ERP Adoption for SMEs
How The Vendors Are Striving To Implement And Deploy ERP Systems For Smes?
Integrated, responsive and streamlined words are common terms used in the description of what a company is supposed to develop to become profitable and sustainable regarding SMEs in the highly competitive business age. Over the past two decades, technology has greatly advanced in the field of Information Technology. Consequently, this has led to wide enterprise technology adoption enabling the development of enterprise resource planning (ERP) systems which are regarded as a key contributor to business transformation. Accordingly, ERP is known to bring splendid business returns in a more competitive market. As a result, for companies to run effectively, there is need for them to move towards effective information systems such as ERP. Unfortunately, SMEs are facing numerous challenges of integration with ERP solutions (Tarhini, Ammar, and Tarhini, 2015, p. 25). Thus, this forms the core reason for ERP dealers to provide ERP systems to SMEs. Hence they have begun to divert their efforts to target small businesses. This paper discusses how the vendors are striving to implement and deploy ERP systems for SMEs. The target of vendors is the SMEs market. Therefore, they are repackaging ERP systems to suit the functionality of SMEs. The primary objective of this paper is to determine the limitations based on the literature as well as other aspects that affect the acceptance and execution of ERP systems in SMEs which are the same in the perspective of Australia.
Initial research studies done with Australia SMEs have shown the significance of human resource for ERP choice and execution as well as implementation as merely done. The reason is that they use simple technology to fix problems instead of taking it as a strategic business venture. Seethamraju (2015) notes that with the progressive latest technology such as cloud computing, it is essential that the process is revisited because the constraint expenses and other factors differ by a huge margin (p. 479). Despite the fact that most of the contemporary study in Australia has been based on ERP implementation in higher education ERP is stillyoung now is when it is advancing paths in business sector. According to Sedera, Gronau, and Sumner (2015), the present turbulence in the business setting it is mounting much pressure on companies to become sure that it is possible for them rapidly attain consumer needs and wants as well as making of sound and timely decision on their resources. Thus, most of the corporation in Australia have been forced to employ ERP system as substitute for a unified information system support functions. Also, these companies have implemented a packaged ERP solution for creating an integrated core system instead of outmoded system development. SAEP an internationally recognized ERP vendor has reported more than 70% of Fortune, over 100 companies that have already installed or are in the process of installing the R/3 system. Therefore, the ERP market share in Australia is constantly advancing with approximately 5% yearly, and it is moving towards the extended ERP solutions like CRM and SCM.
ERP Implementation Challenges for SMEs
Regardless of ERP dealers recording a lot of successful cases, different stories have also emerged concerning the failed or out-of-control projects. For example, it has been debated that the bust of FoxMeyer was facilitated by its adoption of ERP system. Another example is Mobil, Europe which makes use of a colossal amount of money but in the end it is rejected since its merger associate refute the idea to adopt ERP system. Venkatraman and Fahd (2016) note that most corporations such as Dell Computer, Dow Chemical, and Foodland supermarkets have gone through a lot of challenges in ERP implementation as well as stabilization due to the haphazard training organization that takes the advancements negatively. These corporations concentrate on training as the most significant element instead of integration. Indeed, Australian firms have suffered from similar difficulties in the introduction of international standard practices such as new information system needs and unit measures to make a comparison between their old-style native practices as well as the initial IT level of legacy systems.
Ultimately, implementation of ERP demands numerous investment in solution license charges and hardware in addition to consultation cost for the goal of ERP knowledge distribution solution functionalities and project management (Ram, and Corkindale, 2015). But it may not be possible to realize the substantial intention of the business operations which place companies at a point of missing strategic business chance. Overstressing on the outstanding justification and implementation of these issues and lack of understanding on ERP potential as well as an influence to the organizational performance in the ERP implementation lifecycle. Particularly the post-execution stage is very crucial to keep receiving constant improvement.
Internationally companies are adopting a wide range of descriptions for small-medium enterprise (SMEs) but the primary difference is the size choice and the threshold used in measuring. Most companies use balance sheet, size of the workforce and total revenue to define SMEs (Ahmad, and Malik, 2016). In Australia, diverse corporations use dissimilar measures to describe SMEs, for instance, the Australian Stock Exchange (ASE) classify entities that have less than fifty workers as SMEs (Chong, 2014, p. 44). Contrary to big organizations, SMEs depend upon other companies for services which include training and marketing. Therefore SMEs are vital components of the economic policy and particularly experts in developing and creation of employment. Consequently, with the implementation of ERP system, it is view as a significant plan towards creating new robust bookkeeping practices which will also aid in the enhancement of the survival of SMEs (Chong, 2014, p. 42). But SMEs are showing opposing forces to the adoption of ERP through the barriers and constraints involved in both domestic and international contexts.
ERP in Australia
Typically, the standard ERP system execution demands substantial support from the organization in the form of capital, time as well as labor. When compared to big corporations SMEs have merger resources regarding skills, money and limited time. As per the view of Pearlson, Saunders, and Galletta, (2016) SMEs lacks the latest technology such as IT setup, and the quantity and quality of present commercial data. Subsequently, these constraints act as barriers to ERP implementation and even adjusting to ERP. Accordingly, research from different parts of the globe define differently the core obstacles and limitations facing SMEs in the adoption of ERP and implementation. Some of the chief constraints faced by MSE for the standard adoption of ERP include:
Long Implementation Time: The implementation of ERP need more time unlike another type of software. Thus, the long period of SMEs resources does not favor the organization’s major business.
