Enterprise Resource Planning for Small Business

Introduction

The following is a discussion on various strategies used by the Enterprise resource to market the enterprise resource software to the small and medium enterprises. The following essay discusses how the reasons why small business enterprises have become the target market for most of the enterprise resource vendors. The essay discusses strategies used by the vendor to look for the resources as well as the kind of work necessary for the enterprise. Other than looking at the strategies used by the vendors, the essay will explore why the Small and the medium business enterprises are not receptive to the Enterprise resource planning programs. The essay will examine how the ERP vendors are doing to reduce these barriers. The final part of the essay will explore case studies of some companies, which have used the ERP SaaS systems in their operations and the challenges they encountered s well as the benefits.

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Definition of SME

The Small medium enterprise has different definitions depending on the country because different countries have different definitions of Small and medium enterprises. In the United States, a small business is the one, which has the utmost two hundred and fifty employees but not less than ten employees. Other than the size parameter, there are other measures used to classify the business as a small business enterprise. They are the value of total assets or the net worth of the business. The turnover is another parameter used to classify small business. However, these parameters differ from one country to another (James, 2000).

Why ERP vendors are focusing on the SME

The Enterprise Resource Planning vendors have recently shifted their focus from large organizations and have an interest in the Small and the Medium Enterprises. Previously the vendors were interested in large organisations, and they did not pay much attention to the small and medium enterprises. However, recently the vendors have shifted focus and have been triggered by a number of factors (James 2000).

The first reason why the organisations have changed their focus from other fields is that they have almost exhausted the market of large enterprises. This is because the software is one-time-use software and once a client organisation acquires the Enterprise Resource system and integrates it into the day-to-day operation in the organisation, it becomes easy for the organisation to work and improve it such that they do not require any service from the vendor. This is imperative as it ensures that the organisation has well-integrated strategies to maintain and integrate the software in the operations. The software is a one-time sale limits the number of sales volume that the vendor can make from any given organisation, making the large enterprises a limited market (Becker 2003).

The other reason why the vendors are focusing on the Small and Medium enterprises is their vastness of the market. In addition, almost every country has medium and smaller enterprises. In some countries, such as the United States of America, there is more than fifty-one per cent of the overall businesses found in such countries. This shows that they are an integral part of the economy, and their influence is higher. Focusing on these enterprises will certainly advantage the vendor (Becker 2003).

The other reason for the vendors of enterprise resource planning software to look for ways in which they are going to enter into the field of the small and medium enterprises is the fact that the market is new and unexploited. This is because at first vendors focused on the huge organisation, and they underestimated their role and the vastness of the small and medium enterprises when formulating their sales strategies. This makes the field unexplored, and it has a huge potential for the vendors to exploit (Becker 2003).

The vendors are focussing on the great profits and high sales volumes, which may be attained in the market as they explore for new ways and methods of exploiting this market. The huge number of small and medium enterprises in every country represents the growth of the organisations and the way in which the company may formulate strategies to sell their RP software to the interested companies (Turban 2008).

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The small and medium enterprises are also looking for ways to compete or reach large enterprises. The ERP will give the companies an edge in the market in terms of coordinating their data as well as managing their operations efficiently. This is imperative to the ERP vendor who is looking for ways to incorporate the small and medium enterprises as part of the target market. The same are looking for the resources due to the resources capability to enable them to serve their clients more efficiently as well as solve their problems quickly and effectively (Turban et al. 2008).

Due to the huge number of the Small and medium enterprises, the competition between the small enterprises is becoming higher, and the enterprises which will receive their return on investment have the ability to use technology to their favour. Ability to use the enterprise resource planning systems is an added advantage to any organisation. The demand for the ERP systems has triggered the vendors to consider the SME market as a ripe market for their software (Thomas, 1998:14).

Globalization has also triggered the companies to have enterprise resource planning software as part of their business. This is because much of the business is going over the internet and positioning the company by establishing branches all over the world is imperative for any enterprise hoping to achieve maximum return on their investment. The Enterprise Resource Planning systems are imperative in managing the operations of all those organisations in the different parts of the world. Need for constant communication and transfer of information from one place to other calls for the adoption of ERP (Willie, 2007).

Barriers of implementation of ERP’S ON SME’s

Despite the fact that there is a need for the enterprise resource, there are barriers, which prevent the ERP vendors from selling the software to SMEs. The first barrier is that of the high cost of having the ERP software. The ERP software was designed for large businesses and because they were not intended for mass sale their cost was usually high as the organisation in need of the ERP would have software tailored for its specific operations (Wylie 2007).

