Enterprise planning system

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An enterprise planning system covers the methods of planning for the internal and external factors that affect an enterprise.

Contents

These factors generally fall under PESTLE. PESTLE refers to political, economic, social, technological, legal and environmental factors. Regularly addressing PESTLE factors falls under operations management. Meanwhile, addressing any event, opportunity or challenge in any one or many factors for the first time will involve project management.

As opposed to enterprise resource planning (ERP), enterprise planning systems have broader coverage. Enterprise planning systems address the resources that are available or not available to an enterprise and its ability to produce products or resources and/or provide services. It also considers those factors that will positively or negatively affect the firm's ability to run these actions.

Enterprise planning systems will tend to vary and are flexible. These are due to the periodic and adaptive nature of strategy formation. These will also have tactical aspects. Typically, enterprise planning systems are part of a firm's knowledge base or corporate structure whether it formally identified and structured or simply executed these when the need appeared.

Purposes

An enterprise planning system will address at least three basic purposes to help the enterprise:

Survival

An enterprise will plan for tactical moves for quick reaction to the PESTLE threats that affect its survival. For instance, right after Japan's Fukushima nuclear power plant has experienced explosions due to the earthquake and the tsunami that followed, several enterprises (within and outside Japan) publicly announced their course of actions to address the emergency. [1]

Competition

Meanwhile, an enterprise will plan for longer term strategic actions to address its competition or improve its competitiveness. For instance, enterprises will plan for, set budgets, implement and use strategic information systems as “information systems or information technology investments can be a source of competitive advantage”. [2]

Opportunities

Most significantly, an enterprise will plan for using the PESTLE opportunities that are available to it. The profit and benefit motives justify most enterprise planning systems. [3]

Vulnerabilities

A fourth noteworthy purpose for enterprise planning systems is preparedness against terrorist attacks. As noted in the US Presidential Directive for Critical infrastructure protection, terrorist groups are likely to attack commercial infrastructure for economic sabotage. Enterprises that are providing products or services that are critical to the economic system of a nation are potential targets of extremists.

Strategic planning

Two major characteristics of EPSs are (1) variety and (2) flexibility. For instance, technological risks abound as even enterprise software are prone to obsolescence and disruptive innovations. Technology is not stagnant. Thus, variety and flexibility work to the advantage of a strategically adaptive or agile enterprise as PESTLE conditions change.

To illustrate this some more, ERP software prescribes processes to realize its promised benefits. However, compliance to these rigid, prescribed processes is often assumed rather than real. In many cases, the ERP software is accepted but the practices within the enterprise reflect inconsistencies with the prescribed processes of the software. In a sense, variety and flexibility in a standard ERP implementation will still manifest in many ways such as "workarounds, shadow systems, various forms of unintended improvisations, and organizational 'drift'" as the knowledge workers in the enterprise adapt to the realities of daily activities. [4]

With changing real world conditions, at least three components can structure enterprise strategy. These are:

Strategy via analysis

Frameworks of analysis usually drive a firm's strategy. These enable the firm to cope with the actions of its competitors, demands of its consumers or clients, nature of its operating environments, effects of government regulations in the places where it does business, or opportunities that are available among other factors. [5] Here, team planning is crucial. One group will normally specialize in one aspect like operations or government regulations. Managing the interrelation of PESTLE factors requires teamwork in the enterprise planning process.

A sample framework for general analysis is the SWOT analysis. Another is the Balanced Scorecard for performance measurement analysis. [6]

Strategy via geography

Enterprise strategy can also refer to the mix of structured actions that address the political, economic, social, technological, legal and environmental factors that affect a business or firm. These structured actions can be local, transnational, global or combination of local, transnational or global. [7] Hence, enterprises can have any of the following geographic strategies in their plans:

Strategy via projects integration

Moreover, since management actions occur simultaneously in an enterprise, strategic planners can consider operations or project portfolio management (PPM) as crucial elements in an enterprise's strategic planning guide.

For instance, the need to have strategic priorities across many projects in companies with multiple product development projects have made executives borrow principles from investment portfolio management to better manage the distribution of resources compared with the assessed risks for each project. [9]

Thus, PESTLE factors lead to strategy formation that will enable the enterprise to adapt to changing conditions. Meanwhile, the strategies that have been formed from the analytical framework processes of evaluating an enterprise's condition will lead to detailed plans which could be part of a firm's manual of operations or projects portfolio thrusts for funding and execution across the units or geographic coverage of the enterprise.

