Sinosteel management decided to initiate an information system known as enterprise resource planning (ERP). This strategy was aimed at maintaining control over its expanded and complex operations and also to achieve a competitive advantage. ERP had some challenges; It is too costly in terms of acquisition of computer hardware and software, internet connection charges and high labor installation fees. Employees require some training in order to understand the operations of the system. This training will involve organizing training seminars, conferences and educational workshops. Another challenge is resistance to change from the employees who feel like the new system is aimed at eliminating them or making them work extra hard, therefore to counter this, the employees need to be consulted in decision making and allow them to participate right from introduction to implementation of information system.
For an organization to implement the new system, it has to be ready to bear some business risk. Its part of strategic decision and they change the operations of the business. One of the major risk is that the large capital devotion may end be unprofitable, this will discourage the management and seen as a failure. Another risk is about full data security of an organization, if the system is installed without strong data firewalls and data encryptions then the confidential data can be corrupted or leaked to unauthorized parties. The change in operations will result to change in the way services and products are produce, these changes in activity should that that will make the business have a large market share and not otherwise.
How the Investment in ERP Systems Help Sinosteel to Achieve Operational Excellence
ERP made Sinosteel management to be able to control and supervise the operations of its subsidiaries, coordination of activities and planning. ERP simplified the operations to a great extend. All the business resources were able to be utilized and efforts of the employees also realized. Sinosteel was able to bring team work in the tasks carried out. Effective chain of command was put in place and flow of information was established to suit the organization. Benefit was expansion through being able to penetrate different markets in the continent. Sinosteal was able to acquire more subsidiaries and increasing its capital base.