Enterprise Information Systems - Assignment Example

Lecturer: Presentation: Introduction Small and medium enterprises constitute about 95% of the businesses in the world. Major economies are driven by these businesses which contribute approximately 45 % of GDP (Bhaskaran 2008 p 89). In their capacity, they have provided a lot of jobs and livelihoods for the majority of world’s population. In Europe alone, approximately 65 million people earn their livelihoods from these enterprises and thus they can be termed as of great significance thereby calling for protection and improvement (Bhaskaran 2008 p 67). In India 33% of the export is generated by this economic sector which possesses a significant percentage of the total output in manufacturing. Based on these findings, it is evident that this sector holds a bigger share of the world’s major economies and if substantial efforts are put in place, the sector can grow bigger providing more benefits to the economy. This essay is a critical evaluation of the impact of Enterprise systems on the future of SMEs. Enterprise Systems and Their Impact on the Future of SMEs Enterprise systems are the future of SME’s. These are information systems dedicated to business, with high capabilities to manage and store voluminous data in systematic and high quality standards (Paul 2003 p 56). The systems are developed to steer the process of information processing and transmission between the various levels of management with the capability of networking various enterprises in one digital village for the purpose of creating healthy and productive competition for the market (Wagner 2008 p 36). This in itself is a solution to the problem of having many information systems that result to fragmentation of information as it flows through the various levels of management. With an Enterprise Information System, transmission of information is standardized and the possibility of data redundancy and errors occurring can be minimized. The information systems ensure that there is consistency of data within the business as opposed to the manual systems that most of the enterprises use which make the process of retrieving and editing records tedious and time consuming (Hoffer 2008 p 32). Financial records are important to the business and therefore it would be necessary to change the mode of storage so that their maintenance and operations especially calculations and transfer of data from one department to the other could be made easier and accurate in order to reflect the actual nature of the expected results (Luvai 2008 p 71). The SMEs being a busy field operating with a lot of information cannot survive the era of technology without incorporating these changes. The world we are living in today has embraced technology in most of the activities changing the way various activities are carried out especially in business. This has seen various large organizations and companies developing information systems to manage and control their activities (Wagner 2008 p 25). This has helped in marketing and has also increased competition. To counter this, the SMEs have no other option but to upgrade their systems into ones that can offer the same standards as those of their competitors so that they can compete with them. The only solution to this is the enterprise system which is well designed to suit the SMEs. Another factor that demands the use of the system is the necessity to make business decisions within short time. Decisions that require consultation can take a lot of time to make, a period within which great deals could be accomplished. Board meetings can take a lot of time to organize and make conclusive decisions. Instead of meeting physically to do so, the information system can facilitate the meeting with the technology of video conferencing and VOIP (Dunn 2004 p 23). This requires just a click of a button on the computer for the meeting to take place. Video conferencing and VOIP requires one to have a camera installed on his networked computer together with sound devices. Once that is done and a connection is established, the various members can communicate and see each other on their computer screens regardless of where they are. This way, deliberations and instant decisions can be made thus reducing the amount of response time that could have been used (Luvai 2008 p 67). Since most of the large organizations are using this technology, it is important for the SMEs to do the same so as to catch-up with their competitors in the market. SMEs generally are low income generating businesses as compared to their competitors i.e. the large businesses and due to this, any project that can cut down on the expenditure could be of great importance to the enterprise. The information system can help to achieve this by reducing the number of employees working in various departments (Schekkerman 2006 p 18). This is due to the capability of the system to hold and organize large volumes of data that would require a number of personnel to manage. The operations of the system can be controlled by few individuals thus the need for embracing the change in the SMEs. The mode of doing business has changed and therefore the SME’s also have to change and move with time. Ecommerce has made a tremendous improvement on the process of buying and selling commodities through online shopping (Panko 2008 p 96). This has been facilitated by the availability of internet connection to many homes and people with personal computers who could be potential buyers of the commodities. This way, it is possible to advertise commodities and at the same time make orders and purchases. The enterprise systems offers the connectivity required for this service and due to its availability and affordability, the SMEs will definitely go for them to keep up with the trend. These systems may also be of benefit to the SMEs in that they help in the survey of other equal businesses activities internationally by providing a channel for communication over international boundaries (Luvai 2008 p 56). This has been evident in Japan and it has been of great economic use to the industry and thus the future of SMEs based on the trend lies on the enterprise systems since every business enterprise will require expansion and to achieve this, there would be need for surveying what others are doing so as to be well informed. Most if not all of the