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Table of Contents

Preface 2
1. The Evolution of Production Management Systems 3
1.1The need for manufacturing planning 3
1.2The pre-MRP era 4
1.3Material Requirements Planning 5
1.4Manufacturing Resource Planning 7
1.5Enterprise Resource Planning 7
1.6From Extended ERP to ERP II 10
2. ERP: The thin line between a successful and an unsuccessful
implementation 12
2.1The Hersey Case 12
2.2The Lussile Case 13
2.3The ERP-Related expenses 14
3. ERP Implementation Process 16
3.1Selecting an ERP system 16
3.2General Implementation Process 16
4. Downsized ERP – A new trend in the Market 20
4.1The TEC Experiment 22
4.2The Panorama Consulting Group’s Surveys 23
5. ERP in the Services Sector 29
5.1ERP systems in Hospitals 31
5.2ERP in the commercial restaurant business 32
6. ERP in the Greek Market 33
7. Future Trends 37
8. Conclusion 38
References 39

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Preface

This paper has its origins in the Industrial Systems and Management
Module of the Msc in Advanced Industrial and Management
Systems, undertaken at the Technological Educational Institute of
Piraeus in cooperation with the Kingston University, under the aegis
of Dr. Emilia Kondyli.

This assignment revolves around Enterprise Resource Planning


Systems.
After holding a review on the essence of Manufacturing Planning, it
focuses on the distinct phases of Resource Planning, presenting the
features and the impacts that each one of them has had in
Manufacturing.

It investigates two distinct examples of ERP Implementations, with


dissimilar basis and completion, to conclude with a plan of
implementation that would be in harmony with a company’s
operation.

In addition, it studies the present trends in the ERP market,


enhancing its deductions with surveys conducted by ERP experts.

Finally, it offers an insight of the domestic ERP Market and identifies


the future trends of Enterprise Resource Planning.

I hope that this paper’s readers will find its recordings interesting
and that its reading will be a pleasant experience.

Georgios Rokos

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1. The Evolution of Production Management
Systems

1.1 The need for Manufacturing Planning

Manufacturing is treated in various manners, depending on the person


who tries to depict it. For economists, manufacturing is an economic
sector that contributes to Gross Domestic Product; for politicians, it is a
source of employment and social stability; for environmentalists, it is a
point of pollution; for employees and employers it is a source of revenue.
Nevertheless, the more effective manufacturing is, the happier each one
of the above will be. It is said that an economy with limited manufacturing
production is a gammy economy and Europe’s current financial crisis, with
the exception of Germany, proves this rule.

Manufacturing is the transformation of low-value elements and


components into higher-value products. However, the economic value, in
the aggregation of which capital, labor, materials and other kinds of
tangible and intangible resources participate, must match people’s
exigencies. Otherwise, the production will be left on the selves.

Plossl (1994) state that “the essence of manufacturing is a flow of


materials from suppliers, through plants to customers, and of information
to all parties about what was planned, what has happened, and what
should happen next” and that its benefits rely on the speed of that flow.
From this perspective it arises that time is the most valuable ingredient of
an efficient manufacturing process.

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Figure 1: The essence of Manufacturing
Source: Plossl (1994), Orlicky’s Material Requirements Planning, p 5

Time is a resource that is equally available to all parties, but it can not be
stored. An eventual leeway, no matter which point of the manufacturing
process causes it, affects all parties and cannot be made up.

Plossl (1994) recognizes six questions that define a manufacturing


process:

1. What is to be made?
2. When is it to be made and in what quantity?
3. What is required to do this?
4. What is already available?
5. What will be available in time?
6. What more is needed and when?

Business and marketing functions respond to the first two questions while
internal company planning and control systems, the subject of this paper,
to the rest.

1.2 The pre-MRP era

Maximizing a manufacturing organization’s efficiency has always been a


major terminus. Frederick W. Taylor, the father of scientific management,
developed standard-setting methods that still constitute the cornerstone
of Labor Requirement Planning (Plossl, 1994). Those methods, which are

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particularly quoted for their pioneer thinking to relate productivity with
financial motivation to employees, were later adopted by Henry Gantt,
Franc and Lilian Gilbreth and Harrington Emerson (Sapru, 2006)

In 1915, Ford Harris gave birth to the Economic Order Quantity (EOQ)
technique by calculating the first formula to minimize the total cost of
ordering and carrying costs (Buglear, 2005). The EOQ system
predominated in the pre-MRP era. Through this method, a company was
trying to apply scale economy by placing massive orders of components
while keeping in mind the point on which inventory cost exceeded the
financial benefits of scale economy. The goal was to define the ideal
quantity of components that the company should order to achieve the
lowest possible cost. This technique was in fact a tactical reaction to
fluctuations of demand and is still used by a notable number of companies
(Bingham, 1998).

In 1934, R.H. Wilson introduced statistics to apply inventory planning while


eliminating prediction errors, reducing material shortages and improving
customer deliveries with minimum inventories (Plossl, 1994). Wilson’s
technique, also known as Purchase Quantity Model, differs with Harris’
technique on the inclusion of the costs related to making an order instead
of the setup-up costs before the manufacturing process (Buglear, 2005).

During the 2nd World War, the lack of resources made British scientists
apply mathematical and scientific methods in an attempt to find alternate
uses for the existent products in warehouses. For more than 20 years,
European and American scientists were struggling to apply Operations
Research, in particular linear programming as well as queuing theory, to
manufacturing logistics (Plossl, 1994). However, the dearth of computer
systems turned such attempts unsuccessful.

In the 50’s, George E. Kimball is believed to have developed the Base


Stock System (Mohemius et al, 1972), a technique which aims at
eliminating variations in converse demand caused by independent
ordering of components of assembled products. This technique, which was
in fact the ancestor of the Japanese Kanban (pull technique), was based on
communicating end-product actual requirements to each supplier
producing components of the end-product.

Exponential Smoothing is a forecasting technique publicized by Robert G.


Brown in 1959. According to Ghiani et al (2004), this technique provided a
forecast of demand based on the demand of past years and the errors that
occurred in the forecast of past years.

Computer hardware and software made their appearance in the business


world in the early 60s and cleared the way for MRP.

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1.3 The Material Requirements Planning (MRP)

According to Greene (1987), the Material Requirements Planning (MRP)


was firstly used by J.I. Case, Black & Decker, Twin Disk and Perkins-Elmer.

MRP started as a simple idea. Using three tools, the Bill of Materials (BOM),
the Master Production Schedule (MPS) and the Inventory Status File (ISF),
a closed loop information system called MRP would predict the
requirements for component materials needed in the production process
of the final products. MRP is a dependent demand technique, meaning
that the demand for one product is related to the demand for another
product (Swamidass, 2000). For instance, Black & Decker, a
manufacturing company which produces electronic devices, can
accurately predict how many screws it takes to produce one piece of
electronic dustbuster. Thus, since the relationship between screws and
dustbusters is fixed, it is also dependent.

The Master Production Schedule provides a plan for the quantity and the
timing of orders. It combines both existing orders and a forecast of future
orders, based on experience. The more accurate the MPS is, the more
efficient the MRP will be.

The Bill of Materials clarifies what amount of which subassemblies and


components are needed to produce a given quantity of final products. It
also prefigures a structure of the production process in terms of the
development of a final product, from the bottom where its initial
components can be located to the top where the on tap product lies. In
other words, the BOM provides a schematic view starting with the final
product, descending to its subassemblies, each of which then descend to
their subassemblies and so on, until we get to the initial components that
the manufacturing company needs to order to start up the production
process.

