Management Decision Making – Assignment 2

Student Name: Abdullah Altammar

Student Number: @00544484

Programme of Study:

MSc Management
Table of contents:

Executive Summary…………………………………………………………………………...3

Introduction……………………………………………………………………………………3

Literature Review……………………………………………………………………………...4

Organisational Context………………………………………………………………………...7

Evaluation Within Case………………………………………………………………………..9

Conclusion……………………………………………………………………………………11

References……………………………………………………………………………………12

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Executive Summary:

The implementation of Enterprise Resource Planning (ERP) systems in Small or Medium

Enterprises (SMEs) have been studied. (ERP) systems have shown a competitive advantage
when used and implemented by enterprises. Many organisational needs were satisfied with the
use of (ERP) systems. Pushbike Inc. is a small enterprise that is suffering from lack of
communication and information-sharing. The case study shows a comparison between the
company’s current business process and when an (ERP) system is applied. The implementation
of an (ERP) system and the transition of the company’s Business Process Model (BPM) have
been discussed and evaluated. The findings of this particular case study should provide logic
solutions to many organisational needs.

Introduction:
Management Information Systems (MIS), are known as the tools that organisations use to
manage and control their business plans and their ongoing business situation. With the use of
technology, organisations can document and file their whole or part of their business activities
and analyse it, which can provide the organisation with the predicted changes of their business
plans (Robson, 1994).
Small and medium enterprises (SMEs) plays an important role in the growth and enhancement
of the world economy. The definition of SMEs varies from country to another and it is
dependent on several factors. The most known factors that define the SMEs are the number of
employees, the investment level, and the total assets. However, a large number of publishers
agreed that SMEs are formed of approximately 250 employees or less (Ayyagari, Beck and
Demirguc-Kunt, 2007). (Dallago, 2003), stated that the SMEs boost the revolution of economy
as it help in the creation of jobs and the modernisation of the economic system.
This report study a small enterprise called Pushbike Inc. The enterprise consist of 50 employees
and therefore it is classified under small and medium enterprises (SMEs). Its main business
idea is selling push-bikes for all ages. The way that Pushbike is setting up their business
sometimes causes them problems. Lack of communication or delayed communication and
inaccurate information sharing are their main problems. These problems can severely hurt a
business in terms of customer relations which can be costly for the business. Such issues can
be minimised or solved by introducing an information system which can easily improve the
business’s communication and information-sharing. For Pushbike in particular, an enterprise
resource planning system (ERP), can be useful in resolving the company’s issues in a costly-
effective manner, which will be discussed and proved later in the report.

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Literature Review:

In any business, management decisions are made on the basis of information developed by the
organisation’s database or the managerial skills. Top level managers set business goals and
plans to be executed and carried out by the organisation’s middle managers in a form of
activities, which will develop the organisation’s database. The operational decision will then
be derived from the organisation’s database which will be updated on a daily bases and reflect
on the current situation of the business. At the same time, the middle or the tactical managers
compare their actual operational results with the planned results, the same information are used
by the top level managers to act on for forecasting and shaping the future of the organisation.
This example shows how a company’s database or information system can improve the
outcomes of any business plan and show its advantages and disadvantages, which will
eventually lead to proper management decision making (Fong, 1997).
As stated earlier, organisations depends mostly on information and knowledge in order to run
its operations. It is very difficult for managers to use their only knowledge and skills to drive
the business. The information and knowledge that organisations need and use, have to be stored
in their database in any form. For a successful business, it is important and essential to know
that all departments within the organisation have to interact with each other. For example, if
the production department of a certain company are looking to increase their production
capacity, it is important that the sales department is on the same page as the production
department, as the sales department can provide their plans for wither they can achieve the
selling of the desired capacity or not. When two or more departments share information within
the company, more accurate and precise decisions are to be expected. A well-developed
information system can identify the companies needs and perform its goals (Fong, 1997).
(Cox, 2014), claimed that in order for an information system to work properly and to be aligned
with the organisational needs, certain procedures have to be followed. Identifying the time that
the information needs to be changed, to keep a record of the information changed, to update
the information, to archive the information, to retrieve the archived information, and to destroy
the information. Any information system is a liability if these procedures were not followed
(Cox, 2014).
Many scientists have been working on developing information systems that can provide
comforting outcomes for organisations. Some systems were developed during the 1960s to
control the manufacturing processes such as the manufacturing resource planning (MRP).

