Enterprise systems, or enterprise resource planning (ERP) systems, integrate the key internal business processes of a firm into a single software system so that information flows seamlessly throughout the organization, improving coordination, efficiency, and decision making.

Enterprise software is based on a suite of integrated software modules and a common central database. The database collects data from and feeds the data into numerous applications that supports nearly all of an organization's internal business activities. When new information is entered by one process, the information is made available immediately to other business processes.

Figure 9-1

FIGURE 9-1 HOW ENTERPRISE SYSTEMS WORK Enterprise systems feature a set of integrated software modules and a central database that enables data to be shared by many different business processes and functional areas throughout the enterprise.

Enterprise software is built around thousands of predefined business processes that reflect best practices. Best practices are the most successful solutions or problem-solving methods in an industry for consistently and effectively achieving a business objective.

Organizations implementing commercial enterprise software first select the business processes they wish to use from the software and map their own processes to these, using the software's configuration tables. Although businesses may choose to rewrite portions of the software to match their existing processes, this can degrade system performance and fail to reap the benefits of this software.

Enterprise systems produce value by increasing organizational efficiency and by providing firmwide information to help managers make better decisions. Enterprise systems create a foundation for a more customer-driven organization by integrating firm data to enable quicker responses to customer requests and information.

Enterprise systems:

• Use analytical tools to evaluate a firm's overall performance
  
  
• Use standard definitions, formats, and performance figures across the organization