MANAGEMENT INFORMATION SYSTEM FINAL PROJECT

ENTERPRISE RESOURCE PLANNING (ERP) SOFTWARE FOR MEDIUM ENTERPRISE

DESIGNED BY: Edi Kristanta (008201200016) Accounting (2012)

PRESIDENT UNIVERSITY 2012/2013

Executive Summary
ERP Software system is very important for the performance of an enterprise. The company has to choose the most appropriate software in order to produce better outcome of information. Suitable software for medium company should provide modules that cover characteristics of medium company. There are three suitable softwares for medium company, those are OpenERP, SAP Business ByDesign, and IFS Application 8.0. The most suitable software for medium company is OpenERP.

Table of Contents

Executive Summary....................................................................................... Table of Contents........................................................................................... Introduction ................................................................................................... Literature Review .......................................................................................... Methodology.................................................................................................. Result and Discussion.................................................................................... Conclusion .....................................................................................................

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Table 1. ......................................................................................................... Table 2. ..........................................................................................................

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Introduction
The purpose of this report is to give advice in determining the most suitable Enterprise Resource Planning (ERP) software for medium size company. This report is maturity on June 5th, 2013. Nowadays, in size classification, enterprise is classified into small, medium, and large. It causes the necessary information for each company is difference. The company has to survive in the flexibility of economic evidences. Thus, the company has to able using information to forecast the economic evidence and as data of operation in an enterprise. In modern era, computer and software help the human in processing of information. Recently, Enterprise Resource Planning (ERP) is software that usually used in an enterprise. Each kind of ERP software provides different features and modules. The company has to choose the most appropriate software in order to produce better outcome of information. This report provides recommendation of suitable Enterprise Resource Planning (ERP) software for medium size company. Assessment is accepted in this report without any practical proof required. This assessment is given in form of recommendation as solution of the topic of this report.

Literature Review
Companies of all sizes ranked economic conditions as a major challenge (Abberdeen Group, Kevin Prouty and Nick Castellina: 2011). Not every small or midsize customer needs the same type of software; many of these companies are industry-driven, not sizedriven, and want to configure solutions to fit their needs (Source: SAP Official Website). Companies of different sizes approach ERP implementations differently across a range of issues (Vincent A. Mabert, Ashok Soni: 2003). From the quotes, it can be concluded that choosing software has to analyze. SMEs stand for small-to-medium enterprise. It doesnt include large company. In general, SMEs and large is differentiated by size classification. There is no exact definition of SME. It depends on whos doing the defining.

The larger the enterprises, more activities and operations will be incurred. The necessary employee of divisions and database will also be increased. Some divisions of an enterprise are Finance, Supply Sales and Marketing, Management, Human Customer Resource, Relation Production/Manufacturing, Chain

Management. This circumstance causes the enterprises required a solution of providing and controlling the accurate information for each division in an enterprise to take decision. The European Union has defined an SME (small-to-medium enterprise) as a legally independent company with no more than 500 employees (Margareth Rouse: March 2011). In additional, Statistics Canada also defines SMEs as any business establishment with gross profit less than $50 billion. In 2005, the Institute of Chartered Accountants and BDO Stoy Hayward conducted a research and identified seven key dimensions of differentiates. Stoy Hayward explained the characteristics of medium company are owners plus professionals in key leadership roles, empowerment of employees, formal processes, long-term planning horizon, external input from professionals, wider equity base, diversified customer base, culture enables employee/management development, source of capital needed longterm/funding available shorter term. Management information systems (MIS) is a general term for the computer systems in an enterprise that provide information about its business operations (Margareth Rouse: March, 2007). In the other word, it is combining how the human being skills in managing an enterprise and software of information technology as instrumentality for providing information to human in order to take a decision. In todays highly competitive business, the quality and timeliness of business information for an organization is not the choice between profit and loss, it is a question of survival of bankruptcy (Luminita Hurbean: 2005). Recently, one of the most popular software that commonly used is Enterprise Resource Planning (ERP) software. Enterprise Resource Planning (ERP) is often synonymously considered with enterprise computerization, though in reality this is not the case (Anchal Singh: 2009). ERP software has the ability to make a business more profitable
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as it allows automation of most of the functional business processes across the enterprise (Ashwin Raj: June, 2013). It provides some modules and functional areas that are suitable to be used every division in an enterprise. ERP softwares are designed for companies that work in a wide variety of areas (Ashwin Raj: June, 2013). They combine a large number of different elements in a single unit. According to Ashwin Raj, the ERP softwares also have to cover three important elements of enterprise. Those are manufacturing, human resource, and finance. Manufacturing could also be defined as operation of a company. Enterprise Resource Planning (ERP) consists of Human Resource (HR), finance, material, management, sales, production planning and control (Pankaj M. Madhani: 2007) Based on the Stoy Hayward explanation, the writer takes some outline characteristics of medium company as materials of consideration and aspect to choose the suitable software of ERP to medium company. Those are financial management, human capital management, operation/market sector, customer management. The fields of software packages considered and chosen, the weights assigned to different selection criteria, the size and structure of the team responsible for the decision (Edward Bernroider, Stefan Koch: 2001). Suitable software for medium company should provide modules that cover characteristics of medium company. In addition, the writer is also adding some aspects of the software, like cost, level of difficulties of implementation, and modules provided. The aspect of the medium company and ERP software will be conformed to each other.