Lack of training on the Small Medium enterprises is imperative makes it hard for the organisation to implement the ERP software as they are complicated and most of the users in the small and medium enterprises are ignorant on how to use the software. The lack of technical know-how on the implementation of the work makes it hard for the customers to use the ERP’s effectively (Waldner 2002)

Overcoming the barriers

The first way of overcoming the barrier set against the implementation of the ERP is by handling the implementation of the ERP is handling ERP implementation as a project, where the organisation is handling the activity in terms of having a project manager to supervise the project. The internal responsibilities are those activities that are part of the project organization. The first implementation activity is that of supervision of ERP in the project management. The project manager is the one who is to ensure that the entire departments are utilizing the ERP to the maximum. This responsibility is an internal responsibility and fall directly under the project manager who can delegate it to the assistants who are responsible for the supervision of their subordinates (Harlord 2003)

The second internal responsibility is that of validation and assessment of the ERP software from the manufacturer. This is a very important responsibility of the project organization. The chief IT consultant is the one who will be responsible for quality validation and the necessary assessment tasks of the software and quality control (O’Brien 2011)

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The other important aspect in implementation of ERP concerns the issue of financial management that is very critical in this project. It involves analyzing the flow of finances in the project especially finances what are concerned with salary payments, purchase of materials, and the balancing the books of account to create an accounting system (O’Brien 2011).

Communication is another major concern when implementing ERP. The communication will involve ensuring proper flow of information from the SME to the manufacturer, also proper flow of information from the project manager to the workers. Communication done through emails and the work of liaison officer will be of preparing memos and letters as instructed by the project manager (Head 2005).

The ERP vendors must also work together with their companies to simplify the software used by the small and medium enterprises as this will affect them negatively and prevent the companies for maximizing the potential of ERPs (Harold 2003). The ERP needs customization such that it is specific for the customer and it suits their needs in the most appropriate manner. This is because it is imperative for customers to adapt to the need of the business and to ensure that customer is positioned for success when using the software as they have specific need, which they meet for the customer (King 2005).

With the increased competition, ERP vendors must look for new ways of maintaining customer loyalty as the new entrants in the market may look for ways of getting customers from the existing brands. The integrated marketing will suit the company need to maintain the existing customers through integrated marketing communication systems (James 2000).

Case one

The following part of the essay will deal with the Examples of companies which are using the ERP and how they have used the ERP in their marketing strategy. The implementation of ERP in Porsche Dubai is a radical decision for the small dealer in Dubai. To succeed it is imperative for the company involved to ensure that they involve the senior managers in the plan. In the case of the Porsche, some of the dealerships managers need to participate in the ERP as without their input, the efforts may experience challenges. The support of integrated communication program by all managers is crucial as it enhances cooperation among all the departments involved in the integration process (Brown 2003).

The other important aspect is of ERP implementation is that the company must have proper internal communication mechanism aimed at ensuring that the departments involved in marketing activity participate in the work. This is important as it enables the company to move ahead in the implementation plan. The internal communication places the company in a situation where it trains its workers to use ERPs. The other important aspect of the business is in ensuring that there is the relevance (Shields 2001)

The ERP implementation to be effective in Porsche Dubai, all the departments need to work together to ensure that there is integrated systems. This is where the company aspects come together with an aim of creating a common front. The common front implies merger of databases associated with the brand. This is especially important for the Porsche brand, as the dealership in Dubai also owns dealership for other type of vehicles (Shields 2001).

The other major factor of necessity is preparing an ERP implementation is having a budget. The budget helps in determining the amount of resources needed in the implementing ERP. Determining the resources enables the department to focus on cost effective means of marketing while having the best results possible. The integrated budget has to take care of Training, merger of databases and the cost of the ERP. ERP implementation requires many resources due to the complexity and integration of all marketing activities into one front (Yakovlev 17)

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The ERP integration for Porsche Dubai to be effective, the existing customers must be a part of it. ERP must focus on data and trends in the market as the satisfied customers have a lot to tell about the brand and their message is very important. Including ERP in the marketing strategy is important, as their testimonials of satisfied customers are imperative in enhancing the brand visibility and advertising the company brand through the word of the mouth (Yakovlev 2002).

Having put all the mechanisms that support the ERP mechanism in place it is important to formulate better strategies to reach out to the consumer than the previous strategies. ERP is appropriate when used to increase the effectiveness Porsche in Dubai. The first aspect when formulating the ERP implementation strategy is that of conducting research on the market. The research is critical as it provides and insight on the consumer behaviours. It also helps to identify the target market of the product without which the work may not be achieved. Identifying the target market is of necessity as it ensures that the strategies formulated with an aim of reaching to the right people. The target market if Porsche is the high-end market with high levels of disposable income (Sheilds 2001). The increase of the people with disposable income in Dubai as indicated earlier calls for the integrated marketing to reach out to the increased number of people. The research helps to use ERP in exploring the behaviours and car taste of this people with disposable income (Khosrow 2006).

After conducting the market research, the company must then use the information derived from the research to analyze the behaviours of the target market and look for ways of target marketing. The target marketing is a strategy where the messages sent out are not meant for all and sundry but for the people with high disposable income. From the research information such as the kind of magazines the people in the target market read, the kind of sports they participate in, the television channels they watch is very important. This is because in advertising choosing the appropriate channel of communication to the target group will be of importance to the consumer. Identifying the target group behaviours helps in formulating the events and sponsorships that will expose the Porsche brand to the potential buyers (Khosrow 2006).

