Table of Contents

Preface 21. The Evolution of Production Management Systems 31.1 The need for manufacturing planning 31.2 The pre-MRP era 41.3 Material Requirements Planning 51.4 Manufacturing Resource Planning 71.5 Enterprise Resource Planning 71.6 From Extended ERP to ERP II 102. ERP: The thin line between a successful and an unsuccessful implementation 122.1 The Hersey Case 122.2 The Lussile Case 132.3 The ERP-Related expenses 143. ERP Implementation Process 163.1 Selecting an ERP system 163.2 General Implementation Process 164. Downsized ERP – A new trend in the Market 204.1 The TEC Experiment 224.2 The Panorama Consulting Group’s Surveys 235. ERP in the Services Sector 295.1 ERP systems in Hospitals 315.2 ERP in the commercial restaurant business 326. ERP in the Greek Market 337. Future Trends 378. 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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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 particularly quoted for their pioneer thinking to relate productivity with

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Figure 1: The essence of Manufacturing

Source: Plossl (1994), Orlicky’s Material Requirements Planning, p 5

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 Productivity2. Reduction in inventory (raw materials, end products, components,

subassemblies, work-in-process)

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3. Reduction in Lead Time4. Better utilization of resources5. 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.

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

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Table 1: Comparison of Ordering Techniques

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

Order point MRP

Deals with parts ProductsLooks to the past FutureUses averages BatchesRequires bills of material?

No Yes

Inventory is maintained run outRecommends order dates to

start Complete

Activated for an order

once Periodically

Shows future orders none all in horizonCan be replanned? No Yes

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 (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:

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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).

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).

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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

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

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Time Frame

Process Event Process Expectations

Yearly Strategic review Business imperativesTalent reviewSuccession planning

Updates to the strategic plansPrioritizing the sort list of “must do” objectivesManagement assessment of key employee skillsKey position and skills analysis of bench depth

Monthly S&OP

Project review

Risk Management of capacity, inventory and customer service decisionsReview progress on business imperatives

Weekly Performance reviewProject review

Process owner review of progressDetail review of projects by process owners

Daily Schedule reviewDaily walk-through

Detail review of yesterday and today’s requirementsManagement-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

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).

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

Source: Sheldon, (2005), Class A ERP implementation: Integrating Lean and Six Sigma, p 23

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.

ERP(1990-1999)

Extended ERP(2000-2005)

ERP II(2005 Onwards)

Materials Planning Scheduling Project ManagementOrder Entry Forecasting Knowledge ManagementDistribution Capacity Planning Workflow ManagementGeneral Ledger e-Commerce Customer Relationship

ManagementAccounting Warehousing Human Resource ManagementShop Floor Control Logistics Portal Capability

Integrated FinancialsInternet and WWW IntegrationAnalytics-Sales, Financial, HRSupply Chain Management

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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 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

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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 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:

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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 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

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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 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

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system it usually takes on one expert or more (whose salaries are ongoing

costs) to handle it.

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,

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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.

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.

An ERP system is always accompanied with a set of implementation processes and timetables indicated by its

developer. Numerous attempts have been made to propose a generally accepted methodology, but they have fallen flat.

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.

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Table 4: Implementation Strategies by Vendor

Adapted from Altekar V. R., (2004), EnterpiseWide Resource Planning: Theory and Practice, p 103

Vendor ImplementationMethodologies

SAP ASAPBaan TargetOracle AIMOrigin ImplantMovex Implex

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.

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.

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Implementation Group

Project Manager

Steering Committee

Project Teams

Support Team

Project Sponsor

Figure 1: A typical ERP Implementation Group Structure

Adapted from Kiakis (2006), Συστήματα Διαχείρισης Επιχειρησιακών Πόρων (ERP): Το Microsoft Business Solution Navision και Μελέτη Περιπτώσεως για την υλοποίησή του, p 28

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.

II. 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.

III. 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.

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

IV. Full application (Going Live) & Support

Steps ElementsPhase 1.Preparation and Selection of ERP

Form ERP selection and implementation teamDevelop ERP vision (needs, objective, outcomes)Identify the Implementation model (One-vendor or best-of-bread solution, etc.)Develop selection criteriaEstablish ERP software candidate list (four to six candidates)Create Request for Proposal (RFP), and send it to the prospective

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candidatesReview their responses and identify three-four finalistsRequest the finalists to demonstrate their packagesSelect the winner and negotiate the contractJustify the investment