Method
Analyzing, reviewing journal, and comparing ERP softwares are the main method of this report. The journals of ERP software are collected from internet. Examples of reviewed journal are Role of ERP Software in An Organization, collection journal of SSRN website, journal of google website. The writer also gets the information from the article and official website of ERP software. The experienced customer of ERP is also helping in writing this report.

Result and Discussion

Comparison characteristics of eight ERP softwares 1. System Applications and Products (SAP) Business ByDesign 2. Suited for companies of 100 to 500 employees (Medium Company) All customizations need to be done On-demand ONLY solution Average implementation time of 6-12 weeks Provided modules are Accounting and Financials, Operations and Distributions, Administration and Reporting, Customer Relation Management (CRM), etc Monthly subscription of $149 USD per user minimum of 25 users Total average cost for 5 years: $ 223,500 USD System Applications and Products (SAP) Business One 3. Suited for companies of 100 employees and less (Small Company) SDK (System Development Kit) available for in-house customizations On-premise ONLY solution Average implementation time of 8-16 weeks Starting at $20,000 USD for 5 users (includes license cost and implementation cost) Average maintenance cost per year is 18% of your license cost Total average cost for 5 years: $37,000 USD System Applications and Products (SAP) Business All-in-One Suited for companies of 2,500 employees and less (Large Company) All customizations need to be done by SAP Over 1,000 SAP resellers offering support for over 700 verticals On-premise or Hosted solution Average implementation time of 30-48 weeks Average of $500,000 USD for 40 users (includes license cost and implementation cost) Average maintenance cost per year is 18% of your license cost Total average cost for 5 years: $950,000 USD

4.

OpenERP Implementable on-site or on-line Many modules provided and the implementation is flexible as the enterprise needs. Low cost of starting and ownership. The monthly fees is affordable in amount of 40 per month Easy implementation Suitable to all sized enterprises Price range is USD $ 12,000 USD $ 100,000 Suitable for multinational (large enterprise) User range 5 500 users Twenty modules provided that in outline includes Advanced Planning and Scheduling (APS), Manufacturing Execution System (MES), Customer Relationship Management (CRM), Quality Management, Lean Scheduling, Project Management, Financials, Dashboard. No service support provided Version 2012 Cost range is USD $ 4,000 USD $ 20,000 User Range is 1 200 users Not suitable enough for medium company. Yet, it is more suitable for small company. About seven working days implementation practices time taken (based on customer experience)

5.

Infor Visual

6.

Sage 100 ERP

7.

NetSuite The version is always up to date The price range is USD $ 10,000 USD $ 100,000 User range is more than ten users until unlimited users More suitable for large company Implementation practices time is two and half months

8.

IFS Application 8.0 The price range is USD $ 300,000 USD $ 2,000,000 The user range is 40 5000 users More suitable for medium company Offered a training of 108 hours for mastering IFS

Small Company SAP BusinessOne OpenERP Sage 100 ERP

Medium Company SAP Business ByDesign OpenERP IFS Application 8.0

Large Company SAP Business All-in-One OpenERP Infor Visual NetSuite

Table 1. Classification of ERP softwares based on size company

Total Cost Time Users/Employees Modules Estimation (USD $) Practices Available Provided SAP BusinessOne 7,400/annual 8-16 weeks 100 7 SAP Business ByDesign 150/user 6-12 weeks 100-500 8 SAP Business All-in-One 120 k 2 M 30-48 weeks 2500 11 OpenERP 52/month A week Unlimited + 200 Sage 100 ERP 4k 20k 7 days 1-200 8 IFS Application 8.0 300k 2M 108 hours 40 5000 8 Infor Visual 12k 200k 3 6 months 5 500 20 NetSuite 10k 100k 2 1/2 months 10 - unlimited 7 Table 2. Comparison of ERP softwares based on cost, time, users, modules provided

Conclusion
Based on the comparison in result and discussion section, the most suitable software for medium company is OpenERP. It is a cheap software and flexible to companys needs. The company can add more installations as growth of the company itself. The implementation of OpenERP software is easy and takes a week.

