Barriers Of Enterprise System Information Technology Essay

This report focuses on the impact of Enterprise System on ALDI s

The Internet Protocol is the foundation of the TCP/IP protocol suite and the Internet, IP lies in the 3rd layer of the OSI model which is Network Layer and the purpose of IP addresses is to route the data packets across different networks and provide network wide addressing i.e unique address to each device on a network. IPv4 is 32bit address which provides 2^32 i.e 4.2 billion approx IP addresses. There are more than 6 billion people on earth, no doubt that not everyone out of these 6 billion people consume IP address and there are just 2 billion people out of 6 billion who are consuming IP but these 2 billion people owns more than 1 network aware device which needs IP addresses to connect to the Internet so multiple device require IP addresses which leads of IP exhaustion, This is where IPv6 comes to rescue, IPv6 offers 2^128 addresses i.e 340 undecillion unique addresses and by one estimate we can assign more than 2000 addresses to every square meter on earth.[3]

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Main problems during transition

The main problem is that IPv4 is running out of unique addresses to assign and this is the reason why we need to shift to IPv6 which cannot be done in a one giant leap, it requires sometime and strategy to seamlessly deploy IPv6 without interrupting the entire Internet and without bothering the customer because customer doesn’t need to be concerned with IP addresses and their up-gradation, it is the responsibility of ISP’s to take care of the seamless and smooth up-gradation of IP addresses without panicking their customers, but if there is too much delay and we keep on procrastinating it and avoiding the importance of transition from IPv4 to IPv6 then indeed there will come a time when ISP’s will need to call their customers and ask them to replace their legacy hardware and software to accommodate new IP version 6 and this is where one of the bottlenecks occurs because IPv6 is not backward compatible with IPv4 because the addressing system and datagram format are different. NAT (Network Address translation) comes in the way of direct, computer-to-computer communication because real-time applications such as voice over IP, online gaming, video conferencing experience delay in transmission because of NAT, with IPv6 since both the parties will have unique addresses then there is no need for NAT and there will be no delay so it implies that IPv6 is good for real-time applications, Also in IPv4 security suffers a lot because we don’t have any security built-in mechanism for IPv4, for that matter we need to implement IPSEC, in IPv6 – IPSEC is built-in.

Problems faced in Pakistan

In Pakistan the biggest hurdle in the way of IPv6 implementation is that there is lack of awareness amongst the people and ISP’s are very reluctant to implement IPv6 because of fear of cost and lack of technical skills – because staff will have to be trained to install, maintain and troubleshoot problems occurring in devices software that supports IPv6 because IPv6 header is quite different from IPv4 header, in Pakistan Cybernet is the only ISP that has taken the initiative to deploy IPv6 and started a project by the name “6 core” and they are in a transition mode and has begun offering IPv6 related services, they even offer training service for technical staff and they are encouraging people, government bodies and other ISP’s and educational institutes to start transitioning to IPv6 because we are depleted of IPv4 and in a very near future there will be no more IPv4 left to be assigned and then this is the time where we will have to take a one giant leap and might face temporal halt, Many routers these days are already equipped with IPv6 stack and they do support IPv6 as well as IPv4, Now Supernet and Dancom are also supporting and working with Pakistani IPv6 task force towards the seamless transition fromIPv4-toIPv6 and they all are working under the umbrella of Pakistani IPv6 task force and testing and deploying IPv6 transition mechanism.


The 6Core is a network of IPv6 clouds present in Pakistan to share Information without going to International IPv6 Cloud. The links between these IPv6 clouds on the 6Core are made using IPv6. The IPv6 protocol currently is carried over IPv6 over IPv4 Tunnels because of unavailability of IPv6 WAN (Native) connectivity in Pakistan NAPs (FLAG Telecom, ITI PIE) [1]

Figure 1 Six core Network [1]

6core project is offering IPv6-over-IPv4 Packets, this is called tunneling and in order to require this service one has to register to IPv6 Core network and then they will carry your IPv6 packets encapsulated in IPv4 packets because not all the networks across the world are fully IPv6 native and they are disconnected so there is a very high possibility that our IPv6 packet is received by a IPv4 router which will not understand so that is why we will need to encapsulate IPv6 inside IPv4 and then later these networks will be shifted to IPv6 networks which is the ultimate goal of “6 core project” .

Deployment of IPv6 in CYBERNET

Deployment of IPv6 in CYBERNET has been broken down in to number of phases. List of these phases is shown below:

Phase I: Registration with APNIC for IPv6 CIDR.

