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Enterprise Resource Planning

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May 05, 2013

The Multinational Dimension of ERP….Reality or Illusion?

Organizations thought the world are sacrificing big capital investments for the implementation of ERP systems. Implementation has been proved to have a level of difficulty and this is mainly because of business problems and not technical obstacles. The technical part which is mainly related with the installation and the existing systems integration is considered to be a critical phase, but the management aspect of ERP system could have an even greater impact on the success of the system or use.

C. Sheu et al. (2004) attempted to investigate the dimensions of natural differences. Some of those which play a vital role in the ERP Implementation are language, culture, politics, government regulations, management style, and labor skills

Based on what was mentioned above, it can be supported the view that no universal ERP system can be implemented in different counties successfully without resolving obstacles that are driven from national differences. The business models, including operating processes underlying most ERP software packages, reflect European and US industry practices. Such operating processes are likely to be different in Asian countries, having evolved in a different cultural, economic, and regulatory environment.

Both European cases suggest that ERP implementation in Europe is a very challenging task due to national differences between countries in Europe. Specifically, ERP implementation in Europe is more complex because companies have diverse national cultures that influence corporate culture, thereby making the implementation of multinational ERP solutions difficult. This study supports previous evidence that ERP implementation in the US has been more effective that in Europe because of the more complex European corporate and national cultures (Krumbholz & Maiden 2000), (Vernon M., 1999).

The analysis is focusing on the cultural diversity which is considered to be a factor which may affect the implementation of ERP. However, this fact standing itself does not help very much on resolving the problem. It needs to be addressed which are the impacts on the implementation strategy per national difference.

Initially, it can be considered the factor which is related with the culture of language which might cause problems like; technical problems in entering data, cultural resistance, communication barriers between facilities due to different languages, localized implementations and alteration of training programs in different site. We can also consider the Management Style factor which is more related with problems like; differences in priority settings, implementation style: either “big bang” or “piecemeal” approach to the implementation and project duration.

There are many more national differences which might be analyzed and a lot of research has been done for that topic as it considers being one of the most critical issues which need to be resolved for the successful implementation of ERP.


Chwen Sheu, Bongsug Chae, Chen-Lung Yang, (2004), National differences and ERP implementation: issues and Challenges, The International Journal of Management Science Omega 32, pp 361 – 371

Krumbholz M, Maiden NA. (2000,) How culture might impact on the implementation of enterprise resource planning packages. CAiSE pp 279–93.

Vernon M. (1999), ERP endangered species? Computer Weekly, pp 32–35.

May 01, 2013

ERP: The necessary evil

When reading relevant literature on ERP implementation and its Critical Success Factors, one gets the impression that ERP is very rigid, complex and risky. In fact, reading case studies of ERP implementation projects that have failed and forced large organisations to file for bankruptcy is like being told stories of people who have died as a result of ignoring their doctors’ instructions when taking medications. Just like one is required to follow the doctor’s prescriptions fully in order to get rid of a life-threatening disease, the ERP implementing company is required to pay attention to key Critical Success Factors for the project to be successful and lead to process performance improvement. These Critical Success Factors include senior management involvement, Business Process Re-engineering, Training and Education, IT infrastructure, proper package selection, Project Management and Management of Change.

Due to the severity of the consequences of poor ERP project implementation organisations must always avoid the temptation to succumb to peer-pressure and hasty decisions. Kick-starting the ERP implementation process should only take place when the most important Critical Success Factors are readily available and the environment made conducive enough to handle the complexities and massive changes that are associated with ERP introduction and operation. Failure to pay attention to these rules serves to invite the Evil side of ERP which often represents disaster!

Source: Basu, R., Upadhyay, P., Das, M. & Dan, P. (2012), “An approach to identify issues affecting ERP implementation in Indian SMEs”, Journal of Industrial Engineering and Management, 5(1):133-154.

April 29, 2013

SAP Netweaver and Process Integration

SAP Netweaver and Process Integration

SAP Netweaver is an application and integration platform that unifies ‘people’, ‘information’ and ‘business processes’. It has been built as the new technical foundation for all future SAP applications. This platform is based on Enterprise Service Architecture (ESA), keeping in mind SAP’s strategy of offering future products in compliance with ESA. ESA is built on the benefits of web service, which is an interface implementing the industry standards of SOAP and WSDL to expose different functionalities to a web service consumer. The use of web service allows direct integration between applications and ERP system or more specifically SAP, without involving a middleware for integration.

