufacturers and global units recognize the significance of integrated ERP systems in helping them realize their objectives and enable them create scenarios of effective response to the dynamics of global supply chain (Buckley & Casson, 2009). ERP systems deliver seamless platforms that reorient such organizations to reduce their long-term IT costs.

Global business units can achieve global visibility

Achieving global visibility in a demand driven supply chain market is what many global firms are focused on. In an age of tight competition and cost management, it is essential that manufactures optimize their resources as they continue to offer their unique goods and services (Bartlett & Ghoshal, 2003). Businesses need to identify and make use of their inventory and information capacities to derive profits and remain relevant in the market.

As businesses engage other partners through supply chain systems and third party logistics, ERP systems are strategic business systems that provide solutions to problems of information sharing between global business, suppliers and customers. Understanding where resources are located, businesses have deployed several technologies to streamline their business operations (Bartlett & Ghoshal, 2003).

However, research shows that these technology platforms can rely on the right ERP systems to meet the expectations of organizations and their customers. With integrated information systems, ERP systems also support relationships and alliances (Bergeron, Raymond & Rivard, 2004). The capacity to collect and share large volumes of information between different business units via ERP systems has been cited as a core business factor of success.

The findings of the research conducted on the impact of ERP systems have supported previous studies that conceptualization and alignment of ERP systems capacities creates a ground for improved business performance. The findings of the study establish that each global firm has unique information needs and that ERP platforms have the capacity to support B2B relationships and the flow of information (Buckley & Casson, 2009).

Managing global performance

Many firms have argued that ERP systems have provided actionable information to employees and partners of global business across the world to make viable decisions (Aberdeen, 2007). Through integrating data and providing global visibility, ERP systems can provide quick route toward reduced costs, advanced speed and transparency that aims to improve customer satisfaction. The bottom line is that modern ERP systems have evolved into operating platforms that continue to scale global competition (Bergeron, Raymond & Rivard, 2004).

ERP systems have become popular business trends among global business organizations that seek to achieve efficacious operations in an era of global business. According to Bergeron, Raymond & Rivard (2004), 15 trillion US dollars worth of trade from goods and $3.7 trillion from services are exchanged across borders every day. Analysts suggest that these figures are bound to increase as many businesses continue to appreciate the need for seamless exchange (Aberdeen, 2007).

The number of firms are getting into global business are definitely on the increase to take advantage of the opportunities available from global markets. Many reasons have been used to explain why businesses are rushing to employ ERP systems. Increased global demand for goods and services, reduced trade barriers and the need to form multinational alliances are some of the reasons firms are seeking to invest in global business.

ERP helps to reduce the costs incurred by an organization in running global activities (Bouquet, Morrison & Birkinshaw, 2009). Gone are the days when firms or businesses had to hire many professionals in order to perform technical works such as accounting and network administration. ERP system helps to synchronize all global units and departmental functions with the help of software alone (Bartlett & Ghoshal, 2003).

Conclusion

A growing body of knowledge confirms that the growing competition demands businesses to develop business systems that will bolster their processes as they exploit new markets.

Through integrating data and providing global visibility, ERP systems can provide quick route toward reduced costs, advanced speed and transparency that aims to improve customer satisfaction.

Additionally, businesses with the help of ERP systems are able to support and enhance end-to-end business processes. These businesses have been found to support and coordinate business activities and track business-to-business (B2B) and business-customer activities. ERP systems deliver seamless platforms that reorient such organizations to reduce their long-term IT costs.

References

Aberdeen. (2007). The role of ERP in globalization. Boston, Massachusetts: Aberdeen Group.

Bartlett, C. A. & Ghoshal, S. (2003). What is a global manager? Harvard Business Review, 81(8): 101-108.

Beard, J. W., & Sumner, M. (2004). Seeking strategic advantage in the post-net era: viewing ERP systems from the resource-based perspective. The Journal of Strategic Information Systems, 13(2): 129-150.

Bergeron, F., Raymond, L. & Rivard, S. (2004). Ideal patterns of strategic alignment and business performance. Information & Management, 41(8): 1003-1020.

Bouquet, C., Morrison, A. & Birkinshaw, J. (2009). International attention and multinational enterprise performance. Journal of International Business Studies, 40(1): 108-131.

Buckley, P. & Casson, M. (2009). The internalisation theory of the multinational enterprise: A review of the progress of a research agenda after 30 years. Journal of International Business Studies, 40(9): 1563-1580.

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