ICACSIS 2013
Analysis and Design of Enterprise Resource Planning
(ERP) System for Small and Medium Enterprises (SMEs)
in the Sales Business Function Area
David, Y. Ruldeviyani, P. Sandhyaduhita
Faculty of Computer Science, Universitas Indonesia
Email: david@ui.ac.id,yova@cs.ui.ac.id, p.indahati@cs.ui.ac.id
Abstract --- Enterprise Resource Planning can
provide many benefits for organizations that use
them. This also holds for Small and Medium
Enterprises (SMEs). However, due to limited
funds, SMEs is unable to procure a commercial
ERP system. Nevertheless, even for a free ERP
system, SMEs do not have the expertise in dealing
with the hardware, software, nor ERP system
infrastructure. Therefore, we are interested to
perform analysis and design of an ERP system for
SMEs that is free, able to be implemented and
maintained easily by SMEs. However, in this
research, we constrain ourselves to focus only on
one of the main business function areas namely
the Sales Area. First, we perform analysis on
SMEs’ business processesusing interviews to 17
SMEs in Jakarta to create generic business
process model for the corresponding area. We also
use additional references, i.e., analysis on two
open-source ERP software
packages,viz.Openbravo and Apache OFBiz.
Based on the analysis, we further try to build the
designof the ERP system.In the end, this research
yields a generic process model of the ERP
systemfor SMEs in the Sales Business Function
Area and the corresponding Use Case Diagram
(UCD), Class Diagram, Entity Relationship
Diagram(ERD) and Architectural Deployment
Diagram.
I. INTRODUCTION
B
USINESS is an organization that sells goods or
services to consumers for profit. During its
running, a lot of the transactions occur among
business people. Generally, the transactions involve
variety of data on the organization, e.g., the amount
of inventory, the amount of incoming and outgoing
money, the amount of goods that must be made, etc.
In addition, transactions usually also produce a
variety of documents such as inquiry, quotation, sales
order, invoice, etc [2].
Without the help of any (technical) system, an
organization has to maintain its data manually. The
documents that are output of business transactions
must also be created manually. This is undoubtedly
very cumbersome thus requires extra time and great
effort.
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ISBN: 978-979-1421-19-5
Starting in 1975, a system was developed as a tool
in addressing specific business function [1]. With this
system, activities and transactions on a business
function can be automated. However, because each
system is specific to a business function and there is
no integration between the systems, the inter-area
business functions in the organization have to share
data manually. Thus, it is very likely that data is
being duplicated. For example, in a case that data on
sales business function is also required by financial
and materials management functions, the data is
simply being duplicated to fulfill the needs. This is
the main reason of why Enterprise Resource Planning
(ERP) integrates some or all business functions in an
organization through a single database. It is expected
that using this system, all transactions that occur in
an organization can be automated and all business
functions within the organization do not need to share
data manually. Therefore, the existence of an ERP
system is very important for an organization to run its
business efficiently [3].
Many vendors who have developed ERP
systemsset very high prices for the systems. Thus,it
makes the systemsunaffordable for Micro or Small,
and Medium Enterprises (SMEs) [5]. However,
despite the availability of free ERP systems provided
by the Open Source Group, the SMEs still need
expertise in order to install, configure and modify the
system [7].This causes problem forSMEs usually do
not have resources of skilled IT people to perform
those steps. Eventually, it hinders SMEs for having
ERP systems to support their business.
To help SMEs sector acquireERP systems;our first
objective is to design an ERP system that is relatively
easy to implement and to use by the SMEs. Web-
based application does not require any installation on
the client site, and,itcan be further implemented using
cloud computing technology [4]. By using cloud,
SMEs do not have to provide and maintain
serversorto have skilled IT resources. They only need
to provide computers and browsers to run their
businessusing ERP systems. Therefore, we design the
ERP systemas a web-based application. It is
expectedthat the number of SMEs using ERP systems
will increase as the steps to implement and use the
