Enterprise Resource Planning (ERP) Systems in SMEs: A Report

Desklib provides past papers and solved assignments for students. This report analyzes ERP implementation in SMEs.

ITECH5402- Enterprise Systems

Contents
Introduction................................................................................................................................................3
Discussion.................................................................................................................................................4
ERP in action — Challenges and benefits for management control in SME context..................4
Adoption of Software as a Service (SaaS) Enterprise Resource Planning (ERP) Systems in
Small and Medium Sized Enterprises (SMEs)..................................................................................6
ERP system implementation in SMEs: exploring the influences of the SME context..................8
Marketing small and medium sized enterprises in the digital age: opportunities and challenges
.................................................................................................................................................................9
Implementing Enterprise Resource Planning, the Case of Small and Medium-Sized
Enterprises in Romania......................................................................................................................11
The Critical Success Factors of ERP implementation in Higher Education in Saudi Arabia: A
Case Study..........................................................................................................................................13
Case Study..............................................................................................................................................15
Conclusion...............................................................................................................................................16
References..............................................................................................................................................16

Introduction
ERP systems are also known as the enterprise resource planning system is one the
most influential technology adopted by some of the big enterprises. The reason behind
this is that implementation of ERP systems enhances the performance and the profit
earning capability of the enterprises. Using ERP system all the major and important
decision making and management work related to the organization can be done in an
easy and efficient manner. As most the big organizations are using ERP system, if the
ERP system is also implemented in small and medium-sized enterprises can help SMEs
to have better management and decision making performance. However, there are
many challenges and opportunities that small and medium-sized enterprises face while
adopting ERP system. In this report, all such challenges and opportunities are
described.

Discussion
ERP in action — Challenges and benefits for management control in SME
context
The paper by Henri Teittinen, Jukka Pellinen and Marko Järvenpää explain the
Enterprise Resource Planning and its implantation in small and middle-sized
enterprises. The authors of the paper highlighted the major challenges, opportunities,
and problem faced by the enterprises while working the Enterprise Resource Planning
systems. Researchers have also pointed out some of the major reasons due to which
any business enterprise face challenges of the ERP implementation. The paper also
highlighted the basic reasons which result in the generation of benefits in the enterprise.
While working with the research, the researchers analyzed the work and the behavior of
people which are at the different levels in the organization (Teittinen, H., Pellinen, J., &
Järvenpää, M. 2013). By analyzing the people present at different levels of the
organization researchers found that each level of person in the enterprise has different
perspective of doing work in the organization and also have different level of tasks to be
performed.
Researchers stated that any ERP system, when designed must be built by keeping in
mind work of all level of people in the enterprise. They highlighted that enterprises are
not using enterprise resource planning systems in an adequate way, resulting in
unmanageable outputs within the organizations. In the research, it has been found that
ERP system is implemented in any enterprise, small or big, for the purpose of

minimizing the efforts of people and making the management work of the enterprise
more easy and efficient. The main purpose of an ERP system is to develop a system for
any organization in such a way that work of data collection, data storage, and data
usage within the entire enterprise become smooth and easily manageable. When
talking about the traditional process of management in the organization, the system was
only limited to decision making. Only the work of making a major decision of the
enterprise was done using the traditional systems. After the ERP system came into
existence, all the other work of the organization like the financial management,
accounting management, decision making, etc. were managed by the organization in a
relatively easy and efficient way.
The implementation of ERP system helps an enterprise to look over all the areas like
the strategic control process and operation control process which deals with all the
operations performed by the organization and are not only confined to the basic
management control mechanism that the traditional management system was based
on. In the research, many challenges that small and medium-sized enterprises face has
been explained.
Some of the major challenges discussed in the paper are the process of ERP system
are not unambiguous which results in different meaning for the people having a different
perspective. Another challenge faced by the enterprises is that many ERP software has
the features which are not defined clearly, SAP is one of the greatest examples. When
ERP system is implemented in small enterprises having people relatively less skill as
compared to the people of big enterprises, understanding the system becomes the
major challenge. One other challenge which is mostly faced is the process of making