Phase II: Building of IPv6 Test bed in KHI, LHR and ISB separately.

Phase III: Building First IPv6 Tunnel ring between KHI, LHR and ISB PoPs.

Phase IV: Building International IPv6 Tunnel with v6 Tunnel Service Provider.

Phase V: Launching of www6 and DNS6 services over Dual Stack Servers.

Phase VI: Launching of Dual Stack Media Server.

Phase VII: Building National IPv6 Tunnels between Pakistan v6 ISP/NSP.

Phase VIII: Establishing 6PE over CYBERNET MPLS Core.

Phase IX: Testing of IPv6 over xDSL.

Phase X: Testing of 6VPE over CYBERNET MPLS Core.

Current Status in Pakistan

Engineers has been working day and night across the world towards the implementation and promotion of IPv6, but the 6Core project is in a strong position in Pakistan with tremendous achievements and therefore IPv6 is penetrating in Pakistani’s ISPs and organization far more than any other Asian Country.

Progress of Phase 1 has been completed and Phase 2 is in progress.

Figure 2- IPv6 6Core Deployment Graph

IPv6 implementation mechanisms

a) Standalone (IPv6-only), in this case all the routers and networks support IPv6 protocol only and this is not practical at the moment because not everyone has routers that support IPv6 only because there are millions of IPv4 routers running already.

b) Dual-Stack Routers, Dual stack routers support IPv6 as well as IPv4 so if the user has IPv6 installed and is requested IPv6 service then router can serve it as if it is IPv6 only and incase if the same user requests IPv4 service then router can offer it as well as if it was IPv4 only, so it only depends on the user and the application requesting the service and router serves it.

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c) Tunneling, In tunneling IPv6 packets are encapsulated inside IPv4 packets so that they can be routed through IPv4 enabled routers as well, and this way all the disconnected IPv6 networks can be connected, when the destination IPv6 edge router receives the IPv4 packet then it looks into the header and de-capsulate it in order to get the IPv6 packet.

Figure 3 Tunneling [2]

IPv6 Backbone Ring in Pakistan

IPv6 Task force is the first project in Pakistan that has provided a common platform to all the renowned ISP’s in Pakistan (SUPERNET, DANCON & Cybernet) to collaborate with each other under one platform towards the growth and implementation of IPv6 and all of them has extended their test bed to international and national boundaries, all of the collaborating ISP’s are putting their efforts using the IPv6 Platform to build the Pakistan’s virtual IPv6 backbone. The first step is to build the Backbone Ring in Pakistan between these collaborating ISPs, Cybernet, Supernet, Dandom are the Top Level Aggregators (TLA’s) on the 6Core and they are connected via tunnels over the IPv4 Internet. All the ISPs are free and welcome to join this project and participate in the growth of IPv6 in Pakistan so there TLA list is not fixed, all the ISPs, educational, organizations and government sectors can connect to IPv6 Tunnel using these TLA’s

Figure 4- IPv6 Backbone Ring in Pakistan


Cybernet is one of the biggest internet service provider in Pakistan which was founded in 1997 and started offering its Internet and Data communication services then extended its network all over the Pakistan, Cyber is the first ISP in Pakistan which undertook the major of initiating IPv6 implementation by registering with APNIC for Ipv6 on March 2006 and was allotted with 2001:4538::/32 CIDR. After the allocation of IPv6 CIDR then Cybernet started its R&D on IPv6 test bed and appeared on the World map after establishing IPv6 Tunnel. In order to achieve end to end IPv6 service in Access/Distribution/Core which is the ultimate goal Cybernet been pursuing- they have 2 options either move every service over IPv6 built parallel each at a time but this is way to costly and service disruption may occur Or the one which is recommended is to first go for Dual Stack then integrate Dual Stack Distribution and Access Network to IPv6 enabled Core, this is the recommended way and its most suitable and the only reliable and feasible transition from IPv4 to IPv6 at this stage is co-existence.

Figure 5- Cybernet IPv6 deployment Graph


Asia is the largest consumer of IP addresses and we are running out of them very quickly, China is the leading IP consumer in the world and Pakistan is no less in consuming IP addresses so it is very necessary for the government of Pakistan to cooperate with “6 core Project” and offer training and conduct country wide seminars to indicate the importance of IPv6 transition and this is the right time to start that and the complete transition will take place in about 5 years at least but if we continue to procrastinate it then there will come a time when we will have no choice but to throw away our current hardware and buy the new IPv6 enabled equipment and also software or be disconnected from the world.