The BOM provides information on the quantity of components required but


some components may have been ordered in the past and have remained
unused in inventory. Thus, the BOM does not directly indicate the demand
for components. MRP, using the Inventory Status File and the BOM, is
expected to determine whether an order of components must be placed at
each given moment. The Inventory Status File also keeps records on what
quantity of component parts should be kept as a safety stock, if there is a
minimum quantity order for some components, what quantity of which
components is already on order and how long it takes to acquire the
components (lead time).

Mishra and Soota (2005) identify the following benefits in MRP systems:

1. Increased Productivity
2. Reduction in inventory (raw materials, end products, components,
subassemblies, work-in-process)

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3. Reduction in Lead Time
4. Better utilization of resources
5. Faster response to demand fluctuations

According to Plossl (1994), in 1971, 150 MRP systems were already at use
in US. By 1975, 700 companies were using an MRP system and by the mid-
80s thousands more.

Table 1: Comparison of Ordering Techniques

Source: Plossl (1994), Orlicky’s Material Requirements Planning, p 29


Order point MRP

Deals with parts Products

Looks to the past Future

Uses averages Batches

Requires bills of No Yes


material?

Inventory is maintained run out

Recommends start Complete


order dates to

Activated for an once Periodically


order

Shows future none all in horizon


orders

Can be No Yes
replanned?

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1.4 Manufacturing Resource Planning (MRP II)

In the early 80s, interest rates were exploding and global competition was
reflecting on prices, exerting pressure on businesses. In an effort to
reduce costs, manufacturing companies concluded that a short of MRP
implementation could expand to additional types of recourses, other than
strictly the product components (Sheldon, 2005). Such resources
comprehend labor-hours, machine-hours and cost (accounts payable).

Thus, a new, dilated manufacturing planning system emerged, the


Manufacturing Resource Planning (MRP II).

MRP II was a Trial and Error Scenario Analysis planning system that
differentiates depending on the unit it treats (Kondyli, 2010).

By calculating the investment and the workforce requirements, operation


managers were able to provide useful information in an attempt to
coordinate actions among marketing, financing, and technical
departments. The questions of capacity planning and scheduling discipline
were prioritized. By mid-80s, Master Production Schedule came under the
hammer of a new management approach, which highlighted capacity. A
new business role was born, MRP consultants. APIC’s role in the
formulation of an integrated approach on which principles MRP II includes
was vital, since it organized speaking circuits such as regional seminars,
dinner meetings and the Annual APICS International Conference and
Convention (Sheldon, 2005).

During the popularization of MRP II, Top Management Planning Process


was also evolving. The S&OP model, which initially stood for sales and
operation planning, would eventually become a high-level tool of
synchronization among most functions of the organization and a major
component of MRP II. Top Managers would now interfere in inventory
levels and risk management decisions such as capacity and anticipated
demand. Following MRP II consultants’ recommendations, top managers
started investing in training their staff (Sheldon, 2005).

At that time, MRP II implementation time was estimated between 18 and


24 months. A successful MRP II application would result in reduced
inventory, higher productivity, increased customer service, lower costs,
join decisions and strategic financial planning alongside the production
planning (Sheldon, 2005; Mishra and Soota, 2005).

1.5 Enterprise Resource Planning (ERP)

During the ’90s, MRP evolved from a set of metrics to a multi-component


process. According to Sheldon (2005), new methodologies such as TQM

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(Total Quality Management), JIT (Just In Time), Lean Manufacturing and
ISO (International Organization for Standardization) affected this evolution.

In particular, Taiichi Ohno’s (father of JIT) recommendation to produce only


what you need and only when you need it passed into the MRP philosophy.
Lai and Cheng (2009) argue that JIT’s main principles are:

• Eliminate Waste (overproduction, transport, process, unnecessary


motion, defective goods, inventory and waiting time)

• Involvement of Everyone (encouragement of employees to


contribute through generating ideas, provision of training in a wide
range of tasks)

• Continuous Improvement (teamwork, implantation of the idea that


progress needs patience and meets no limits)

Total Quality Management system (TQM) offered a new management


approach, coined by Edwards Deming (Walesh, 2000). TQM’s main
objectives referred to:

• The elimination of errors during the production process,

• The enrollment of client and the recognition of his demands,

• The development of strategic supply alliances

• The emphasis on quality

• The commitment of administration

Lean Manufacturing, is a system that combines the principles of TQM and


JIT (Halevi, 2001). More specifically, according to Kondyli (2010), Lean
Manufacturing encourages companies to:

• Identify which products do not create value for the end customer
and cease their production

• Restructure their functional and non-functional processes in a way


that they would be more flexible to eventual market changes

• Develop stable relationships with suppliers and subcontractors.

The International Organization for Standardization (ISO) was founded on


February 23, 1947. Its main objective was to promulgate global
proprietary manufacturing and commercial standards. In the early 90s,
ISO was nothing more than a means of secure transactions between EU
countries. Nevertheless, its popularization was accompanied with an
insistence on the documentation of processes and on a recurrent process
control. The latter were also prerequisites for a successful MRP application
(Sheldon, 2005).

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The above-mentioned practices, which concentrated on process design,
management systems and results, obviously affected behaviors and aided
in process control. An irrebuttable indication of their radical impact was
that although MRP II systems were getting more and more complex and
demanding, their average implementation time was declining. Top
Managers were more involved in the Resources Planning, conducting root
cause analysis and participating in actions (Sheldon, 2005).

The term ERP was coined by the Gartner Group in 1990, although the
philosophy of ERP pre-existed in many MRP II implementation cases. The
first synthetic “E” stems from the word Enterprise to underline that this
new kind of software applies to all the departments of a company, thus it
is an enterprise-wide solution.

Before the advent of ERP systems, every department in a company had


had its own, customized computer system. Subsequently, communication
problems between departments had been pretty common. Gaps and
differences in the data of the departments had been resulting in
inaccuracies, especially in the field of sales forecasting. The need for
integration had been more than evident.

According to Behl (2009), ERP systems, as introduced by Gartner, have


three main properties:

1. They are multifunctional. ERP systems treat a number of activities


such as manufacturing and human resources, sales, procurement,
financial results, etc.
2. They favor integration by nature. For instance, when the
procurement department places an order, data in the financial
department will be updated automatically.
3. They are structured modularly and can be used in parts (modules)
or resoundingly.

Sheldon (2005) states that in the late 90s, the Resources Planning
software solutions were dealing not only with scheduling and planning but
also with:

• Inventory Strategy

• Product and Service Quality

• Supply Chain Management

• Plan Execution

• Demand Anticipation

• Project Management

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ERP Management System had, at that point, different levels of
expectations.

Time Process Event Process Expectations


Frame

Yearly Strategic review Updates to the strategic plans

Business Prioritizing the sort list of “must do”


imperatives objectives

Talent review Management assessment of key


employee skills
Succession
planning Key position and skills analysis of bench
depth

Monthly S&OP Risk Management of capacity, inventory


and customer service decisions

Review progress on business imperatives


Project review

Weekly Performance Process owner review of progress


review
Detail review of projects by process
Project review owners

Daily Schedule review Detail review of yesterday and today’s


requirements
Daily walk-
through Management-by-observation tour of the
factory

In the early 2000s, due to the technological breakthrough, new topics such
as transaction design emerged. Moreover, supply chain management
became more important than MRP.

