Small enterprises are facing significant challenges to become suppliers of bigger customers due to the excessive costs associated with accessing a vast market of potential customers. It is essential for small businesses to adopt an ERP system to maintain control of their operations and to compete globally. An ERP implementation is expensive and risky for all businesses, but it is still more challenging for small businesses, which have particular characteristics. We identified from archived literature, key decisions necessary in selecting and implementing an ERP system. While these critical decisions are applicable to all types of businesses, the focus of this research was to recommend the best practices for each one of these key decisions for small businesses. We interviewed six small businesses to recommend best practices for the critical decisions: (1) project team structure, (2) implementation strategy, (3) database conversion strategy, (4) transition technique, (5) risk management strategy and (6) change management strategy. Our results indicate that these best practices greatly enhanced the success of an ERP implementation for small businesses. Further, we recommend studying the impact of ERP systems on the small business’ participation in supply chain management.
Enterprise Resource Planning (ERP) systems integrate all information and processes of an organization into a coalesced system that concerns how people and organizations access, collect, store, gather, summarize, interpret, and use information. An ERP system integrates different components of computer software and hardware to enable information flow throughout the enterprise. An important element of most ERP systems is the use of a unified database to gather data for the different system modules. ERP technology is complex, and its implementation often entails significant risks. In spite of these risks, organizations implement ERP systems for greater visibility into business process. The greater visibility allows companies to adapt readily in a dynamic business environment that calls for a continuous transformation of business processes (Konicki, 2001, Mabert et al., 2000 and Songini, 2002). The continuous transformation of processes occurs at different levels and in different areas of the organization. Continuous transformation encompasses managing (1) activities that promote changes in the patterns of behavior of customers, people, and organizations and (2) information that leads to changes in the way people use information to engage in knowledge focus activities. An ERP implementation usually affects both suppliers and customers due to the transformation that generally occurs through the technical integration of software, hardware and processes
The ability of a firm to implement an ERP successfully is of significant importance; ERP is an enabler for technological integration that has evolved from basic Material Requirement Systems (MRP, MRPII) to sophisticated and multimillion-dollar systems that aim to link databases and applications in a friendly manner. The implementation of an ERP system is complex and requires significant investment in consulting and software, which is usually doable only for very large corporations (Andriole, 2006). Moreover, the ability of an organization to evaluate the value creation and economic returns from an ERP system is a difficult task. The source of the difficulty seems to be in the necessary organizational changes for ERP implementation and in predicting the return on investment (Mabert, Soni, & Venkataramanan, 2001). These issues are particularly important within small and medium enterprises (SMEs), where the ERP implementation and evaluation of the potential benefits are still more uncertain (Davenport, 1998 and Levy and Powell, 2000).
he decision to implement an ERP system in a SME usually has a profound impact on the organization and on all members of the supply chain. The ERP implementation should be planned very carefully. The needs and business processes of the SME must be clearly identified and each business process meticulously documented. There must be a clear and documented understanding of the impact of an ERP implementation on each business process and on the supply chain.
Modern ERP software is flexible and customizable and encompasses some of the best practices in a given industry. However, the ERP implementation team must understand its organization or client's business processes and create an implementation that is in harmony with the users. This is critical for SMEs, due to their particular characteristics. If changes to the business process of the SME are required, the cost and benefit of such changes must be clearly communicated to the stakeholders. While there are technical risks in installing an ERP system, studies have shown that the highest risk in any ERP implementation is the people involved (Avital and Vandenbosch, 2000, Somers and Nelson, 2001, Sumner, 2000, Wright and Wright, 2002 and Wu et al., 2007). The people involved include the executive management, project champion, project manager, project implementation team, functional manager, consultants, users, suppliers, and all members of the supply chain. Most implementations do not perform as expected due to the people issues.
Once a decision to install an ERP software package has been made, the project champion must stay in close communication with all the key stakeholders. The stakeholders must understand that they have an ongoing responsibility to help with a successful implementation. The odds of a successful implementation are greatly enhanced by: (1) assigning a heavyweight project manager who also acts as a project champion, (2) partnering with an external organization with the requisite experience, (3) implementing the ERP package in a phased manner, (4) adopting a predominantly manual database conversion strategy, and (5) proactively managing project risk and internal change. It is inevitable during the course of implementing an ERP system that conflicts will arise, goals and objectives will change, and established business processes will be revisited. The key stakeholders must address the issues directly and facilitate the project in order for it to progress successfully.
