Analysis of ERP Application in Small and Medium-sized Enterprises

Overview:

In the era of economic globalization, a large number of domestic small and medium-sized enterprises have emerged and developed rapidly, but due to the internal and external environment and their own conditions, the survival and development of small and medium-sized enterprises are facing a lot of pressure. The introduction of advanced management software ERP and vigorously carry out information construction, is recognized as an effective means to improve management efficiency, but also is considered to meet the new era of new challenges facing the necessary technical basis. With the popularity of ERP in China, there has been a wave of ERP applications in small and medium-sized enterprises across the country. Compared with large enterprises, small and medium-sized enterprises have their own unique advantages: first, the difficulty of ERP implementation is relatively low, the business process and organizational structure are relatively simple, and ERP software development is relatively easy to realize; Second, the ERP implementation cycle of small and medium-sized enterprises is relatively short and effective, and the results are obvious through management consultation in the process of implementing ERP. The implementation of ERP in small and medium-sized enterprises can ensure the advantages of high efficiency and flexibility in the competition with large enterprises. Therefore, it is necessary to further study and discuss the ERP application of small and medium-sized enterprises in the rapidly changing information society and business ecological environment.

1. The application status of ERP in small and medium-sized enterprises in China

China's existing ERP management model is based on the industrial environment of product process organization production, more emphasis is on the delivery date and time schedule plan, strengthen the multi-stage planning system management and time schedule management as the center of the comprehensive management of resources, emphasizing the right time to send the right information to the right place. Relatively speaking, it is relatively weak in cost planning and control, on-site management and control, personnel management and incentive mechanism. For manufacturing enterprises in countries that have completed the industrialization process, cost management control, time schedule management and personnel incentive management are all key factors. China's small and medium-sized enterprises in practice found suitable for China's national conditions of modern management mode. For example, Haier's "target system, Nissin system and incentive mechanism" model. Recently, the academic circles have put forward the "ERP management mode based on active cost control", which plays a role in promoting the development of ERP in China.

Statistics show that at present, less than 9% of China's enterprises with assets exceeding 30 million yuan still implement ERP projects. Although there are a small number of enterprises in the machinery, metallurgy, clothing, electronics, petroleum, chemical, trade and other industries, the large-scale promotion and application of the whole industry is still very little. In banking, securities, transportation and other important industries, the application of ERP is just beginning.

2, China's small and medium-sized enterprises to implement ERP environmental conditions analysis.

The conditions for the successful implementation of ERP in small and medium-sized enterprises can be divided into two categories: external environmental conditions and internal environmental conditions. The former refers to the social environment in which the enterprise operates and the external resource environment (software vendors and consulting service providers) required to implement ERP. The latter refers to the factors that influence and determine the results of the project implementation within the enterprise implementing ERP.

2.1. Analysis of external resource conditions

First, the risk from software companies. At present, there are two main categories of ERP products in China's market: ERP products developed by foreign software manufacturers and ERP products developed by domestic software manufacturers. As foreign ERP products have gone through a long development and application stage in some developed countries, they are advanced and mature in concept, mode and technology. However, foreign manufacturers often do not understand the actual situation of Chinese enterprises, and localization is not enough. At the same time, the system has high requirements for internal basic management and basic data, and it is difficult to implement. Domestic ERP software suppliers with the understanding of China's national conditions, can provide more localized services, the price is relatively cheap. However, there is still a certain gap in technology, experience and application practice compared with foreign software companies. In addition, the current ERP supply market in China is also immature. In order to simply pursue profits, individual software suppliers do not consider whether their products are suitable for the actual situation of the enterprise. This irresponsible approach is very likely to bring users difficulties in implementation, poor results, and even follow-up The implementation work cannot be carried out and other risks. There are also individual software companies in order to seize the market, often excessive to meet the unreasonable requirements of enterprises, did not play the optimization process, management mode innovation.

Second, the risk from the project implementation consulting services firm. At present, China's management consulting institutions are not perfect, the level is uneven. Consulting companies lack theoretical level and practical experience of personnel, because there is no deep management knowledge and background, they often tend to avoid management changes in the project implementation process and even business process optimization, reorganization. In addition, the staff of the consulting company is also very mobile and lacks qualified project managers. There are also many consulting companies with poor credibility. As long as the contract is signed, they are eager to get out and hand over the work, narrowing the scope of project services, especially those related to enterprise management reform.

Finally, the risk of cooperation between the enterprise and external sources. Cooperation risk refers to the risk of tripartite cooperation between the enterprise implementing ERP and the software supplier and consulting service provider during the implementation of the ERP system and during the subsequent support period. From the point of view of the implementation enterprise, the risk of cooperation can be attributed to the choice risk of the enterprise, that is, the risk of software selection and the risk of the choice of the implementation consulting company, as well as the risk of dislocation in the understanding of the enterprise when cooperating.

