The Concept of “Organizational Memory” Used to Transform IBM?

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Updated: Mar 31, 2023
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Let’s take a quick look at Organizational Memory. Organizational Memory refers to the process of utilization of structured and unstructured data, which can be utilized in the future for making decisions. Organizational Memory capabilities include two relevant technologies Enterprise resource planning (ERP) and Data Warehousing. As described in the case study, IBM was having troubles with respect to five common business processes such as integrated product development, integrated supply chain, customer relationship management, human resources, and finance. Hence IBM decided to integrate all the business activities into SAP, which provides solutions to all these problems using Enterprise Resource Planning (ERP).

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The use of SAP brought many benefits to IBM, such as including integrated business processes across the enterprise, a single database, access to real-time transactional data, and the elimination of costly legacy stand-alone systems. The main problem at IBM was at the personal systems group (PSG), where they produced all the personal computers. They were receiving complaints from the dealers about being out of stock of the most popular product, and hence the ERP systems will help to improve the way an organization manages the order fulfillment process. Thus, the use of ERP will help to improve the activities of the order fulfillment process as it effectively integrates different departments such as sales, finance, manufacturing, and logistics department. But ERP systems are time bounded. They record transactions with respect to accounting periods of the company, such as three months, six months, or max a year. Thus, this restriction of the ERP system will be removed by Data warehousing, which is the second aspect of organizational Memory. Data warehousing will allow IBM to store data for a long period, such as five years or ten years, depending upon the storage capacity. Thus, this technology will provide solutions to IBM by identifying similar trends in the past and giving solutions to the company.

The operational model for IBM before and after adopting SAP

IBM adopted SAP in the year 1995, and things became more under the control of IBM. Before the adoption of SAP, the company was a big mess. All the departments were having lack of coordination. IBM was having trouble with high expenses, redundancies in manufacturing and research and development, and excessive employees. The success of IBM was a big doubt for most of its investors. The main profitable business of IBM was by selling personal computers, but that department was facing the problem of being out of stock. The dealers of the products were getting frustrated because of a shortage of supplies as each of the manufacturing plants across the world had different application systems and technologies.

Thus, the supply chain management was very poor. Also, the company was not able to become more competitive. The pricing strategy was poor, and the innovations from its competitors led to a loss in the loyalty of its customers. And so, the company decided to investigate and tried to find different solutions. After investigations, the corporate staff decided to use SAP which uses ERP systems, so that each department is coordinated. After the implementation of SAP, different manufacturing plants became one unit, and a group model was implemented based on common processes, common development and support, common architectures, common education, and real-time access to information. The process was distributed into six different teams Manufacturing, Sales and distribution, Production Planning, Finance and costing, Procurement, and Engineering change. Hence, all the teams had only one goal, and each of the teams knew what the company expected from them, and a more coordinated effort came into existence after the implementation of SAP.

The main focus of BI is to create value for an organization by discovering knowledge from explicit organizational Memory, such as ERP systems or data warehousing. This case study reflects the need to utilize organizational Memory to transform a business to become one single unit where all the departments get the same amount of input but different goals with respect to their specific departments. The main problem of IBM regarded the lack of real-time information for each manufacturing unit which was solved by implementing business intelligence software. Nowadays, BI has become an important aspect of a business in providing solutions as companies are expanding globally, and there is always a communication problem between each unit due to different time zones, so it becomes very important to connect each unit with ERP systems so that goals are clearly specified.

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The Concept of “Organizational Memory” Used to Transform IBM?. (2023, Mar 31). Retrieved from