Is Technology Enough to Compete: The Value of ERP's

Technology, though important, cannot provide a sustainable advantage to an organization. The most competitive advantage an organization can have is its ability to be innovative. The pursuit for innovation is a continuous process because technology can be easily copied, techniques can be mirrored by the competition. According to Farrell et al (2002, p.12), “Investments in IT were more likely to remain differentiating where coupled with other core sustainable advantages such as scale, significant changes in the business process, and associated learning effects.”

Technology provides core services that contribute to an organization’s success. Business intelligence, cloud computing, enterprise resource planning (ERP), software as a service (SaaS), and collaboration and workflow tools are all essential services that no modern organization can operate without. As a matter of fact, the following three technology characteristics has a significant impact on productivity (2002 p.10-12):

  • Tailored to sector-specific business processes and linked to performance levers.
  • Deployed in a sequence that built capabilities over time.
  • Co-evolved with managerial and technical innovation.

According to Porter’s Value Chain Analysis, (Russo) “a value chain is a set of activities that an organization does to create value for its customers.”

Porter’s Value Chain divides divides an organization’s ERP process into two main parts: primary and support.

Primary activities deals with the creation, sale, maintenance, and support of an organization’s product and/or service. This includes such activities as logistics, operations and marketing. 

Support activities reinforce the primary activities and include such services as human resources, procurement and research and development. 

Below is a chart of a generic value chain:

Enterprise Resource Planning can methodize the process in which an organization conducts business. As a Technologist, our main focus should be to “think about productivity (getting more done with less).”

According to Perkins (2019), there are four factors that are commonly underestimated during ERP project planning that can affect the success of implementation:

  • Business process change
  • Organization change management
  • Data migration
  • Custom code

Sources

Farrell, D., Mendonca, L., Nevens, M., Manyika, J., Lai, S., Roberts, R., … Cho, M. (2002). How It Enables Productivity Growth. How IT Enables Productivity Growth (pp. 6–14). San Francisco, CA: McKinsey Global Institute.

Perkins, B. (2019, February 22). What is ERP? Key features of top enterprise resource planning systems. Retrieved November 16, 2019, from https://www.cio.com/article/2439502/what-is-erp-key-features-of-top-enterprise-resource-planning-systems.html.

PR Lecture on Why Organizations Exist. Slides in course site. Paul Russo’s Lecture on What Organizations Do.pptx

Porter’s Value Chain: Understanding How Value is Created Within Organizations. (2017). Retrieved November 16, 2019, from https://www.mindtools.com/pages/article/newSTR_66.htm.