Phase 2. Organize the implementation projectInstallation and Implementation

Define the performance measures for the new systemCreate the initial detailed implementation project planEducate the project teamAssess integrity of the existing databaseInstall new or upgrade existing hardwareInstall the software; perform the computer room pilotEducate the ERP usersDefine and refine procedures for the new systemEnsure integrity and accuracy of the dataBring the 1st module/product/plant live; refine and adjust.Repeat the same for other modules/products/plantsImprove continually

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

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Table 5: Main Steps and Elements of ERP Implementation

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

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

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

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Some Figures showing why ERP Vendors turned to SMEs

70% of SMEs using ERP are manufacturing companies (Ashcroft J., 2009, source: http://www.supplychainnetwork.com/erp-study-suggests-tier-ii-solutions-may-be-preferable/, accessed on 3/12/2010)

SMEs made more than 50% of ERP vendors’ profits in 2009 (Hoffman K., source: http://www.erp.com/erp-archive/324-erp-archive/7210-small-businesses-are-becoming-big-business-for-erp-vendors.html, accessed on 3/12/2010

96% of manufacturing companies in the U.S.A. have less than 250 employees (source: http://www2.isye.gatech.edu/~jswann/teaching/6201/6201erp_6.pdf, accessed on 3/12/2010)

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

5) 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)

o In 2003 PeopleSoft bought out JD Edwards. o One year later, Oracle took over both PeopleSoft and,

subsequently, JD Edwards. o 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).

o Sap launched Business All-In-One.o Oracle expanded its Accelerate Program to cater

specialized, fixed-price ERP systems to SMEs, offering lower prices and allowing faster and easier deployment.

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o 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.

4.1 The TEC Experiment

A TEC Advisor’s research analyst conducted an experiment, letting customers compare Tier I and Tier II vendors’ ERP, to measure the perceived difference in functionalities – modules. (Osintsev Aleksey, 26/08/2010, source: 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 and post-sale service. After all, support may be more profitable for a smaller vendors that the system itself.

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4.2 The PANORAMA CONSULTING GROUP’s Surveys

In 2008, Panorama Consulting Group unveiled the findings of a three-year elaborate survey which revolved around the experienced differences between Tier I and Tier II ERP Vendors’ solutions.

At first, the survey estimated ERP Vendors’ Market Share.

Sap turned out to be the market’s leader by occupying 35% of the market, Oracle followed with 28%, 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 is important to mention that the standard deviation for each of the 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.

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35%

28%

14%

23%

SAP Oracle Microsoft Tier II

2008 Survey’s Data

No of participants:

1322 global organizations

Survey’s Period:

Dec 2005 – Nov 2008

Participants’ location:

31% North America 31% Asia Pacific 14% Europe 8% Africa 3% South America 13% Other

Figure 3: 2008’s ERP Market Share

Source: Panorama Consulting Group, 2008 ERP Report Part III

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%).

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Microsoft Tier II

SAP Oracle

Vendors’ Prices Distribution

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

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.

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.

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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

31%

25%14%

30%

SAP Oracle Microsoft

Tier II

Figure 5: 2010 ERP Market Share

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

SAP Oracle Microsoft Tier II AverageDuration (Months) 20,0 18,6 18,0 17,8 19,8Cost of

Implementation

$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%

Tier I Tier II Tier IIISAP Epicor ABAS

Oracle Sage Activant Solutions Inc.

Oracle e-Business Suite

Infor Bowen and Groves

Oracle Peoplesoft IFS CompiereMicrosoft Dynamics QAD Exact

Lawson NetsSuiteCDC Software Visibility

CGSExact

HansaWordConsonaSyspro

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.

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Table 7: Classification of products in Tiers

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

Tier I Tier II Tier III0

10

20

30

40

50

6053%

33%

59%

38%

56%

34%

9%11%

6%

Over BudgetUnder BudgetOn 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

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Figure 6: Budget Estimation Accuracy per Tier

Source: Panorama Consulting Group, 2010 ERP Vendors Analysis Report, p 5

Figure 10: Customization per Vendor’s Tier

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

and 1,7 years respectively). Finally, it takes 2,2 years for a Tier-II-vendor ERP system to pay back the required investment for its implementation.

The level of customization of the system by vendor’s Tier was also examined in the new survey. The results revealed that Tier I 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.

SAPOracle

Microsoft Dynamics Tier III

Tier III

0

10

20

30

40

50

60

70

5%3%

0 3% 7%

29%

25%

21%

6%12%

45% 47%

42%

69%

38%

20%25%

37%

22%

43%

Completely customized Heavily customized Mostly vanilla Vanilla

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Table 8: ROI per Tier

Source: Panorama Consulting Group, 2010 ERP Vendors Analysis Report, p 5

Vendor Tier Average Payback Period (Years)

Tier I 3,0Tier II 2,2Tier III 1,7

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.