systems are relatively easy.
As mentioned earlier, SMEs have limited capital.
Thus, a free ERP system is very desirable since it will
not give financial burden to them. Therefore, our
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second goal is to design a free ERP system such that
SMEs do not have to pay for the purchase or lease of
the systems in order to increase their business
performance in some aspects, e.g., customer
management, sales, inventory etc.
Basically, an ERP system can support several
functional areas of operation, e.g., sales
&marketing,SCM (production planning, material
management), accounting & finance, and human
capital management [1]. Due to research limitation,
we focus only on the sales business function area as
one of the most important areas for SMEs.
Accordingly,we design an ERP systemthat supports
the sales area. We leave the remaining areas open for
subsequent researches.
II. RESEARCH METHODOLOGY
In this research, the development of ERP systems
is conducted using waterfall process modeldescribed
in [8]. The stages carried out during the research and
development of the ERP system includes Planning,
Analysis, and Design of the ERP system. Due to time
limitation, the Implementation, Deployment and
Maintenance stages are not performed within this
research scope.
A. Planning
This stage begins with a literature study on the
concept of ERP in [1]&[9], and onIndonesian SMEs
information provided by the Ministry of
Koperasiwho issues regulations for SMEs. Moreover,
for our reference and background knowledge we
choose to explore 3 existing ERP systems, viz. SAP
(commercial), Openbravo (open source), Apache
OFBiz (open source), later on in the Analysis stage.
We are aware that SMEs business varies. We find
that SMEs business categories shown in [10] by the
Indonesian Ministry of Koperasiis too product-
oriented rather than process-oriented. Thus, we
choose to adopt GDP sector categorization for we
consider it is more process-oriented. The
categoryconsists of 3 sectors, i.e., Agriculture,
Industrial and Service sector [11]. Next, we try to
map every category in [10] to each group in [11].
Accordingly, we add a new sector viz. Trading
sector.
In order to propose a general business process of
SMEs in Indonesia, the case study must represent
Fig. 1. Sales & Marketing Business Process for Service sector (e.g., Rental Service)
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ISBN: 978-979-1421-19-5
each sector. Hence, we interview 17 SMEs in
Indonesia such that every sector is fairly represented.
B. Analysis
The second stage, i.e., Analysis, requires a lot of
effort for we perform intensive analysis on the
problem domain in this stage. We question 17 SMEs
concerning their sales business process,as we use
process approach, and the corresponding features
required from an ERP system in order to support it.
Next, we explore SAP, Openbravo and Apache
OFBiz.
From various SMEs business processes, we try to
derive a general sales business process for SMEs.
First, Trade, Industry, and Agriculture sector have
business process resemblance so that we classify
them as Non-Servicesector. Two variants of Non-
Service sector business processes are shown in Fig.2
andFig. 3, while the Service sector can be seen in
Fig.1. Note that we include some marketing
processes since sales area is tightly-coupled with
marketing area.
The variation on the Non-Services sector occurs for
two reasons. First, activities in the sales area after the
booking have several alternatives, e.g., new goods are
available after going through the production process
and then directly sent, or goods after production still
needs to be reassembled so that preparation is still
necessary before goods are being sent, or there are
goods that are ready or not ready (need to be
produced first) and then go into preparation activities.
Secondly, there are activities in the marketing area
that rely on sales/marketing team, marketing via the
bazaar, or marketing via partnership with retailers.
Secondly, overall, we recognize that the sales
process for all sectors includes pre-sales activities,
ordering, production (if required), delivery, and
payment. As for marketing, it includes marketing
planning and marketing plan execution. Thus,
combined with the information of the required
features elicited from 17 SMEs and 3 existing ERP
systems as reference, we then identify the required
master data and the corresponding master forms (and
fields) for the ERP system that are used as the input
for the Design stage. In the end, we can construct the
general business process for the sales area in which
ERP system is utilized.
ICACSIS 2013 ISBN: 978-979-1421-19-5

