SME ERP system sourcing strategies: a case study
| Published date | 25 April 2008 |
| Pages | 421-436 |
| DOI | https://doi.org/10.1108/02635570810868317 |
| Date | 25 April 2008 |
| Author | Deb Sledgianowski,Mohammed H.A. Tafti,Jim Kierstead |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
SME ERP system sourcing
strategies: a case study
Deb Sledgianowski and Mohammed H.A. Tafti
Department of Information Technology and Quantitative Methods,
Frank G. Zarb School of Business, Hofstra University,
Hempstead, New York, USA, and
Jim Kierstead
Kanebridge Corporation, Oakland, New Jersey, USA
Abstract
Purpose – The purpose of this paper is to identify ERP system sourcing strategies available to SMEs
and to provide insights from a case study of the practices applied and decisions made by an SME in
using a hybrid of sourcing resources to implement the successful conversion of their legacy ERP
system to a new information technology (IT) environment.
Design/methodology/approach – This research is a case study utilizing various data sources
including face-to-face interviews, informal conversations, and e-mails with members of the case
company. Company software applications and documents were examined and employees were observed
in action. The analysis compares characteristics of the client-vendor relationship of the case company
with findings from relevant outsourcing literature.
Findings – This case study identified, among others, the following practices that were critical to the
case company in their outsourcing endeavors: attending networking events for SMEs, obtaining
formal contract for ownership of intellectual property, utilizing local vendor contact point for
communication with offshore contact point, and utilizing vendor’s skill-set for specialized resources.
Practical implications – This case study relates practice with theory, providing a reference for
both academia and practitioners.
Originality/value – The decision making and practices described in this paper provide insights that
may be useful to organizations considering IT software implementations. ERP systems are
increasingly more affordable for SMEs and offshore outsourcing is becoming more accessible;
therefore, SMEs considering these options may benefit from Kanebridge’s experience.
Keywords Outsourcing,Manufacturing resource planning, Smallto medium-sized enterprises
Paper type Case study
Introduction
ERP systems enable the enterprise to streamline and integrate virtually all operations
and functions from order processing to vendor and customer relationship
management. These relatively expensive and sophisticated computer-based systems
were afforded only by large business organizations in the past. But recently, as they
proved to be very effective in providing large enterprises significant competitive
advantage over those that did not implement ERP solutions, they became more
available and affordable for SMEs as well (Olsen and Saetre, 2007).
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0263-5577.htm
This research was sponsored by a Summer Research Grant from the Frank G. Zarb School of
Business at Hofstra University.
SME ERP
system sourcing
strategies
421
Received 2 September 2007
Revised 24 November 2007
Accepted 5 December 2007
Industrial Management & Data
Systems
Vol. 108 No. 4, 2008
pp. 421-436
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635570810868317
On the one hand, the advent of the internet and open systems has brought about
several options for SMEsin sourcing information technology (IT) solutions such as ERP
that until recently, have only been within the reach of large organizations. On the other
hand, several new providers of ERP solutions have joined SAP and other providers to
offer various options for SMEs in implementing their ERP systems (DePompa, 2003).
These recentdevelopments have opened new windowsof opportunities for SMEs in ERP
sourcing strategies including theuse of outsourced software (Brysonand Sullivan, 2003).
This paper discusses case study research conducted at Kanebridge Corporation
(www.kanebridge.com). Kanebridge, a medium-sized company, recently underwent a
decision-making process to determine whether they should “make or buy” a mission-
critical enterprise system. They decided to make the system, which was a rewrite of
their existing system, but their decision process led them to use a new software
development environment and IT infrastructure in their first-ever major offshoring
endeavor.
A goal of this research is to identify practices applied during an SME’s experience
with outsourcing a software development project. We identified eight characteristics
(Figure 1) associated with Kanebridge’s client-vendor outsourcing relationship which
we analyze and compare to findings from relevant outsourcing literature.
Kanebridge has successfully implemented an offshore application development
relationship enabling them to achieve their application implementation project goals
within their allotted time and cost. Information obtained for this case study was
Figure 1.
Characteristics of
client-vendor outsourcing
relationship
Close, friendly, and
somewhat informal
client-vendor
relationship
Vendor has a high
level of required
technical skills
Vendor has a clear
understanding of
the ERP project
requirements
Work is relatively
standard and has a
low-level of
complexity Required client-specific
custom code for
ERP application
Source code is
formally agreed to
be client's property
No formal
contract with
the exception
of source code
ownership
Similar
client-vendor
company size
Characteristics of
client-vendor
outsourcing
relationship at
Kanebridge
IMDS
108,4
422
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