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Mission
Critical
Realizing
the Promise of
Enterprise
Systems
THOMAS H. DAVENPORT
04 03 02 01 00 5 4 3 2 1
HD30.213.D38 2000
658.4'038'011--dc21
99-051644
Contents
Preface vii
Acknowledgments ix
1 What Are Enterprise Systems and
Why Do They Matter? 1
2 The Promise and Perils of Enterprise Systems 29
3 Should My Company Implement
an Enterprise System? 55
4 Linking Enterprise Systems to
Strategy and Organization 105
5 Linking Enterprise Systems to
Business Processes and Information 135
6 Achieving Value during
Enterprise System Implementation 169
7 Transforming the Practice of
Management with Enterprise Systems 203
8 Using Enterprise Systems to
Manage the Supply Chain 237
9 The Future of ES-Enabled Organizations 265
Appendix
A Technical Overview of Enterprise Systems 299
Notes 313
Index 321
About the Author 335
v
Davenport.1_1-28 12/9/99 12:44 PM Page 1
1
What Are
Enterprise Systems
and Why
Do They Matter?
1
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2 Mission Critical
4 Mission Critical
but what if the information differs from one part of the organi-
zation to another? For the most part, this is prevented in ESs
through the use of a common database for the entire organiza-
tion. Not only can one track customers through marketing,
sales, and service activities, but the customers identification
number and address are constant across those different applica-
tions and business functions. The Babel-like information envi-
ronments of most large organizations, in which the same term
might mean different things in different parts of the company,
can be avoided altogether through the use of an ES.
In short, these systems offer just about everything businesses
want from a computer. They serve up information in a format
that anyonenot just technologistscan understand. They
employ client/server technologythe state of the commercial art
in information systems. They even work well with the Internet.
If these systems are so good, why wouldnt every organization
want one?
In fact, they do. With a few exceptions Ill discuss later,
large, medium-sized, and increasingly even small organizations
are installing enterprise systems: from Iowa Spring, which has
about $11 million in revenues, to its customer General Motors,
which is more than ten thousand times larger. Public-sector
organizations ranging from the city of Round Rock, Texas, to
the Victoria Department of Education in Melbourne, Australia,
have them. In some industries, such as petrochemicals, every
company has an ES. In others, such as the electrical utilities busi-
ness, ESs are being adopted at a rapid rate. Even in financial ser-
vices, one of the industries in which these systems have been less
popular, hundreds of organizations from Bank One to Dai-Ichi
Life Insurance have them in place.
The software and hardware spending alone for ESs is well
over $15 billion per year worldwide, and professional services
fees add another $10 billion. Revenues for ES vendors have
grown between 50 and 100 percent a year. Very large compa-
nies, such as Hewlett-Packard, Procter & Gamble, and Intel,
speculate that their ES expenditures will easily top $1 billion
before they are finished. (As I describe later, they will never be
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6 Mission Critical
8 Mission Critical
10 Mission Critical