1.6 From Extended ERP to ERP II

Table 2: ERP’s Management System Elements in the late 1990s


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Source: Sheldon, (2005), Class A ERP implementation: Integrating Lean and Six Sigma, p 23
In the 2000s, Internet’s unprecedented diffusion has led to an evolution of
ERP’s orientation. New external business modules have been integrated to
ERP, as a result of the enablement of users to access and control Business
Resources at any time from anywhere.

ERP initially responded to raw materials, inventory, order entry and


distribution issues but failed to extend to other functional areas such as
sales, marketing and customer services. It was also unable to provide
value for non-financial relationships with external partners and vendors,
and other operations beyond inventory and order taking. Moreover, ERP’s
first edition did not include CRM functionalities, it did not permit access to
call center and quality assurance staff and, more importantly, it did not
include document management (Leon, 2008; Vaman, 2007).

Extended ERP was an evolution of ERP, including functionalities that


existed outside the ERP mix. Forecasting and Scheduling became typical
component parts of ERP systems, while e-commerce practices were
introduced (Vaman, 2007).

ERP II was Extended ERP’s next step. The scope of the enterprise
extended to customers and suppliers outside the enterprise. The strongest
characteristics of ERP II are its web-centricity and designed-to-integrate
structure. ERP initially used Internet as a supportive means. ERP II made
Internet access a part of the integrated system. Leon (2008) emphasizes
the difference between using technology, as ERP systems did before the
year 2000, and possessing technology, as they do today.

Collaborative commerce is an illustrative example of possessing


technology. Through c-commerce companies share information posted on
e-commerce panels. For instance, manufacturers and suppliers can
exchange data in forums, specialized web pages, etc. to arrive to the
deployment of a new product that would respond more efficiently to the
market needs. In addition, c-commerce turns the partner query process
less demanding. A manufacturer can detect a supplier of a certain solution
easily, by posting his/her precise request online.

Table 3 unveils the functionalities that ERP systems comprehended by


period.

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Table 3: The Evolution of ERP systems
Adapted from Vaman (2007), ERP in Practice, p 165; Leon (2008), ERP Demystified, 2/E p 532

2. ERP: The thin borderline between a


successful and an unsuccessful
implementation
ERP Extended ERP ERP II

(1990-1999) (2000-2005) (2005 Onwards)

Materials Planning Scheduling Project Management

Order Entry Forecasting Knowledge Management

Distribution Capacity Planning Workflow Management

General Ledger e-Commerce Customer Relationship


Management

Accounting Warehousing Human Resource


Management

Shop Floor Control Logistics Portal Capability

Integrated Financials

Internet and WWW Integration

Analytics-Sales, Financial, HR

Supply Chain Management

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ERP systems can not promise success and Return On Investment (ROI) in
advance. History shows a number of disastrous ERP implementations.
From the two following examples, it appears that cost is not among the
decisive factors.

2.1 The Hershey Case

Hershey constitutes one of the most lustrous examples of ERP


implementation failures. Carr (2002), Collett (1999), Koch (2002), Davena
and Wieringha (2008) focus on Hershey to illustrate
how an ERP project can end in a thunderous fiasco.

Hershey started out as a small caramel artisanship


back in 1876. With the pass of time, Hershey became a
leading manufacturing company of chocolates,
confectionaries and beverages in the USA which also
operated internationally. The company belongs to the
Fortune 500.

In 1996, Hershey’s CEO authorized the replacement of the company’s


legacy systems by an ERP system for two reasons; the Y2K problem and
the shift to a client-server kind of software which would facilitate the
communication of the company with its clients and permit a better
coordination of production and sales, which would, in turn, lead to cost
reduction. The project ran into $110 million .

Hershey chose SAP and some modules of Manugistics and Siebel. IBM
Global Services took the responsibility to integrate the software on one
platform. The plan was to implement the platform within 30 months,
although such a venture would normally take 4 years. Hershey wanted to
have the implementation completed by April 1999, a lean period, in order
to respond to market needs which would augment the following months
due to the Halloween and the Christmas approach, the period which
averages 40% of the total annual sales. Besides, the Y2K threat was
drawing close.

In July 1999, three months after the scheduled completion of the


implementation, a few more modules were yet to be implemented and
Hershey decided to shift to a Big Bang implementation, namely to
implement all the resting modules at once, instead of keeping up with a
phased installation of modules which would allow the company to detect
and correct eventual flaws of one module before moving to the next.

Although Hershey provisioned to have at that point 25% more inventory


stock than usual, within a month the company was half a month behind
schedule in fulfilling orders, due to problems in order entry, processing
and fulfillment, as a result of scrappy training. Furthermore, the lack of
coordination between the technical personnel implementing the ERP and

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the staff involved in the implementation group led to a decisive omission;
they forgot to insert data to the system concerning some warehouses that
the company used other than their main distribution center and the
central warehouse. Subsequently, although there was available production
stock, the system could not track it to transmit orders to the distribution
centers.

Hershey lost credibility over its clients, market share and, of course,
profits. It is indicative that the company’s stock price dropped by 35% by
late October while the Dow Jones Industrial Average had risen during the
same period by 25%.

It took more than a year to stabilize the ERP system and the intake of
George Davis, a well-waged CIO. However, the lesson was later taken and
when the process was redesigned, in July 2001, the implementation cost
20% less than expected and lasted only 11 months. Finally, Hershey
managed to get back on track.

2.2 The Lussile Case

Lussile is a Greek manufacturing company of clothing, footwear and


accessories for women. The company possesses a sales network of 38
stores in Greece and in Europe.

External Threats:

Over the last 15 years, the clothing industry in Greece has come up
against a great challenge, since companies from eastern countries entered
the market, offering products at very low prices. Lussile, like most
manufacturing companies of its kind in Greece, was forced to find a way to
compete the newcomers by lowering its costs while maintaining its high
quality. The clothing market is a seasonal market. Thus, success is closely
related to flexibility.

Internal Weaknesses:

• Apart from market changes Lussile had to face its internal muck-
ups:
• Scrappy technological background
• Fragmentation of information in different databases
• Constant problems in the operation of retail shops because of
telecommunication problems that interrupted their online
connection
• Time-consuming costing of the production process
• Difficulty in communication between the company’s departments

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• Strenuousness in the collection of information for decision making

The Solution:

Lussile addressed to Envision, a local ERP vendor.

After studying Lussile’s deficiencies, Envision proposed a set of ERP


modules, stemming from four different ERP developers. Envision would
undertake to integrate the different modules into one practical and flexible
system. Metrix, which constituted the body of the proposed solution with 5
modules, was edged with Retail Force (a suitable module for retail shops),
QlickView (a software that facilitates information recuperation and
handling) and M-Sales (a software suitable for immediate order taking).

Envision followed a phase to phase approach during the implementation of


the ERP system, creating working groups of employees to assist and
participate in the process. The whole implementation process lasted 7
months and its total cost came at €45000. After implementation, the old
and the new system were working simultaneously to track any eventual
flaws in the implementation for about a month.

According to the implementation consultant, Mettos I. (2010, pers. comm.,


16 November), the most trying point in the process was the company’s
corporate culture. Despite the “resistance to change” phenomenon,
Lussile’s implementation process was by far smoother than Hershey’s.