Planning and budgeting

Enterprise planning and budgeting go hand-in-hand as the wherewithal to execute plans will determine the success or failure of an enterprise strategy. In another light, expanding or limiting the budget for a particular operations aspect of the enterprise or an ongoing project in favor of another will signal changes to an enterprise's strategy. [10] Hence, planning and budgeting are integral parts of any enterprise planning systems as these impact the strategic directions of the enterprise.

For instance, enterprise projects tend to be mutually dependent with other projects to leverage a firm's engineering, financial and technology resources. [11] A market research project will trigger a research, development and engineering (RD&E) project for a new product. In turn, this RD&E project could trigger a production strategy project to manufacture the new product at the most efficient locations to bring it closer to its target consumers. [12] Hence, cutting the RD&E project budget in half or increasing it twice will have profound effects in the long term direction of an enterprise as this will affect the other units of the firm undertaking projects that are linked to the RD&E project.

Classifications

Enterprise planning and budgeting can be generally classified into:

Centralized. Headquarters or executive management directs all planning and budgets from the top then downwards in the organization hierarchy. It will closely follow Frederick Winslow Taylor's Principles of Scientific Management.

Devolved. Middle managers set plans effectively steering the enterprise's strategic direction. Executive management takes into account that the enterprise has knowledge workers that are experts in their respective fields. The Management Board approves the proposed strategic direction under certain financial constraints such as expected returns on investment or equity.

Hybrid. Executive management determines and sets the strategic direction of the enterprise based on the inputs of middle managers and the rank and file. In this set up, plans and budgets are negotiated.

Essentially, enterprise plans and budgets can be detailed in a top-down approach, generalized in a bottom-up approach, or combined in a top-down and bottom-up approach.

Group planning

Enterprise group planning will typically refer to the involvement of the major units of an enterprise such as the finance, marketing, production or technology departments. It can also refer to the involvement of the geographic units of a transnational or global firm. Some enterprises also involve external parties in their group planning where inputs from the crucial parts of the supply chain, cooperation and collaboration, or outsiders-looking-in are part of the firm's strategy. [13] [14]

Enterprise group planning will usually manifest in regular board of directors' or management committee' meetings with varying frequencies such as monthly, quarterly or annually. Traditional meetings have required the physical presences of representatives from the various business units of the enterprise. With improvements in telecommunications, enterprise group planning can be conducted through video conferencing where participants may be dispersed geographically. However, video conferencing still appears to be an inadequate substitute when warm, interpersonal relations are part of the firm's culture.

Yet for fast-paced events like natural disasters or a meltdown of the financial markets that require immediate action from the enterprise, video conferencing might be the only option. Troubleshooting that requires the major resources of the enterprise will also entail enterprise group planning. Here, enterprise planning systems take a tactical form rather than a strategic focus to preserve the stability or ensure the survival of the enterprise.

Transition plan

Enterprise transition plans will generally refer to change management-related actions in the case of mergers or in the implementation of an enterprise-wide project. The transition plan will cover the elimination of redundant functions in the case of a merger or the incorporation of new processes into business operations in the case of a technology project.

Planning software

Enterprise planning software will have varied or depth of coverage but will not essentially refer to enterprise resource planning software. This will include planning-centric software and the tools to support strategic and tactical planning for and across the enterprise, such as:

See also

Related Research Articles

<span class="mw-page-title-main">Enterprise resource planning</span> Corporate task of optimizing the existing resources in a company

Enterprise resource planning (ERP) is the integrated management of main business processes, often in real time and mediated by software and technology. ERP is usually referred to as a category of business management software—typically a suite of integrated applications—that an organization can use to collect, store, manage and interpret data from many business activities. ERP systems can be local-based or cloud-based. Cloud-based applications have grown in recent years due to the increased efficiencies arising from information being readily available from any location with Internet access.

Project management is the process of supervising the work of a team to achieve all project goals within the given constraints. This information is usually described in project documentation, created at the beginning of the development process. The primary constraints are scope, time, and budget. The secondary challenge is to optimize the allocation of necessary inputs and apply them to meet pre-defined objectives.

