SAP R/3 Implementation Issues for Small to Medium Enterprises

We are undertaking research into “Issues in ERP in Small and Medium Sized Enterprises in Australasia. ” Main objectives of the research are to better understand issues faced by smalland medium-sized enterprises (SMEs) in adopting ERP; better understand local/regional SME expectations of ERP; promote awareness of developments promoting and facilitating increased uptake of ERP by SMEs; influence curriculum design to produce graduates who are well placed to be closely involved in the uptake and support of ERP in SMEs. This paper reports on the design of this research project. Background While SAP’s significant efforts have seen the successful adoption of ERP by a majority of very large organisations worldwide, only in the past couple of years has SAP begun to focus on smalland medium-sized enterprises (SMEs). Market developments, technology developments and ERP developments are all encouraging the increased uptake of ERP by organisations with revenues between $50-200 million. Market characteristics encouraging increased focus on SMEs by ERP vendors include: • Most LEs have adopted ERP (the segment is largely saturated) • Electronic commerce benefits from close integration between LE and SME systems • SMEs grow up to be LEs (and will tend to retain existing systems if they are scalable) • The vast majority of businesses are SMEs rather than LEs (and account for a majority of economic activity, jobs and assets) • Integrated packages originally developed for the SME market are becoming increasingly upwardly scalable (to some extent due to technology developments listed following) At the same time, various technology developments are encouraging the increased uptake of ERP by SMEs: • The advent of powerful, relatively inexpensive microprocessor-based servers • The advent of new, scalable, full-function PC and network operating systems (specifically Windows NT) • The availability of a low-cost database management system for the Windows NT platform, in SQL Server Major recent SAP initiatives that have made R/3 more accessible to SMEs include: • Introduction of the ASAP implementation methodology • The Certified Business Solutions Program • Shrink wrapped, ‘Ready-to-run R/3’ • Industry focused solutions • R/3PAQ Prior Research into Small and Medium Enterprises Though the above listed developments suggest increasing uptake of ERP by SMEs, there is yet a need to better understand the disincentives, many of which continue to exist. It is thus important to consider how SMEs differ from larger organisations and how these differences may influence the ERP implementation issues faced by SMEs. In [1984] Raymond proposed a conceptual framework, identifying four main dimensions of the specificity of SMEs: (1) organizational, (2) decisional, (3) psycho-sociological, and (4) information systems. The four dimensions, and their related underlying properties, represent unique characteristics of SMEs, that may have significant influence on the ERP implementation lifecycle. Following are discussed these four dimensions and their related properties. Organizational Specificity: The SME is typically characterized as: having a simple and highly centralized structure [Mintzberg, 1979]; being "resource poor" in human, financial and material terms [Welsh and White, 1981]; and facing greater environmental uncertainty, as they have a lower measure of control over their extraorganizational situation [Miller, 1987]. For example, SMEs have less influence over computer vendors or consultants and thus they may receive a relatively lower level of service [Delone, 1988]. SMEs can also be located in more remote areas, where service delays are longer and external computing resources scarcer. Decisional Specificity: The strategic decision cycle or time frame of the SMEs is characterized as being: generally short term, with a reactive rather than a proactive orientation [Mintzberg, 1973]; and less formal, using fewer formal management techniques (e.g. in capital budgeting, project management, inventory control and financial analysis) [d'Amboise and Gasse, 1980]. It is also suggested that the decision-making process of small business managers is more intuitive and judgemental and