large business enterprises have been using the enterprise systems in their operations and hence are no longer providing to their demand (Hoffer 2008 p 23). Due to this, the manufacturers of these systems have directed their attention to the small and medium enterprises which they are providing at cheaper prices than those of the larger companies. This marketing strategy is penetrating through the SMEs population and as a result, those that do not have the systems will have to acquire them so as to ensure that they are capable of competing with their business rivals. It would therefore be true to say that the future of SMEs lays in the enterprise systems. How ever, these information systems though advantageous to the operations of the SMEs have their limitations that may have a negative impact on the businesses. Acquiring the system is an expensive process that may put stress on the businesses’ budget (Panko 2008 p 120). Due to this, the enterprises may overlook the advantages and instead opt to stick to their old information systems. The cost of maintaining the system too is expensive for the SME’s and this would serve as a drawback to the enterprises which have limited funds as compared to the large companies that are using these systems. The use of internet has strengthened the process of advertising through the businesses’ website targeting the wider market opportunities facilitated by online shopping. While at it, the business is exposed to information security risks that may jeopardize the customer business relationship thus reducing the profit margins (Warkentin 2006 p 84). These risks may arise due to vulnerability of the systems to interference for example by hackers and crackers who break into networks with the intention of stealing information either for personal or corporate gain. Once they acquire this information, they may use it to damage the reputation of the business by availing it to the press for publication or they may decide to sell it to competitors. This would weaken the business’ ability to compete or worse may discourage customers and investors from investing in the business (Cordeiro 2006 p 45). It would therefore be unnecessary for the SMEs to risk their investments in such a system. Adopting and implementing the system also would require additional training for the personnel who would be operating them (Bernard 2005 p 59). This would result to extra expenditure that would reduce the profit margins of these enterprises. Based on the aim of businesses which is to make profit, many enterprises may opt not to change their old information systems. The fear of change in employees may also lead to low productivity or even influence low employee turn over (Luvai 2008 p 79). This is a situation that occurs where by employees fear losing their jobs or losing their positions due to the introduction of a new system that they may not be familiar with. This would be of no benefit to the businesses and thus the systems may not be the future of the SMEs. The systems are prone to technical failures that may be as a result of mismanagement and lack of maintenance (Killmeyer 2006 p 21). This would require extra personnel to maintain and repair the systems in case they break down and also to operate in case the business does not have an IT department. More to this is the risk of infection of computers by computer viruses which may destroy the information and data that is important to the business (King 2001 p 112). Without proper training of the users and other staff on the care and maintenance of the machines, the businesses stand to lose a lot in terms of assets and information. As a result, the businesses would incur extra costs for paying the services and this may hinder many enterprises from acquiring these systems. Conclusion Small and medium enterprises constitute about 95% of the businesses in the world. They have provided many jobs to the world’s population with approximately 65 million employees in Europe only. It is therefore necessary for these enterprises to ensure that this rate is maintained and at the same time focus on expanding their business interests with the foundation of making profit. These enterprises can achieve these objectives by changing their current information systems and instead use the enterprise information systems which have been used by larger business enterprises and proved to be of great significance. The advantage of using these systems is that they improve the service delivery and flow of information through the various levels of management. They have also enabled sharing of information between international companies through the connectivity provided by the internet. Through these systems, advertisement and business transactions have been made possible through the internet and online shopping. On the other hand, the systems have their demerits that make them unsuitable for the SMEs thus diminishing the hope of them being the future of the. These problems include technical, human interference and environmental factors. Regardless of this and based on the trend the businesses are taking, it is evident that the enterprise systems are the future of the SMEs. References 1. Bernard S. 2005. An Introduction to Enterprise Architecture, Author House. 2. Bhaskaran S. 2008. SME Entrepreneurs: Challenges and Opportunities, Icfai University Press. 3. Cordeiro J. 2006. Enterprise Information Systems, ICEIS. 4. Dunn C. (2004). Enterprise Information Systems: A Pattern-Based Approach, McGraw-Hill. 5. Hoffer J. (2008). Modern Database Management, Prentice Hall. 6. Killmeyer J. (2006). Information Security Architecture: An Integrated Approach to Security in the Organization, Auerbach Publications. 7. King C. (2001). Security Architecture: Design, Deployment and Operations, McGraw-Hill. 8. Luvai F. (2008). Enterprise Systems for Management, Pearson Prentice Hall. 9. Panko R. (2008). Business Data Networks and Telecommunications, Prentice Hall. 10. Paul A. (2003). Component-Based Development for Enterprise Systems: Applying the Select Perspective, Cambridge University Press. 11. Schekkerman J. (2006). How to Survive in the Jungle of Enterprise Architecture Frameworks, Trafford Publishing. 12. Wagner B. (2008). Enterprise Resource Planning, Course Technology. 13. Warkentin M. (2006). Enterprise Information Systems Assurance and System Security: IGI Publishing. Read More