The benefits:

✔ Unflagging operation of the shops


✔ Amelioration of the shops’ performance
✔ Gradual cost reduction (Manufacturing and Inventory costs)
✔ Surge of the Products’ turnover rate
✔ Better control of the company’s claims and obligations
✔ Better client service
✔ Full availability of information
✔ Transformation of information to knowledge

2.3 The ERP-related expenses

In order to judge whether an ERP implementation is successful, it is crucial


to bear in mind its total cost.

Hershey’s ERP project cost $110 million. This sum seems frightening and
prohibitive for the majority of enterprises. However, not all ERP

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implementations cost that much. Lussile vindicates the above. ERP cost
estimation is not an easy task. Scientists still struggle to develop a single-
dimensional or multidimensional cost relationship model (Davena and
Wieringa, 2008). Nonetheless, Hamilton (2003) identifies the main cost
sources of ERP systems and divides them into two classes: the one-time
costs and the ongoing annual costs.

A) One time costs

Software: Its cost varies depending on (a) the vendor, (b) the number of
predestined users, the extent of (c) customization and (d) integration with
other solutions.

Hardware: The vendor foreordains the hardware requirements which do


not generally burden significantly the budget.

External Assistance: This encompasses consultants and trainers. Its cost


depends on (a) the complexity of the system, (b) the experience of the
trainees and (c) the enrollment level of the external associates in the
implementation process.

Internal staff: This cost is dependent of the number of employees involved


in the implementation process and their total time allocation.

B) Ongoing annual costs

Software: This cost includes software upgrades, such as further


customization and integration, improved versions, system expansions etc.

Hardware: Upgraded software will ultimately lead to further hardware


requirements.

External Assistance: Training and consulting is a ceaseless process in


companies that embrace the philosophy of continuous improvement. In
addition, software upgrades and eventual new employments call for
training de novo.

Internal staff: The implementation group does not complete its task once
the system is “live”. Upgrades and new employments will ask for its
participation again. Moreover, when a company implements an ERP
system it usually takes on one expert or more (whose salaries are ongoing
costs) to handle it.

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3. ERP Implementation Process

From the case studies above, one may easily deduce that the success of
an ERP system screens behind its selection and implementation process.

3.1 Selecting an ERP System

Given that implementing an ERP System is likely to impose a new business


philosophy to the corporate culture as well as the strategic plans of the
company, its selection is a process that calls for major inspection. The
greatest failures in ERP history resulted from the combination of the needs
and capacities of an ERP System with existing business and organization
processes.

When a company buys ERP software, it also buys its developer philosophy
on business processes. That is why it is crucial to discuss with the vendor
before the purchase and determine what should be restructured within the
company so that implementation succeeds. After all, the primary goal is to
help the company progress and not just to implement a system. (Vaman,
2007)

The first fundamental choice companies need to make is whether business


processes should be restructured before (Business Reengineering Process
- BRP) or after implementing the system (Altekar, 2004).

The first alternative implies that the system will automate the new
restructured processes (customization of the product), whereas the
second alternative implies that process restructure will be based on the
practices which the selected ERP system preconceives (Leon, 2008). Diaz,
Lorenzo and Claes identify the first alternative as “Modeling choice” and
the second alternative as “Blueprinting choice” or “Vanilla” (Barjis, 2010).
O’Leary (2000) states that more than one third of the companies that
implement an ERP system apply BRP prior to the implementation.

There is also a third alternative, restructuring while implementing. No


matter how ideal the last solution may sound, in practice it is very likely to
fail, since such an attempt would disorganize the whole company, as in
Hershey’s case. After all, during an ERP Implementation process the
company still functions and has to serve its clients.

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3.2 General Implementation Process

After selecting which ERP system Philosophy best suites the company’s
objectives and how any internal restructure procedures will take place, the
implementation process commences. At this point, adherence is
indispensable from all parties concerned.

Vendor Implementation An ERP system is always


Table 4: Implementation Strategies
accompanied with a set of
by Vendor Methodologies
implementation processes and
SAP ASAP
Adapted from Altekar V. R., (2004), EnterpiseWide timetables indicated by its
developer. Numerous attempts
Baan Target have been made to propose a
generally accepted methodology,
Oracle AIM
but they have fallen flat.
Origin Implant

Movex Implex

An ERP implementation varies depending not only on the vendor but also
on the country of origin of the company (Kwank & Ahn, 2010) on the
industry – sector of the company (Barjis, 2010) and on the largeness of the
company (Koh et al, 2009).

Kiakis (2006) summarizes the general implementation steps in four


phases.

I. Analysis & Preparation

A) The set-up of implementation group.

Those groups often shoulder the evaluation and the software selection
processes as well. The structure of an implementation group depends on
the needs of a project. The following scheme unveils a typical structure.

B) The development of an implementation program.

After setting-up the implementation group, each member takes specific


responsibilities.

The Project Sponsor is the person who, on behalf of the administration,


ensures the essential financial resources flaw.

Figure 1: A typical ERP Implementation Group


Structure
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Adapted from Kiakis (2006), Συστήματα Διαχείρισης Επιχειρησιακών
The Project Manager is responsible for staffing the group, for selecting the
analysis, planning and development methodology, and, finally, for
coordinating the group.

Exterior Consultants and Top Management representatives constitute the


Steering Committee, which supervises the project and communicates with
the users in order to understand their needs. The committee develops the
implementation program and synthesizes the processes in a way they can
be easily handled.

Those who are responsible for training the company’s staff and for
supporting it later on constitute the Support Team.

Project teams are small groups which execute the basic tasks an ERP
system. Each project team is headed by a manager.

C) Any preparation needed concerning equipment requirements and


software installation.

It must be determined if any of the old electronic systems of the company


may be useful for the new ERP software and what new equipment must
be purchased.

I. Process Analysis & Parameter Setting

At this phase, project teams receive a preliminary training on the modules


they are going to operate. Moreover, the implementation group conducts
an evaluation and an elaborate planning of the business processes
(Business Process Mapping) that will be put forward. The system’s
modules will then be adapted to the selected processes (Process
Adaptation).

After adapting the system to the company’s needs, parameters are


introduced in order to determine who will be allowed to access which
modules of the system.

II. Data Migration & Control

There are two methods to transfer/insert Data to the new ERP system;
directly from the company’s older system and manually. If the first
method is preferred, the implementation group controls the migration
process. If the second method is preferred, the implementation group
shoulders the insertion of data with the support of a Program Logic that
locates eventual vacancies.

At this point, ERP’s destined users receive a deeper training, in gradual


stages, to avoid eventual problems on the utilization later on.

20
After training is over, a pilot implementation takes places so as to detect
and correct probable errors before full implementation.

III. Full application (Going Live) & Support

21
Once the pilot implementation succeeds, the group accepts the system
and proceeds to full implementation. However, for some time both the old

Steps Elements
Phase 1. Form ERP selection and implementation team

Preparation Develop ERP vision (needs, objective, outcomes)


and Selection
of ERP Identify the Implementation model (One-vendor or best-of-bread
solution, etc.)

Develop selection criteria

Establish ERP software candidate list (four to six candidates)

Create Request for Proposal (RFP), and send it to the prospective


candidates

Review their responses and identify three-four finalists

Request the finalists to demonstrate their packages

Select the winner and negotiate the contract

Justify the investment

Phase 2. Organize the implementation project

Installation Define the performance measures for the new system


and
Implementati Create the initial detailed implementation project plan
on Educate the project team

Assess integrity of the existing database

Install new or upgrade existing hardware

Install the software; perform the computer room pilot

Educate the ERP users

Define and refine procedures for the new system

Ensure integrity and accuracy of the data

Bring the 1st module/product/plant live; refine and adjust.