SAP Netweaver is not a replacement for SAP R/3, but has been explained as a marketing strategy. One important part of Netweaver is integration of processes. This is done through SAP’s own middleware called SAP PI (Process integration, previously known as SAP XI). SAP PI is used for integrating both SAP and non-SAP applications. It is used for both internal and external integration. i.e. for both application to application and business to business. It runs on SAP WAS (Web application Server), which is the common platform for all SAP applications. The integration builder, which is the middleware, comprises of two main parts-

  • ESR (Enterprise Service Repository)
  • ID ( Integration directory)

These two are used for designing and configuration of objects within the middleware respectively. The integration builder is built on two stacks- ABAP and Java. The best part about SAP PI is that all definitions use open technologies like BPEL (Business Process Execution Language), WSDL,XML and XSD. Java based graphical tools are also deployed in this middleware.

Process Integration is an important part of the framework, and critical for successful implementation of SAP. For this reason, most SAP implementation projects involve the use of SAP Netweaver and SAP PI.

June 18, 2012

ERP and PLM integration

The percentage of ERP implementation failure is high which is the ERP solution cannot fits organization objective. The critical reason of failure is organization did not preparing properly before use ERP solution, the information system is weak and preparation of business information data is not accurate and enough. Integration of ERP and PLM is a generation of enterprise systems.

PLM (product lifecycle management)is the process of managing the entire lifecycle of a product from its conception, through design and manufacture, to service and disposal.PLM integrates people, data, processes and business systems and provides a product information backbone for companies and their extended enterprise. PLM can solve problem relate to products development, such as, how to organise products information data, how to generate and control products information data and who is responsible for different part of the products. On the other hand, ERP is more focus on organisation resources management strategy, eliminate resource waste and reduce costs. Therefore, today¡¯s vendors start thinking integrates PLM and ERP to increase the ERP implementation success rate and products quality.

The customers¡¯ needs in today are variable and constantly changing, organisation has to emphasis on production diversity to obtain market share. This business environment requires ERP system has to be able to processing the product information and inventory data to all departments effectively and accurately, in order to help organisation achieve the objectives of low production costs, high quality product and shorter new products launch time. Therefore, I think the PLM can be the base of ERP to achieve these objectives.

In addition, through PLM and ERP integration, organisation can effectively carry though significant innovation, for example R&D new and distinctive products, lower production costs and improve products quality. Integrated PLM and ERP system, provides value of innovation to organisation, at same time, gives organisation ability to control products manufacture. This integration brings organisation huge competitive advantage, because it pushed manufactural development, thus makes organisation capture and response to market opportunities quickly and confidently.


Charles Møller, (2005),"ERP II: a conceptual framework for next-generation enterprise systems?", Journal of Enterprise Information Management, Vol. 18 Iss: 4 pp. 483 - 497

April 27, 2012

Impacts of ERP on Supply Chain Integration

ERP, which originated from MRP in manufacturing industry, has enjoyed a great popularity in recent decades. Meanwhile, the scope of ERP has been expanding in different sectors and there are increasingly more ERP vendors start concentrate on the ERP solution for supply chain integration.

Supply chain integration, which reduces the overall costs, improves efficiency and effectiveness, shortens lead time, develops customer satisfaction, plays a vital role in most industries nowadays.

With regard to the way how ERP helps the entire supply chain to gain competences, I think the most important function is the real-time information exchange. It refers several aspects.

First is inventory management. Based on the real-time sales transactions and the production and schedule plan of suppliers in ERP, inventory level can be appropriately controlled. The real-time sales data also helps develop forecasting plan so as to enable companies be prepared. Furthermore, the relationship with suppliers is developed as well. There is a trend that it is better for buyers to cooperate with fewer but more reliable suppliers. The information sharing with suppliers?? delivery and production plan makes buyer company works closer with its suppliers.

Secondly, customer service satisfaction is improved. Since companies are able to access real-time data of customer requirements and all the resources of operational process through ERP system, the reaction time is shortened. Also, with the control of operational activities, better quality of products can be achieved. Furthermore, ERP system is able to support mass customization by translating a specific order from a customer into production so as to achieve assemble-to-order or make-to-order.

Thirdly, ERP system contributes to more smooth and streamlined operational process. With all the integrated data available, it is much easier to fulfill and replenish orders, organize production plan and purchase raw materials. Accordingly, the overall costs are reduced.

Even there are many benefits that ERP contributes to supply chain integration. Some obstacles still exist. For instance, the standardization of data among partners throughout the supply chain, the resistance of information sharing in order to keep confidential and overwhelming available data for decision-making.

To conclude, ERP does bring loads of benefits to supply chain integration. The obstacles need to be further tackled and supply chain members should also pay attention to these obstacles when integrating.


Kelle, P and Akbulut, A. (2004). The role of ERP tools in supply chain information sharing, cooperation, and cost optimization. International Journal of Production Economics. 93 (8). pp. 41¡§C52.

Akkermans, H, A., Bogerd, P., Y¡§?cesan, E and Wassenhove, L, N, V. (2002). The impact of ERP on supply chain management: Exploratory findings from a European Delphi study. European Journal of Operational Research. 146(2). pp. 284¡§C301.