A project is a type of assignment, typically involving research or design, that is carefully planned to achieve a specific objective.

Strategic planning is an organization's process of defining its strategy or direction, and making decisions on allocating its resources to attain strategic goals.

A management information system (MIS) is an information system used for decision-making, and for the coordination, control, analysis, and visualization of information in an organization. The study of the management information systems involves people, processes and technology in an organizational context. In other words, it serves, as the functions of controlling, planning, decision making in the management level setting.

<span class="mw-page-title-main">Strategic management</span> Planning for a companys responses to external issues

In the field of management, strategic management involves the formulation and implementation of the major goals and initiatives taken by an organization's managers on behalf of stakeholders, based on consideration of resources and an assessment of the internal and external environments in which the organization operates. Strategic management provides overall direction to an enterprise and involves specifying the organization's objectives, developing policies and plans to achieve those objectives, and then allocating resources to implement the plans. Academics and practicing managers have developed numerous models and frameworks to assist in strategic decision-making in the context of complex environments and competitive dynamics. Strategic management is not static in nature; the models can include a feedback loop to monitor execution and to inform the next round of planning.

Marketing management is the strategic organizational discipline which focuses on the practical application of marketing orientation, techniques and methods inside enterprises and organizations and on the management of marketing resources and activities. Compare marketology, which Aghazadeh defines in terms of "recognizing, generating and disseminating market insight to ensure better market-related decisions".

A value chain is a progression of activities that a business or firm performs in order to deliver goods and services of value to an end customer. The concept comes from the field of business management and was first described by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance.

The idea of [Porter's Value Chain] is based on the process view of organizations, the idea of seeing a manufacturing organization as a system, made up of subsystems each with inputs, transformation processes and outputs. Inputs, transformation processes, and outputs involve the acquisition and consumption of resources – money, labour, materials, equipment, buildings, land, administration and management. How value chain activities are carried out determines costs and affects profits.

In business analysis, PEST analysis describes a framework of macro-environmental factors used in the environmental scanning component of strategic management. It is part of an external environment analysis when conducting a strategic analysis or doing market research, and gives an overview of the different macro-environmental factors to be taken into consideration. It is a strategic tool for understanding market growth or decline, business position, potential and direction for operations.

<span class="mw-page-title-main">Business analyst</span> Person who analyses and documents business processes

A business analyst (BA) is a person who processes, interprets and documents business processes, products, services and software through analysis of data.The role of a business analyst is to ensure business efficiency increases through their knowledge of both IT and business function.

A product software implementation method is a systematically structured approach to effectively integrate a software based service or component into the workflow of an organizational structure or an individual end-user.

A warehouse management system (WMS) is a set of policies and processes intended to organise the work of a warehouse or distribution centre, and ensure that such a facility can operate efficiently and meet its objectives.

Enterprise software, also known as enterprise application software (EAS), is computer software used to satisfy the needs of an organization rather than its individual users. Enterprise software is an integral part of a computer-based information system, handling a number of business operations, for example to enhance business and management reporting tasks, or support production operations and back office functions. Enterprise systems must process information at a relatively high speed.

Business analysis is a professional discipline focused on identifying business needs and determining solutions to business problems. Solutions may include a software-systems development component, process improvements, or organizational changes, and may involve extensive analysis, strategic planning and policy development. A person dedicated to carrying out these tasks within an organization is called a business analyst or BA.

International business refers to the trade of Goods and service goods, services, technology, capital and/or knowledge across national borders and at a global or transnational scale.

A glossary of terms relating to project management and consulting.

Maconomy was a global provider of Enterprise Resource Planning (ERP) software founded in 1989 in Denmark by Per Tejs Knudsen, Philip Dam and Ulrik Jørring. Maconomy was acquired by Deltek in 2010.

The Digital Firm is a kind of organization that has enabled core business relationships through digital networks In these digital networks are supported by enterprise class technology platforms that have been leveraged within an organization to support critical business functions and services. Some examples of these technology platforms are Customer Relationship Management (CRM), Supply Chain Management (SCM), Enterprise Resource Planning (ERP), Knowledge Management System (KMS), Enterprise Content Management (ECM), and Warehouse Management System (WMS) among others. The purpose of these technology platforms is to digitally enable seamless integration and information exchange within the organization to employees and outside the organization to customers, suppliers, and other business partners.