Repeat the same for other modules/products/plants

Improve continually

22
and the new system operate simultaneously for security reasons. An ERP
system should never be abandoned by its provider. Support should be
constantly offered to its users. Additionally, changes in company’s
environment impose frequent upgrades.

Bigdoli (2004) suggests a two-phase implementation process, in which he


comprehends the selection of the software.

4. Downsized ERP: A new trend in the market

In the early 1990’s, when ERP was introduced, its vendors focused
exclusively on large fortune 500 companies. That was mainly due to the
high costs associated with the implementation of such a system at that
time and, secondarily, due to the small amount of ERP vendors.

However, with the pass of time, small to medium-sized companies


(identified also as SMBs or SMEs) turned vendors’ attention on them. One
may relocate five reasons for that turn.

1) Exhaustion of “big” clients.

At the beginning, ERP vendors targeted fortune 500 companies. Soon


most of these companies had an ERP system implemented. To attain their
constant growth, vendors have been triggering demand for ERP to smaller
and smaller companies (source: http://knol.google.com/k/erp-for-sme-s#,
accessed on 3/12/2010).

2) Growth of small businesses sector.

Over the past 20 years, small businesses’ accessibility to resources,


mainly due to banking, technological and legal shifts, has led to a
fundamental restructure of global economy. Small to medium sized
businesses have managed to bridge the gap with large businesses, newly
founded companies have been able to compete with traditional players at
short notice and the formerly disheveled productive class has turned into
economy’s steam engine. (Hoffman K., source: http://www.erp.com/erp-
archive/324-erp-archive/7210-small-businesses-are-becoming-big-

Table 5: Main Steps and Elements of ERP Implementation


Source: Bidgoli, H., (2004), The Internet encyclopedia, p 715

business-for-erp-vendors.html, accessed on 3/12/2010)

23
Some Figures showing why ERP Vendors turned to SM
MEs using ERP are manufacturing companies (Ashcroft J., 2009, source: http://www.supplychainnetwork.com/erp-study-suggests
de more than 50% of ERP vendors’ profits in 2009 (Hoffman K., source: http://www.erp.com/erp-archive/324-erp-archive/7210-sm
anufacturing companies in the U.S.A. have less than 250 employees (source: http://www2.isye.gatech.edu/~jswann/teaching/620

3) Raising competition in ERP Vendors Market.

SMBs participation in economic growth did not affect solely the demand
for ERP. Traditional ERP Vendors such as Oracle and Sap saw an increasing
number of competitors popping up, offering competitive solutions at lower
prices. Tier II (medium) and Tier III (small) companies entered ERP
Suppliers’ market and differentiated radically ERP’s orientation. In an
attempt to antagonize their renowned competitors, smaller vendors
introduced business field specialization as a new factor in clients’ decision
portfolio, mo functionalities on instances (Martinez R., 2010, source:
http://www.erp.com/section-layout/51-erp-success-stories/6630-three-
reasons-why-erp-vendors-should-target-erp-for-small-business.html,
accessed on 3/12/2010)

4) Large companies announcing cuts in their IT budgets

Sap saw its big clients’ IT budgets moving down after the millennium turn.
As a result, the leader of ERP Vendors had to adjust to the new
circumstances by seeking for new, smaller clients (source: IT Analysis,
9/12/2003,

24
http://www.theregister.co.uk/2003/12/09/sap_hones_midmarket_message/
, accessed on 3/12/2010).

1) SMEs as an experiment for greater Big ERPs’ efficiency

Big ERP vendors faced SMEs as a challenge. Small companies’ inadequate


financial resources made vendors look for ways to cut costs. SaaS
(Software as a Service) ERP is an example of the above. The “mandatory”
changes that had to be done to fit SMEs’ potentials could later be
implemented to bigger companies as well. A more cost-efficient and
functional ERP system would not let the so-called “Big” customers
indifferent (Martinez R., 2010, source: http://www.erp.com/section-
layout/51-erp-success-stories/6630-three-reasons-why-erp-vendors-
should-target-erp-for-small-business.html, accessed on 3/12/2010)

The “downsizing” trend is expressed as follows:

• Smaller vendors offer specialized solutions, with fewer


(quantitatively), yet more efficient (qualitatively) functionalities.
• Traditional vendors buy out smaller vendors and their solutions
so as to keep control of the market. (Thompson, J., (2003),
source: http://www.allbusiness.com/buying-exiting-
businesses/mergers-acquisitions/163532-1.html, accessed on
3/12/2010)
○ In 2003 PeopleSoft bought out JD Edwards.
○ One year later, Oracle took over both PeopleSoft and,
subsequently, JD Edwards.
○ Microsoft entered the ERP market by buying out the
Norwegian “Navision Software” which specialized in SME
systems and launched Microsoft Dynamics Series,
appropriate for Tier II and Tier III companies)
• Traditional vendors develop different versions of their ERP
systems to match Tier II and Tier III businesses’ needs and
potentials (source: http://knol.google.com/k/erp-for-sme-s#,
accessed on 3/12/2010).
○ Sap launched Business All-In-One.
○ Oracle expanded its Accelerate Program to cater
specialized, fixed-price ERP systems to SMEs, offering
lower prices and allowing faster and easier deployment.
○ Both Sap and Oracle developed On Demand – SaaS ERP
Solutions (Sap BusinessByDesign, Oracle Sourcing on
Demand) in order to offer more affordable software for
SMEs.

25
4.1 The TEC Experiment

A TEC Advisor’s research analyst


conducted an experiment, letting
customers compare Tier I and Tier 2008 Survey’s Data
No of participants:
II vendors’ ERP, to measure the
1322 global organizations
perceived difference in
Survey’s Period:
functionalities – modules. Dec 2005 – Nov 2008
(Osintsev Aleksey, 26/08/2010, Participants’ location:
source: 31% North America
31% Asia Pacific
14% Europe
8% Africa
3% South America
13% Other

http://blog.technologyevaluation.com/blog/2010/08/26/big-erp-vs-
tier-2-erp-%E2%80%93-is-the-gap-in-functionality-as-big-as-it-
appears/, accessed on 3/12/2010).

The findings revealed that users do not rate Tier I’s functionalities
significantly higher than Tier II’s functionalities.

In particular, the biggest difference can be relocated at Human


Resources Management (HRM), where Tier I solutions outmatch Tier
II solutions by 19%. Of course, Tier I ERPs need to address to
complex large corporations forced their vendors to invest more on
developing and incorporating modules for HRM, Enterprise Asset
Management (EAM) and Product Lifecycle Management (PLM). On
the other hand, small ERP vendors usually use application
programming interfaces (APIs) to connect their solutions with the
clients’ existing systems or third, economic systems to serve those
needs.

The experiment unveils that there is not much of a difference as far


as Manufacturing, Inventory, Sales and Procurement Management
modules are concerned. That is because the later constitute the
basics of an ERP system and small ERP vendors focus on them.
Furthermore, the smaller a vendor is, the more important and
unique one customer is to him. Thus, smaller vendors tend to pay
extra attention to their customers, especially in terms of support

26
Sap post-sale
and turned out
service.
to be the
After
market’s
all, support
leader
may bybeoccupying
more profitable
35% offor
the
a
smaller vendors
market, Oracle followed
that the system
with 28%,itself.
Tier II vendors came third with
23% and, finally, Microsoft occupied 14% of the market at the time
of PCG’s survey.