REFERENCES

http://www.businessoneexperts.co.uk/page/sap-business-one/core-modules http://www.allianztechnology.com/index.php?pgid=134&mmid=2&redrtpg=sbmn&prvpid=13 http://www.top10erp.org/infor-solutions-erp-software-comparison-technology-143 http://www.infor.com/product_summary/erp/visual/

Ten Reasons Small and Midsize Enterprises (SMEs) Choose SAP to Help Transform Their Business". Article of SAP Official Website (Access: June 2nd, 2013) Raj Ashwin. Role of ERP Software in an Organization. Article of ERP Software. Hurbean, Luminita, Performance Management with Business Intelligence (May 1, 2005). Available at SSRN: http://ssrn.com/abstract=906721 or http://dx.doi.org/10.2139/ssrn.90672 Silva, Niranga, De Silva, Buddhi Manjula and Gunawardana, Kennedy D., The Impact of Enterprise Resource Planning Systems on Management Accounting in Private Companies in Sri Lanka (January 17, 2011). Available at SSRN: http://ssrn.com/abstract=1742377 or http://dx.doi.org/10.2139/ssrn.1742377 Gorica Industries. Driving the Business With SAP ERP. (Access: June 2 nd, 2013) IFS AB (2012). IFS ApplicationTM 8 Architecture and Technology Aberdeen Group, Kevin Prouty and Nick Castellina, ERP in Manufacturing 2011: Defining the Strategy, July 2011, p.5. SAP Company (2012). SAP List of Prices and Conditions SAP Software and Support 2012/1 Switzerland. SAP Company (2007). Thinks SAP Only Support Large Enterprises? Think Again Eskeli, J., Heinonen S., Matinmikko T., Parviainen P., Pussinen P., (2010). Challenges and Alternative Solutions for ERPs). Research Report VTT-R-05936-10. Sage Company. Sage 100 ERP : Available Modules. (Access: June 3 rd, 2013)

U.S. International Trade Commisions (2010). Small and Medium-Sized Enterprises: Characteristics and Performance. Rouse, M., (2011). Definition Small to Medium Enterprise (SME). www.infor.com www.netsuite.com Singh, Anchal, ERP Trend Towards SMEs (August 26, 2009). The IUP Journal of Systems Management, Vol. VII, No. 3, pp. 24-31, August 2009. Available at SSRN: http://ssrn.com/abstract=1462148 Madhani, Pankaj M., Saraswat, Amit and Gor, Ravi, ERP Implementation in SMEs: Pre-ROI Calculations (May 7, 2010). E-Business, Vol. 8, No. 12, pp. 37-44, 2007 . Available at SSRN: http://ssrn.com/abstract=1507631 Edward Bernroider, Stefan Koch, (2001) "ERP selection process in midsize and large organizations", Business Process Management Journal, Vol. 7 Iss: 3, pp.251 257 Mabert, A., V., Soni, A., M.A. Venkataramanan, (2003) The impact of organization size on enterprise resource planning (ERP) implementations in the US manufacturing sector, Omega, Vol. 31 Iss: 3, pp.235-246 Pedro Ruivo, Tiago Oliveira, Miguel Neto, (2012) "ERP use and value: Portuguese and Spanish SMEs", Industrial Management & Data Systems, Vol. 112 Iss: 7, pp.1008 102 Maruf Hasan, Nga T. Trinh, Felix T.S. Chan, Hing Kai Chan, Sai Ho Chung, (2011) "Implementation of ERP of the Australian manufacturing companies", Industrial Management & Data Systems, Vol. 111 Iss: 1, pp.132 145 Sirigini i Subba Rao, (2000) "Enterprise resource planning: business needs and technologies", Industrial Management & Data Systems, Vol. 100 Iss: 2, pp.81 88 A. Momoh, R. Roy, E. Shehab, (2010) "Challenges in enterprise resource planning implementation: state-of-the-art", Business Process Management Journal, Vol. 16 Iss: 4, pp.537 - 565