Proceedings of the International Conference on Industrial & Mechanical Engineering and Operations Management

Dhaka, Bangladesh, December 26-27, 2021

Case Study of Enterprise Resource Planning System

Implementation in Small Medium Business
Rizky Aditya Nugroho, Awang Andhyka, Catur Lega Wibisono, Syahri Mu'min,
Arief Saputro, Vivi Izzah Nur Kholifah
Information Systems Department
Universitas Nahdlatul Ulama Sidoarjo
Sidoarjo 61218, Indonesia
[email protected], [email protected], [email protected],
[email protected], [email protected], [email protected]

Abstract
With the ERP systems are applications to business operations including, production planning, manufacturing,
purchasing, marketing, human resources into a number of modules or functions. These modules and functions are
data-integrated and functional processes so that business and administrative processes in the company can be carried
out Utility. This ERP project implementation process method consists of guidelines to help the project team manage
change, offering the completion of tools for practitioners to direct resources accordingly and maximize benefits so as
to achieve the expected results, optimizing the capabilities of the ERP system and avoid unproductive expenses and
expensive.These modules include: supply chain management, accounting and finance, human resource management,
customer relationship management, inventory management, material management, logistics, maintenance, sales,
production, distribution, procurement, asset and cash management, financial accounting, strategic planning, quality
management.

Keywords
Case Study, Enterprise Resource Planning, Small Medium Business, Strategic planning

1. Introduction
During the current COVID19 pandemic, digital marketing has made MSMEs even more aggressive in the
offline and online marketing process. Therefore, a design and formulation in the development of local potential is
needed, especially digital financial applications for MSMEs. Take advantage of the COVID-19 condition to seize the
opportunities that exist, because in the current pandemic era it changes human lifestyles and orders. People today are
more interested in finding and buying things online using existing marketplaces and social media. By using this media,
it helps MSMEs in marketing their products to consumers. Social mapping is needed to find out the entrepreneurial
potential of one of the marketing media that is currently in great demand by the public to support various activities
carried out. They gradually began to leave the conventional/traditional marketing model. Switch to modern marketing,
namely digital marketing. With digital marketing, communication and transactions can be done any time / real time
and can be global or global. With the large number of chatini-based social media users and increasing number of
opportunities for MSMEs to develop their market online using websites and social media as an internet-based
application group that uses Web 2.0 ideology and technology, where users can create or exchange information on the
application. Some of the social media that are very popular and have millions of users in Indonesia are Facebook,
Twitter, Instagram, Youtube, Blogs, and others. Social media allows users to communicate with millions of other
users. ERP application the app will provide combined benefits to their employees working in different locations
departments such as finance, human resources and warehouse due to the uniformity of the platform. In the normal
scenario, each department has its own special independent computer system programmed to perform a specific set of
activities related to the department.This independent systems can help with coordination and intercommunication
issues across different departments. ERP applications enable and provide solutions by combining activities and create
one integrated database, allowing different departments to access and share valuable information consistently. The

© IEOM Society International 859

Proceedings of the International Conference on Industrial & Mechanical Engineering and Operations Management
Dhaka, Bangladesh, December 26-27, 2021

literature considers ERP applications being the most innovative development in the ICT sector, yet due to their
complexity and significant business process change and infrastructure requirements, ERP applications are considered
an expensive alternative. ERP systems provide data integrity, interface uniformity and integration that are critical
deliverables for timely and accurate information for reporting. The literature argues differently on the history of ERP,
as some researchers believe ERP as an extension of MRP and MRPII while others do not accept this notion. ERP
applications are either vendor based standardised applications or an open-source application, developed to meet
specific sector requirements. Major players in ERP include SAP, Oracle Corporation (PeopleSoft, J.D. Edwards) and
Microsoft. ERP applications comprise different modules and each module provides specific organisational functions
such as, financial management, human resource management, customer relationship management, material
management, logistics, maintenance, sales and distribution, warehouse management, procurements, asset and cash
management, project management and so forth. These functional modules provide an integrated service to the
organisation using a GUI interface and are hosted on central RDMS. ERP systems have an ability to provide accurate
and timely reporting for effective decision making that is considered to be an important business requirement.

Figure 1. ERP design system

ERP systems offer adopting organisations the prospect of increased work productivity and operational
efficiency. Yet its implementation is costly and resource intensive. The evaluation of ERP system benefits is important
to justify the investment made. Equally, it is important for adopting organisations to understand what forms of
implementation efforts are required to optimise their ERP system performance. Current literature on ERP system
benefits overly focuses on performance-based metrics,financial, operational or balanced scorecard. The literature
review suggests that organisational inertia & change management, IT maturity, organisational learning and
organisational innovation are crucial factors impacting on ERP implementations, that may further enhance or inhibit
the benefits derived from ERP system. Due to the situational nature of ERP implementations, this research employs
contingency theory complemented by CVF as a theoretical lens to examine the implementation process of ERP
projects and its associated outcomes.There is a lack of understanding on the manner in which organisations deal with
issues known to affect ERP implementations to obtain the anticipated ERP benefits. The proposed framework offers
an analytical base to assess the manner in which the contingent factors contribute to ERP system benefits realisation,
including the range of benefits that could be derived post ERP implementation. While making adoption decisions for
ERP applications, organisations generally tend to identify their business and technology needs to establish a business
case. Haddara and Zach (2011) conducted a comprehensive literature review on ERP adoption in small and midsize
business and argued that the current literature on ERP adoption has several issues in relation to the midsize business
context. To understand and evaluate the adoption and ERP selection process, many case studies identified factors that
could influence ERP application selection in small and midsize businesses. Organisational factors such as business
complexity, change management, external factors (like supply chain partners) and networking pressures could be
considered important for the selection decision. While other studies suggest that cost drivers, business functional