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Later on, with the complexity of businesses and organisations, the sales and marketing
departments needed to use the information systems alongside the manufacturing and
production departments, when the enterprise resource planning (ERP) systems were
introduced. The (ERP) systems were developed to automate and provide links between all
company departments eliminating the need of old approach of communication and information
sharing. The use of (ERP) systems gave organisations the ability to thrive as it can easily store
information that the business needs to act on in the future. It also has the capability to spread
any information collected from one department to every other department within the
organisation, which makes it easy for every department to proceed with a new plan without
conducting any form of communication or meeting with other departments. Moreover, (ERP)
systems made the entire selling process easy and much shorter in an effective cost manner. For
Example, with an (ERP) system, a customer can immediately know his credit limit and if the
product he needed is in stock or not and from which location he can collect it. This process can
take days if the organisation that the customer is ordering from was not using an (ERP) system.
Regarding the supply chain of the organisation, the (ERP) systems can make the whole
operation of the organisation shorter timewise, which will definitely decrease the operational
costs (Chapman and Chua, 2003).
On the other hand, installing an (ERP) system can be a disadvantage. Training the employees
to adapt to the new system sometimes can be difficult and costly. When the organisation is
looking to make changes to the chains of the business, they have to also change the system or
modify it as it will not work effectively. Also, to install and maintain the (ERP) system, a
specialised IT staff is needed alongside the facilities needed for the system to be installed in.
With all the disadvantages and downsides of the (ERP) systems, it was proven that
organisations suffer massively without it (Hall, 2002).
There are different types of (ERP) systems. Off-the-shelf systems, open source systems, and
in-house systems are some types of the (ERP) systems. Off-the-shelf (ERP) systems or known
as packaged software are systems that is designed and prepared for any organisation in the
market. Companies can directly buy the off-the-shelf system from various vendors and start
using it straight away. One of the off-the-shelf system advantages is that it is ready to use and
easy to work with. It is also cost-effective, as the organisation pays only for the licence to be
able to use it. However, off-the-shelf systems cannot cope with the business plans as it is ready
to use with minimal changes settings, so some organisations need to adapt to the system. Also,
there are many features that companies often does not need which with time may slow down
the system and would have a negative impact on the business (HeadChannel, 2020).

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Another type of an (ERP) system is the open source system. An open source (ERP) system is
a coded system that IT employees can develop based on the needs of their organisation. Open
source systems does not require a licence or installation fees. Large organisations with large
IT departments tends to favourite the open source systems as they can shape the system on
their organisational needs and create competition within the IT department with minimal costs.
Also, the organisation can hire a consultant who can advise them on the best ways of using the
open source system. Freelancers in the field are ready to develop an open source system for
organisations which makes it less expensive than bespoke systems (OpenSource, 2020).
In-house (ERP) systems are systems that the organisation develop from scratch. It can be useful
in the term of flexibility, but it is expensive, as the company needs to provide large investment
in technological solutions which will drain the company’s resources (BlueLinkERP, 2020).
The use of an enterprise resource planning (ERP) system in an organisation can be useful in
terms of providing a competitive edge or a competitive advantage. Implementing an (ERP)
system will make information-sharing within a business easier, therefore, efficiency and
accuracy in identifying customer needs will be increased which gives an advantage over
competitors. Organisations with a well-prepared (ERP) system have the ability to save a large
amount of money operational and production departments, which in leads them to sell their
product for a cheaper price. Selling a high quality product with a cheaper price, gives the
organisation an advantage over competitors. In general, (ERP) systems provide organisations
a better and a useful amount of information which will eventually lead to perfect decision
making (Exel, 2020).

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Organisational Context:

In this section, business process models (BPM) will be discussed extensively. The following
business process model shows how a certain physical selling process in a certain company
work. The company provide pens and customers can only buy and collect the pens from the
store. It proves how a simple purchase can be complex and tiring both for the organisation and
the customer.

Figure 1: (BPM) for a pens company.

The figure above shows that in order for a customer to buy a certain pen, they need to go to the
store and search for the exact pen they needed in order to buy, if they could not find it, they
have to ask the seller to physically search for it, they then can buy it and use it, otherwise they
have to go to another store. A business process model was made for Pushbike Inc. The
following figure indicates how two departments in Pushbike communicate with each other and
with the customer.

Figure 2: (BPM) of Pushbike’s S&M and CS communication with customer.

