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Evaluating risks associated with extended enterprise systems (EES)

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2 Author(s)
Ganguly, Anirban ; School of Systems & Enterprise, Stevens Institute of Technology, USA ; Mansouri, Mo

The term “system” is defined as a: “… set or arrangement of elements (people, products, (hardware, software) and processes (facilities, equipment, material, and procedures)) that are related and whose behavior satisfies customer/operational needs, and provides for the life cycle sustainment of the products” [1]. Similarly, “enterprise” is described as a: “goal-directed complex system of resources -human, information, financial, and physical-and activities, usually a significant operational scope, complication, risk, and duration” [2], However, the necessities of today's market governed by intense competition, globalizations, and battles among supply chains, have changed the focus on how an enterprise conducts its business. Enterprises are gradually moving on from operating as a stand-alone entity to producing goods and services through a network of independent or semi-independent organizations [3]. As a result, enterprises are becoming extended network-based organisms able to operate in extremely complex environments [4]. In order to capture the dynamic nature of such entities, existing approaches can be combined to introduce an Extended Enterprise System (EES) as “a complex network of distinctive yet distributed and interdependent organizational systems that are connected in an autonomic way to achieve objectives beyond reaching capacities of each” [5]. The type of interactions among constituent systems of such a network might be defined based on hierarchy, collaboration, coordination, or a combinatorial form. Regardless of the interconnectivity rules and forms that results in an increased flexibility and adaptability, an EES is not devoid of being susceptible to sudden, unforeseen vulnerability that can put it in a position of great risk through astronomical financial losses and a steep decline in its overall market share, thereby leading to the loss in its competitive advant- ge. Since developing a “risk free” strategy that enables the “ideal” functioning of an EES is nearly impossible in the currently prevailing business environment, having a clear understanding of the critical risks associated with the functioning of an EES is absolutely necessary for its growth and sustenance in the business environment. Furthermore, the boundaries for evaluation and management of risks associated with an EES are inherited from a plethora of intra- as well as inter-organizational relationships [6,7] that stretches well beyond those associated with its enterprise-centric counterparts, and therefore warrants a great deal of attention from policy-makers as a part of designing a well-structured risk mitigation strategy. However, despite the rapidly growing popularity of EES among practitioners, there is still a considerable void in the open literature on evaluating the critical risks associated with an EES, something that the current research is trying to shed some light on.

Published in:

Aerospace and Electronic Systems Magazine, IEEE  (Volume:27 ,  Issue: 5 )