2.2. Analysis of internal environmental factors

Internal environmental factors mainly refer to the content that affects and determines the results of the project implementation within the small and medium-sized enterprises implementing ERP, including the level of enterprise management, the foundation of enterprise information, the ability of enterprise financial support, the ability of enterprise technical support, the degree of leadership attention, and the preparatory work of the project.

(1) The current management level of small and medium-sized enterprises

The fundamental reason for the introduction of ERP system in small and medium-sized enterprises is the advanced management concepts and management methods it contains, but if it ignores the management factors in the process of project implementation and only regards it as software, it will inevitably fail. With the implementation of ERP system, enterprise business processes need to be integrated and optimized to remove redundant and invalid work links, so as to ensure that the enterprise has a scientific and standardized business process and management foundation, and on this basis, the organizational structure of the enterprise is adjusted accordingly to achieve flat management to meet the requirements of the management reference model implemented by ERP. Therefore, business process change is an indispensable link in the implementation of ERP system, and the content of the change depends on the gap between the current management level and management mode of the enterprise and the ERP system management benchmark, if the gap is too large, the implementation is also very difficult. According to the current real management level of the enterprise, reasonable measures should be taken to select the appropriate ERP products.

(2) Information foundation of small and medium-sized enterprises

The importance of information technology to the implementation of ERP in small and medium-sized enterprises is self-evident. The basis of enterprise informatization can reflect the real level of current enterprise informatization from the perspective of capital investment and use of software and hardware in the process of enterprise informatization, as well as the quality of personnel who use the information system.

(3) SME financial support capacity

The introduction of ERP system in small and medium-sized enterprises usually requires a large amount of capital investment. If the project financial support is weak, or the enterprise does not fully understand it, then the project will have problems in the implementation process, and even the failure of the whole project will be caused by the lack of capital investment in the later period, which makes the early investment not play a good role.

(4) Technical support capacity of small and medium-sized enterprises

The project implementation process requires internal personnel to support the project, which mainly includes project planning and implementation recommendations, project objectives and needs survey, new system function description and requirements, system configuration, necessary secondary development, system maintenance and system upgrade work. Therefore, the quality of the internal technical personnel and their understanding and mastery of the project content affect the effect of the system implementation.

(5) The degree of attention of SME leaders

ERP project is a top project, and the participation and support of the top leadership of the enterprise is the key to the success of ERP project. This kind of participation process can not be simply understood as approval and signature, not just verbal support, formal participation, but the need for business leaders to truly realize the importance of ERP, can fundamentally promote and promote the implementation of the project process.

3. The problems faced by ERP in the implementation of small and medium-sized enterprises in China

The benefits brought by the application of ERP system to enterprises have been recognized by the vast majority of people, especially since China's accession to the World Trade Organization, for the domestic booming private enterprises, the introduction of international advanced ERP management software for management is not only a recognized effective means to improve management efficiency, but also become the necessary technical foundation to meet the challenges of the new economy. However, looking at its application status in our country, it is not difficult to find that, except for a few large enterprises, the majority of small and medium-sized enterprises, especially small and medium-sized private enterprises, have a very low success rate after the introduction of ERP system, which often turns into a simple purchase of software in the end. Not only the old problems cannot be effectively solved, but also many new problems have arisen, which eventually leads to the failure of ERP implementation and the enterprise. The problems faced by small and medium-sized private enterprises in the process of applying ERP are mainly manifested in the following three aspects:

3.1. Blindness of enterprise use

Enterprises have a vague understanding of ERP and confuse the concepts of "ERP software" and "ERP system. They believe that as long as a certain amount of money is invested in the purchase of computer hardware and some ERP software, enterprises can solve such and such problems. Or it is that enterprises spend money on external packaging to catch up with the trend. Without a solid foundation, just blindly optimistic, the enterprise is doomed to hidden dangers. As a result, the investment of the enterprise is often far greater than the gain, the software does not match the actual situation of the company, and the system cannot operate normally and effectively, which not only makes the system lose its own value, but also makes the enterprise bear a heavy burden.

3.2, many related products on the market

This also makes the enterprise face a choice problem. Enterprises often need to consider the cost, convenience, security and whether the actual business and so on. On the one hand, this not only makes some enterprises "talk about it" and take a wait-and-see attitude towards the use of ERP, but also causes inconvenience to a number of enterprises that are ready to use and have already used it.

