Performance analysis & evaluation of

ERP in Indian small manufacturing

enterprises (SMEs)

Course Work Seminar-I

By
Bhagyashree Mohanta
Department of Computer Science and Engineering
Registration Number:

Under the Guidance

of
Dr. Srikanta Patnaik,
Professor, Department of Computer Science and Engineering

Institute of Technical Education and Research

Siksha ‘O’ Anusandhan (Deemed to be University)
Content
• What is ERP
• Basic Philosophy of ERP in an Enterprise
• ERP Evolution
• ERP in SMEs and it’s benefits
• Business Needs & Technology used in SME
• ERP implementation methodology
• Effects of customization in ERP
• Factors influencing ERP implementation success
• Performance evaluation of ERP
• Conclusion
What is ERP?
• Enterprise resource planning (ERP) is a packaged software of highly
integrated applications that makes managing business operations easier.

• It is a complete package which supports every functional area of a

manufacturing unit and every aspects of an enterprise that includes the
complete product lifecycle right from, CRM, Customer/Prospect
Management, Engineering, Sales Orders, Job Estimating, Shop Orders,
Scheduling, Capacity Planning, Material Requirements Planning, Purchasing,
Receiving, Job Labour Reporting, and Quality Management.

• When first developed, ERP systems were used only for

large manufacturing companies. Today, they benefit all sizes of companies,
even those that are quite small.

• In India, it is a limitation for small manufacturing enterprises to utilize the

benefits of ERP system due to its cost of the software, cost of its
implementation and maintenance, customization process and complexity in
use and understand.
Generalized model of an ERP system
Basic Philosophy of ERP in an
Enterprise
• The term ERP was coined in 1990 by Gartner Group, but its roots date to the 1960s.

• Gideon I. Gartner is the founder of Gartner, Inc. a Stamford, Connecticut information

technology research and advisory company.

• ERP system application can be followed back for more than two decades with many
national programs in India supporting IT developments. Earlier research and
development programs like, e.g., more than 750 Program on computer integrated
manufacturing (CIM) systems, was launched in March 1995.

• Few well-known ERP systems that are available in Indian market:

• SAP ERP
• Microsoft
• Netsuite
• Oracle
• Infor
• Epicor
• IFS
• Tally
Continue
• The basic objective is to introduce a simple, cost effective, easily
customizable and quality ERP system, so that Indian SMEs can avail the
benefits of the ERP system.

• The ERP Business Transformation Strategy is to modernize and integrate

business processes and systems.

• The future of SMEs will empower the ERP users to access information and
provide services through an intuitive and integrated interface, and ultimately
aims to:
• Improve Service Experience
• Enhance Competitiveness
• Modernize Business Processes and Systems
• Automate Business Solutions
• Increase Operating Efficiency
• Provide Access to Standardized business Data
ERP Evolution
General Features of ERP
An ERP System is not the integration of various organization processes.
Any system has to possess few key characteristics to qualify for a true
ERP System. These features are:

• Flexibility
• Modular and open
• Comprehensive
• Beyond the company
• Best business practices
Benefits of ERP in SMEs
• Enterprise Resource Planning (ERP) is the business process management
software that helps small to medium sized businesses use a system of
integrated applications for managing business and automating several
business functions, such as

• Integrate the flow of information

• Streamlined Processes
• Customer Service
• Cost Savings
• Reporting
• Enhances productivity
• Maintain control & reduce operating costs
• Higher flexibility
• Increase sales and long term planning
• Improved decision-making
• Exceeding Collaboration
• Transparency
Business Needs & Technology
used in SME
• ERP software is needed because it can facilitate the following:

• Increase effective communication between departments

• Allow employees to access information they need from anywhere
• Streamline processes across various department
• Provide a birds eye view of a business' overall operations
• Better manage a company's finances
• These benefits lead to higher productivity, more efficient operations, and
reduced errors.

