Barriers to implementation of erp system in sme

The research identified four providers of ERP in Thailand. The names and locations of the companies will not be revealed for legal purposes. All four of the companies requested that their identities be kept confidential. The reason for the request was that the interview and the questionnaire would touch on company sensitive information and they were afraid, that although they were assured that company information would be kept confidential, they still preferred to remain anonymous as a condition of their participation.

Barriers to implementation of erp system in sme

Small and Medium Enterprises and ERP Systems Posted on by kamleshgsingh Introduction Enterprise Resource Planning ERP Systems have been around for more than four decades now, during each decade the ERP system needs and feature continued to evolve and become more user friendly and widely used by majority of enterprises.

This is leading to flourishing of small and medium business enterprises. These enterprises open a big window opportunity for simple and effective enterprise resource planning systems.

Barriers to implementation of erp system in sme

The definition varies country by country based on every countries economic status. From April the definition is changed and updated to be companies that have annual sales turnover of not more than SGD million or have employee base of less than staff.

Although the deciding criteria remains number of staff, annual sales, net asset investment in most cases the absolute numbers differ per country.

Barriers to implementation of erp system in sme

For some countries SMEs are further broken up in definition as small enterprise and medium enterprise. From several vendors the market share came down to handful which acquired several other smaller vendors to be the vendor of choice. This is leading to saturation of further implementation of ERP systems and it turns to more upgrades and managing the customer accounts.

This leads to the need of firstly evolving ERP systems that fit small and medium enterprises by efficiency simpler and faster to use and effectiveness low cost and scalable.

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Above statistics is just for Singapore and if this is checked worldwide then in opens up a huge market space which ERP vendors can target to deliver meaningful solutions. For ERP vendors there is also another plus point of entering this market and that is related to mergers, acquisitions and disentanglements.

The fast changing pace of business changes lead to faster and faster acquiring, merging and disentangling of business divisions by various enterprises. In doing so if ERP vendors have suitable solutions they would be able to help transform these businesses much more smoothly and hence keep the market share growing and their customers satisfied.

As ERP systems integrate various business processes and automate them, they are seen as complex in nature. Additionally the ongoing maintenance and support costs of good ERP systems are very high for small and medium enterprises.

Time ERP systems require a long time for implementation and changes. Time is number 2 barrier in ERP Systems implementations. Generally full implementation of ERP systems could take from 6 month to 1. Also more the time and complexity it leads to more costs which is already number one barrier for ERP systems implementation.

People Resources ERP systems implementation requires various skilled resources to correctly and smoothly implement the solution. From SMEs it requires skilled business resources that know the business process very well and able to spend time with the project time during entire project life cycle.

SMEs are generally small in size and its resources are multi hated play multiple roles leading to no or very little time to spend on ERP systems projects. This is one of the key barriers which can lead unsuccessful ERP systems implementation. User Trainings and System Friendliness ERP systems are wide and complex in nature and generally have too many screens, options and features.

This means users need to be well trained and continued to be trained for effective use of ERP systems. SMEs being small in size have less number of users to be trained but the same users could have multiple hats leading them learn and remember several options, steps, features to successfully use ERP system.

This leads to information overload and user resistance. Additionally SMEs being small in size also have faster staff change rate as very often staff joined in will learn and leave for working in bigger size organisation. This leads to continuous need for trainings of new staff.

Business Process Management For effective configuration and installation of ERP systems, business processes of the enterprise must be well documented, maintained and owned. For SMEs the business process management is most of the time not formally documented and maintained.

This leads to ERP systems configuration and implementation barrier. It also leads to higher costs of firstly documenting business processes for the enterprise and then applying the same for ERP systems implementation.

Also the IT Infrastructure for hosting and support of applications is nonexistent leading to hiring of outside service provider resources which leads to higher IT costs and as vendor resource may not have all SME IT systems knowledge could lead to unsuccessful ERP systems implementation.

The barrier even continues post implementation during ERP systems upgrades and maintenance.Based on the extant literature, the barriers to implementation of ERP systems in SMEs have also been discussed. Discussion about the implementation barriers is included to explain how organisations can prepare and plan for effective ERP system implementation.

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When dealing with large enterprises, some of the key factors that need to be considered before implementation is attempted include the benefits ERP will bring, barriers, cost implication, internal and the external pressures, IT sophistication and infrastructure, and the support framework for the integration technology and packages.

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Read unbiased insights, compare features & see pricing for solutions. Request demos & free trials to discover the right product for your business. Sectors - Internal Market, Industry, Entrepreneurship and SMEs. Internal Market, Industry, Entrepreneurship and SMEs.

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