As part of integrated marketing communication, strategy of the company the company must also ensure that it is visible to the growing online community (Khosrow 2006). Use of websites, and face book pages as part of marketing is very important as it helps to reach out to the adherents and fanatics of the model. This provides a good opportunity for the company to market its event as well as predict the target market (Khosrow 2006).

Integrated marketing communication must also take into consideration the need for the company co work together with the manufacturing department. As a part of the Porsche selling strategy, the customers wait for a period of one year for the delivery of the car model. With the increased completion, the company manufacturing needs to increase its elasticity of demand such the company may handle the growing orders for the car. Failure to reduce the waiting period may act as a deterrent to the marketing activities as an increase in the number of vehicles ordered may result in increased period of waiting (Khosrow 2006).

The sponsorships are also an important part of integrated marketing communication as other than offering brand visibility, the sponsorship activities expose the company brand to the public and to the target group of people. The Porsche sponsorship of Dubai golf tournament is an important marketing strategy when considering that golf is a luxurious sport and participants may have interest gin luxurious cars. Sponsorship of any event that attracts participation and attention of people with high disposable income is important (Monk & Wagner 2006).

ERP implementation allows the visitors to look for more information, availability of brochures and manuals to give the visitors are important. The ERP integration provides an opportunity for the company to market its events such as the annual road show event where the interested buyers get an opportunity to test drive the car. It is also an opportunity for the attendants to address the concerns of the potential buyers such as the price and the warranty issues (Monk & Wagner 2006).

Case study 2

Globalization has become the norm as the integrated communication technologies have made the distance smaller thus making it easy to trade globally. The Zimmer Motor Corporation must also strategize on how to sell its Zimmer Golden Spirit car in the global market. Entering the global markets require good advance plans on how to position the product in the global market place. There are methods that the company may use to enter into other countries. This may be through subsidiaries or through joint ventures or partnership (Thomas 1998).

The ERP has enabled the company to manage its joint ventures, as it is helps the organisation to enter into other markets where it will own joint ventures with companies, which have showrooms in those countries. The company meets the cost of manufacture and delivery whereas other partner will meet the cost of marketing in those countries. Considering that the company may not receive funding from banks or from the government, it would be risky for the company to have a subsidiary in other country without first testing the success of the products through joint ventures. Joint ventures will suit the company, as the other partner will meet the other side of obligations (Fryling, 2010).

Having analyzed the company strategically and looking for better ways of living and ensuring that the company is positioned for success all over the globe it necessary to have a plan on how to Implement its ERP project and make it possible for the company to sell the car globally (Clemons 2008).

The first aspect of executing the project is assessing the current financial status of the company. The financial assessment is in terms of its assets, liabilities, and its sales strategic plan. Without a good assessment of the financial position of the company to ascertain whether the company has funds that to purchase the ERP it will be a financial suicide for Zimmer Motor Corporation (Fryling 2010).

Having assessed the financial position of the company, the assessment will determine the ways in which the company will liaise with ERP vendors. This is important in that it enables the company to formulate ways of raising capital to fund the global joint ventures. However in the case of the Zimmer Company the only cost it will meet is that of purchasing the ERP software. The partners in those countries will meet the other costs such training the employees (Kraemmerand 2003).

The other important aspect in the execution of the company strategic plan is communicating to all shareholders of the company to ensure that they are aware of the plan and its advantages. This is imperative especially if there is need to raise additional funds for the project. The shareholders support will be crucial to ensure that they provide any additional fund needed to make ERP implementation successful (Kotler 1986).

The company must develop an integrated marketing communication strategy where the company harnesses its resources to brand the company as well as sponsor events that will create awareness of the product in the local market and in the global market. This is because as earlier shown the brand of the company is weak and if the company will experience any success in the globe, it is necessary that the company formulate marketing and communication plans to increase the sales volume of the company (Kotler 1986).

The company needs to conduct market research on the availability of the ERP, as this will enable the company to have the best ERP providers in the global market. The market research is imperative in countries where the company has branches and they may be of help to the company enabling the company to invest its resources in companies where there is a ready target market for the car (Kotler 1986).

Conclusion

Using the ERP is important for any company as it ensures effective use of time and provision of efficient services by the company thus increasing its sales. The ERP enables the company to reach out to its potential customers through cost effective methods. It also brings together all the departments as all aspects of the company pay a role in marketing and in communicating to the buyers.

References

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Fryling, M 2010, Estimating the impact of enterprise resource planning project management decisions on post-implementation maintenance costs: A case study using simulation modelling. Enterprise Information Systems vol. 4, no. 4, pp. 391–421.

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Yakovlev, I 2002, An ERP implementation and business process reengineering at a Small University”. Educause Quarterly vol. 2, pp. 52–57.

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