3.3. Differences between different production (operation) business processes

The differences between different management methods (related to the management system, management level, enterprise size, management system, management method and other factors, as well as the primary goal of applying ERP) are far from the problem that can be solved by "personalized customization of human-machine interface", and changes in the required treatment scheme are also possible. differences between different industries. The traditional method is to use different versions for different industries, but because of the difference in core functions, the traditional development method often changes the program greatly, which is tantamount to writing two sets of software. Therefore, choosing an ERP system that is inconsistent with its own production (operation) business process is also one of the reasons for the failure of the implementation of the ERP system after the introduction of the enterprise.

4, China's small and medium-sized enterprises ERP implementation of countermeasures and suggestions.

ERP is to adapt to the development of market economy, is the only way for enterprises to enter the mature stage. In order to survive, enterprises must have good adaptability and the ability to respond quickly to the market, and do everything possible to reduce costs. In order to break the large and comprehensive model of the past, make full use of information resources, and grasp the latest market dynamics, it is necessary to implement ERP. Compared with large enterprises with greater competitive advantage, small and medium-sized enterprises inevitably have to deal with more potential risks and uncertainties in the process of starting the transformation of ERP management.

First of all, to do their own positioning, choose the appropriate ERP system. ERP system is not the larger the better, nor is it the more complete the better, the key is to meet the actual needs and development needs of the enterprise itself, ERP should promote rather than restrict the development of the enterprise. Therefore, in general, for small and medium-sized private enterprises, if not in the management has formed a fixed model, should be small and medium-sized ERP software as the main consideration. For small and medium-sized private enterprises that are still in their infancy or hope to improve their management level through ERP, they should be treated differently according to their own characteristics.

Secondly, it is necessary to combine the actual situation and choose the timing of ERP application. The development of small and medium-sized private enterprises generally goes through the stages of entrepreneurship, development, prosperity, and re-development. In the initial stage of enterprise development, small and medium-sized private enterprises are facing competition and pressure. The first problem to be considered is how to survive better. At this stage, ERP is not suitable for application. We can learn advanced concepts and good experiences and practices in ERP management of advanced enterprises, and accumulate experience through learning, reference and comparison, so as to lay a good foundation for future application of ERP. In the development period of small and medium-sized private enterprises, the work of the enterprise is basically straightened out, the system is basically perfect, and a stable management mode has been basically formed. At this stage, some preparatory work for ERP application can be done. In the prosperous period and the further development period of the enterprise, the enterprise is basically in a state of steady development, basically forming a benign mechanism system. However, due to the early stage of enterprise development in order to ensure that enterprises can survive and ignore some of the problems are gradually exposed, the shortcomings of the traditional manual management and the rule of man model will also appear, affecting the further development of enterprises, become the bottleneck of the development of small and medium-sized private enterprises. At this stage, enterprise managers usually hope to improve the management level through technological innovation, optimization of management and other ways to start the construction of ERP.

Again, to make overall planning, develop good ERP application steps. Before the implementation of ERP, small and medium-sized private enterprises must carefully analyze their own problems, clear objectives, so that the implementation of ERP system has a clear direction, to ensure that the whole project reasonable and orderly development. At the same time, do a good job in enterprise process reorganization, the enterprise manual business processing process redesign, make it adapt to the requirements of ERP system, to ensure the internal finance, materials, sales, human resources and other management department system operation of the overall inheritance, data sharing and data consistency. In addition, small and medium-sized private enterprises should fully realize the implementation risks of ERP, and must have a full understanding of the environmental risks, process risks and decision-making information risks in the process of ERP implementation. In the process of ERP application, a set of effective project and risk management mechanisms should be established to improve the success rate of ERP implementation.

5. Conclusion:

At present, there are many factors that need to be considered in the application of ERP in small and medium-sized private enterprises, and there are also many factors that will determine the success of ERP application. Moreover, from the results of ERP implementation, although the failure rate is still higher than the success rate until today, it is encouraging that the success rate is constantly improving. Combined with the actual, comprehensive consideration, comprehensive analysis, less detours, to ensure the success rate, which is small and medium-sized private enterprises in the implementation of ERP process must be correctly considered and faced.

Of course, the most important thing for small and medium-sized enterprises in China to implement ERP is to solve their cognitive problems. Management is a cost, ERP is only part of the cost of management, can not simply say how much money to invest in ERP, the key is to look at its later return on investment. Haier, for example, has an annual turnover of 7 billion. After using ERP system, the cost has been reduced by 4%-6%, which is tens of millions. The investment will soon be rewarded. What's more, the benefits of ERP to enterprises are not only to reduce costs, but also to improve and update the existing management mode of enterprises.