High Costs of Standard ERP Implementation: The cost of implementing ERP is higher because it entails some things such as training, customization, resources and maintenance costs. Therefore, due to financial constraints, it makes it challenging for SMEs to adopt ERP. SMEs call for a solution at a lower price from ERP vendors thus it becomes impossible for ERP sellers to provide solutions at a lower cost (De Salas, Lewis, and Huxley, 2017, p. 428).
The nature of Standard ERP is resource-intensive: The implementation of ERP demands specialized professionals, topmost leadership commitment, and intensive training. Moreover, when ERP customization is required it strongly emphasizes the resources.
In order to realize SMEs needs and constraints, ERP vendors have been forced to offer a solution established on scaled-down types of the ordinary and massive applications that are mainly intended for big corporations. Therefore, the function of ERP is scaled down to ensure that it is affordable and fit with SMEs, which are small in size and complexity.
The method of implementing ERP has been evolving to a fast trajectory performance with the intention to minimize the cost time and SMEs effort. Some of these methods include hosting
Decision making is a central part to any business since the majority of operations if not all within the business revolve around decisions completed by the company’s administration and another shareholder in the company (Laudon, and Laudon, 2015). In order to ensure a swift and smooth flow of operation in an organization, it calls for a sound information system because the decision is made from the available information. In relation to Ruivo, Oliveira, and Neto, (2015) they note MIS plays a significant role in the choice of the decision to be undertaken. Therefore, corporations ought to make sure that they are equipped with the outstanding information system. Generally, a good management information system helps to enhance sound decision making just like poor MIS will foster arriving at poor decisions. Galliers and Leidner, (2014) support this thought by arguing that “the value of administrative decision-making is directly related the quality of existing information.” Therefore, managers are required to nurture a surrounding that support the progress and viable emergent of excellent information. Basically, before making a decision on which MIS strategy to take, it is significant to ensure that the taken option will be completely compatible with the existing system. Indeed, with this information in place, it will help to prevent erratic choices. Thus, this save the company time and resources as it makes its operations fast and swift..
ERP Failures and Success Stories
The dawn of computer-based information systems has made it possible for leading organization such as Zappos to adopt information systems for all its operations. Consequently, Zappos has been able to triumph to greater heights due to the implementation of MIS in its decision-making practices. Accordingly, MIS comprise of the flowing compute based decision-making software, Decision support system (DSS), Management information system (MIS); Transaction Processing System and Executive Information System (EIS).
Decision Support System: Decision Support System (DSS) is a computer-based information system that supports companies in the process of making decisions (Wager, Lee, and Glaser, 2017). DSS has helped Zappos to be in the position of enjoying high-quality services regarding operations, management, as well as organization planning because it offers it with support regarding decision making. According to Johansson, and Neto, (2017) the theorists note that DSS can be fully computerized or human. Researcher has comprehended DSS as a device that is useful for decision making. Accordingly, Zappos Company acknowledged DSS as a powerful business tool, and out of that, it has helped in simplifying its operations. According to Dwivedi et al. (2015). DSS is mainly used with the topmost management to solve problems that are not are unspecified and unstructured (145). DSS combines analytic techniques with conventional data access as well as recovery functions. DSS emphasizes on the need for a business to become flexible. The flexibility allow for easy accommodation of changes in the business setting as well as different users’ decision making approaches (Power, Sharda, and Burstein, 2015).
Management Information Systems: The software provides information that is required by the company for effective and efficient management. Tatoglu et al. (2016) state that management information systems come in dissimilar functionalities whereby some are used for purposes of analysis while other facilitates for tasks and practices which are meant for strategic operation management.
Transaction Processing System: defines TPS as a system that allows for the execution and day to day record keeping practices in business. TPS systems are primarily developed to help in achieving daily business transactions in the most effective way.
Executive Information System: Ram, and Corkindale, (2015) describes EIS as a management system that is capable of simplifying operations to support in decision making necessities of topmost leadership in an organization. As a result, the software provides easy access to internal and external information which is suitable for the mission and vision of a company (Stair, and Reynolds, 2017).
Limitations and Constraints
Conclusion
Currently, organizations are supposed to ensure that they have streamlined their operations to improve productivity, lower costs, heighten efficiency, gain flexibility and empower workforce. Since the business environment is constantly changing. Therefore, for a company to attain the above operation features it must be ready to invest in information systems through integration of data across all processes within an organization. Consequently, the best way to realize success is through enhancing good information management systems by applying different management information systems. Whereas, there is an increase in the use of ERP systems, it adoption among SMEs is growing slowly, therefore, there is need for an incorporated ERP system to retain features and circumstances to realizing user information fulfilment, flexibility, improved system usage, scalability as well as complete benefits which will lead to its implementation in SMEs (Olson, 2014). With the aggressive speed with which ERP vendors are moving at to implement the integration of ERP application into the SMEs market, ERP is likely to come up with a lasting solution in the cloud and will help to sweep off the mythos that ERP is solely practical for large-scale organizations (Cecez-Kecmanovic, Galliers, Henfridsson, Newell, and Vidgen, 2014, p. 809). Therefore,s this paper makes use of SMEs as a case study in Australia to uncover the present information system challenges and limitations, particularly since the SME is getting it costly and difficult to integrate data with the increasing franchising.
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