The survey calculated the average implementation duration, the


average cost of implementation, the average post implementation
satisfaction and the average emergence of problems after “going-
live” (Business Risk Factor).

Sap’s average implementation duration was measured at 20


months, Oracle’s at 18,6 months, Microsoft’s at 18 months and Tier
II vendors’ at 17,8 months.

Microsoft Dynamic’s average cost of implementation was the lowest


one, coming at 2,6M USD. Tier II vendors’ products followed,
averaging 3,5M USD. Oracle’s average cost was approximately five
times Microsoft’s average cost (12,6M USD) while SAP’s was more
than six times Microsoft’s average cost (16,8M USD). At this point, it
Figure 3: 2008’s is
ERP Market to mention that the standard deviation for each of the
important
Share four choices was also measured, showing that Microsoft’s prices,
followed by Tier II vendors’ prices, were by far more homogenous,
probably because SAP and Oracle address to both Large and Small
to Medium enterprises.

SAP Oracle

Vendors’ Prices Distribution

27
Microsoft Tier II

Figure 4: 2008 Cost of ERP Implementation by Vendor


Source: Panorama Consulting Group, 2008 ERP Report Part II: Comparing Tier I and Tier II Solutions

Table 6: 2008 Overall Comparison of Tier I and Tier II ERP solutions


Source: Panorama Consulting Group, 2008 ERP Report Part II: Comparing Tier I and Tier II Solutions

The average satisfaction measurement enhanced TEC’s findings,


showing that SAP’s and Oracle’s products create to end users
similar level of satisfaction to Tier II vendors’ and Microsoft’s
products. The most surprising was that Oracle’s rating was by 8%
lower than Tier II vendors’ rating (62 and 70% respectively). SAP got
the highest rating (73%), while Microsoft was classed 3rd (69%).

In the field of credibility, SAP was ranked 1st, since it averaged 50%
in post-implementation problems (operational stoppages and
disruptions). Oracle followed with 56,9%, Microsoft Dynamics
averaged 57,7% and Tier II Vendors’ solution were placed fourth
with a 61,8% average.

28
SAP Oracle Microsoft Tier II Average

Duration
(Months)
20,0 18,6 18,0 17,8 19,8

Cost of
Implementatio
n $16,8 m $12,6 m $2,6 m $3,5 m $8,5 m

Overall
Satisfaction
73% 62% 69% 70% 67%

Business Risk
Factor
50% 56,9% 57,7% 61,8% 54%

In 2010, Panorama Consulting Group repeated its survey, this time


on 1600 organizations having implemented an ERP system within
the last four years.

The most surprising finding was that within 2 years, Tier II vendors
increased their market share by 7%. Sap and Oracle lost 4 and 3%
of the market respectively, while Microsoft recorded a slight
increase (1%).

After studying the renewed market share, Panorama Consulting


Group decided to class vendors into 3 categories (Tier I, Tier II and
Tier III vendors) to accomplish more illustrative results. Table 7
demonstrates which vendors were taken into account and in which
category they were placed.

Figure 5: 2010 ERP Market


Share
Source: Panorama Consulting Group, 2010
ERP Vendors Analysis Report, p 2 Tier I Tier II Tier III

SAP Epicor ABAS

Oracle Sage Activant Solutions


Inc.

Oracle e-Business Infor Bowen and Groves


Suite

29
Oracle Peoplesoft IFS Compiere

Microsoft Dynamics QAD Exact

Lawson NetsSuite

CDC Software Visibility


Table 8: ROI per Tier
CGS
Source: Panorama Consulting Group, 2010 ERP
Vendors Analysis Report, p 5
Exact

HansaWord

Consona

Table 7: Classification of products in TiersSyspro


Source: Panorama Consulting Group, 2010 ERP Vendors Analysis Report, p 2

The survey revealed that most Tier II vendors’ implementations


were completed under the estimated budget, whereas the majority
of Tier I and Tier III vendors’ implementations exceeded the
estimated budget.

The survey also calculated what was the average payback time
(years taken to recover the ERP investment) and ended up with a
rather expected result. A Tier-I-vendor ERP takes about twice the
time it takes a Tier-III-vendor ERP (3

Vendor Tier Average Payback


and 1,7 years Period (Years)
respectively). Finally, it
Tier I 3,0
takes 2,2 years for a
Tier-II-vendor ERP Tier II 2,2
system to pay back
the required Tier III 1,7
investment Figure for 6:its Budget Estimation Accuracy per Tier
implementation.
Source: Panorama Consulting Group, 2010 ERP Vendors Analysis Report, p 5

The level of customization of the system by vendor’s Tier was also


examined in the new survey. The results revealed that Tier I

30
Vendors tend to customize their products to the client’s needs more
than Tier II and III ERP Vendors do. The latter boast about their
products’ high customization level but if that is true, then it has to
be made before implementation, since Panorama’s survey shows
the opposite. Perhaps smaller ERPs do not need customization
during implementation because they already are specialized.

Last but not least, the new survey occupied with the customer
satisfaction level by vendor’s Tier by measuring how many
companies state that more than half of the expected benefits came
true. The results revealed that Tier II vendors seem to satisfy their
clients more than Tier I and Tier III vendors do. Yet, none of the
three Tiers is found to satisfy on average at least half of the clients’
expected benefits.

Figure 10: Customization per Vendor’s Tier


Source: Panorama Consulting Group, 2010 ERP Report, ERP Vendor Analysis, p 8

Figure 11: Average satisfaction per vendor’s Tier

Source: Panorama Consulting Group, 2010 ERP Report, ERP Vendor Analysis p 9

31
5. ERP in the services sector

Due to their nature, MRP and MRP II were both systems uniquely
destined to manufacturing companies. However, their evolution,
ERP, because of its extended orientation, seemed as an ideal
solution for services suppliers as well. ERP vendors were also
temped by the possibility to extend the use of their products
beyond the Manufacturing Industry. After all, the services industry
is by far more “crowded”, especially in western countries, while
economic analysts predict that the tertiary sector will continue to
grow at the secondary sector’s expense.

Agri Indu Ser


Country . s. v.
30.6 63.4
World 6% % %
1.9 25.2 72.8
E.U. % % %
1.2 21.9 76.9
United States % % %
1.6 21.9 76.5
Japan % % %
Table 9: Nominal GPD Sector 10.6Composition,
46.8 42.6
China 2009 % % %
1.2 23.8
U.K. Source: % % 75%
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_co
3.4 20.7
Greece % % 76%
ERP
constitutes the attempt of a company to integrate its different
functionalities into one single information system. Most functions
that ERP systems handle apply to the services sector as well.
Finance and Revenue Management, Human Resources and
Workforce Management are such functions.

According to Botta-Genoulaz and Millet (2006), ERP systems were


adopted by service companies to:

1. Solve the Y2K problem.


2. Deal with the Euro migration. European companies needed
an information system capable of managing two currencies
with certain conversion rules.
3. Have better control. ERP would allow top management keep
up with the company’s function “with the press of one
button”.
4. Replace their fragmented information system with an
integrated one, improving communication between
departments.

