Enterprise Resource Planning Systems for Small and Medium-Sized Enterprises

Enterprise Resource Planning Systems for Small and Medium-Sized Enterprises

Rogério Atem de Carvalho (Fluminense Federal Institute, Brazil) and Björn Johansson (Center for Applied ICT, Copenhagen Business School, Denmark)
DOI: 10.4018/978-1-60566-731-7.ch024

Abstract

After the implementation peak of ERPs that occurred during the pre- and post-Y2K periods, the high-end ERP market started to saturate and major ERP vendors started to seek for new business opportunities, in special towards Small and Medium-sized Enterprises (SMEs). On the buyer side, demands for becoming more competitive in a globalized market, have been pushing SMEs to adopt ERP too. Additionally, influenced by the free/open source movement, new types of ERP licensing appeared by the beginning of the decade, creating a classification according to the basic licensing model: free/open source ERP (FOS-ERP) and proprietary ERP (P-ERP). Therefore, this paper aims at exploring the merge between SMEs, P-ERP, and FOS-ERP, by analyzing the differences between the two proposals and offering guidance for prospective adopters.
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A Framework To Guide Erp Adoption

Selecting an ERP for adoption is a complex process, because, besides the size of the task, it is an important enterprise component that impacts the adopter organization in financial and self-knowledge terms. In that aspect, the Generalized Enterprise Reference Architecture and Methodology (GERAM) is a well-known standard that can be used to identify the main phases of an ERP adoption project, helping guiding the comparison of free and proprietary alternatives.

The GERAM framework provides a description of all elements recommended in enterprise engineering and a collection of tools and methods to perform enterprise design and change with success (IFIP – IFAC, 1999), providing a template lifecycle to analyze ERP selection, deployment, and evolution. GERAM defines seven lifecycle phases for any enterprise entity that are pertinent during its life. These phases, presented in Figure 1, can be summarized as follows:

Figure 1.

GERAM lifecycle phases

Identification: identifies the particular enterprise entity in terms of its domain and environment.

Key Terms in this Chapter

Free/Open Source ERP: ERP systems that are released as Free Software or Open Source Software.

Small and Medium-sized Enterprises (SMEs): In the chapter the definition of SMEs follows the definition presented by the European Commission in 1996 which state that: a small enterprise is an enterprise with fewer than 50 employees and a medium-sized enterprise is an enterprise with more than 49 and fewer than 250 employees.

Open Source Software: According to the Open Source Initiative, licenses must meet ten conditions in order to be considered open source licenses: 1) The software can be freely given away or sold; 2) The source code must either be included or freely obtainable; 3) Redistribution of modifications must be allowed; 4) Licenses may require that modifications be redistributed only as patches; 5) No discrimination against persons or groups; 6) No discrimination against fields of endeavor; 7) The rights attached to the program must apply to all to whom the program is redistributed without the need for execution of an additional license by those parties; 8) The program cannot be licensed only as part of a larger distribution; 9) The license cannot insist that any other software it is distributed with must also be open source; 10) License must be technology-neutral. The official definition of Open Source Software is very close to the definition of Free Software; however, it allows in practice more restrictive licenses, creating a category of “semi-free” software.

Enterprise Resources Planning (ERP): A kind of software which main goal is to integrate all data and processes of an organization into a unified system.

Software as a Service (SaaS): According to the Software and Information Industry Association, in this model, the application, or service, is deployed from a centralized data center across a network providing access and use on a recurring fee basis. In other words, users “rent,” “subscribe to,” “are assigned”, or “are granted access to” the applications from a central provider.

Proprietary Software: According to Wikipedia proprietary software is a term for computer software with restrictions on use or private modification, or with restrictions judged to be excessive on copying or publishing of modified or unmodified versions. The term is coined by the free software community and means that these restrictions are placed on it by one of its proprietors. Similarly, closed source is a term for software whose license does not meet the Open Source Definition.

Free Software: According to the Free Software Foundation, is a Software that gives to the user the freedom to run the program for any purpose, study how the program works and adapt it to his/her needs, redistribute copies, improve the program, and release his/her improvements to the public, so that the whole community benefits.

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