This report was written as part of our Research Report Course under the supervision of Sir Asim Riaz. The writers are very grateful to Sir Asim Riaz who supervised our report and periodically checked our report for further refinement and also the entire BS Computing faculty for their reviews and interest in our course and the students for their valuable feedbacks and comments, We would like to also thank to viewers for taking out time to review this report.


upermarket. ERP systems are costly and complex. They require heavy investments and experts. This research examines key dimensions of implementation of Enterprise system within ALDI supermarket. The components of Enterprise System Software: ERP, CRM AND SCM and its benefits to ALDI supermarket are identified and discussed. Although enterprise system benefits ALDI in many ways, there are some disadvantages and barriers to implement it. These barriers and risks are identified and possible solutions are suggested.

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ALDI (Albrecht Discount) is a discount supermarket chain which is based on Germany and is one of the cheapest and smartest ways to buy groceries. ALDI was established in 1913 and the chain is made up of two separate groups, ALDI North and ALDI south. By the early 1990s the company operated an estimated 3,000 stores in Germany, the Netherlands, Belgium, Denmark, Austria, the United States, France, and the United Kingdom. Today, ALDI’s rapidly growing network has more than 7,000 stores and serves millions of people across three continents. Aldi has taken this retail concept, which features low overhead and scanty selection, to its extreme. Unlike other supermarket chains, which continuously increase their product offerings and selling space, Aldi holds selection at its stores to about 500 items. The bulk of these items are packaged grocery or dry goods.

ALDI claims “Simplicity, consistency and responsibility have always been our three defining core values. As an expanding discount retailer, our actions have international influence in different markets and along the supply chain.”

ALDI has a different strategy of doing business and saving money. ALDI stores are usually small, from 8,000 to 15,000 square feet. ALDI’s outlets also used to bypass expensive barcode scanners that are used by other stores to inventory and price products. Instead, a stockperson would simply post a sign with the price nearby. Price lists were memorised by the cashier but with the demanding information technology, ALDI has now started to use barcode scanners. Each product that ALDI sales have 4 barcodes which makes it quicker to scan and increases the productivity of the cashier (this has been inspected in one of the ALDI store in seven sisters, London). ALDI has also decided not to sell fresh meat which again saves company money as it can avoid steep refrigeration costs as well as the high wages the meat-cutters’ unions demand.

ALDI also has a strategy to keep labour cost low in different ways. ALDI charges four cents per bag to their customers and the customers must bag their own groceries. Customers can rent a shopping trolley for 25 cents and they get their quarter back when they bring the shopping trolley to the front of the store. By doing this, ALDI does not have to pay someone to collect the trolley in the parking lot or replace stolen ones. ALDI also keeps the telephone numbers of their stores unlisted so that employees don’t waste time answering the phone. Aldi-style austerity holds labour costs to an estimated four percent of store sales, compared to ten percent to 12 percent for most supermarkets.


Enterprise software services a larger amount of users and needs, typically through the use of a network and multiple points of processing and clients. Enterprise software provides services which are typically business-oriented tools such as online shopping and online payment processing, interactive product catalogue, automated billing systems, security, content management, IT service management, customer relationship management, enterprise resource planning, business intelligence, Human Resource management, manufacturing, application integration etc. It is normally multi-tiered client/server.

In the past, companies were used to compete based on one or two competitive performance objectives such as price and quality. However, present markets demand both price and quality in addition to greater flexibility and responsiveness. Information systems such as

Enterprise resource planning (ERP) have gained ground in providing support for achieving an integrated supply chain. Firms around the world have been implementing ERP systems since the 1990s to have a uniform information system in their respective organisations and to re-engineer their business processes.

There are three main components of Enterprise System Software. They are:

Enterprise Resource Planning (ERP),

Customer Relationship Management (CRM), and

Supply Chain Management (SCM)


ERP uses internet technologies to integrate the flow of information from internal business functions as well as information from customers and suppliers such as manufacturing, finance, procurement and distribution. The system uses a relational database management system, within client/server network architecture, to capture valuable management data.

ERP systems offer companies the following three major benefits:

Business process automation

Timely access to management information

Improvement in the supply chain via the use of e-communication and e- commerce.

ERP links all areas of a company including order management, manufacturing, human resources, financial systems, and distribution with external suppliers and customers into a tightly integrated system with shared data and visibility.

