Extending the ERP system: considering the business relationship portfolio

Abstract

Purpose– Research has shown that companies focus their internal processes when they adopt enterprise resource planning (ERP) systems. However, the ERP systems need to expand their functionality to include customers and suppliers (with e-commerce functionality) to reach their full potential. The purpose of this paper is to consider business relationships as a resource but also a limitation when companies strive to get an extended ERP system.Design/methodology/approach– The paper presents an illustrative case study of an industrial company's process of developing an extended ERP and how the company's portfolio of business relationships has affected the solution. The analysis is supported by the markets-as-networks theory.Findings– The process of developing an extended ERP system needs to incorporate the company's business partners (customers and suppliers). It is a simultaneously bottom-up and top-down process given that the operative frontline staff hold the knowledge about the company's business relationships while the corporate management has the means of extending the ERP system functionality and align it with the focal company's strategy.Research limitations/implications– Companies need to consider the fact that the technological and financial status of their customers and suppliers differ. Thus, an effective and flexible extended ERP system needs to include both a high-end and low-end solution as well as understand that a full interorganizational integration might not be realistic.Originality/value– The paper puts forth business relationship portfolios as an important factor to consider when extending the ERP system functionality in the supply chain and toward customers.