ERP Trends in Saudi Arabia 2006

8/12/2019 ERP Trends in Saudi Arabia 2006

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ERP Implementation Trends and Practices in Saudi Arabia

Al-Turki, Umar M., Andijani, AbduBasit. A., Siddiui, Ati !.,

King Fahd University of Petroleum & MineralsP.O. Box 123!"# $hahran# %audi ra'ia

altur(i)**se.(fu+m.edu.sa#andi,ani)**se.(fu+m.edu.sa#ati-ue)**se.(fu+m.edu.sa

Abstract

n the last fe/ years# 0nter+rise esour*e Planning# 0P# has 'een im+lemented 'y a num'er of

organiations as an innate solution to their 'usinesses in future. n s+ite of its intuitive a++eal# 0P has

*hallenges and diffi*ulties in its realiation. Saudi Arabiais in a transient +hase /ith regards to 0P

im+lementation and a num'er of organiations are either im+lementing or +lanning to im+lement one

of su*h systems. n this +a+er# existing 0P trends are investigated# and various as+e*ts /ere surveyed

to evaluate the overall +rogress of 0P in %audi ra'ia. he survey *a+tures 'est im+lementation+ra*ti*es# diffi*ulties# ex+erien*es and 'enefits gained.

"e#$ords%0nter+rise resour*e +lanning# 0P# nformation systems

& Introduction

Enterprise Resource Planningor 0P is an integrated information system that serves all fun*tions

/ithin an enter+rise. 0P is a 'usiness management system# having 'road set of a*tivates# that results

in various 'enefits su*h as streamlining 'usiness +ro*esses through integration# real time information

+ro*essing# elimination of data & o+erational redundan*ies# relia'le information a**ess# et*. t

essentially integrates various 'usiness +ro*esses# *ommonly 'ased on 'est 'usiness +ra*ti*es# 'ringing

in inherent effi*ien*ies as a result# into the enter+rise.

4enerally# 0P system im+lementation is a *hallenging and time *onsuming +ro*ess that needs large

finan*ial re*ourses. 5o/ever# the 'enefits they yield# if +ro+erly im+lemented# are far more

su'stantial. he 'enefits in*lude *ost redu*tions# im+roved *ustomer satisfa*tion# higher trans+aren*y#

real time information tra*(ing# and organiational effi*ien*ies 'eside others.

6ountless organiations around the /orld have either im+lemented or in the +ro*ess of im+lementing

an 0P system. ts vitality for the su**ess of an organiation *an 'e measured 'y the fa*t that in the

year 2771# 879 Fortune 177 organiations are reliant on these systems :$e;itte# 27713 users and a

total of ?7 organiations res+onded to the survey. he results demonstrated that the lo*al 6hinese
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organiations are as su**essful as the foreign organiations. 5o/ever# fe/ areas su*h as master data

maintenan*e /ere 'etter /ith the foreign organiations as *om+ared to the lo*al organiations.

ose :2773< surveyed a sam+le of exe*utives from fortune 1777 organiations a'out the

im+lementation ex+erien*e. ++roximately 2>3rd of the organiations surveyed re+orted su**ess.

hose re+orted failure /ere tested for signifi*ant differen*es /ith res+e*t to 3" 0P su**ess fa*tors

re+orted in the literature. num'er of fa*tors /ere found to differ relating to *hange management

+rogram# 'usiness +lan & vision et*. $ata gathered from 11= organiations 'y M*@urlin :27716ost estimates *onforman*e

". Deading role +layers & *hange management +rograms during im+lementation

=. m+ortant su**ess or failure fa*tors# as suggested 'y the organiation itself.

?. Modules de+loyment.

* Sur(e# Results

he *olle*ted surveys /ere analyed and re+orted in this se*tion.

