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April 19, 2015

ERP implementation in China

Background of ERP implementation and its situation in China:

ERP is a type of business management software with multimodule including manufacturing resource planning, supply chain management, financial management, customer relationship management and human resource management. ERP comes form original material requirement planning (MRP) and has developed to integrate some new module in the control system during the period of evolution.

Nevertheless in China, implementation of ERP still in the developing stage during which time industry equipped with this information system would come across some difficulties and even failure. While ERP system enables multi-functional information system integrate into a coherent network in enterprise, the implementation of ERP still is a challenge in China due to its expensive implementation cost, complicated technology, insufficient information technology infrastructure, inexperienced operation staff. This situation sometimes is caused by cultural difference from foreign countries, especially for the state-owned companies that are always lack of passion and incentive for ERP integration.

Barrier of ERP implementation:

ERP often faces with the crisis of being abandoned just before completing or gaining the expected outcome, especially for the small and middle-sized enterprise with limited budget, although ERP has numerous benefits to win competitive advantages. Apart from the huge expense of implementation, another factor is the complex technical process of implementation (Soh et al., 2000), which requires expertise to give training or guidance for the employees.

In China, expensive cost and technical complexity are two most common barriers in the ERP implementation. As for the specific enterprise, the IT infrastructure is the big headache for Chinese companies, followed with less well-trained staff, cultural difference and language barrier. In order to pursue a better outcome of managing resource via ERP, overcoming the obstacles listed above is the key to success.

Too much rely on the ERP software vendors can also endanger the whole company, which means company purchasing the ERP system should invest more time to study and be familiar with its function. Otherwise, if enterprises just rely on their providers, the whole business process can be a failure. To sum up, company should be aware of the project initiative and how to manage it with ERP system, only doing like this, the ERP implementation could be a success.

Management problem is another barrier of ERP implementation. Before explaining this point, it is necessary to illustrate the background and situation in China. Several years ago, China witness a long period of planning economy and then market economy took a place of that, leading to managerial method and strategy lagging behind industries in western countries. Apart from that, even laws and policies are not ready to serve and organization forms a hierarchical structure. However, these changes had a bad influence on the ERP implementation, as the key to ERP implementation is to integrate suitable and state-of-art management concept and method into business process. In this case, with enough support of management experience and practice, company is unlikely to achieve a better performance in ERP implementation.

By Bo Yang (U1451409)


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