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Over the past decade, many organizations planted expensive seeds in the expectation of growing an entirely new information technology capability. At great cost, they replaced a scattered array of technology applications with integrated enterprise systems that were designed to bring a wide variety of business benefits. But the hoped-for results did not appear immediately, and critics were quick to label the investments as purely infrastructural or the equivalent of adding a commodity such as electricity–in other words, incapable of providing any degree of competitive advantage.

Accenture has been studying how organizations use enterprise systems to achieve business value and performance for several years. In 2005 and 2006, the Accenture Institute of High Performance Business conducted a four phase over 12 months. First, Accenture interviewed more than 25 industry analysts and experts. Next, the company analyzed data from a global survey of 310 CIOs. Then, between May and October 2005, the company conducted a global web based survey to gather quantitative and qualitative data from 450 executives in medium to large organizations that had implemented two major enterprise system modules.

Today, however, the environment has changed. Accenture's latest research has found that the seeds planted by organizations when they first implemented enterprise systems are bearing fruit. Enterprise systems are now helping organizations achieve high performance. Of course, not everyone achieves benefits equally. As we found in our previous study in 2002, some organizations reap considerably greater benefits than others. While most organizations received benefits, Accenture's new study discovered that top performers (those who scored highest on three measures of financial performance–profit, shareholder return and revenue growth–relative to their industry) harvested considerably greater business value than low performers. We found that top performers took a distinctly different approach to implementing and leveraging their enterprise systems. For example, the research indicates that top performers are more likely to be using their systems to improve financial management, cut costs and increase revenue.

When implemented and managed properly, enterprise systems lead to higher levels of financial performance. They are also making major contributions to organizations' ability to develop and hone distinctive capabilities, a key component of high performance. Enterprise systems may have been late bloomers, but their use for competitive differentiation represents a full flowering of IT value.

When it comes to enterprise systems, organizations reap what they sow. Although some that neglected to properly tend their systems have had some disappointing harvests, those organizations that invested the time and resources to nurture their systems are enjoying abundant benefits.

Executives naturally want to see substantive business value generated by their investments in enterprise systems. For many companies, the implementation of a new enterprise system was a business mandate to prepare the organization for the future. While most enterprise systems originally were justified on the basis of IT or operational cost savings, senior management's underlying objective was to improve the quality and transparency of information.

Enterprise Systems and Distinctive Capabilities
Accenture's continuing research on how organizations achieve high performance found that one of the three essential building blocks is an ability to create distinctive capabilities–the ongoing activities and processes that are differentiated from competitors and that create an organization's formula for business success. From interviews with senior executives we learned that some organizations are beginning to use enterprise systems to support not just undifferentiated processes and capabilities, but also distinctive capabilities and business models.

The 2006 survey results revealed, in fact, that the stereotype of commoditized enterprise systems applications is now obsolete. What was once derided as generic IT is today contributing to competitive advantage and high performance.

Precisely how enterprise systems contribute to these distinctive capabilities varies according to the organization's unique strategy and market position. This high level of differentiation may seem unexpected for software that has often been called generic. But organizations have considerable latitude in deciding which system modules to implement. And there are many system parameters that can be configured to fit an organization's processes. Even when the software has not been customized, no two companies have exactly the same implementation. Each organization's technology and organizational environment is unique. Most enterprise systems must be integrated with legacy systems, share data with best of breed systems, and enable standardization of data and process.

Top performers were much more likely to have implemented industry-specific modules than low performers (48% versus 25%) or to have plans to do so in the future (20% versus 13%). The goal in adopting such modules is to enhance distinctive capabilities and to facilitate differentiation in the market. The most common strategic business objectives that were substantially supported by an enterprise system, according to respondents, were high-quality service, efficiency and the ability to operate globally.

The systems most frequently supported distinctive capabilities by integrating critical processes, providing analytics for decision making and making more accurate planning possible. A general manager of IT transformation for a large consumer goods manufacturer commented that the organization's enterprise systems provided "improved discipline in the merchandising and supply chain functions, including more standardized processes." For companies pursuing a growth-by acquisition strategy, the flexibility and adaptability of an enterprise system to quickly incorporate a recent acquisition was cited by several executives as particularly significant.

Future Directions
The organizations in our survey are continuing to expand their use of enterprise systems. Top performers are more likely than other organizations to have implemented modules in every category. More importantly, extending enterprise system capabilities gives top performers more complete and consistent information, thereby helping managers across the enterprise make better decisions.

Financially successful organizations approach their systems as part of an ongoing program rather than as a project with a specified end point. Accenture's 2006 survey revealed that most organizations plan to add more system functionality over the next two years. Interest is highest in expanding capabilities to build customer relationships, manage the supply chain and enhance analytical capabilities. As noted earlier, top performers are more likely either to have implemented industry-specific modules already or to plan to implement them in the next two years. However, most organizations in our study have not yet begun to implement industry-specific modules and have no plans to do so, at least in the next two years.

Source: Accenture
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