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Cover page
Dissertation Submission
Participants:
Dissertation Title: Challenges of ERP in the SMB Market in UAE – Vendor and Customer
Perspective
ACKNOWLEDGMENTS
Working on this Dissertation has been a great learning experience. Many people have been a part of this
journey and helped in making it a success. First and foremost, we sincerely thank Dr. Vijay Sethi who has
been a constant source of ideas and inspiration. His vast knowledge pool and invaluable experience have
provided us with significant insights and his critical opinion and structural guidance constantly refined
our focus and provided us with a sense of direction.
We are grateful to Mr. Mohamed Yousouf, who has continually extended his support despite being in
Singapore.
We would also like to express our gratitude to our Dean, Mr. Sanjay Dalvi for his continual support and
guidance.
We wish to thank all the participants (ERP solution vendors, Channel Partners and Customers) from
diverse domains who spared their valuable time to talk to us and provide us with primary data. Their
insights and knowledge helped us in coming out with guidelines and recommendations for
implementing an ERP package successfully.
We extend thanks to Ms Arunita Paul and Ms Firdose Husain for coordinating and informing us of all
dissertation related deadlines and details. Ms. Menchie Aplaca, our librarian has been very helpful
throughout the course of this project. We extend our heartfelt gratitude to the entire faculty and
management of S.P Jain Center of Management for the immense support they have given us throughout
the project.
We wish to thank Mr. Navneet Tandon, Vice President, Raqmiyat who has been there to guide and
encourage us every time we spoke to him.
Last but not the least, we also wish to thank our friends and colleagues who provided us with significant
information from time to time.
Table of Contents
EXECUTIVE SUMMARY .................................................................................................................................. 6
OBJECTIVE ..................................................................................................................................................... 7
WHY ERP?.................................................................................................................................................... 11
STAKEHOLDERS ........................................................................................................................................... 27
VENDORS................................................................................................................................................. 27
APPENDIX .................................................................................................................................................... 66
EXECUTIVE SUMMARY
There is a general trend of most big league ERP vendor focusing on SMBs are their new clientele.
The SMB segment is large and offers substantial potential to the ERP vendor. However, this segment is
also extremely price-sensitive and is generally intolerant of high gestations on realizations from
investment.
SMBs now seriously consider ERP as panacea for all their present day ills and as an imperative to retain
their competitive edge. Some of the factors that have catalyzed this process are globalization,
competition, need for faster response to the market place and the pressure to contain costs and
improve efficiencies. SMBs are looking to mature in terms of processes and move to global market
channels.
However, the third trend is highly worrisome in the market today. Most ERP implementations are failing.
Most SMBs are unhappy with ERP solution they have adopted in their organization. The bottom line of
the Vendors is coming down as the margin per SMB is much smaller and the effort in most cases is the
same. In addition, there are limited guidelines for the three stake holders involved in an implementation
of an ERP system.
This is the reason why we chose this topic as our subject for research.
The objective of this research work was to study the ERP implementation from three perspectives, from
the vendor perspective, from channel partners’ perspective, and from the SMBs perspective itself to
understand the various challenges faced by the three of the core stake holders.
We have formulated a set of guidelines for the three stake holders in an ERP implementation project
that are the ERP Vendor, Chanel partner, and the SMB itself. These guidelines have been documented at
the end of this research documentation.
OBJECTIVE
The objective of this study is to analyze the challenges faced in the ERP market for SMB - a perspective
from the three main stakeholders - vendors, channel partners and the customers.
At the end of the study, we have developed a set of guidelines for both the vendors and the SMB
customers to enable the ERP process - right from vendor selection phase to that of post implementation
RESEARCH METHODOLOGY
Approach
This section of the report describes the research methodology and the overall approach followed in the
project. The outline of the overall approach and research methodology process in shown in the given
flow:
Journals
Problem identification
White Papers
GITEXResearch Problem
Personal Interviews
“ To understand the GCC market in terms of
the
Data Consolidation and Analysis
parameters related
Data Consolidation
to ….. and Analysis
Guidelines &
Recommendations
SP JAIN CENTER OF MANAGEMENT 7
Challenges of ERP - SMB market in UAE
The objective of this study is to analyze the challenges faced by both the Small and Medium Businesses
(SMB) customers of Enterprise Resource Planning (ERP) solutions and the ERP solution providers. This
involved study of the customers who had ERP implemented in their organizations, vendors of different
ERP solutions available in the market and the channel partners who implemented the software.
Once the research design and strategy was decided, the sources for the collection of data for the
research were identified.
We approached the ERP vendors and their channel partners through GITEX Trade show, personal and
telephonic interviews. To understand the ERP market better, data was also sourced from secondary
sources like Company’s website, annual reports, research reports, journals and other independent
reports.
We also referred to several research reports from sources like Gartner, IDC, Datamonitor and Aberdeen
to understand the market conditions.
