Enterprise resource planning (ERP) systems have become the de facto standard for large and medium organisations to run their major functional and process operations. Since a significant percentage of organisations have already implemented them, the introduction of a new ERP system might no longer be considered the source of competitive advantage that it once was. Indeed today, ERP systems are sometimes described as merely the price of entry for running a business.
Innovation, on the other hand, continues to play its traditionally important role in sustaining competitiveness.
Although ERP systems are sometimes perceived as constraining and inflexible, to the extent that ERP systems may even seem incommensurate with the notion of innovation; this is not the case in real life. It is argued that innovation capabilities can actually be improved by ERP systems and vice versa, because of improved transparency and better information flow. Innovation may occur either from within an organisation or externally. ERP implementations have traditionally used a form of open innovation in their use of both ERP vendor and implementation partners. In this chapter the authors discuss the links between ERP and innovation and how this combination might help organisations regain that elusive competitive advantage.
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