*.& Major sectors implementin+ ERP

otal num'er of *om+anies res+onded to the survey /ere =. he distri'ution of the organiation

res+onded to the survey# a**ording to nature of 'usinesses is summaried in ta'le 1. Dargest num'ers

of res+onses /ere from manufa*turing organiations /hi*h is around 28.=9. 8.!9 & 17.?9 /erefrom Oil# gas and +etro*hemi*als res+e*tively in*luding *onglomerates su*h as %audi ram*o and

various *om+anies from %B6. Parti*i+ation of etail# # Ban(ing and 6onsumer +rodu*ts

'usinesses /ere around ?.19# ?.19# ".?9 and !.9. Ban(s in*lude 'oth lo*al and of foreign origin.

round ".?9 /ere general *ontra*ting organiations. Fe/ government o/ned utilities su*h as %audi

0le*tri* Organiation too( +art in the survey 'esides a *ou+le of health*are organiations.

@ature of Business 6om+anies res+onded

otal 9

Manufa*turing

Oil & 4as

etail

Petro*hemi*al

Ban(ing

6onsumer Produ*ts

4eneral *ontra*ting

Utilities

5ealth*are

Others

22

=

""

?

!

!

3

3

!

28.=

8.!

?.1?.1

17.?

".?

!.

".?

.1

.1

".?

a'le 1 Organiation +arti*i+ated in survey 'y se*tor

*.' ERP endor Market sares

%P and Ora*le /ere the *lear leaders in %audi 0P mar(et /ith 'oth nearly having a mar(et of

a++roximately 79 ea*h. Other +resen*e in*ludes Baan =.=9# 4reat Plains 3.?9# Orion 3.?9 and

E$ !.?9# /hile remaining vendors have 8." 9 of the mar(et in all.

40.4

7.73.8

3.85.8

9.6 40.4 SAP

Oracle Applications

Baan

Greate Plains

Orion

JDA

Others


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Figure 1 Cendor Mar(et %hares

*.' Sie o/ or+aniations0 adoptin+ ERP s#stems

Organiations are *lassified as small :%< if they have less than !77 em+loyees medium :M< if they

have 'et/een !77 and !77 em+loyees and large :D< if they have more than !777. Organiations are

also *lassified 'ased on their sales volume +er year. *om+any is *onsidered small :%< if it has sales

turnover less than !77 Million Medium :M< if it has sales turnover 'et/een !77 Million and ! Billion

and large :D< if it has sales turnover larger than !77 Billion. t/o /ay *lassifi*ation of sie is sho/n

in figure 2# /ith the first re+resent the em+loyee sie and the se*ond re+resent the sales sie. s an

exam+le# M% means *om+anies having medium sales turnover and small num'er of em+loyees.

SS, 9, !6"

S#, !!, 3"

$$, 7, 9"

#$, 7, 9"

$#, 3, 4"

#S, 4, 5"

##, !, 6"

SS S# S$ #S ## #$ $S $# $$1i+ure '% Sales Turno(er-2umber o/ Emplo#ee per 3ear 4Sales, Emplo#ees, 56

Most of the *om+anies in this *ase 'elongs to the %M :22.319


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!7.8

47.!

!0.8

4.!

00" S+ccess

75" S+ccess

50" S+ccess

ail+re

1i+ure 8% Success Ratin+

he distri'ution of su**ess as +er sie of the organiation is sho/ 'elo/ in figure ! as

0"

!0"

40"

60"

80"

00"

SS S# #S ## #$ $# $$

0"

50"

75"

00"

1i+ure 9% Success Ratin+ b# :r+aniation Sie

t is *lear from the results that larger organiation :Both in terms of %ales urnover and @um'er of

0m+loyees< had high su**ess rating as *om+ared to smaller ones. he 'est +erforming *ategory /as

ho/ever# M% :Medium %ales urnover# %mall @um'er of 0m+loyees< /here most *om+anies

*onsidered their im+lementation a *om+lete su**ess.