Fig. 2. Sales & Marketing Business Process for Non-Service Sector

with Ready Goods and Non-Ready Goods

Fig. 3. Sales & Marketing Business Process for Non-Service Sector with Marketing via Partners

C. Design created or updated are company (companies),

employee (employee), material (material),
For the third stage, i.e., Design, we use object-
organization (organization), and customers
oriented approach based on [12] to model the design
(subscribers). In the pre-sales activities, if there is
of the ERP system. Master data and the
any procurement or goods production process, the
corresponding master forms (and fields) is considered
process can be recorded in the system via the
as data requirements for the ERP system. Thus, it is
"Material Movement/Transaction" menu.
used as guidelines to design the system database. The
A customer can request an inquiry or quotation to
database design is formulated as an Entity-
the seller. For an inquiry, the seller can directly create
Relationship Diagram (ERD). Subsequently, a Class
through the system and subsequently print it for the
Diagram which covers the features of the ERP
customer. However, for a quotation, the seller should
system is constructed. Next, for the Deployment
think in advance whether he/she can fulfill the order
stage, a design of Deployment Architecture Diagram
or not. Quotation is a legally binding offer, so the
is built to show how the software component is
seller must be able to fulfill orders based on it. If the
deployed physically. All diagrams can be found in
seller is not sure whether he/she can fulfill orders in
[6].
the quotation, then the quotation itself should not be
Features provided by the ERP system are as
made in the first place. A pre-sales activity will
follows: Material Management, Inquiry, Quotation,
continue to a sales activity if a customer creates order
Sales Order, Shipment/Delivery, Invoice, Receipt,
based on a quotation.
Payment, Return Rental Order, Return Order.
B. Sales Activities
III. RESULTAND ANALYSIS
The sales activitybegins when a sales order is
The sales business process model consists of 4
made. When a customer comes to the seller to order
high-level business processes, viz., pre-sales-
and the seller feels he/she is able to fulfill the order,
activities; sales activities, invoice & payment in, and
then an order is created. If there is an employee who
payment out, each of which is formulated in Fig. 4 to
is held responsible for the sales order, then the
Fig. 9. For each business processes model, it is
employee data can be entered to a sales order.
clearly shown where the ERP system is utilized.
The seller can check the availability of the items
A. Pre-Sales Activities through the "Material Master Data> Material" menu.
The menu will display table of the material. The
Sellers can create and update the company's master
amount of goods available at the warehouse can be
data in the pre-sales stage. Master data that can be

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ICACSIS 2013
seen in the "Material In Inventory" menu. The
number in the "Material In Inventory" is calculated
based on the data in the "Material Movement/
Transaction", "Sales Order", "Order Return", and
"Return Rental Order" menu.
For ready stock items (goods), the seller can
directly provide goods and record it in the system
through the "Shipment/Delivery" menu. For goods
that are not ready stock, customers have to wait for
the goods to be produced first, and then the goods are
delivered to them. In some cases, a down payment is
required and the new good can be produced after the
down payment is paid by the customer.
If there is a problem in an order, the seller can
record it through the field "Notes" of the sales order
in the system. The corresponding solution of the
problem can also be recorded in the same field as
well.
If there are loan items in the sales order, the
customer must return the loan items. The items
returned can be recorded in the "Return Rental
Order". The “Return Rental Order” will be
automatically generated by the system if the sales
order contains loan items that have been paid
(although not necessarily to be paid completely).
The seller can record return delays, condition of the
goods, and other issues related to the goods being
returned in the "Return Rental Order" menu. If
required, a customer must give compensation or pay
for damages.
If goods delivered by the seller are not in good
order or does not fit the order, the customer can
return the goods to the seller. If this happens, the
seller must create a "Return Order" in the system.
Goods that are returned can be replaced by other
goods, money, or both.
C. Invoice and Payment In
There are three kinds of incoming payments, i.e.,
down payment, sales order payment (excluding down
payment), and damage compensation for rental items.
The payment process begins with the invoice sent to
the customer. The seller can print an invoice through
Small And Medium Enterprise Sales Process (Level 1)
Sales, Customer, Material
Management
1.0 Pre-Sales 2.0 Sales
Start
Activities Activities
Reject
Fig. 4. High-Level Business Process
ISBN: 978-979-1421-19-5
the "Financial Management> Invoice". When there is
a payment from a customer, the seller can record it
through the menu "Financial Management> Payment
In". As a proof of the payment, the seller can also use
invoice document because an invoice basically
records all paymentsthat have ever been made for a
corresponding order.
D. Payment Out
Payment Out may occur if a customer returns
wrong/damaged items or experiences other problems
and thus the seller pays the customer back. To record
a payment out, the seller can use the menu "Financial
Management>PaymentOut". Since customer
normally does not provide receipt for the payback,
the seller can ask the system to print the receipt (the
menu "Financial Management> Receipt> Order
Return Receipt") and then ask the customer to sign it
as a proof that the payback has been made.
IV. CONCLUSION
The sales business process model for SMEs
produced in this research can be adopted as a
business process for SMEs in the sales business
function area. Furthermore, it identifies business
processes that can be supported by the ERP system as
an ERP system is intended to enable an organization
to run more efficiently. Hence, it can be used as
guideline for SMEs who want to obtain ERP systems.
Moreover, the corresponding design artifacts, i.e.,
the Use Case Diagram, the Class Diagram, the
Entity-Relationship Diagram, and the Deployment
Diagram, can be used as a reference or guideline for
the implementation, integration, testing, and
deployment stagesof the ERP system for the sales
business function area. The design of the ERP system
in this study is proposed to help data processing and
information integration of the organization
particularly to enable the sales process to become
more efficient. The processed data and integrated
information includes master data, pre-sales activity
(inquiry, quotation),sales activity (sales order) up to
payment data and information.
3.0 Invoice
4.0 Payment
And Payment End
Out
In
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ICACSIS 2013 ISBN: 978-979-1421-19-5

