A Web-Based DSS for the Evaluation of an ERP System

Zaitun A. B. and Zaini Zainol Department of Information System, Faculty of Computer Science and Information Technology, University of Malaya, 50603 Kuala Lumpur, Malaysia.

Introduction - ERP
Enterprise 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 System

DSS 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 in solving 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 Problem

ERP adoption and implementation involves high

risk

Huge initial investment 90% are over budget 33% success rate 40% achieve only partial implementation 20% are scrapped as total failure Between 60% - 90% did not achieve ROI identified

during the approval stage

lack of proper guidelines or planning to assist old and new companies in implementing ERP systems correctly
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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.

Figure 1: Research Design

Research Problem

A survey
Identify ERP Success factors

Case Studies
Measurement of ERP Benefits

Interviews
Productivity indicators

Develop Tool SEEBAS

The Survey
128 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 developed countries. SPSS version 12 for Windows Descriptive statistics - mean, mode, median and dispersion measures of standard deviation and variance were considered.

The Case Study

4 Case studies Two of the case studies used the SAP software

(the market leader of ERP systems) The other two of the case studies used the software Pronto (catering for relatively smaller to medium market segment). The case studies will reaffirm the findings from the survey carried out.

ERP Implementation Success Factors

Project Steering Committee (PSC)

Top Management Support (PSC)

Project Leader Characteristics

Well Organized Training

Well Organized Business Blue Print

Minimal Customization

Dedicated Consultants

Managing Change Management

Local Cultural Understanding

Language Barrier

Resistance from older employees

Continuity in Training

Rewards

Continuous Support from consultant

Better Future of ERP Planning

Future Consultant Commitment

Contribute To The success of ERP project

Figure 2: Framework for ERPs Evaluation 9 Implementation Success Factors

Code

Variables Asked

Operational benefits:
OB01 OB02 OB03 OB04 OB05 Process cost reduction Cycle time reduction Productivity improvement Quality improvement Customer service improvement P E R F

Result To

Managerial benefits:
MB01 MB02 MB03 Better resource management Improved decision making and planning Performance improvement

O R M A N C E

Figure 3: Framework for ERP Evaluation ERPs Benefits

Strategic benefits:
SB01 SB02 SB03 SB04 SB05 SB06 Supporting business growth Support business alliance Build business innovations Building cost leadership Assisting with product differentiation Improved linkages with customers and suppliers

O F

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Table 1: Framework For ERP Evaluation (ERPs Productivity) No. 1. 2. 3. 4. 5. 6. 7. 8.

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Indicator Indicator: Labour Cost Competitiveness (LCC) Formula : Added Value / Cost Indicator: Labour Cost per Employee (LCE) Formula : Labour Cost / Number of Employee Indicator: Unit Labour Cost (ULC) Formula : Labour Cost / Total Output Indicator: Labour Productivity (LP) Formula : Added Value / Number of Employees Indicator: Total Output per Employee Formula : Total Output / Number of Employees Indicator: Capital Productivity (CP) Formula : Added Value / Fixed Assets (IT related equipment) Indicator: Capital Turnover Formula : Total Output / Fixed Assets (IT related equipment) Indicator: Capital Intensity (CI) Formula : Fixed Assets (IT related equipment) / Number of Employees

The need for the evaluation of ERP performance

The huge investment. The outcome

from its investment should be higher than the cost of implementing it. The system effectiveness in addressing all problems faced by the old system. Investment justification Future reference particularly when further investment need to be carried out as the ERP system evolve from time to time.

SEEBAS
The evaluation module has three sub modules: ERPs Implementation Success Factors ERPs Benefits ERPs Productivity Indicators

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 from example 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 assisted

us 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 used to evaluate the success of an ERP implementation. These findings were incorporated in the web-based to become the DSS 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 be used to strengthen the criteria that we have used as ERP success factors, benefits measurements and productivity indicators.

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