Sua, Y. and Yanga, C. (2010). A structural equation model for analyzing the impact of ERP on SCM. Expert Systems with Applications. 37 (1). pp. 456¡§C469.

April 25, 2012


Today, there are many discussions on the internet about relationship between ERP and BPM which show that many people are confused and don’t understand the differences between these two solution. The question in this area included;

Does BPM is going to replace ERP?

- What is the business value of BPM comparing with ERP?

Which solution should be implemented first?

ERP: the concept of ERP is focusing on integrate information flow within a company using the concept of decentralize database which will be updated on demand and give a single view on customer data. In order to work with ERP in multi user environment, it requires the effective process management to make sure that all users realize the important of process and discipline to business procedure. Some customers didn’t realize an important of business process in implementing ERP and expect that the system will support their processes. However in most cases, company need to reengineering their business process to match ERP best practice and this is why the cost of ERP solution is very expensive.

BPM: in the other hand, BPM is focusing on workflows of task which essential to deliver business objective. BPM aim to make business processes more efficient, more effective and flexibility enough to support any change that happen within the company.BPM tools provide the platform that allows users to create business applications bringing all different data, document, operation and people together. Moreover, it will help improve business agility and productivity while business components can be reusable and changeable.

The difference characteristics of these two systems give the answer that BPM cannot replace ERP system as they focus on different purpose. In spite of those facts, I'm not surprise to see both of BPM software vendors and ERP software vendors offer the solution of complementing these two systems together.

In SAP website, the given information shows that the company adjusts BPM concept solution to help integrate business process throughout application and organizations, know as SAP BPM solutions. SAP BPM claim to have ability to exchange data across applications or module both from SAP and non-SAP. The latest improvement of using SAP BPM is the ability to allow mobile users to interact with SAP and non-SAP application via mobile application. This is just only one example of benefit from combining ERP and BPM together.

As ERP can handle all the data and information while BPM will create business process base on those data to make sure that the data was used through entire business process even the process has been changed, I think ERP BPM solution will easily attract new ERP customer to go for this solution.





4. Enterprise Resource Planning: Implementation and Management Accounting Change in a Transitional Country. Ahmed O. Kholeif, Magdy G. Abdel -Kader and Michael J. Sherer. Palgrave Macmillan, 2008. Palgrave Connect. Palgrave Macmillan. 24 Apr 2012

5. DAVIS, R. & BRABÄNDER, E. 2007. An Introduction to BPM ARIS Design Platform. Springer London.

March 21, 2012

Benefits of using ERP solutions as cloud–based services

An ERP cloud is also known as enterprise resource planning using cloud computing which is one of the major ways a new business that provides an approach as Software as a Service, which can ensure continued growth and increasing profits as time goes on. This unique way of organising a business focuses on a modular, consistent management of information across an entire organisation or business.

Many new entrepreneurs form their first business around their area of expertise, and may in fact be highly skilled within that area, but may also be unprepared for day to day management of growing business. Such an entrepreneur may find that as their business increases in size, inconsistencies can pile up as well.

The number one reason why such inconsistencies may happen is that as a business grows, a number of different software may be used in order to manage various areas on information within a business, for example, such as finance, human resources, various supply chain management tasks, as well as payroll and fixed asset and cash management.

Such multiple kinds of software can make it very challenging for a growing business to manage some very technical administrative reasons. In fact, many newer owners make the mistake of continually patching up issues as they crop up, hiring various experts and buying newer and newer types of software.

It is precisely for this kind of a situation that enterprise resource planning was designed to handle. Originally a software process developed for the biggest of international conglomerates, this type of software has been in recent years geared and rebuilt with smaller and growing businesses in mind, in order to be available and useful to many new clients.

In fact, as such businesses may not have the space or large sums of money to pay upfront for an entire retooling of their existing information management systems. For that reason, this type of enterprise resource planning software is also designed to work in a special and growing way of storing management via an ERP cloud.

The advantage of this particular type of computing is that it does not require retooling of the client’s physical systems at all because the data required is stored centrally at a dedicated server that does not need to be hosted in the building where the target business is located at all. In fact, with this type of computing, the client business may only need to have a dedicated internet line.

Since this type of computing means that data is stored in one location and not in the business of the client at all, convenience is at a premium as this type of computing is particularly well suited for the business owner who may not have much technological expertise, as well as not much of a budget to hire such experts or to retool the way the business’s own hardware. Furtermore, in this approach all software might be availale as on-demand concept and there is a flexible schemes of payments for this model.

Example of on-demand service architecture

on-demand service

When it comes to running a growing business, ERP cloud may be more of a necessity than a luxury. A growing business has specific needs if it is to remain profitable and remain successful.

