Enterprise Systems in Small and Medium-Sized Enterprises

Enterprise Systems in Small and Medium-Sized Enterprises

Sanjay Mathrani (Massey University, New Zealand), Mohammad A. Rashid (Massey University, New Zealand) and Dennis Viehland (Massey University, New Zealand)
Copyright: © 2009 |Pages: 15
DOI: 10.4018/978-1-59904-859-8.ch013
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Abstract

The market for enterprise systems (ES), continues to grow in the post millennium era as businesses become increasingly global, highly competitive, and severely challenged. Although the large enterprise space for ES implementation is quite stagnated, now all of the ES vendors are focusing on the small to medium-sized enterprise (SME) sector for implementations. This study looks at the current ES implementation scenario in the SME sector. The purpose of the study is to gain insights into what is a typical case of ES implementation and to understand how current implementations in the SME sector differ from the earlier implementations in the large enterprise sector through a perspective of ES vendors, ES consultants, and IT research firms in a NZ context. Implications for practice in implementation processes, implementation models, and organizational contexts are discussed.
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Introduction

Enterprise systems (ES), also known as enterprise resource planning (ERP) systems, are large, complex, highly integrated information systems designed to meet the information needs of organizations and are, in most cases, implemented to improve organizational effectiveness (Davenport, 2000; Hedman & Borell, 2002; Markus & Tanis, 2000). These are comprehensive, fully integrated software packages supporting automation of most standard business processes in organizations including extended modules such as supply chain management (SCM) or customer relationship management (CRM) systems. ES applications connect and manage information flows across complex organizations, allowing managers to make decisions based on information that accurately reflects the current state of their business (Davenport & Harris, 2005; Davenport, Harris, & Cantrell, 2002). In a more integrated and global market, extended ES offers new functions and new ways of configuring systems, as well as web-based technology to establish the integrated, extended business enterprise (Shanks, Seddon, & Wilcocks, 2003). The market for ES continues to grow despite much speculation on its future in the post millennium era. Although most large enterprises have completed their ES implementations by now, the ES market continues to grow in the small and medium-sized enterprises (SME) sector. A number of research studies have been conducted to establish and understand the critical success factors for ES implementations (e.g., Allen, Kern, & Havenhand, 2002; Bancroft, Sep, & Sprengel, 1998; Holland & Light, 1999; Parr & Shanks, 2000; Plant & Willcocks, 2006; Sarker & Lee, 2000; Scott & Vessey, 2002; Skok & Legge, 2001; Sumner, 1999; Yang & Seddon, 2004). However, there has been little research that examines ES implementation at the strategic decision-making process level (Viehland & Shakir, 2005) and compares current implementations in the SME sector with earlier implementations in the large organizations. The purpose of this study is to examine the current ES implementations scenario in New Zealand. The main objectives of this study are to explore what is a typical case of ES implementation and to understand how current implementations in the SME sector differ from the earlier implementations in the large enterprise sector. The study does so through a practitioners’ perspective, with interview data collected from ES vendors, ES consultants, and IT research firms who are actively engaged in ES implementation. This approach differs from the organizational approach usually found in the literature. This is a replication study following a similar approach used by Shakir (2002), who also investigated aspects of ES implementation in the NZ vendor-and-consultant community. The focus of that study was to identify key drivers influencing ES adoption and implementation (e.g., Shakir and Viehland, 2004) whereas the focus of the current study is to understand how current implementations in the SME sector differ from the earlier implementations in the large enterprise sector. The current study extends and builds upon existing ES research.

Semi-structured interviews were conducted with key players of ES implementations in New Zealand including ES vendors, ES consultants, and IT research firms to explore the current ES implementation scenario. Several measures such as the number of users, modules implemented, cost of implementation, number of sites/locations where implemented, industry type, organization size, implementation phases, time to implement, implementation partners, and levels of customization were discussed to understand a typical case of ES implementation and current implementation practices. The empirical findings are analyzed and reported in this paper. This study has been conducted in a New Zealand (NZ) context which can be extended to show current trends worldwide.

Key Terms in this Chapter

Application Service Provider (ASP): An ASP is a business that provides computer-based services of specialized software to customers over a network.

Extended ERP: Extends the foundation ERP system’s functionalities such as finances, distribution, manufacturing, human resources, and payroll to customer relationship management, supply chain management, sales-force automation, and Internet-enabled integrated e-commerce and e-business

Critical Success Factors (CSF): Are the factors which are critical for an organisation or a project and which must go right to achieve the defined mission.

Customization: Altering a system’s software code to include functionality specifically wanted by an organization, although not originally included in the package itself.

Small and Medium-Size Enterprise (SME): A business enterprise independently owned by contributing most of the operating capital and managed by the owners or managers, having fewer than 250 employees and a small-to-medium market share. This number differs in different regions or countries (in some countries it is less than 500 while in others the number may be less than 100). The number may also vary depending on the type of business.

Business Process Outsourcing (BPO): Contracting of specific business task (s), such as payroll, marketing, billing etc, to a third party service provider as a cost saving measure

Customer Relationship Management (CRM): Software systems that help companies to acquire knowledge about customers and deploy strategic information systems to optimize revenue, profitability and customer satisfaction.

Supply Chain Management (SCM): Software systems for procurement of materials, transformation of the materials into products, and distribution of products to customers, allowing the enterprise to anticipate demand and deliver the right product to the right place at the right time at the lowest possible cost to satisfy its customers.

Enterprise Resource Planning (ERP): Software systems for business management that integrates functional areas such as planning, manufacturing, sales, marketing, distribution, accounting, finances, human resource management, project management, inventory management, service and maintenance, transportation, and e-business.

Business Intelligence (BI): Software tools that use the ERP database to generate customizable reports and provide meaningful information and analysis to employees, customers, suppliers, and partners for more effective decision making at the organization.

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