1.0 Pre-Sales Activities (Level 2)

No
Customer

Need
Quotation? Yes
End

Start
No No

Need Yes 1.4 Request For 1.8 Request For 1.12 Analyze Offer 1.13 Request
1.7 Get Inquiry
Inquiry? Inquiry Quotation Quotation Accepted? For Sales Order

Yes

Customer’s Yes
Data Already
Stored? 1.9 Analyze Able To Yes To 2.1
1.3 Store 1.5 Create 1.10 Create 1.14 Analyze
Quotation Fulfill Order In
Customer Data Inquiry Quotation Order Request
Request Quotation?
No
No
Sales

Need To Store No
Customer’s Data? Yes
Reject Able To
Fulfill Order?
Yes 1.11 Send
1.6 Send Inquiry
Quotation No

Reject
Management
Material

1.1 Procuring Or 1.2 Insert

Start
Producing Material Data

Start

Fig. 5. Pre-Sales Activities Business Process

2.0 Sales Activities (Level 2) (1)
Customer

2.9 Get Product

or Service

From 1.12 2.8 Deliver

No 2.4 Check To 3.6
Or 1.14 Need PIC? Product Or Any Problem?
Availability Service No
To 3.1

Yes Yes
Sales

Need Down Yes 2.7 Post Goods 2.10 Record

2.2 Choose PIC Payment? Issue Problem

No
2.1 Create Sales
Order From 3.5

2.3 Input PIC 2.11 Handle 2.12 Record The

Data To Sales Problem Solution
Order
Yes
Ready Stock?

No
Management
Material

2.5 Producing,
2.6 Insert
Procuring, Or
Material Data
Serving

Fig. 6. Sales Activities (1) Business Process

Fig. 7. Sales Activities (2) Business Process

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ICACSIS 2013
Fig. 8. Invoice and Payment In Business Process
Fig. 9. Payment Out Business Process
V. FURTHER RESEARCH
As sales business process of SMEs varies, the
proposed general sales business process might still
weak in giving strong argument for the level of
abstraction as well as the granularity of the proposed
process. Further research to improve the proposed
business process can be performed using DEMO
methodology [13] that claims to have a firm
theoretical foundation in defining business process.
Also, additional research for an extensive evaluation
to a lot of SMEs can be performed in order to verify
that the design is general enough. Furthermore, since
there is no direct implementation of the proposed
sales business process model, further research is
needed to evaluate the practicality of the model.
Lastly, for this research focuses only on the sales
business function area, we suggest further research
on other areas, e.g., Production, Marketing, Finance,
etc.
ACKNOWLEDGEMENT
We thank to IMHERE project officers for their
support in disseminating the results of this research.
The IMHERE project is fully supported by the
Directorate General of Higher Education, Ministry of
National Education, the Republic of Indonesia.
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ISBN: 978-979-1421-19-5
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