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This is an enhanced edition of HBR article 98401, originally published in July 1998. HBR OnPoint articles include the full-text HBR article, plus a synopsis and annotated bibliography. Drawing on company examples, Thomas H. Davenport, a professor at the University of Texas''s Graduate School of Business, provides a fresh, high-level perspective on enterprise systems to help senior executives think rationally about their large-scale investments in this technology. Enterprise systems allow companies to replace their existing information systems--often incompatible with one another--with a single, integrated system. By streamlining data flows throughout an organization, these commercial software packages, offered by vendors like SAP, promise dramatic gains in a company''s efficiency and bottom line. Businesses are jumping on the ES bandwagon. But while these systems offer tremendous rewards, the risks they carry are equally great. Not only are the systems expensive and difficult to implement, they can also tie the hands of managers. Unlike computer systems of the past, which were typically developed in-house to a company''s specific requirements, enterprise systems are off-the-shelf solutions. They impose their own logic on a company''s strategy, culture, and organization, often forcing companies to change the way they do business. Managers should heed the horror stories of failed implementations. FoxMeyer Drug, for example, claims that its system helped drive it into bankruptcy. Using examples of both successful and unsuccessful ES projects, the author discusses the pros and cons of implementing an enterprise system, showing how a system can produce unintended, highly disruptive consequences. He cautions against shifting responsibility for its adoption to technologists. Only a general manager will be able to mediate between the imperatives of the system and the imperatives of the business.