Large software companies such as India’s Satyam Computer Services have fought hard to stay afloat in today’s vicious world economy since innovations in research and development are the backbone to such companies. Last year, the company came under fire for a controversial failed acquisition/merger that was responsible for investor unhappiness and leaders leaving the company. Because of the scandal, critics raised many questions such as “just how interested is this producer in their actual software products?” and “Are they more interested in profiting from similar controversial deals than in the actual quality of their product?” (1) During this crisis in India’s fourth largest software company, other companies stepped in to compete, in line with the threat from Porter’s Five Forces Model. In an attempt to turn things around, Satyam began to use communication skills to improve customer relationships. In addition, they placed much focus on the marketing, sale, implementation, and management of their new ERP systems.
This article is especially interesting because it shows the other side of Information Systems Technology. Instead of discussing a company that implements different systems so that they may run more efficiently, this article addresses a company that not only must implement their own similar systems, but also create and implement these systems for and in other companies. Because of this, they must stay updated with technologies as soon as they are created. One of these that are mentioned in the article is an Enterprise Resource Planning System for the US-based company Caterpillar. An Enterprise Resource Planning System is a collection of integrated software for business management, accounting, finance, human resources, project management, inventory management, service and maintenance, transportation, supply chain management, customer relationship management, and e-collaboration. It is a unified interface across the enterprise, with everything related to technology systems and software connected on one system. In my opinion, this is what Satyam should be trying to implement for itself, as the company has continued along a path towards destruction.
I also believe, however, that there are costs and benefits to implementing such ERP systems. Even IS companies are willing to admit there are many problems (2). These problems include expense, complex maintenance, need for many interfaces, no solid data about benefits or the ERP, and difficult updates. Although it may be beneficial to implement a software system used to manage and coordinate all resources, information, and functions of a business from shared data resources, it is also a risk to put everything together on one system. Therefore, a company must be fastidiously careful when deciding who may implement it. According to Business Week, Satyam has also had a history of fraud and rocky investor relations. Because of this, I would recommend that companies think twice before becoming customers of Satyam’s. It may be cheaper to outsource your Information Systems programs to an overseas company, especially in India, but this company has lost too much reputability in recent years between faulty deals, concern about software products, fraud, and bad customer reviews to take the risk. This statement is especially true with something as important as the company’s dependence on their entire Enterprise Resource Planning System and the information that it contains.
RESOURCES:
"Satyam Struggles to Keep Customers - BusinessWeek." BusinessWeek - Business News, Stock Market & Financial Advice. Web. 12 Feb. 2010. http://www.businessweek.com/globalbiz/content/jan2009/gb2009015_126729.htm.
" The Pros and Cons of Integrated and Autonomous ERP Systems." ERP Software from Lawson. Web. 11 Feb. 2010. http://www.lawson.com/WCW.nsf/pub/FB_43F44F.
"SATYAM COMPUTER SERVICES-ADR (SAY:US): Stock Quote & Company Profile - BusinessWeek." Investing & Stock Research by Company and Industry - BusinessWeek. Web. 12 Feb. 2010. http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ticker=SAY:US.
I found it very interesting to look at the companies that are creating the ERP systems. In class, we have discussed the companies who need ERP systems and how they use them. However, we have not looked at who makes them and how they are created. I agree with the statement that each company "must stay updated with technologies as soon as they are created" for we live in a rapidly changing world that sees technological advances so often. In order to effectively create an ERP system that will benefit a company, companies such as Satyam must focus on what their buyers are looking for and work towards supplying their needs. Also, like we talked about in class with the data marts, companies creating ERP systems need to be able to create a system that, while putting pertinent information together in an organized way, the information can still be found efficiently.
ReplyDeleteScandal can definitely hurt a company, but it seems that Satyam has attempted to build better relationships with the public. Therefore, I would not necessarily refuse giving business to Satyam. If a company's management is making an effort to clean up their act they usually realize their wrongs. Moreover, I find it intriguing that a software company that produces ERP systems is dealing with managing their own ERP system. I think this must be an interesting predicament because Satyam is obviously dealing with some of ERP’s negatives, but must continually emphasize the ERP’s positive attributes.
ReplyDeleteThis is an interesting blog and I was thinking about a point I was going to make through reading this, but Eileen briefly covered it at the end, and Chris mentioned it in his post too. A company's reputation is something that greatly affects public opinion, and ultimately the company's sales. For instance, Enron. When the Enron scancdal broke, Arthur Andersen (one of the Big Five) went down with it. In addition to the Enron scandal, Arthur Andersen was involved in other shady business. The company lost reputation through one scandal, and it domino-ed and the company lost its CPA license.
ReplyDeleteIn addition, there are always scams on TV ads. You hear these tax centers saying how they will reduce the amount you owe, etc. People fall into this trap, realize it's not real, and then the tax center loses them as a customer. Without customer relationships, a company is not sustainable. They easily lose customers through inferior quality, or inferior service. In addition, one way to judge if a company is sustainable is to see how much they've invested in customer relations.