32
5. Achieve real time data-processing.
6. Diminish administrative workload.
7. Grow without further information needs. ERP supports actions
such as business amalgamations and acquisitions.

Before 2000, the hardest task that service companies and ERP
Vendors had to face in order to make their collaboration possible
was the adjustment either of the company to the software or of the
software to the company.

Later on, vendors started working on specialized ERP solutions for


service companies. Financial Services (Banking and Insurance
companies), Healthcare Services (Hospitals and Pharmacies), Higher
Education, Public Sector, Telecommunications, Field and
Professional Services, Wholesale distribution and Retail got
themselves a specialized ERP solution.

At this point, it would be useful to examine ERP’s entrance in the


Health Care Sector.

SAP Industry-specific business maps

Financial Services Banking Insurance

Manufacturing Aerospace & Industrial Machinery


Industries Defense and components

Automotive Life sciences

Chemicals Mill products

Consumer products Mining

Engineering, Oil and Gas


construction,
operations

High Tech

Public Services Defense and Higher education and


security research

Healthcare Public sector

Service Industries Hospitality Railways

Logistics service Telecommunications


providers

Media Utilities

Postal services Waste and recycling

33
Professional services

Trading Industries Retail Wholesale distribution

At this point, it would be useful to examine ERP’s entrance in the


Health Care Sector.

5.1 ERP systems in hospitals

The healthcare sector is, after the manufacturing one, the most
frequent user of ERP Systems (Khosrow-pour, 2002). Hospitals
combine both capacity (doctors, nurses) and material (facilities,
drugs, equipment) requirements.

Roth and Van Dierdonck developed Hospital Resource Planning


(HRP), using Diagnostic Related Groups of patients in order to study
their past resources needs and predict future needs of patients with
similar health problems. Their theory concluded that an integrated
Hospital Resource Planning system was more appropriate for
hospitals since the treatment of a certain patient involves more
than one department, thus an enterprise-wide solution would allow
the coordination of activities (Van Merode et al, 2004; Botta-
Genoulaz and Millet, 2006).

In the mid-1990s, many hospitals understood the necessity to


replace their obsolete management systems for fear of the Y2K
problem. Soh, Kien and Tay-Yap discussed the implementation of
ERP in seven public hospitals in Singapore. The plan was to
implement financial, materials and inpatient management systems
while the old HR and outpatient management systems would
continue to operate. Specific public sector requirements, such as
reporting requirements to regulative authorities and accepting

Table 10: ERP-compatible industries

Source: http://www.sap.com/industries/index.epx, accessed on 12/12/2010

public reimbursements, and other national requirements resulted in


a number of misfits during implementation. Moreover, the inpatient
module, which was in fact a customized industrial module, was not
well integrated with the rest of the modules. However, the
implementation was considered successful since the Y2K problem
was overcome and the system made activity-based costing
Accord

34
ng to Microsoft Hellas , there are 5000 companies, out of a total of 850000 enterprises, in Greece that can implement an ER
possible. In addition, information on resource usage was provided to
management, allowing better planning for the future.

Long before Singapore, the Dutch Government launched a project


develop an integrated management system for hospitals that would
initially contribute to more efficient knowledge management and,
subsequently, to ameliorated quality of patient care, better
resource management and useful data for educational and research
reasons (Bakker & Leguit, 1999). The project involved many
hospitals all over the country. HIS (Hospital Information System)
was expected to enable computers gather, retrieve, process and
communicate information concerning hospitals while it would
“satisfy the functional requirements of all authorized users”,
according to Bakker. Although finance and administration modules
were originally excluded from the project, HIS ended up a complete
system with 80 modules. HIS, now known as HISCOM, was bought in
1999 by BAAN.

5.2 ERP in the commercial restaurant business

Restaurants identified on ERP systems a method to cut costs. ERP


would be a way to automate their back-office. Beyond the evident
benefits related to inventory control, ERP systems can cater useful
information for marketing reasons. An implementation of a dynamic
centralized database would enable restaurants to gather precise
data concerning customer preferences and, more precisely, their
dining patterns, average meal duration and quantity. By tracking
the average meal duration and the average time-traffic, a
restaurant would be able to apply a booking management plan, a
form of yield management, offering incentives to customers to visit
it at different times than its peak hour (Boyer & Verma, 2010).

Moreover, if combined with a smart card, an ERP system would


facilitate its user apply customized services. For instance, if a
customer is vegetarian, each time he used his loyalty card the
system would track him, allowing its user propose a customized
meal, a special offer etc.

Ansel and Dyer suggest that the dining sector was a late adopter of
ERP systems because of the high implementation costs and the
small profit margin of the sector (Botta-Genoulaz and Millet, 2006).

35
P system. That is because the rest of the domestic companies are too small to turn to such solutions. However, only 15% of
(Netweek Magazine, 20/09/2010)
1.ERP in the Greek Market

The first questions a company’s administration has to answer to


before implementing an ERP system are which system it is going to
select and from which vendor it is going to purchase it. Despite the
recent corporate merges and acquisitions that took place in the
Information Technology sector world-wide, reducing, hence, the
number of alternative solutions and suppliers, the ERP market in
Greece remains nebulous. New products and vendors pop up, older
system suppliers make renewal efforts and prices differentiate
(Konomi).

This can be explained by the fact that ERP is not so abroach across
Greek companies, thus there is still a great deal of potential
customers.

A quick glance at the economic structure of Greece is sufficient to


disclose why ERP was “late” in this country. According to the
General Association of Professional Industrialists and Merchants of
Greece, Institute of Small Businesses, Greek economy is based
almost exclusively, namely by 99,5%, on small and very small
companies counting from 0 to 49 employees

36
ERP-compatible companies have already implemented such a solution.
(http://www.imegsevee.gr/index.php?
option=com_content&view=article&id=177:02-09-2010-
&catid=95:oikonomia&Itemid=234&limitstart=1, accessed on
15/12/10). As aforementioned, ERP vendors have only recently
decided to address to this type of companies. In addition, the
manufacturing sector, which was ERP’s initial target, occupies
20,7% of the GDA, that is 4,5% below the E.U. average and 10%
below the global average (see table 7). Finally, while the average
annual IT spending of European SMEs constitute more than 1% of
their turnover and of American SMEs more than 2%, in Greece it
they constitute only 0,6% (Manolitsakis, 2010).

We may distinguish two categories of ERP solutions, based on their


origination: (a) the multinational solutions and (b) the local ERP
solutions.

Konomi argues that multinational solutions have the edge on Greek


ERP systems in terms of:

• Flexibility. Multinational ERP solutions are open to more


elaborate parameter setting, thus, they are more flexible.
However, adopting certain parameters presume that the
company-user of the system is determined to acquire precise
business processes.
• Integration of peripheral circuits (Production, Equipment
Maintenance, HR Management, etc)
• The Work-Flow functionality, which allows IT support in
processes such as Commitment Management or Pre-Sales.

On the other hand, multinational solutions cost more than Greek


ERP solutions and usually involve need more people in the
implementation process.

Finally, multinational solutions require customization to Greek


particularities, such as the National Accounting System and other
legal and cultural matters (relationships between public and private
enterprises, etc).

Greek ERP solutions are usually more frugal. They comprise less
functionalities and this is why they tend to be less expensive and
require less people involved in the implementation process.
However, Greek ERP developers have been investing important
amounts in the deployment and integration of “enhanced” logistics
and production modules over the past few years (Konomi, n.d.).