<span class="mw-page-title-main">Strategic competitiveness</span>

Strategic competitiveness is accomplished when a firm successfully integrates a value-creating strategy. The key to having a complete value-creating strategy is to adopt a holistic approach that includes business strategy, financial strategy, technology strategy, marketing strategy and investor strategy. The objective of the firm has to be based on creating value in an efficient way because it is the starting point for all businesses and it will generate profit after cost. Eric Beinhocker, the Executive Director of the Institute for New Economic Thinking at the Oxford Martin School, University of Oxford, says in his book The Origin of Wealth that the origin of wealth is knowledge. Knowledge does not have to be perceived as an assumption, or as an external factor. It has to be in the heart of the business. For this reason, the value-creating strategy must include a thorough knowledge of each area of the company in order to develop a competitive advantage.

Strategic risk is the risk that failed business decisions may pose to a company. Strategic risk is often a major factor in determining a company's worth, particularly observable if the company experiences a sharp decline in a short period of time. Due to this and its influence on compliance risk, it is a leading factor in modern risk management.

References

  1. ↑ Adam Gabbatt; Richard Adams; Ben Quinn (14 March 2011). "Japan tsunami and nuclear alert - Monday 14 March part two". guardian.co.uk. London: Guardian News and Media Limited. Retrieved 30 April 2011.
  2. ↑ John Ward; Joe Peppard (2002). Strategic Planning for Information Systems 3rd Edition. West Sussex PO19 1UD, England: John Wiley & Sons Ltd. pp. 23–43. ISBN   0-470-84147-8.{{cite book}}: CS1 maint: location (link)
  3. ↑ Massood Samii. "Project Financial Evaluation". Lecture Notes MIT OpenCourseWare. Massachusetts Institute of Technology. Retrieved 30 April 2011.
  4. ↑ Berente, Nicholas; Danail Ivanov; Betty Vandenbosch (2007). "Process Compliance and Enterprise System Implementation". IEEE Computer Society. 40th Hawaii International Conference on System Sciences: 1530–1605.
  5. ↑ Williams, Kevan (2009). Strategic Management. New York: DK Publishing. pp. 16–32. ISBN   978-0-7566-4859-6.
  6. ↑ Kaplan, Robert S.; David P. Norton (January–February 1996). "Using the Balanced Scorecard as a Strategic Management System". Harvard Business Review.
  7. ↑ Mellahi, K., Frynas, J.G. & Finlay, P. (2005). Global Strategic Management. New York: Oxford University Press. pp. 7–18. ISBN   978-0-19-926615-9.{{cite book}}: CS1 maint: multiple names: authors list (link)
  8. ↑ HSBC. "The world's local bank". 2011. HSBC Holdings plc 2011. Archived from the original on March 3, 2011. Retrieved March 3, 2011.
  9. ↑ McGrath, Michael E. (2004). Next Generation Product Development: How to Increase Productivity, Cut Costs, and Reduce Cycle Times. United States of America: McGraw-Hill. pp. 229–232, Chapter 17. ISBN   0-07-143512-3.
  10. ↑ Fraser, Xiall M.; et al. (2009). Global Engineering Economics: Financial Decision Making for Engineers. Toronto, Ontario: Pearson Education Canada. pp. 90–110. ISBN   978-0-13-207161-1.
  11. ↑ Nobeoka, Kentaro; Michael A. Cusumano (11 September 1993). "Multi-Project Management: Strategy and Organization in Automobile Product Development" (PDF). WP-3609-93 BPS. MIT Sloan School of Management. Retrieved April 27, 2011.
  12. ↑ Fujimoto, Takahiro. "Production Strategy" (PDF). Department of Economics, University of Tokyo. Archived from the original (PDF) on 22 July 2011. Retrieved 16 March 2011.
  13. ↑ Usoro, Abel; Abbas Abid; Matthew Kuofie (December 2008). "Scales Construction for Organisational Variables that Influence the Use Of ICT for Global Planning". International Journal of Global Business. 1. 1: 242.
  14. ↑ Koch, Richard (2001). The Natural Laws of Business: How to Harness the Power of Evolution, Physics, and Economics to Achieve Business Success. New York, USA: Doubleday, Random House Inc. pp. 107–108. ISBN   0-385-50159-5.
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