Towards ERP success in SMEs through business process review prior to implementation
| DOI | https://doi.org/10.1108/JSIT-06-2013-0021 |
| Date | 11 November 2013 |
| Published date | 11 November 2013 |
| Pages | 304-323 |
| Author | Maria Christofi,Miguel Nunes,Guo Chao Peng,Angela Lin |
| Subject Matter | Information & knowledge management,Information systems |
Towards ERP success in SMEs
through business process review
prior to implementation
Maria Christofi, Miguel Nunes, Guo Chao Peng and Angela Lin
Information School, University of Sheffield, Sheffield, UK
Abstract
Purpose – ERP systems are not the exclusive concern of large companies anymore. More and more
small and medium sized enterprises (SMEs) are now engaging with the implementation and
exploitation of this type of system. However, reports of ERP failure are numerous and frequent. Very
often, this failure results from technical and implementation problems. But even more frequently, it is
due to lack of preparation, by the companies themselves, for the implementation process. The purpose
of the study reported in this paper was to identify and explore ways in which SMEs may need to
prepare themselves before implementing ERP systems.
Design/methodology/approach – The research took a Cypriot SME as a case study and adopted
an inductive approach supported by in-depth interviews as the main method of data collection. The
qualitative data collected were analysed by using a thematic analysis approach. Subsequently, a rich
picture and concept maps were used to represent the findings generated.
Findings – The study identified that business deficiencies and problems, which can impact potential
ERP adoption and usage in SMEs, can be localised across business processes boundaries, such as sales
order processing, stock control, and bill of materials management, etc. These business problems were
found to be attributed to a variety of organisational, technical and human-related reasons. Therefore,
this study established that in order to implement ERPs successfully, organisations may require
changes in people’s work practices and understanding of technology, ownership and control of
business processes, as well as organisational wide policies.
Research limitations/implications – This study contributes to the knowledge of ERP preparation
and business process improvement in SMEs.
Practical implications – The findings of the paper provide useful insights for both academic and
practitioners who are thinking of implementing ERP systems. The paper contributes to the body of
literature on issues that SMEs may need to reflect upon before embarking in a costly and resource
intensive process of ERP implementation.
Originality/value – Business process improvement is traditionally considered as the result of an
ERP project phase. This is how the large majority of the academic literature and the totality of
marketing information by ERP vendors portray it. In fact, the reality of practice shows a different
scenario with frequent reports of failure and inadequate ERP implementation. This paper aims at
breaking with this myth, by proposing that ERPs cannot resolve the large variety of deficient business
processes and internal problems that may exist in SMEs. Therefore, this study argues that SMEs need
to prepare in advance by engaging in business process reviews prior to the ERP implementation that is
engaging in a pre-implementation or preparation phase.
Keywords Preparation,Business process improvement, Enterprise resource planning,
Pre-implementation, Small and medium sizedenterprises
Paper type Research paper
1. Introduction
Enterprise resource planning (ERP) systems can be defined as “configurable information
system packages that integrate information and information-based processes within
and across functional areas in an organization” by using a single comprehensive
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1328-7265.htm
Received 2 June 2013
Revised 19 July 2013
Accepted 10 August 2013
Journal of Systems and Information
Technology
Vol. 15 No. 4, 2013
pp. 304-323
qEmerald Group Publishing Limited
1328-7265
DOI 10.1108/JSIT-06-2013-0021
JSIT
15,4
304
database (Kumar and Hillegersberg, 2000). ERP is often considered by practitioners and
IS researchers as one of the most crucial tools to achieve and sustain business
competitiveness (Deep et al., 2008). However, due to technological and economic
restrictions, only large companies could traditionally afford and implement ERP in the
past (Deep et al., 2008). Nevertheless, over the past few years, the large enterprise market
has become increasingly saturated (Gable and Stewart, 1999). This has led ERP vendors
to seek for potential alternative markets among small and medium sized enterprises
(SMEs) (Deep et al., 2008). In fact, SMEs often account for more than 90 per cent of all
firms for most countries, e.g. China (National Bureau of Statistics of China, 2007), and
continents, e.g. Europe (GBRW, 2004, p. 1). Therefore, the SME sector presents itselfto be
an enormous potential market for ERP adoption (Deep et al., 2008). As a consequence,
and also because of rapid reduction in the cost of IT and IS (Attaran, 2004; Gable and
Stewart, 1999), there has been a substantial and continuous growth in the use of ERP
systems by SMEs in recent years (Deep et al., 2008; Everdingen et al., 2000).
However, since ERPs are very complex enterprise-wide applications and can affect all
functional areas of an organisation, the implementation of ERP is never a
straightforward task. According to Martin (1998), about 90 per cent of ERP
implementation projects are late or over budget, and almost half fail to achieve the
desired results. The Standish Group, a market research firm (cited by Zhang et al., 2005),
also reports that ERP implementation projects in average are 178 per cent over budget,
take 2.5 times as long as intended, and deliver only 30 per cent of promised benefits.
Overall, Zhang et al. (2002) highlight that, ERP implementation success rate is only
about 33 per cent in general. The success rate of ERP adoption in SMEs is expected to be
even lower, owing to a variety of common drawbacks and barriers that are prevalent in
this type of firm, e.g. lack of long-term strategic planning, sparse resources, insufficient
IS and ERP knowledge, and irregular business procedures and roles, etc. (Deep et al.,
2008; Harindranath et al., 2008; Achanga et al., 2006; Premkumar, 2003).
In order to increase the possibility of ERP success and achieve desired outcomes, it
is often critical for SMEs to improve and modify existing business processes and
organisational structure to fit in the new ERP environment (Newman and Zhao, 2008;
Markus and Tanis, 2000; Jarrar et al., 2000). A business process, as defined by
Jarrar et al. (2000), is:
[...] set of interrelated activities which [are performed by specific actors and] have
definable inputs and, when executed, result in an output that adds value from a customer
perspective.
IS researchers, such as Jarrar et al. (2000), Martin and Cheung (2000) and Loh and Koh
(2004), stress that fundamental and iterative improvement and even redesign of
business processes should be carried out during the ERP implementation project, as
well as when the system evolves and is being used in the post-implementation phase.
However, Nah et al. (2001) and Lee et al. (2003) argue that broad improvement of
business processes should actually be performed well before implementing ERP, and
even before choosing the system. In fact it is generally accepted in the literature that
there is a need to understand the usefulness of the ERP in organisational terms rather
than just understanding the technical capabilities of the ERP system, i.e. what
functionality it provides, how easy it is to configure, etc. (Kim et al., 2005; Pan et al.,
2011; Peng and Nunes, 2012).
ERP success
in SMEs
305
To continue reading
Request your trial