entries in the system as the process is very time consuming and become even more
challenging when corrections have to be made in the entries. But there is also a large
number of advantages of implementing ERP systems. Some of the advantages are:
usage of standard software which results in standard solutions of the problem maintains
transparency while processing and decision making, process of creating and collecting
the profit/loss statement is not time-consuming.
Adoption of Software as a Service (SaaS) Enterprise Resource Planning
(ERP) Systems in Small and Medium Sized Enterprises (SMEs)
The paper by Ravi Seethamraju is a study where the researcher has done a cross-
sectional investigation of different organization by asking some set of questions to four
organization and based on the response of the members of those organization some
conclusions have been made. The main base of the research is to give a strong point
that the implementation of Software as a service-based ERP system is best for the
small and medium-sized enterprises. The researcher argued that the adoption of cloud-
based ERP has many advantages over the traditional ERP system. In the research,
after analyzing the responses of the four organization regarding the question that has
been asked to them, it has been found that there are several challenges that a business
enterprise faces while implementing ERP systems. Along with the challenges, the
researcher has also specified some of the major determinants which work activities
during the adoption of ERP system or during the adoption of cloud-based software as a
service ERP system (Seethamraju, R. 2015). In the research, the research the

researcher highlighted some of the main determining factors that affect the
implementation of ERP system in a positive or negative way.
The researcher pointed out the if software as a service based enterprise resource
planning systems is implemented, then it can result in a crucial innovation for the
business enterprises irrespective of their size, small, medium or big. The whole
management process can be changed in a better way when cloud-based ERP systems
are adopted and implemented. The tradition ERP system needs high cost for
implementation and usage, which small enterprises cannot afford. With the arrival of
cloud-based ERP systems, the cost of implementation was reduced which ultimately
resulted in the adoption of ERP system even by the small or middle-sized enterprises
which cannot afford high pay of ERP. According to the researcher, SaaS-based ERP
results in one of the best and cost-effective way of delivering the business.
The researcher has highlighted some of the main advantages and disadvantages of
adopting and implementing Cloud-based ERP system in the small and middle-sized
enterprises. The advantages of implementation are that it is the most efficient way to
process business, it gives real-time access to the data, it gives accurate information, it
is an effective process for managing the information, and security of data is one the
major feature of this kind of ERP system.
The challenges that can be faced during implementation involve high cost of investment
in the hardware, and the process is little time-consuming. Other than this, cloud-based
ERP systems are very beneficial for the small and medium-sized enterprises.

ERP system implementation in SMEs: exploring the influences of the SME
context.
In the paper, the research has been done by Ondrej Zach, Bjørn Erik Munkvold & Dag
Håkon Olsen where the researchers have discussed the fact that how small and
medium-sized enterprises are affecting the life cycle to Enterprise Resource Planning
systems. The researcher has stated that most of the SMEs do not have to potential and
appropriate financial to implement enterprise resource planning in their enterprises. The
highlighted that small enterprises do not have well-skilled workers who can efficiently
work with the ERP system but there is a great need and it is the high time that the
SMEs must implement ERP system in their organization so as to earn better profit and
better customer support. (Zach, O., Munkvold, B., & Olsen, D. 2014)The researcher has
surveyed four different organizations and got some very curial finding from the survey.
In the research paper, the researchers have highlighted the characteristics of the small
and medium-sized enterprises, and how they are influencing the ERP system. They
have pointed out the features of ERP system which can increase the performance of the
enterprises. The whole life cycle of the ERP system starting from the adoption to the
retirement phase has also been explained in the research. The researchers stated that
most of the SMEs have less number of resources and have very less experience with
new technologies of the market. By implementing ERP systems in the SME can be very
beneficial for the business enterprises.

