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ERP Applications May Aid Corporate Social Responsibility Programs


Enterprise Resource Planning (ERP) applications have been a powerful business tool for a very long time. That's why it feels somewhat surprising when we are still able to find new and innovative ways to use ERP to improve our companies. In a really well done ERP seminar I attended, the instructor delivered an example that referenced a article titled, "Is ERP Ready for Corporate Social Responsibility?" another potential new role for ERP was outlined - how it could be used to help track key business information and metrics to improve corporate social responsibility (CSR) policies.

The idea is that existing ERP applications may be the perfect place to add extensions to help manage voluntary CSR guidelines that are being drafted and finalized by the International Organization for Standardization (ISO) under its fledgling ISO 26000 standards. Two years ago, the ISO launched the development of an International Standard providing guidelines for social responsibility for companies to follow. "The need for organizations in both public and private sectors to behave in a socially responsible way is becoming a generalized requirement of society," according to the ISO. "Our work will aim to encourage voluntary commitment to social responsibility and will lead to common guidance on concepts, definitions and methods of evaluation."

So why is this relevant now? "The importance of documenting and managing CSR practices becomes eminently clear when we consider occurrences such as the tragedy surrounding the 2010 explosion of the BP Deepwater Horizon offshore oil rig," according to the article. "BP's reputation as a good corporate citizen has been diminished and they may be held liable for damages due to their actions, particularly if they cannot document that they had been following accepted practices for two of the key areas dealt with in ISO 26000, environmental protection and labor relations."

And how does this tie with ERP? Well, since ERP systems already act as central information depositories for so many important processes and roles in businesses, it is a perfect place to add additional tracking capabilities for CSR programs. That would include things like human relations, labor relations, the environment and corruption, which are all being addressed under the ISO 26000 standard.

This makes lots of sense and is a natural extension to ERP's data tracking, management, reporting and oversight capabilities. It would help provide more concise tracking and flow of critical information in the event of disasters like the oil rig explosion and could help companies improve their CSR by making such incidents more transparent when they occur. Information is power and if the data is there and is being tracked automatically, it can support ethical companies even during crisis situations. Also if corporate decisions and information are being tracked and documented, there is less opportunity for corruption by officials, according to the ISO 26000 proposals.

By building CSR tracking into ERP, it would link new responsibilities to an existing software application that already contains and manages other key corporate data. According to CIO, "Risk management functionality that is embedded directly in an enterprise application rather than a stand-alone solution will be preferable for one simple reason; when risks are identified and a risk mitigation plan created, risk management that exists directly in an ERP system used widely throughout a company will allow execution of that mitigation plan to be automated to a much greater degree. A separate risk management tool will really leave executives guessing as to whether the risk mitigation plan they created is being followed, and that could lead to some very unpleasant surprises."

That's smart thinking and it will be fascinating to see where the ISO 26000 process ends up. The BP disaster in the Gulf of Mexico is only one incident where a link between ERP and CSR could be hugely beneficial for society.

This is a big first step and another example of how much we have come to rely on ERP software, despite its challenges and complexity. ERP may not be easy, but it certainly helps our businesses and it could ultimately help increase corporate social responsibility in our country and abroad.

Post Posted by: Jeffrey
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Michael Kirk says:

ERP systems are a natural for this type of CSR management. The more data in one system, as opposed to multiple systems, the easier to track, manage and report.


Sandy says:

A fair point but I think the precursor question is why would ISO put even more requirements on business at this point in time? Business is over-regulated. | ERP Software Forum