Jan Devos - 20/09/2012

Faculty of Engineering and Architecture – Campus West

Effect of ERP implementation on

the company efficiency –

A Macedonean Case

Jan Devos, PhD

Rajcanovska, J., Van Landeghem, H. & Deschoolmeester, D.

CONFENIS 2012 Conference Ghent

pag. 1

Outline of the presentation - ERP

- Macedonia

- Research Questions

- Research Methodology

- Findings

- Conclusion

Jan Devos - 20/09/2012

Faculty of Engineering and Architecture – Campus West pag. 2

Enterprise Resource Planning (ERP) - Globalization of economies

- Maintain a competitive level

- Increasing organizational efficiency

- Coordinating all resources: IT, IS, data,

information

- Paradigm shift with bespoke applications

Jan Devos - 20/09/2012

Faculty of Engineering and Architecture – Campus West pag. 3

Research Objective

What is the situation of ERP in a developing

country (Macedonia) as compared with that

in developed countries

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Faculty of Engineering and Architecture – Campus West pag. 4

Research Questions - What was the reason to implement ERP?

- What were the objectives of the ERP

implementation?

- What was the effect of the ERP implementation

on the company?

- How the company changes its efficiency after

ERP implementation?

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Faculty of Engineering and Architecture – Campus West pag. 5

The Situation in Macedonia - Central Balkan

- Independent since 1991

- UN member in 1993 (FYROM)

- Loss of protected markets

- Fall in GDP

- Privatizations

Jan Devos - 20/09/2012

Faculty of Engineering and Architecture – Campus West pag. 6

The Situation in Macedonia - Focus on foreign markets

- Need for more efficient organizations and more

competing products & services

- More use of IT/IS (telecom and banking)

- ERP?

Jan Devos - 20/09/2012

Faculty of Engineering and Architecture – Campus West pag. 7

Research Methodology

- Exploratory research

- (single) Case Study - Archival data (e.g. financial reports)

- Interviews (CIO & CEO)

- Employee survey

Jan Devos - 20/09/2012

Faculty of Engineering and Architecture – Campus West pag. 8

Case Study Company - Oldest and leading producer for paper and carton

boxes

- Computerization started in 1998

- Separate applications (finance, accounting, MRP)

- A lot of manual work

- A lot of problems: wrong orders, missed

deadlines, a lot of complaints, …

- New organizational context (privatization)

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Faculty of Engineering and Architecture – Campus West pag. 9

Findings: Goal setting

gaining technological benefits, effectiveness,

consistency, reaching integrated system,

control, efficiency, preciseness, timeliness,

operating costs reduction, rationalization

within certain departments, providing quality

of finished work, respecting of proposed

deadlines…

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Faculty of Engineering and Architecture – Campus West pag. 10

Findings: 3 phrase implementation

- ERP implementation starts in 2000

(financial module)

- Material accounting, warehouse, sales,

assets, HR & … payroll

- Production, not realized (2003)

- DSS (BI?), not realized (2003)

- IT Failure?

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Faculty of Engineering and Architecture – Campus West pag. 11

Findings Management

- Instant access of information

- Monitoring information

- AR & AP information

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Faculty of Engineering and Architecture – Campus West pag. 12

Findings Use & Satisfaction

- User satisfaction varies

- Fear of more and more control in the

organization

- User resistance

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Faculty of Engineering and Architecture – Campus West pag. 13

Findings Efficiency

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Faculty of Engineering and Architecture – Campus West pag. 14

2001 2002 2003 2004 2005 2006 2007 2008

Inventory/Sales 0.17 0.12 0.15 0.14 0.15 0.14 0.14 0.14

Inventory/Total

Assets

0.18 0.13 0.16 0.14 0.14 0.13 0.14 0.15

Labor

Productivity

1.41 1.58 1.53 1.49 1.71 2.03 2.17 2.44

ROS 2.07 1.91 3.21 3.95 2.22 2.28 4.75 3.54

ROA -2.04 3.02 3.85 2.01 0.55 0.71 2.96 2.22

Profit Margin -2.01 2.68 3.73 2.08 0.61 0.76 2.96 2.06

Inventory

Turnover

4.75 7.01 5.75 6.49 6.05 6.61 6.39 6.84

Assets

Turnover

1.01 1.13 1.03 0.97 0.90 0.94 1.00 1.08

AR Turnover 5.49 4.64 5.36 4.96 4.36 4.55 4.92 4.85

Conclusions

- Long period of implementation and final

acceptation/use (7 years)

- A lot of time, money and engagement of

the management

- Limited effects on efficiency

- ERP helps in the transformation of

ownership (change)

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Faculty of Engineering and Architecture – Campus West pag. 15

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Faculty of Engineering and Architecture – Campus West pag. 16

Questions?