Abstract
In today's conditions, where information plays a leading role in all administrative and operational processes of the business, it is very important to collect, store, and present information to the user for the effectiveness and efficiency of all business processes. One of the tools that is important in information management and frequently preferred by businesses is the enterprise resource planning (ERP) system. This study aimed to identify the problems faced by enterprises and the root causes underlying these problems in the ERP system transition process. The problems experienced in system transition were identified by taking part in the system installation process of a medium-sized enterprise that decided to implement an ERP system, for 18 months. As a result of the study, it was determined that the enterprise had problems mostly in the design and data transfer stages of the system. The main causes of these problems were determined as the difficulties encountered in restructuring the business processes and the resistance of the employees to change.
TopIntroduction
The importance of Enterprise Resource Planning (ERP) systems is increasing with the growing use of industrial digitalization and smart factory systems. Gathering the data obtained from operational processes on a common platform and providing support to users in decision processes will increase the chance of success with ERP. However, initially the enterprise needs to establish and maintain a system that is suitable for its field and organizational structure.
In the digital age, information systems and technology are among the most fundamental strategies for the business to achieve its goals. However, technology is not just an application that can be purchased and implemented (Candra, 2012: 143). Information Systems (IS) are social systems that deal with human and technology interaction (Matende and Ogao, 2013: 519). Enterprise Resource Planning (ERP), one of these systems, consists of a series of applications that automate routine operations such as financial management, inventory management, planning, order fulfillment, service and cost control and many more, while providing benefits to improve efficiency, quality, productivity and profitability (Candra, 2012: 143). ERP is an information system designed to provide data to support strategy development, operational management, data analysis and decision-making functions in organizations (Matende and Ogao, 2013: 519).
At the heart of the ERP system is a central database that collects real-time information from business functions and transfers and feeds data to a range of applications (Davenport, 1998: 124). The main purpose is to ensure that business operations are carried out in an integrated database. The output of one function is the input of another function and the system is based on the principle of process quality excellence. For this reason, it is necessary to configure business processes correctly and to integrate the system into processes.
If ERP systems work in harmony with existing business processes in line with technical and organizational needs, it has the potential to provide significant competitive advantages to the business (Al-Mashari, Al-Mudimigh and Zairi, 2003: 352). However, the importance of integration is not fully understood by the owners or managers, or not explained by the system providers due to their sales targets. The sales negotiations usually focus on the advantages that the system will provide, while the requirements of the system and the negative situations that may be encountered are ignored. Problems arise when the decision to purchase the system is made and the installation process begins, which can turn into fatigue and boredom in business ERP officers, resistance in other related employees, and pressure and regret on the management side. Setting up the system, which is a long and difficult process, and determining the problems that may be encountered in practice beforehand and transferring them to managers and employees and developing business-based solutions for these problems are very important for the effective use of the system.
In this context, the basic questions of the study are:
− At what stages are small and medium enterprises experiencing problems during the ERP System installation process?
− What are the main causes of these problems?
− What should be done to prevent these problems?
The first part of the study covers the literature review related to the ERP system, and in the second part, the application is mentioned. In the last part, the findings, evaluation and suggestions obtained within the scope of research questions are presented.
TopWhat Is Enterprise Resource Planning (Erp)?
Enterprise Resource Planning (ERP) systems are an information system that integrates processes with a common database and shared reporting tools (Dredden and Bergdolt, 2007: 48). The purpose of the ERP system is to create a common information pool that the functions can apply within the framework of the needs by adding the accounting and after-sales service operations to the supply chain functions in the enterprises (Çetinoğu, Kurnaz & Şen, 2011: 141).
The functionality of ERP applications, which was born with the need for resource planning, management and accountability, mainly in different production environments, has made progress in both width and depth in recent years (Laughlin, 1999: 32). Because an information system that supports all functions is needed for enterprises to succeed. These information systems improve the adaptation ability between functions in businesses (Gökbayrak, 2018: 7).
Key Terms in this Chapter
SME: Businesses that employ less than 250 employees annually and whose annual sales revenue or financial balance is determined on a country basis. They are classified as micro enterprise, small enterprise, and medium enterprise.
Operational Management: It is the process of combining existing facility, material, equipment, and human resources in a business in a manner to produce the targeted amount of product, at the specified quality, at the desired time and at the lowest cost.
Action Research: This type of research is carried out to understand the problems that arise in practice and involves the researcher in the process. Thus, the process can be followed more closely and the problems can be detailed.
Enterprise Resource Management (ERP): It is an information system designed to support strategy development, operational management, data analysis and decision-making functions in businesses. The system provides controlling routine operations such as sales, purchasing, inventory management, production planning and control, service, and financial management under one roof.