Greek companies prefer systems that are based on Windows


platforms and are compatible to all databases: Oracle, Microsoft
SQL Server, DB2, etc. In addition, Greek ERP customers pay
attention to the approach of a solution to the 3-tier Client-Server

37
Architecture, which assures rapid communication with remote sites,
an indispensable element for companies with branches.

Varahidis (2007) investigated the Greek ERP market and spotlighted


the main trends, despite the small sampling.

The research was conducted in November 2006, in a sum of 73


companies, all listed on the Athens Stock Exchange. The most
useful findings are summarized below:

• 7 companies responded they don’t use any ERP system.


• 66 companies responded that they use an ERP system, 36 of
which are manufacturing industries.
• The research identified 30 different vendors and 25 products.
That means that some vendors implement ERP systems that
are not deployed by them. For instance, although 18
companies implemented a SAP ERP solution, only 7 of them
actually purchased and completed the implementation with
SAP itself. 11 SAP solutions were implemented by other
companies which are SAP’s partners.
• Although the sample of the research is small, Sigular Logic
and its affiliates (LogicDis, Singular) alongside with SAP seem
to be the leaders in the Greek ERP Vendors market.
• SAP appears to be the leading ERP solution in the Greek
market, followed by Altec Atlantis. Presenting the market
share would be of no use due to the limited sample, however
the prevalence of these two products is obvious.
• Only 8 out of the 66 companies responded that they had
implemented an ERP system before 1998.
• Only 3 companies responded that the implementation
process took more than a year.
• The average implementation time was 8 months.
• The most critical criteria in the selection of an ERP system
was related to the compatibility of the proposed solution to
the strategy and the requirements of the company.
• One out of four companies responded that among the
selection criteria was that of the cost of the system.
• Only 2 out of the 18 SAP users included the latter criterion in
the selection process, demonstrating that SAP is by far more
expensive than other products.

Vendor No of Vendor No of
Imple Imple
m. m.

1 Advanced Consulting 4 1 Ilyda 3


6

2 Altec 4 1 in-house 2

38
7

3 Athens Technology 1 1 Informer 1


Center 8

4 Caterpillar 1 1 Intersoft 1
9 International

5 Computec 1 2 Iris 2
0

6 Computer Project 1 2 Logic Singular 1


1

7 DIS 3 2 Logicdis 7
2

8 Datamedia 1 2 Quality & Reliability 4


3

9 Dataware 1 2 Real Consulting 3


4

1 DD Synergy 1 2 Sap 7
0 5

1 Emphasis Systems 1 2 Singular 4


1 6

1 Entersoft 2 2 Softcom 1
2 7

1 Exodus 1 2 Step One Consulting 1


3 8

1 Galacom 1 2 Unifox 1
4 9

1 IBM 2 3 Teka Systems 2


5 0

Table 11: ERP Vendors in Greece

Source: Varahidis, A., (2007), Χρήση των E.R.P. συστημάτων από τις ελληνικές επιχειρήσεις, p
70

39
Software No of Software No of
Imple Imple
m. m.

1 Armonia 1 1 Oracle 1
4

2 Artemis 1 1 Megatron 3
5

3 Altec Atlantis 9 1 Navition 2


6

4 Compack 400 4 1 Omega 2


7

5 Compackwin 1 1 Orama 4
8

6 DBS Caterpillar 1 1 inSap


Table 12: ERP Software Greece 18
9
Source: Varahidis, A., (2007), Χρήση των E.R.P. συστημάτων από τις ελληνικές επιχειρήσεις, p
7 Defacto 71 1 2 Sen 4
0

8 EBS 1 2 Solution 3
1

9 Emphasis Fashion 1 2 Visual Plano 1


2

1 Entersoft 1 2 Unixfor 1
0 3

1 Epicor 1 2 Αθηνά 1
1 4

1 LB Edwards 1 2 Payroll 1
2 5

1 Global 2000 1
3

The findings of the research above strengthen the deductions put


forward by Konomi. The Greek ERP market does appear to be
severely fragmented, since in a sum of 66 ERP implementations, 30
vendors and 25 ERP systems were spotted. Furthermore, the
implication that domestic vendors charge an ERP implementation
less than the system’s own developers do is also enhanced, since
SAP implemented less than half of its product’s selections, due to
the cost associated with a direct SAP implementation.

40
ERP Selection Criteria
Criteria No of Ratio
choic of
es choic
es

Fame / Experience of the Product's Developer 25 39,06


%

Fame / Experience of the Product's Vendor 26 40,63


%

Compability with the strategy and the requirements of 54 84,38


the company %

Simplicity/ Easiness of utilization 19 29,69


%

Low cost 16 25%

Court Impementation time programme 10 15,63


%

Table 13: ERP Selection Criteria in Greece

Source: Varahidis, A., (2007), Χρήση των E.R.P. συστημάτων από τις ελληνικές επιχειρήσεις, p 73

1. Future Trends

ERP has not reached its final form. It continues to evolve. Vendors
keep an eye on developments and prepare their responses to
market dictations.

Varahidis’ (2007) research demonstrates that the focalization on


SMEs will intensify in the coming years, especially as the Application
Server Provider (ASP) models tend to be established, offering
approachable specialized web solutions to companies. The SME
market is still open to ERP implementations since it appears only a
limited ratio of small to medium sized companies have already
made use of ERP’s benefits.

Bigdoli (2004) states his belief that ERP will continue to integrate e-
commerce solutions, tools and applications while an open
architecture environment will dominate, allowing a company’s
system to connect with suppliers’ and customers’ applications.

41
In addition, the expansion of mobile internet makes ERP vendors
turn to the development of software for mobile phones (Red, 2007).
An ERP-compatible cell phone offers the possibility of incessant
“digital” presence of its user to the company. Such software
solutions are baptized Enterprise Mobile Solutions (EMS).

Dubey (2009) suggests that ERP now has to integrate various


communication technologies such as RFID (radio frequency
identification devices), web interfaces and enterprise data
warehouse technologies. RFID technology allows enterprises to
perform various types of asset management activities, such as
asset accounting, asset auditing, asset tracking and asset visibility.
With the integration of web technologies with ERP, managers will
become ubiquitous and ever-present in companies.

2.Conclusion

Resources planning management systems have shown from their very


beginnings that they are expansion-friendly. What started as a material
requirements technique 40 years ago is now an enterprise-wide system
that, amongst all the other functions of a company, handles materials
planning as well.

Today’s ERP II solutions have little to do with a practice, a method or a


philosophy. They are an indispensable piece of the company. They may
not manufacture a product, but they are a part of it in an extended point
of view, since they are related to everything around it, from its component
parts selection and ordering to the post-sales control. They have a major
impact in the “extended” products that companies are willing to offer to
their clients.

42
The case of Hershey underlines the importance of a cautious
implementation. Possessing the technology must be accompanied with the
“savoir faire”, otherwise it may be preferable for an organization to remain
manual operated.

ERP market is far from saturated. Vendors can count not only in new
businesses but also in businesses that have not implemented such
systems yet for one reason or another. Especially the SMEs sector globally
can continue to absorb the technology of Enterprise Resource Planning
since vendors offer approachable and specialized solutions.

As one would never imagine the expansion of Resource Planning systems


in such a short notice, perhaps ERP users of today can not imagine what
these systems will be like in 10 or 20 years from now. Time will show…

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