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Proceedings of the International Conference on Industrial & Mechanical Engineering and Operations Management
Dhaka, Bangladesh, December 26-27, 2021

requirements, flexibility and scalability and the degree that ERP can align itself to existing businesses process could
also be influential factors for selection decisions.

Figure 2. TOE Framework

As outlined in Figure 2, some researchers have adopted a TOE framework for the purpose of developing a
model that could help predict midsize business adoption of ERP applications. Additionally, adoption of enterprise
systems by midsize businesses is generally influenced by internal organisational and technological factors instead of
the industry and/or market-related factors. In contrast, with reference to another study, Haddara and Zach (2011)
argued that with the higher rate of collaboration amongst midsize organisations, businesses are likely to adopt
enterprise applications due to environmental factors. BRW conducted a survey that showed that most Indonesian
midsize businesses were unaware of the advantages of technology and were focused more on sales and revenue
generation. This was considered to be a major concern for Indonesian economic development, given such short-
sightedness. Haddara and Zach (2011) provided an insight into potential adoption decisions in India, suggesting that
the business needs or requirements along with competition in the market, survival and the desire to retain customers
could be a few of the drivers influencing midsize businesses to adoption ERP. Furthermore, a pre-adoption framework
was discussed that was developed for the purpose of evaluating the suitability of ERP applications in terms of business
requirements, business process complexity, level of change that a company could endure and the cost of ERP
implementation. Free opensource ERP applications in comparison to vendor delivered branded ERP systems are likely
to have less cost dependencies. Business complexity could be considered to be a weak ERP adoption predictor in
comparison with business size being strong predictor (Haddara & Zach, 2011). In addition, the willingness of midsize
businesses and their readiness for adoption could be affected by their type of industry such as, manufacturing, retail,
customer services and so forth. Other evidence suggests that the financial scarcity, resourcing and business size could
be other crucial factors potentially influencing ERP selection by midsize businesses.

2. Research Method
ERP life-cycle model comprising six phases and four dimensions. The phases presented by Esteves (1999) include:
adoption decision, acquisition, implementation, use and maintenance, evolution, and retirement. Dimensions represent
the different point of views through which each phase should be analysed. These are: product, process, people and
change management. The phases of the ERP life-cycle model in more detail are:

1. Adoption decision phase consists of the definition of system requirements, the goals and benefits and analysis
of the impact of adoption at a business and organizational level.
2. Acquisition phase consists of product selection in accordance with business requirements, identification of
customisation requirements, and selection of an implementation partner. Factors to consider in this stage
include product and implementation cost, training and maintenance services, and contractual agreements.
3. Implementation phase comprises acquiring the ERP application package, with or without customisations. In
this phase, external contractors became involved to implement and provide know-how/knowledge of the
application and training.

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Proceedings of the International Conference on Industrial & Mechanical Engineering and Operations Management
Dhaka, Bangladesh, December 26-27, 2021

4. Use and maintenance phase comprises of using the product and gaining benefits with minimal disruption. In
this phase, aspects to consider include functionality, usability and adequacy to the business process after
system implementation. System maintenance and fixing in case of malfunction and general system
improvement/upgrade are included in this phase.
5. Evolution phase includes integration of capabilities in the new system, materializing new benefits and
expanding new frontiers for external partner collaboration.
6. Retirement phase corresponds with the stage when managers decide if they will substitute the ERP software
with other information system approaches that are better suited to organisational needs. In addition to the
phases of the ERP life-cycle, the four dimensions are described as follows:
7. Product: refers to aspects relating to the ERP product such as its functionality, technical features, hardware,
software needs, etc.
8. Process: refers to the pre-existing core capabilities and functionalities of an organisation that need to be
supported by the ERP system. There should be a consideration of business process re-engineering, conversion
of existing processes to new business process or functional requirements of the ERP application for optimal
performance.
9. People: refers to human resources, their skills, roles and capabilities within the organisation. Roles or skills
are required to minimise the impact of ERP implementation, to manage its complexities and facilitate
organisational change. This includes contingencies, change in practice and adopting new structures along
with learning a new culture in organisation.
10. Change management: refers to the body of knowledge used to address complex change brought about by
ERP implementation. Change management ensures acceptance and readiness of a new system for its optimal
use in the organisation.