*.8 Time;


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n the *ase /here it /as as(ed that if the +ro,e*t /as finished /ithin 'udget# the lager organiations

sho/ed most of the im+lementations /ith *ost overruns 'ut there /ere no *om+lete failures# sho/ing

'etter finan*ial management as *om+ared to smaller firms :smaller in term of 'oth sales turnover and

num'er of em+loyees


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0" !0" 40" 60" 80" 00"

Consultants

IT Mangers

Business

Managers

00"

75"

50"

!5 ) 0 "

1i+ure &&% 5 success; /ailure 4eadersip role case6

nother fa*tor /hi*h /as investigated is the ado+tion of a +lanned *hange management +rogram used

during an 0P im+lementation. 5ere *hange management is referred to as the +ro*ess# tools and

te*hni-ues to manage the +eo+leHside of 'usiness *hange to a*hieve the re-uired 'usiness out*ome and

to realie that 'usiness *hange effe*tively /ithin the so*ial infrastru*ture of the /or(+la*e Eeff# .

:277"


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*.= Important success /actors

Organiations /ere as(ed to rate :1 highest J ! lo/est< some (ey su**ess fa*tors in*luding *lear

strategi* o',e*tives# strong management *ommitment# *hange management +rogram# training# and

soft/are sele*tion. he results are +resented in figure 1. he results suggest that most t/o im+ortant

su**ess fa*tors are strong management *ommitment and *lear strategi* o',e*tives /hile *hange

management is rated third. raining is rated as fourth most im+ortant fa*tor /hile soft/are sele*tion

/as *onsidered the least im+ortant fa*tor among all.

0.00.0

!0.030.0

40.050.060.0

70.0

80.0

90.0

00.0

2lear

Strate4ic

O56ecti.es

Stron4

2o--it-en

t

3ro-

#ana4e-en

t

2han4e

#an4e-en

t

1rainin4

So3t/are

Selection

atin 5

atin 4

atin 3

atin !

atin

1i+ure &8% Success;1ailure claim

*.? Module Implementations

he modules im+lemented in various organiations are sho/n in figure 1!. s anti*i+ated# most of the

organiations have im+lemented the finan*e module :more than "! im+lementations


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an im+ortant issue to 'e studied and analyed. 0P is one of the (ey a++li*ations ado+ted 'y a num'er

of organiations around the /orld# to enhan*e their +rodu*tivity# res+onsiveness and *ustomer

satisfa*tion. %audi organiations are moving fast in follo/ing this trend in s+ite of the *ultural

differen*e /ith /estern organiations /here 0P is originated. 5o/ever# there has 'een no formal

study to realie its a*tual +rogress. his +a+er attem+ts to shed some light on 0P im+lementation

trends and +ra*ti*es in the 'usiness *ulture in %audi ra'ia.

he survey indi*ates a *lear tenden*y for ado+ting 0P solutions 'y all ty+es of organiations of all

sies led 'y *om+anies of large sie li(e %audi ram*o and %B6. he results suggest that overall

0P im+lementation s*ored a'out =9 su**ess. One trend that /as evident /as that the organiation

having higher sales turnover to @um'er of 0m+loyees ratio +erformed 'etter in terms of

im+lementation targets su*h as 'udget and s*hedule. Darger organiations i.e.# +etroleum and

+etro*hemi*als# :%audi ram*o & %B6 *om+anies< des+ite some of them 'eing some/hat over

s*hedule and 'udget# *ategoried their efforts as su**ess /ith no +artial or *om+lete failure re+orted.

he results suggest im+lementing 'usiness leadershi+ rather than leadershi+ a**om+anied 'y

extensive *hange management and training +rograms. hese results does not differ mu*h from similar

studies *ondu*ted in different *ultures /hi*h suggests that the *riti*al issues for su**essful

im+lementation of 0P systems is the same regardless of the *ultural differen*es.

his /or( 'y is 'y no mean suffi*ient for ans/ering many issues related to 0P +rogress in %audi

ra'ia. Many issues remain o+en for further study in this area. Many *ultural issues affe*ting

su**essful im+lementation of 0P systems may 'e investigated in*luding the use of ra'i* language

'ased 0P systems.

9. Ackno$led+ement

he authors /ould li(e to a*(no/ledge King Fahd University of Petroleum & Minerals for its su++ort

in *ondu*ting this resear*h.

=. Biblio+rap#

$e;itte# E. & Eung# # :2771


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aylor# E.# :1888

Documents

ERP Trends in Saudi Arabia 2006