Here go with the definition of the ERP and the competitive strategy before go into the depth of the topic.
Enterprise Resource Planning (ERP) is a system which automates business process of the company. It gets the hold of all functional departments across organization to improve the information and communication flow.
Competitive Strategy is nothing but delivering the desired value by evaluating and implementing the internal decisions. In the process of the implementing, you try to gain the edge over your competitor and you can call it as a competitive advantage.
So, the concern here is that how enterprise resource planning will affect the strategy you implement to gain advantage over your competitor. It is so simple that enterprise resource planning will streamline the internal information of all functional departments. What ever the strategy the business owner derives for the company is going to be based on this information. If there is no accurate information available for the business owner, decision making or the strategy design would be too difficult.
The business owner can take the decision and formulate the strategy with whatever the available information without the help of ERP but how effective the strategy which is derived from the half information? It simply may not be effective and definitely will not give proper results. With that improper information, the business owner will not get the clear picture on the strengths and capabilities of the organization. Without knowing the strengths and weakness of the business process, how can we expect a business owner derives the right strategy? So, without enterprise resource planning, the strategies can be made by the business owner but it is certain that the strategy is not going to serve any purpose.
Let's take the case where in the entire business environment is working on a single platform with the help of ERP system. All the functional departments' database will be same in this case. So, entire information come from all the functional departments across the company would be stored in a single database. The database will be updated with the latest data on daily basis. This data can be easily imported to normal Microsoft excel files which are very much easier to analyze. In this case, the business owner can see the entire gamut of the strengths and weaknesses of the company in various departments. It obviously allows him to take the right decision. Apparently, the business owner can understand the core strengths and capabilities of the company in any given context. With all the complete information, it is possible to make the right decisions and derive appropriate strategies for the top management of the company.
Certainly, the decision made without accurate, relevant information will be different from the decision made with the help of proper information. And the same equation holds true in the case of strategy making. So, the information generated by the ERP system affects the decision making process and the strategy making process a lot.
In a nutshell, the strategy derived by using ERP application will definitely give the best results.