The results were analyzed to look for patterns and trends in the result. For recommendations and
suggestions, information was sourced looking at all the primary, secondary analysis documents and also
at the findings for the research questions.
Recommendations:
Based on the research carried out, we have formulated a framework of guidelines to be followed by the
customers and the ERP vendors for the successful implementation of ERP for a Small and Medium
Enterprise.
Phase E:
Phase D: Suggestions
and
Data
Recommendat
Phase C: Consolidation
ions
Primary Data and Analysis
Collection -->
Phase B: • GITEX
Literature • Interviews
Review -->
• IDC
Phase A:
Problem/ • Aberdeen
Scope • Gartner
Definition
INTRODUCING ERP
Enterprise Resource Planning (ERP) comprises of a commercial software package that promises the
seamless integration of all the information flowing through the company - financial, accounting, human
resources, supply chain and customer information.
ERP has its origins in the concepts associated with Manufacturing Resource Planning (MRP) packages
and their antecedents from the 1970s, Materials Requirement Planning packages. A fundamental
feature of the package is a high level of integration, with all applications sharing a single corporate
database. The system is designed for an on-line client/server environment. A high level of application
functionality, richly configurable to the needs of the individual customer is an important objective
embedded in the package. The package is also intended to provide best practice, in a global sense,
through a range of standardized business processes.
WHY ERP?
As defined above, ERP applications help streamline business processes within an organization to
enhance the competitive edge. Other advantages of ERP applications are:
Cost Advantage: One of the many reasons organizations implement ERP applications is to achieve
cost savings. Most savings are achieved by overall efficiencies that are put in place, reduction in
inventory levels, better management of resources, and by strategic alignment achieved by the
inherent nature of the ERP system. Some of these savings are intangible and hard to measure, but
can play a key role in gaining competitive edge.
Modular and Open: ERP systems are designed with open system architecture. This means that a
module can be interfaced or detached as needed without affecting the other module’s
performance. ERP systems may support multiple hardware platforms for those organizations with a
heterogeneous collection of systems. It should also support some third party add-ons.
Standardized Business Processes: ERP applications are generally designed to offer the best business
processes applicable worldwide. When focusing on a particular process to be streamlined by ERP,
the organization is forced to assess their current processes and standardize as needed for all those
points of business implementing ERP. Re-engineering of processes may be a result of the need to
standardize. Standardization as a result of packaged applications offer the advantage that "as the
state of the art moves, you move with it".
Empowers Users: ERP provides accountability and responsibility to users in ways not available
before. With the integration and flow of data, more information is available to users. User screens
may provide data which allows users the ability to make informed decisions, whereas before they
were just a conduit for keystrokes. For example, when placing an order for a client a service
representative may not have had access to inventory stock. Therefore they would just take the
order, and if not in stock, the client would find out at a later date. With integrated systems, the
service rep is able to tell that the item is out of stock and when it is expected. The information can
be relayed to the customer, whereby they can make a decision to still purchase the item or decline.
This information empowers the service rep.
Real time financial data: ERP applications facilitate the real-time movement of financial data
throughout the company. General ledger interfaces between processes such as accounts payable,
payroll and purchases allow for ease in recording and monitoring these transactions. Additionally,
the interfaces allow for consistency of reporting when tracking back GL source data.
Internal Management: ERP can improve analytical and planning capabilities for management by
storing data in a common, consistent format that can be accessed quickly. As a result of the
implementation process, many business processes and data requirements were standardized. This
standardization allows for the ability to extract, manipulate, and analyze information at a more
comprehensive level. Management is provided valuable information from which to make decisions.
On the flip side, it is important to remember that data integrity, one aspect of the value of
information, can be at risk if users are not properly trained or process requirements not fully
explored in the course of the ERP implementation.
Strategic placement: Most organizations are moving toward internet, intranet and extranets in their
business. ERP lays the back end groundwork to support business on the "net". This is most evident
with the material/inventory processes. Many companies are online with suppliers where the
tracking of materials becomes a crucial process as items are often in "virtual warehouses". ERP
provides the flow of information between the sales departments, inventory, purchasing, on to
outside suppliers who need to know when to ship materials. ERP also supports globalization and
helps transcend across geographic or language barriers.
All the above reasons offer why organizations choose to move from traditional, segmented business
functions to ERP’s integrated systems. However, as we know, ERP is not all bells and whistles. There
have been numerous organizations that have had a less than pleasant experience in implementing ERP
applications.
The problem of an ERP solution not meeting expectations could have been due to glitches, unrealistic
expectations, planning errors etc that can be traced back to the time when the company decided to go
for ERP. An understanding of this facet, can help one analyze what key factors have to be kept in mind
from day one of deciding to go for an ERP implementation as well as the pit falls that can be proactively
avoided.