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The above business process model explains how the sales and marketing department at
Pushbike communicate with the customer service department in order to fulfil customer needs.
The (BPM) above indicates that Pushbike’s computer system is inactive and has a negative
impact on the company as each department uses their own database for their own. The basic
computer system for each department at Pushbike have appeared to be a liability as the
customer service department has to contact the S&M department to enquire about product
availability. This concept applies to all departments at Pushbike, which makes the business
slow and very difficult to satisfy customer needs.
One of the key challenges at Pushbike is that the computer system is basic and needs
modification. The computer system is simple and makes communication very weak within the
organisation and with the customers. Also, the system at Pushbike delays information-sharing
between departments and sometimes the information may be not accurate as mentioned in the
case study. These specific problems makes customers look for other vendors or providers,
which can be costly for Pushbike. The business process at Pushbike needs to be modified in
order to compete with competitors and satisfy both customer and organisational needs.
The following table is a SWOT analysis of Pushbike’s business showing the strengths,
weaknesses, opportunities and threats.

Table 1: SWOT analysis of Pushbike business process.

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The above table shows the strengths, weaknesses, opportunities and threats of the Pushbike
current business process and situation. It shows that the current business situation could be
modified and developed by implementing an (ERP) system within the organisation.
As discussed in the literature review, (ERP) systems are meant to improve the business process
of organisations, by providing better communication and information-sharing channels.
Pushbike are struggling with certain problems that any (ERP) system can provide its solutions.
However, some (ERP) systems could work more efficiently than other systems due to many
factors. An organisation like Pushbike should implement an off-the-shelf (ERP) system. Off-
the-shelf (ERP) systems can provide Pushbike with the best needed results. As Pushbike has a
clear and simple distribution of tasks within the organisation, off-the-shelf systems can be
managed easily. In regards to cost, for off-the-shelf systems, Pushbike have to pay a licence
fee and start using the software immediately with minimal costs. In relation to support and
maintenance, vendors of off-the-shelf systems provide support and maintenance as a package
to the organisation alongside usage training. With the use of an (ERP) system, Pushbike can
improve their business process by automation and online based models.

Evaluation Within Case :

Implementing an (ERP) system in organisations can provide outstanding improvements to the

business process and plan as stated earlier. Without correct implementation of the system, the
organisation will suffer and will be lead to a disaster. The main idea of implementing an (ERP)
system is to facilitate information-sharing within the department of the enterprise and improve
communication (Black, 1999). For a successful implementation of an (ERP) system, several
factors needs to be studied (Saini, Nigam and Misra, 2013). The first factor that needs to be
studied for a successful implementation of an (ERP) system is to complete the installation of
the system within the budget. Pushbike will need to complete the project of implementing an
(ERP) system within their budget, which needs to have a precise plan on concluding a sufficient
budget for installing and purchasing the off-the-shelf system from a specific vendor. Going
over budget will then reduce the cost of other factors like training. The second factor is
completing the project within a specific time frame. As the delays of implementing the (ERP)
system can be costly, which Pushbike cannot afford. When it comes to organisational factors,
Pushbike will need to be able to modify their management plan and program. For an (ERP)
system to be successful, organisations have to adapt to a new managerial system which can be
aligned with the system they are implementing.

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One important factor is process reengineering alongside a well-studied business plan to make
the implementation process easy and beneficial. Technological and client consultation factors
are also important in a successful implementation. At last, Pushbike needs to put in
consideration training their employees to adapt to the new system. These factors have shown a
successful implementation and use of (ERP) systems (Saini, Nigam and Misra, 2013).
The following business process model (BPM) is the Pushbike’s revised business process.

Figure 3: Pushbike’s revised business process model.

The business process model for Pushbike is totally different after implementing the (ERP)
system. The new (BPM) allow all departments to improve communication between each other
and share accurate and precise information at the same time. As shown in figure 3, the
accounting and finance department, the sales and marketing department, the procurement
department and the human resources department are all exchanging and passing information
and at the same time they are fulfilling customer needs. With the new business plan, Pushbike
can easily receive an order from the customer knowing exactly if the desired item is available
or not in a timely manner. Also, Pushbike will be collecting precise and important data about
the market needs. At this time, the robust forecasting information and the great inventory
management will give Pushbike a competitive advantage. Note, the customer service
department is no longer needed in the new business plan and it will be replaced with a
distribution department that can add value for the enterprise in terms of gaining customer
satisfaction. The new system that Pushbike will be using will reflect positively on management
decision making.

