Evalution of ERP

8/4/2019 Evalution of ERP

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Zaitun A. B. and Zaini Zainol

Department of Information System,

Faculty of Computer Science and InformationTechnology,

University of Malaya,

50603 Kuala Lumpur, Malaysia.

A Web-Based DSS for theEvaluation of an ERP

System

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Introduction - ERPEnterprise Resource Planning (ERP) is an

information system that manages, through

integration, all aspects of a business including

production planning, purchasing, manufacturing,

sales, distribution and accounting - Khalid (2002)Comprehensive, packaged software solutions that

seek to integrate the complete range of a business

processes and functions in order to present a

holistic view of the business from a single

information and IT architecture Gable (1998)

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Decision Support SystemDSS as an interactive, flexible, and adaptable

CBIS that utilizes decision rules, models, and

model base coupled with a comprehensive

database and the decision makers own insights,

leading to specific, implementable decisions insolving problems that would not be amenable to

management science optimization models per se.

Thus, a DSS support complex decision making

and increase its effectiveness.

(Turban 1990)

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The Research ProblemERP adoption and implementation involves high

riskHuge initial investment90% are over budget

33% success rate40% achieve only partial implementation20% are scrapped as total failureBetween 60% - 90% did not achieve ROI identified

during the approval stage

lack of proper guidelines or planning to assist oldand new companies in implementing ERP systemscorrectly

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This leads to We need a web-based tool to assist organizations

to evaluate the success of their ERP

implementation and measure the benefits

obtained.

We need to establish a guideline of success

factors for ERP implementation.

We need to establish a measurement of ERP

benefits and a list of productivity indicators.

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A surveyIdentify ERP

Success factors

Case StudiesMeasurement of

ERP Benefits

InterviewsProductivity

indicators

Develop Tool

SEEBAS

Research

Problem

Figure 1: Research Design

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The Survey128 small and medium enterprises from the manufacturing

sector of the state of Selangor, in Malaysia They were chosen because of their strength and financial

standing.Located in the industrial estates such as the HICOM

Industrial Estate, Bangi Industrial Estate, Klang Free Zone,Shah Alam and Petaling Jaya.The state of Selangor was chosen because it possesses

modern infrastructures liken that found in developedcountries.

SPSS version 12 for WindowsDescriptive statistics - mean, mode, median and dispersion

measures of standard deviation and variance wereconsidered.

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Project Steering

Committee (PSC)

Better Future of

ERP Planning

Continuous

Support from

consultant

Top Management

Support (PSC)

Project Leader

Characteristics

Resistance from

olderemployees

Dedicated

Consultants

Minimal

Customization

Language

Barrier

Well Organized

Training

Managing Change

Management

Well Organized

Business Blue Print

Continuity in

Training

Local Cultural

Understanding

Rewards Future Consultant

Commitment

ERP Implementation Success Factors

Contribute

To

The success of ERP project

Figure 2: Framework for ERPs Evaluation -Implementation Success Factors9


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Code Variables Asked

Operational benefits:

OB01 Process cost reduction P

OB02 Cycle time reduction E

OB03 Productivity improvement R

OB04 Quality improvement F

OB05 Customer service improvement Result To O

Managerial benefits: R

MB01 Better resource management M

MB02 Improved decision making and planning A

MB03 Performance improvement N

Strategic benefits: C

SB01 Supporting business growth E

SB02 Support business alliance

SB03 Build business innovations O

SB04 Building cost leadership F

SB05 Assisting with product differentiation

SB06 Improved linkages with customers and suppliers E

Figure 3: Framework for ERP

Evaluation ERPs Benefits

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No. Indicator

1. Indicator: Labour Cost Competitiveness (LCC)Formula : Added Value / Cost

2. Indicator: Labour Cost per Employee (LCE)Formula : Labour Cost / Number of Employee

3. Indicator: Unit Labour Cost (ULC)

Formula : Labour Cost / Total Output4. Indicator: Labour Productivity (LP)Formula : Added Value / Number of Employees

5. Indicator: Total Output per EmployeeFormula : Total Output / Number of Employees

6. Indicator: Capital Productivity (CP)Formula : Added Value / Fixed Assets (IT related equipment)

7. Indicator: Capital TurnoverFormula : Total Output / Fixed Assets (IT related equipment)

8. Indicator: Capital Intensity (CI)Formula : Fixed Assets (IT related equipment) / Number of Employees

Table 1:Framework For ERP Evaluation (ERPs Productivity)

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The need for the evaluationof ERP performance

The huge investment. The outcomefrom its investment should be higherthan the cost of implementing it.

The system effectiveness inaddressing all problems faced by theold system.

Investment justificationFuture reference particularly whenfurther investment need to be carriedout as the ERP system evolve from

time to time.


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SEEBAS

The evaluation module has threesub modules:

ERPs Implementation SuccessFactors

ERPs Benefits

ERPs Productivity Indicators


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Figure 4: The sub module of ERPs Productivity

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Figure 5: The Sub menu ERPs Benefits

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Figure 6: ERPs benefit-Result fromexample KPI-B-1

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Figure 7: ERPs productivity indicators -Example: KPI-P-30 (graph)

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Conclusion Extensive literature to develop our survey instrument which assistedus to identify the critical success factors which are specific to

Malaysian manufacturing SMEs.We verified our findings through selected Case Studies on selected

manufacturing SMEs. From the case studies we have identified the matrix of ERP

measurement benefits From the interviews we determined the productivity indicators usedto evaluate the success of an ERP implementation.

These findings were incorporated in the web-based to become theDSS which we have called SEEBAS.

Five ERP users to evaluate the system and received positive

reviews. For future work, we would like to suggest the Delphi approach to beused to strengthen the criteria that we have used as ERP successfactors, benefits measurements and productivity indicators.

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Documents

Evalution of ERP