Some of the important characteristics that must have to be analyzed in the business,
according to researchers, are culture of organization, management of organization,
decision-making ability of the organization, procedures used by the organization and the
ownership of the organization. All of these features are present in the ERP systems, so
if an enterprise wants better results than adoption and implementation of ERP system is
an important factor and is very much necessary.
Marketing small and medium-sized enterprises in the digital age:
opportunities and challenges
A company named Two Lizard advertising and marketing agency specializes in
upbringing small and medium scaled businesses to market their product or services
further increasing their reach in global market. In over past 20 years we have seen a
revolution in marketing strategy and practices with the introduction of social media and
internet. This revolution today proves to have positive impact mainly on medium and
small-sized business ERP tools helps them to reach globally where earlier it would cost
them even more to reach local markets. (Jelfs, A., & Thomson, H. 2016) Based over in UK,
Two Lizards advertising and marketing agency mainly deals and have expertise in
SME’s. Their customer base mainly comprises small and medium business
entrepreneur who does not have any type of experience related to digital marketing.
Problems being faced or cited by these company during approach for solutions are
merely basic and given as follows.
 Not enough customers through the door.
 No visibility over search results when searched over search engines.

 Despite product being original lack of proper branding for business.
Two Lizards first take data and information from the brands about these issues and then
create an assessment form by knowing answer to simple questions.
 Current state of customer base.
 About whom they think might be potential competitors for them in the market.
Here we are taking case of Beauty and Beach salon which approached Two Lizards
stating that their business was booming till a determined, hardworking young woman
came and overtook their business with laser hair removal treatment.
Marketing Challenges faced
 More requirement of customers
 No footfall over weekdays rather than weekend resulting in inefficiency to pay staff.
 Monthly offers being circulated over posters and older marketing strategies.
 Dated website and insufficiency for latest standards resulting into image down-
market.
 Budget for marketing was low as salon was payment approached ‘drip feed’ than
paying at one goes.
Measures Taken
A conductive study was done over competitors website from perspective of mystery
shoppers and found the weakness and strength of the salon when compared to their
competitors at local level. This data was used to find keywords that could enhance their
business and searchability over search engines.

New google analytics was set up over website providing analytics and data SERP of
monthly visitors. This data could be compiled for providing advertisement and offer
strategies of salon for the next month over website. This alone increased customer
footfall at salon by 65%.
By using all surveyed data a modern standard website was created with appointment
booking facility for customers and much more new functionality, giving a rich premium
feel to Beauty and Beaches as a brand. This was achieved over application of
contemporary text, typography and quality images to the website. Thus implementing
ERP in business and terms used by customers were used as a tool for SEO and
marketing strategy resulting in an increasing customer base for the salon. Rebranding
of salon as with a new modern name provided for a rich and more premium feel to the
salon and descriptive of each and every service being offered. Booking window saw
more draw of customers with monthly offers displayed. Combined packages also helped
them in providing value for money to customers.
Implementing Enterprise Resource Planning, the Case of Small and
Medium-Sized Enterprises in Romania
As increasing number in people in present are knowing about importance of ERP and
its potential in future system. Although implementing ERP system does not guarantee
that its implementation would bring an increase in revenue. When looked at certain
examples where the input capital present with company is less could prove a waste of
time and even in cost. System does produce may even be less of expectations. Material
Resource Planning or MRP is considered to be predecessor to the ERP system.

Through planning of material resource, it was used to know how much material amount
would be required to produce a product (Kovács, G., & Avornicului, M. 2010). Equation of
universal manufacturing is simulated by using MRP with assistance of master schedule,
inventory record, determining of requirement of future, material’s bill.
It’s foremost to know about the cost and benefit factor of ERP system, introduction to
these systems are directly being affected as ERP system can access directly to
informational wealth i.e. user request could be directly responded. Is able to deliver
information with quality and possesses unique database further enterprise information
provided quality is increased.
 Applicability: In event of any economic changes system could be configured with
ease.
 Optimal storage and operation over data as database of system could be
rationalized and stored
 If there’s a need of maintenance the system in the company could be modified
easily.
 Collaborative dimension as SCM and CRM modules could be added with system
later in future.
 In ERP theirs support for e-business application integration as its allowed in system
architecture of ERP hence giving birth to e-business.
 Cost of purchase and time is decreased drastically by a system being well designed.
 Through proper planning for the company’s resources, complete planning for
resources could be covered by an ERP system.