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Conclusion :

In our world, whenever a new system, process, or a plan appears, challenges of success appears
at the same time. The transformation of Pushbike’s business plan is considered to be successful,
however, some challenges may interfere with this success. Providing a new business plan may
confuse employees and departments on how to successfully meet the organisations new
requirements and goals. Pushbike’s new plan consist of adding a whole new distribution
department which is completely new to the company’s business and its employee, Therefore,
negative impact may occur in the beginning of the transformation period. The fear of the failure
of the new plan may also affect the company’s focus and create a huge mistakes. In order for
Pushbike to overcome these challenges, training programs has to be provided for the
employees. Also, a smooth and well-studied transition will build confidence within the
organisation, which is very important in changes of any business plan.
When implementing an (ERP) system within an organisation, there are some challenges to be
put in consideration. The first challenge to be put in consideration is the poor (ERP) software.
Some vendor have a reputation of poor software settings which may affect the entire business.
Organisations are advised to choose a reliable (ERP) vendor to overcome this challenge.
Another pressing challenge is the lack of skills. If the (ERP) system was to be installed
perfectly, the employees have to have the skills to use it. Without the skills to use the (ERP)
system, the business will collapse immediately. Also, if the company could not realize the
benefits the (ERP) system can provide, they will be in a difficult situation. Realizing the
system’s benefits is a key point of a implementing it. By considering all challenges of
implementing a new (ERP) systems, organisations are likely to improve in terms of
communication, information-sharing, identifying and satisfying customer needs and gaining a
competitive advantage (Abramowicz and Tolksdorf, 2010).
In conclusion, information systems have been evolving in the past few decades. The use of
information systems in businesses have proven to be an asset to any company or organisation.
Implementing an (ERP) system can make a huge positive impact in terms of raising the
organisation profit, acquiring competitive edge, improving communication and accurate use of
information. In Pushbike situation, an off-the-shelf (ERP) system will provide a major
advantage in enhancing the business process and state, by resolving some serious problems
Pushbike are facing. The implementation of a new (ERP) system may introduce challenges to
the business, studying the process of implementation and transition thoroughly will provide an
advantage in overcoming these challenges.

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References:

Abramowicz, W. and Tolksdorf, R. (2010). Business Information Systems. Dordrecht:

Springer, pp.399-409.

Ayyagari, M., Beck, T. and Demirguc-Kunt, A. (2007). Small and Medium Enterprises
Across the Globe. Small Business Economics, 29(4), pp.415-434.

Black, J.D., 1999. Enterprise resource planning––spatial infor- mation meets business process
software in cyberspace. GeoWorld 12 (4), 38–40.

BlueLinkERP (2020). The Dangers of Developing a Custom ERP System In-House. [online]
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developing-a-custom-erp-system-in-house/ [Accessed 5 Mar. 2020].

Chapman, C. and Chua, W. F. (2003), " Technology-Driven Integration, Automation, and

Standardization of Business Processes in A. Bhimani (Ed.); Management Accounting in the
Digital Economy", Oxford University Press, Oxford, pp. 74-94.

Cox, S. (2014). Managing Information in Organizations : A Practical Guide to Implementing

an Information Management Strategy. 1st ed. Palgrave Macmillan, pp.40-51.

Dallago, B. (2003). The importance of small and medium enterprises. United Nations
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Exel (2020). How ERP systems can be a source of competitive advantage - Exel Computer
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competitive-advantage/ [Accessed 5 Mar. 2020].

Fong, J. (1997). Information systems reengineering and integration. 2nd ed. Hong Kong:
Springer, pp.1-7.

Hall, R. (2002). Enterprise Resource Planning Systems and Organizational Change:

Transforming Work Organization? Strategic Change (2002), Vol. 11(5); p.263.

HeadChannel (2020). Bespoke software vs. off-the-shelf software. [online]

Headchannel.co.uk. Available at: https://headchannel.co.uk/bespoke-software-vs-off-the-
shelf-software-321 [Accessed 5 Mar. 2020].

OpenSource (2020). Why large companies use open source ERP. [online] Opensource.com.
Available at: https://opensource.com/business/15/3/why-large-companies-use-open-source-
erp [Accessed 5 Mar. 2020].

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Robson, W. (1994). Strategic management and information systems. 2nd ed. Financial Times,
pp.82-84.

Saini, S., Nigam, S. and Misra, S. (2013). Identifying success factors for implementation of
ERP at Indian SMEs. Journal of Modelling in Management, [online] 8(1), pp.103-122.
Available at:
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ntifying-success-factors-for-implementation-of-erp-at-indian-smes-a-comparative-study-
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