• The techniques used in ERP systems are, relational database system(RDBS),

communication protocols and user interface framework.
Continue
ERP implementation methodology
• Different phases of ERP lifecycle

1. Pre-evaluation screening
2. Package evaluation
3. Project planning phase
4. Gap analysis
5. Reengineering
6. Configuration
7. Implementation team training
8. Testing
9. End – user training
10.Going live
11.Post implementation phase
ERP Implementation Life Cycle
Effects of customization in ERP
• The software quality characteristics are directly influenced by ERP system
customization in an organization.

• As software quality depend on the ERP customization, software quality

attributes are considered as dependent variables and ERP customization
attributes are taken as independent variables.

• Some of the ERP customization variables are,

• Module customization,
• Data customization,
• Source code customization

• Some of the software quality attributes are,

• Functionality of the software,
• Reliability,
• Usability,
• Maintainability
Factors influencing ERP
implementation success
Continue
• Factor analysis attempts to identify underlying variables, or factors, that
explain the pattern of correlations within a set of observed variables.

• It is most frequently used to identify a small number of factors representing

relationships among sets of interrelated variables.

• For this reason, factor analysis is considered a statistical data reduction

technique that takes a large number of observable instances to measure an
unobservable construct.
Continue
• It generally requires four basic steps:

1.calculate a correlation matrix of all variables,

2.extract factors,

3.rotate factors to create a more understandable factor structure,

(Varimax is the most popular rotation method used in factor analysis. It is

an orthogonal rotation method that minimizes the number of variables that
have high loadings on each factor. The goal of rotation is to achieve simple
factor structure (i.e. high factor loadings on one factor and low loadings on
all others), which simplifies the interpretation of the factors.)

4. interpret results
Performance evaluation of ERP
• Performance evaluation is a key aspect of ERP implementation which can
analyze the risk factor problem.

• To determine the risk criteria different methodologies are used along with
survey analysis.

• Some of the methodologies are,

• Fuzzy Multi Criteria Decision Making (FMCDM)
• The fuzzy extension of MCDM methods such as:
• AHP(Analytic Hierarchy Process),
• TOPSIS(The Technique for Order of Preference by Similarity to Ideal Solution),
• ANP(Analytic Network Process),
• VIKOR and
• DEMATEL(Decision Making Trial and Evaluation Laboratory Model).
Conclusion
• The study and analysis of data show that after completing the ERP
implementation in most of the larger organizations, it is now penetrating into
SMEs.

• The study also revealed that the Indian SMEs are using some computerized
information system to reduce the cost and will switch over to some ERP to
integrate it into one software which will reduce repeated data entry, decrease
processing cost, increase customer satisfaction.

• ERP provides the necessary infrastructure that forms the operational and
transactional system for a business of any size and with least effort.
Outline of Existing Work
Year Author Publisher Work

2017 Parthasarathy et.al. Software Quality Journal • Evaluation of the effect of

ERP customization on ERP
ACM digital library software quality in an
organization
2016 Nandi & Kumar Journal of Enterprise • Survey on ERP
Information Management centralization and its
implementation success in
Emerald Group Publishing Indian SMEs
Limited

2016 Saade & Nijher Journal of Enterprise • studies comprise of various

Information Management critical success
factors(CSFs) which affect
Emerald Group Publishing the success of ERP
Limited implementation in
enterprises
2014 Garg & Garg Journal of Enterprise • Some of the crucial factors
Information Management influencing ERP are
analysed for retail sector.
Emerald Group Publishing
Limited
Continue
Year Author Publisher Work

2011 Annamalai & Ramayah • Business Process • Survey on benefits of ERP

Management Journal implementation in Indian
manufacturing plants
• Emerald Group Publishing
Limited

2016 Upadhyay et al. • Journal of Enterprise • Studies on factors

Information Management influencing ERP implementation
in Indian micro, small and
• Emerald Group Publishing medium-scale enterprises
Limited
2010 Kale et.al. • Journal of Manufacturing • Performance evaluation of
Technology Management ERP implementation in Indian
SMEs
• Emerald Group Publishing
Limited
2000 Subba Rao • Industrial Management & • Survey on needs and
Data Systems technologies of Enterprise
resource planning(ERP)
• Emerald Group Publishing
THANK YOU