Tier I Tier II Tier III0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%69.80%

53.30%

72.00%

30.20%

46.70%

28.00%

Below 50%Over 50%

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Figure 11: Average satisfaction per vendor’s Tier

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

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.

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”.

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Table 9: Nominal GPD Sector Composition, 2009

Source: http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composition,

accessed on 4/12/2010

Country Agri. Indus. Serv. World 6% 30.6% 63.4% E.U. 1.9% 25.2% 72.8% United States 1.2% 21.9% 76.9% Japan 1.6% 21.9% 76.5% China 10.6% 46.8% 42.6% U.K. 1.2% 23.8% 75% Greece 3.4% 20.7% 76%

4. Replace their fragmented information system with an integrated one, improving communication between departments.

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 mapsFinancial Services Banking InsuranceManufacturing Industries

Aerospace & Defense

Industrial Machinery and components

Automotive Life sciencesChemicals Mill productsConsumer products MiningEngineering, construction, operations

Oil and Gas

High TechPublic Services Defense and

securityHigher education and research

Healthcare Public sectorService Industries Hospitality Railways

Logistics service providers

Telecommunications

Media UtilitiesPostal services Waste and recyclingProfessional services

Trading Industries Retail Wholesale distribution

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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 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 possible. In addition, information on resource usage was provided to management, allowing better planning for the future.

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Table 10: ERP-compatible industries

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

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).

.

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6.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 (http://www.imegsevee.gr/index.php?option=com_content&view=article&id=177:02-09-2010-

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According to Microsoft Hellas , there are 5000 companies, out of a total of 850000 enterprises, in Greece that can

implement an ERP system. That is because the rest of the domestic companies are too small to turn to such solutions. However, only 15% of ERP-compatible

companies have already implemented such a solution. (Netweek Magazine, 20/09/2010)

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

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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 Implem.

Vendor No of Implem.

1 Advanced Consulting 4 16 Ilyda 32 Altec 4 17 in-house 23 Athens Technology Center 1 18 Informer 14 Caterpillar 1 19 Intersoft International 15 Computec 1 20 Iris 26 Computer Project 1 21 Logic Singular 17 DIS 3 22 Logicdis 78 Datamedia 1 23 Quality & Reliability 4

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9 Dataware 1 24 Real Consulting 310 DD Synergy 1 25 Sap 711 Emphasis Systems 1 26 Singular 412 Entersoft 2 27 Softcom 113 Exodus 1 28 Step One Consulting 114 Galacom 1 29 Unifox 115 IBM 2 30 Teka Systems 2

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Table 11: ERP Vendors in Greece

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

4 Compack 400 4 17

Omega 2

5 Compackwin 1 18

Orama 4

6 DBS Caterpillar 1 19

Sap 18

7 Defacto 1 20

Sen 4

8 EBS 1 21

Solution 3

9 Emphasis Fashion 1 22

Visual Plano 1

10

Entersoft 1 23

Unixfor 1

11

Epicor 1 24

Αθηνά 1

12

LB Edwards 1 25

Payroll 1

13

Global 2000 1

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

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Table 12: ERP Software in Greece

Source: Varahidis, A., (2007), Χρήση των E.R.P. συστημάτων από τις ελληνικές επιχειρήσεις, p 71

SAP implemented less than half of its product’s selections, due to the cost associated with a direct SAP implementation.

ERP Selection CriteriaCriteria No of

choices

Ratio of

choices

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 the company 54 84,38%Simplicity/ Easiness of utilization 19 29,69%Low cost 16 25%Court Impementation time programme 10 15,63%

7.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.

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).

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Table 13: ERP Selection Criteria in Greece

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

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.

8.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.

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.

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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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3. Bidgoli, H., (2004), The Internet encyclopedia, Volume 1, John Wiley and Sons, (p 715-716)

4. “Πολλά τα περιθώρια ανάπτυξης του ERP” , Netweek Magazine, 20/09/2010

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5. Altekar, V. R., (2004), Enterprisewide Resource Planning: Theory And Practice, Prentice-Hall of India, pp 98-104,

6. Ashcroft J., (2009), source: http://www.supplychainnetwork.com/erp-study-suggests-tier-ii-solutions-may-be-preferable/, accessed on 3/12/2010

7. Bakker, A.R., & Leguit F.A., (1999), Evolution of an integrated HIS in the Netherlands, International Journal of Medical Informatics, Volume 54, Issue 3, June 1999, pp 209-224

8. Bingham, F.G., (1998), Business Marketing Management, NTC Business Books, pp 332-333,

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