Reengineering of the existing business processes became intricately part of the implementing a number of ERP system
modules, not all the functionalities and applications were planned to be utilised. The ERP system modules that were
installed contained a set of industrial “best practices” and processes that were not considered during the ERP system
project initiation. The early stages of the ERP system implementation focused primarily on financial workflows,
processes and reporting.

Figure 3. ERP System planning

ERP system manager claimed that not all functionalities and applications found in the modules that have been
installed were utilised. There is still potential for improvement by reviewing the ERP system performance and
identifying what can be changed to conform to the ERP system’s practices.

3. Results and Discussion

the result of several changes / changes to the existing factors, most of the factors that have been previously identified
include, user analysis, support base for applications, thus adding a new factor to team management and control as well
as reposition some of the factors listed below such as, outline the matrix for team competence, develop training
strategies and so on. In addition, there are factors that are suggested to be and transferred from another stage to the
people domain with some new factors to be proposed from different participants. The factors recommended to be
moved elsewhere in the model are: conflict resolution procedures, analysis of realistic end-user expectations (at least
or nothing) adjustment, resources include skills, developing communication strategies, developing conflict resolution
procedures and develop knowledge management strategies. The factors proposed by the participants were: a plan to
test and identify staffing needs, develop test strategies, test plans, test scenarios and test case records on resources

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Proceedings of the International Conference on Industrial & Mechanical Engineering and Operations Management
Dhaka, Bangladesh, December 26-27, 2021

with details of the utilization of staff allocation on the project for knowledge transfer, internal and external team
engagement planning, developing test strategies, identifying key business users – testing resources, identification of
key business staff for UAT and contract signing so as to finally build stage gate – baseline and work results.

Table 1: Result Implementation stage amended after case study analysis

Planning stage (New factors or changes as Planning stage
Domains

(Before Case study) recommended) (After Case study)

• Selection criteria with • Technical requirements identification •Selection criteria with

relevant parameters • Technical requirements analysis relevant parameters
• Accurate information on ERP • Decision on Testing Tools – QC (QA, •Less reliance on sales
applications QM protocols set) advice
• Less reliance on sales advice • Data Migration Strategy development •New technology adoption
• Time & Cost of • Data migration strategy communication issues
implementation & feedback Mobility, HA, Complexity,
• New technology adoption • Plan for testing and identify Tools network
issues required for Testing QC •Proposed application
• Industry standards • Planning Decisions should be Made System architecture analysis
• Proposed application System • Engage with partners •Technical staff/consultant
Technology factors

architecture analysis • Define compatibility issues with other expertise

• Technical staff/consultant applications •Realistic “end user”
expertise • Identify Applications for Integration expectation analysis
• Realistic “end user” • ERP complexity management planning •Technical requirements
expectation analysis identification and analysis
• Identify value stream for • Plan for Testing
organisation o Decide on Testing Tools–
QC (QA, QM protocols set)
• Engage with technical
stakeholders
•Identify Applications for
Integration
• Compatibility issues with
other applications
•Establish infrastructure
strategy – Technology
requirements

Table 1 shows the “Implementation stage” factor at the end of the first phase of data collection. At the end of this
section, the revised design phase factors will be presented; by case study feedback. The data obtained from the case
study analysis are presented in four category. the purpose of the stage would be to gather requirements, complete
functional design and identify gaps in the solution for potential customisations Compatibility issues with other
applications and their requirements must be carried out at the end so that the practicality of the solution will be
completed at the final stage will make it easier on projects and systems

4. Conclusion
ERP implementation has been described as unique and different from other software implementations due to
its strategic impact over business. There are number of attempts made to produce an effective model, providing an
appropriate strategic direction for large enterprises while implementing sophisticated business applications.
Successful ERP implementation the platform does not imply that the business benefits will be generated automatically
is acceptance and effective utilization of functionality in ERP systems that provide businesses with multiple model
changes to ERP.

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Proceedings of the International Conference on Industrial & Mechanical Engineering and Operations Management
Dhaka, Bangladesh, December 26-27, 2021

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Acknowledgments
This research was supported in part by the Institute for Research and Community Services at the Universitas Nahdlatul
Ulama Sidoarjo, Indonesia.

Biographies
Rizky Aditya Nugroho is a faculty member of the Information Systems Department at the Universitas Nahdlatul
Ulama Sidoarjo, Sidoarjo, Indonesia.

Awang Andhyka is a faculty member of the Information Systems Department at the Universitas Nahdlatul Ulama
Sidoarjo, Sidoarjo, Indonesia.

Catur Lega Wibisono is a faculty member of the Information Systems Department at the Universitas Nahdlatul
Ulama Sidoarjo, Sidoarjo, Indonesia.

Syahri Mu'min is a faculty member of the Information Systems Department at the Universitas Nahdlatul Ulama
Sidoarjo, Sidoarjo, Indonesia.

Arief Saputro is a faculty member of the Information Systems Department at the Universitas Nahdlatul Ulama
Sidoarjo, Sidoarjo, Indonesia.

Vivi Izzah Nur Kholifah is a student of the Information Systems Department at the Universitas Nahdlatul Ulama
Sidoarjo, Sidoarjo, Indonesia.

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