It is not a good move to just plan resources required to run the enterprise; they need to be managed as well. An organisation must access itself, to see if it is ready for ERP. It must determine if it is ready for the competitive business environment and then strengthen its position for future changes. ERP software helps company’s operations after they are integrated into the system with the help of experts. In addition, in order for them to be efficient, they have to be used by experienced personnel so it can sometimes be very costly.

There are number of ERP softwares such as: SAP R/3, ORACLE, IFS APPLICATION, SAGE MAS 500, CANIAS ERP, SAS etc of which SAP R/3 is the most popular and is used by most of the organisation.


ERP software can help ALDI supermarket in following ways:

End user service delivery: ERP software has the features and functions that enable end-user services: innovative support for ALID’s business roles that help to extend the reach of human resource processes to all stakeholders. It also boosts productivity and efficiency and reduces many transactions and processes once handled by HR staff.

Reduce operating costs: ERP software can help ALDI supermarket to reduce cost such as inventory cost, production cost, marketing cost etc. with ERP software, ALDI can improve coordination across functional departments and increase efficiency of doing business.

Support strategic planning: Strategic planning defines business target and set of goals and objectives. It assesses plan and design coordination strategies and logically connects these strategies to needs, assets and outcomes. Part of ERP software systems are designed to support resource planning portion of strategic planning.


Business in today’s world is customer driven. In the past, price and quality were the key factors to successful business but now, customer satisfaction and flexibility have also become equally important. Customer Relationship management is very important to a business successfully. The better the customer relationship is, the easier it gets to conduct business and generate revenue. Customer Relationship Management (CRM) software helps to understand customer needs and allows ALDI supermarket to design customer-specific levels of service and also increases value per customer and customer retention. CRM softwares can be categorised into four different types: outsourced solutions, off-the shelf solution, bespoke software and managed solutions. It might be very costly and time consuming at times to implement CRM software however it can benefit ALDI in many ways:

Based on previous records, it can increase sales through better timing by anticipating customer needs

Can identify needs by understanding customer requirements

Can identify which customers are profitable and which are not

Can improve profitability by focussing on most profitable customers.


Customer Relationship Management (CRM) helps to build profitable and lasting customer relationship by providing the insight and analysis needed to anticipate customer needs. CRM provides the following:

Flexibility to create unique customer experience: CRM software helps end-to-end business processes to address an array of marketing, sales, and service situations. The CRM software easily adapts and extends to create a more distinctive customer experience.

Drives organisation to more consistent interactions across all channels: CRM software can help ALDI to make the most of every customer interaction that is consistent and relevant, with real-time information about the complete history, value and profitability of each customer across the entire customer life cycle.

Enables end-to-end process within the industry value chain: CRM software can help ALDI drive customer value, loyalty across the entire value chain. CRM can turn the vision of customer-driven growth into reality with the best in class front office functionality that complements industry-specific processes.


Supply chain management can be defined as the management of a distribution channel across organisations. It is the design, planning, execution and monitoring of all supply chain activities. Supply chain management can benefit ALDI supermarket to plan smoothly and execute related operations to achieve long-term profitability and maintain a solid competitive edge.


Improve supply chain network: with supply chain management, ALDI can monitor the status of all activities across all suppliers, production plants and distribution centres. SCM enables an effective way of tracking and managing all related processes, from ordering through manufacturing and shipping of end product to customers.

Minimized Delays: Delays in supply chain can result in poor relationship, unsuccessful business and eventually loss of business. With supply chain management software, all activities from start to finish can be coordinated with higher level of on-time delivery across the board.

Enhanced collaboration: Supply chain softwares can bridge the gap between departed business software at remote locations to improve collaboration among supply chain partners. All participants can dynamically share vital information such as demand reports, forecasts, inventory levels etc. in real time.

Reduced Costs: Supply chain software can help ALDI supermarket reduce overhead expenses in many ways. It can improve inventory management and facilitate successful implementation of on-time stock models. It also helps ALDI to make effective demand plans, so production and sales level can be set to the maximum. It can also help improve relationships with distributors which can cut the cost in ordering products in volume.

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Though enterprise system softwares have many benefits, these benefits can sometimes be matched with high level risk because of its complexity. According to Soh (el al 2000), some companies even terminate the implementation of enterprise system software regarding time, cost and disruption caused and sometimes limited benefits once the system becomes operational. There may be some barriers while trying to adjust the enterprise software and barriers cause decrease in organisational performance instead of improvement. Organisational change is one of the most important barriers encountered in transition of new systems. Some of the barriers involved during implementation of enterprise system software are: Structural Barriers, Technological Barriers, Intellectual and Socio emotional Barriers and Cost Barrier.