July 07, 2011

Understand the objective of ERP application

For a large percentage of ERP customers, an ERP implementation has been the most complicated andcostly software project they have undertaken. Companies have made big investments in ERP software, and leading CEO¡¯s now want to see IT contributing more to the bottom line ¨C producing higher value at lower cost. Notwithstanding, patches and new releases create ongoing support and business adaptation challenges that can chip away from the returns on ERP investments. Unmanaged changes to ERP applications have generated some of the most recounted project horror stories. Consequently, ERP Change Management is becoming the focus of attention in many IT organizations. Changes are inevitable. Most companies adapt their business processes for their ERP, but initially find it easier to reduce the impact of the organizational change by customizing and extending the ERP functionality to provide legacy system capabilities that are considered to be business critical. The magnitude of these collective changes is more than most companies can effectively manage. Staffing levels required for steady-state support operations quickly become overwhelmed because the roles they have traditionally played must take on significantly more responsibilities, and the roles in the ERP environment are very different from legacy system administration functions.

June 22, 2011

Why companies should integrate their ERP and what they should be aware of

I have been pondering on how best to go about answering this question for a couple of weeks now. I think I might have figured out the best way to do this (at least by 70%). I first started developing the question by building a mind map for it (IF YOU ARE NOT MIND MAPPING YET, YOU ARE MISSING OUT). As I said before, I feel my work is at least 70% done (very subjective) so it's no surprise that the mind map reflects this. Then I developed a thesis for the question which is (Currently) "The adoption and integration of ERP systems should follow a company's strategy to realize the desired benefits". To answer the question completely I feel that the following list of objectives should be considered:

1. the Importance of Integrating Business functions and the potential of Enterprise systems (ERP)

2. the Importance of Strategy in driving the choice of an ERP system

3. Identify the benefits obtained from an ERP system as per strategy adopted (e.g. Cost differentiation)

4. Identify the potential problems that might be faced when integrating business functions through an ERP system implementation (What to watch out for)

For a complete picture on how I intend to answer this question, see the mind map. Cheers.

ERPI PMA Mind map

June 03, 2011

An ERP Success Story – Discovery Toys

Discovery Toys is a medium-size company that has recorded positive total cost of ownership savings from implementing an ERP system. Discovery Toys designs, distributes, and sells toys with educational value. The company outsources all manufacturing activities. Richard Newton, vice president of Operations, estimated that in the first year of operation of their ERP system, Discovery Toys saved approximately 10 million dollars.

The reasons for Discovery Toys’ successes appear to be in the selection and implementation process. Richard Newton used six criteria for ERP supplier selection: risk, implementation, functionality, partnership, cost, and technology. Risk was assessed by how much the selected ERP system would interrupt business during implementation. (Many companies have had major problems with implementing ERP systems and he wanted Discovery Toys to avoid the problems). Implementation referred to the speed and ease with which the software could be integrated into the company’s working information technology. Functionality covered the issue of how closely the software actually met Discovery Toy’s business needs. (Mr Newton had noticed that many vendors provided ‘bell and whistles’ that were unnecessary, but did add cost and complexity.) The forth criteria, partnership, addressed the relationship the supplier provides, primarily in terms of support during and after the implementation. Cost addressed the total cost of ownership, which included estimating the hidden costs such as training, upgrades, and maintenance. The last criteria, technology, referred to an investigation into the software’s compatibility with existing legacy hardware and software systems.

Discovery Toys implemented a J. D. Edwards ERP system. J. D. Edwards designed its software for small to medium-size companies like Discovery Toys, so the cost was low compared to that of other suppliers. The software did not have as many ‘bells and whistles’, but it did meet the functionality requirements of Discovery Toys. In addition, Richard evaluated the system as quick to implement. In fact, implementation took Discovery Toys only about six months. One of the most important criteria to Richard was partnering. J. D. Edwards demonstrated to Richard through its actions during the proposal phase that it would provide Discovery Toys with strong support after the sale.

The results? After stabilisation of the ERP system, the purchasing staff at Discovery Toys was reduced from nine to two full-time employees. The seven employees released or cross-trained into other areas had been performing clerical work prior to implementation of the ERP system. Similarly, the accounting staff was reduced even more dramatically from 21 to five full-time employees. The ERP system automated most transactions, thereby eliminating almost all of the paperwork and enabling instantaneous tracing of orders and transactions. The two retained purchasing professionals essentially became supply managers and are now able to focus on strategic decision-making. As a result, Richard pointed out that the qualifications for future employment of supply professionals at Discovery Toys had increased significantly, to the point where a college degree in supply management is now essential. Additional improvements were: customer service staff reduced, overall inventories reduced, and average lead time for processing orders dropped from five days to one day (Richard Newton, personal interview, November 1999).

Reference: Burt, D. N., Dobler, D. W., & Starling, S. L. (2003). World class supply management: The key to supply chain management. Boston: McGraw-Hill/Irwin.

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