It is very important to understand the organisational structure existent in the organisation before implementing enterprise system software to prevent possible knowledge integration problems that could exist. The main structural barrier is that organisational structural limits the interaction among the different functional areas. The level of efficiency reached in the implementing enterprise system software depends upon how the organisational structure aligns with the nature of the tasks performed by members. Ross and Vitale’s (2000) found that the majority of the firms surveyed perceived enterprise system software implementation to be extremely disruptive. Enterprise software implementation may only succeed when the organisation is able to re-structure itself, and not just overlay the new management information system on the old organisational structure. Hammer (1999) argues that the ERP implementation is an integrative mechanism that connects diverse departments establishing integrated processes.


The IS people within the information systems department who are the founders of the pervious system might have problems to understand and maintain the new enterprise software easily. This is when the technological barrier emerges. The IS people may not be able to provide good support the new enterprise software users because they had not internalised the routines necessary to support the new enterprise software.

The second technological barrier could be the parallel use of legacy systems. According to Mileton-Kelly (2004), the new systems may quickly become legacy systems as they might not meet the full requirements of the users and may not be able to fully support business evolution. Furthermore, most of the legacy systems do not use a relational database management system (RDBMS); they still use proprietary flat file system. The reason for this is because there is no central ownership of data or information items in use by companies.

This problem could be solved with the use of legacy systems for validation reasons only. Since ERP modules, processes or reports were validated, users only will have access to the ERP environment for their day to day work. This solution reduces the amount of work in terms of duplication of efforts. Moreover, users will focus only in the ERP system; this means a reduction of the comparisons with the legacy systems, an increment of the users’ productivity, and a possibility to integrate user knowledge in the ERP system.


The intellectual dimension is related with the learning and knowledge of users, and the socio-emotional dimension considers the feelings and the willingness to improve skills of the users. The main barriers involved in these dimensions could be: knowledge transfer between the legacy system and the new ERP system, and between consultants and ERP users. According to Ko, Kirsch, and king (2005), not much is known about knowledge transfer from consultants to ERP users, in which the knowledge structure of the participants is asymmetric. The consultant primarily possesses technical knowledge, whereas their clients and future ERP users primarily possess business knowledge. Hence, the knowledge initially possessed by the consultant must be integrated and embodied in the knowledge of the ERP users. This might remove barriers and also allows both parties to minimize disagreements and enhance their ability to work together for effectively transferring knowledge. The concern about users preferring old procedures and not adopting to the new ERP environment could be prevailing. Users may not be resisting to the change, but they might be trying to make sense of the change. This approach is related with the socio-emotional dimension because users need to justify that these changes are better from them.

User training could be a key requirement for ERP implementation. Those organisations which invested in training had successfully overcome socio-emotional barriers involved with the ERP implementation. The individual knowledge barrier could be overcome by the identification and definition of new procedures and functions to shift the user perspective from the individual level to the organisational level. This means that to reach the knowledge integration process across the organisation, there may be a need to map the existing knowledge into the ERP functionality. This new vision helps to reduce the perception of the new ERP system. Pan et al. (2001) also suggests that ERP team members must instigate a process of relationship building through increased information sharing and social interaction among users. This behaviour promotes the structural integration to improve knowledge integration through users’ willingness to share information and ideas in the form of political transparency or process de-layering.


Although Enterprise system software can benefit ALDI in many different ways, it is very costly and hard to implement. ALDI’s main strategy is to sell cheap products and use less technology. They sell the products cheap as they save money on technology but if they use technology, they might not be able to sell the products so cheap which is going to bring another competition among other supermarkets and is against ALDI’s current strategy.


In the report, a brief history and introduction to ALDI supermarket was discussed. ALDI is a supermarket which was established in 1913 at Germany. Today, ALDI has more than 7000 stores and serves millions of customers across three continents. ALDI’s business strategies were studied by visiting ALDI’s local store and conversation with managers of ALDI. An overview of Enterprise Software and its components: Enterprise resource planning, customer relationship management and supply chain management were discussed. Benefits of using ERP, CRM and SCM were identified and it was discussed how ALDI would benefit by using these enterprise system software. Finally, barriers and risks of using enterprise system software were identified and solutions to those barriers were discussed.


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