Assign a project team that consists of employees from sales, customer service, accounting,
purchasing, operations and senior management, each accountable for specific tasks like
developing a timeline, finalizing objectives, formulating training plans.
Examine current business processes: Have the team perform an analysis on which business
processes should be improved. To start the team discussion, consider questions such as: Are
your procedures up to date? Are there processes that could be automated? Do your sales force
and customer service personnel have real-time access to customer information? The team
members should also conduct interviews with key personnel to uncover additional areas of
improvement needed.
Set objectives: The objectives should be clearly defined prior to implementing the ERP solution.
ERP systems are massive and you won’t be able to implement every function. You need to
define the scope of implementation. Examples of objectives would include: Does the solution
reduce backlogs? Can the solution improve on-time deliveries?
Develop a project plan: The team should develop a project plan which includes previously
defined goals and objectives, timelines, training procedures, as well as individual team
responsibilities. The end result of the project plan should be a “to do” list for each project team
member.
Review software capabilities: intensive review of the software capabilities for the project team.
Train on every aspect of the ERP software to fully educate the team on capabilities and identify
gaps. Determine whether modifications are needed prior to employee training.
Identify manual processes: Evaluate which processes that are manual and should be automated
with the ERP system.
Develop standard operating procedures (SOPs): for every aspect of the business. These
procedures should be documented. The documents are modified as the SOP changes. This is a
huge task, but it is critical to the success of your implementation.
Examples of SOPs:
o How do you handle global price changes?
o What are the processes for inputting new customer records?
o How do you currently handle the paperwork on drop shipments?
Convert data: You can’t assume 100% of the data can be converted as there may be outdated
information in the system. Determine which information should be converted through an
analysis of current data.
Collect new data: Define the new data that needs to be collected. Identify the source
documents of the data. Create spreadsheets to collect and segment the data into logical tables
(Most ERP systems will have a utility to upload data from a spreadsheet to their database).
Review all data input: After the converted and manually collected data is entered into the ERP
database, then it must be reviewed for accuracy and completeness. Data drives the business, so
it is very important that the data is accurate.
Data clean-up: Review and weed out unneeded information such as customers who haven’t
purchased in a while or are no longer in business. Now is the time for improving data accuracy
and re-establishing contact with inactive customers.
Pre-test the database: The project team should practice in the test database to confirm that all
information is accurate and working correctly. Use a full week of real transaction data to push
through the system to validate output. Run real life scenarios to test for data accuracy.
Occurring simultaneously with testing, make sure all necessary interfaces are designed and
integration issues are resolved to ensure the software works in concert with other systems.
Verify testing: Make sure the actual test mirrors the Standard Operating Procedures outlined in
step 2, and determine whether modifications need to be made.
Train the Trainer: It is less costly and very effective if one trains the trainer. Assign project team
members to run the in-house training. Set up user workstations for at least 2 days of training by
functional area. Provide additional tools, such as cheat sheets and training documentation.
Refresher training should also be provided as needed on an ongoing basis.
Final Testing: The project team needs to perform a final test on the data and processes once
training is complete and make any needed adjustments.
Develop a structured evaluation plan which ties back to the goals and objectives that were set in the
planning stage. In addition, a post-implementation audit should be performed after the system has been
up and running for the first week for reconciliation purposes and three to six months following to test
whether or not the anticipated ROI and business benefits are being realized. Comparing actual numbers
with previously established benchmarks will reveal if the software tool does what it is intended to do -
add value to the business. It is important to periodically review the system's performance to maximize
ROI.
MARKET RESEARCH
Figure 5: ERP application revenue estimates for the year 2006 through 2011.
Here are some major trends from the 2006 global ERP market:
• ERP vendors that traditionally offered a single, internally developed product line now go to market
with a broad portfolio of products targeted to specific industry and departmental buyers.
• Oracle and SAP continue to dominate the market among very large global companies. In the
increasingly important SMB segment, though, they face formidable competition from Infor, Sage Group,
Microsoft, Lawson and Epicor.
• New pricing and deployment models, such as software as a service (SaaS) and enterprise licensing, are
starting to gain acceptance. Most ERP vendors are expected to begin offering on-demand in addition to
on-premises options in the near future.
• The fundamental ERP concept of a single-vendor, pre-integrated suite of packaged business
applications is making excellent headway in non-manufacturing markets such as retail, financial services,
and public sector. As ERP vendors buy and build the necessary industry functionality, their available
market rapidly expands.
As is clear, SAP is the global market leader with a revenue share of 41%, followed by Oracle (21%), Infor
(7%), Sage Group (6%) and Microsoft (3%).
Traditionally, the ERP market has been segmented by the size of customers the vendors targeted: large
enterprise vendors, midmarket vendors, and small business vendors. It was thought that the same
vendors and products couldn’t serve multiple segments, but that notion has been disproved recently.
Many ERP vendors are now competing effectively in all segments. The Fortune 2000 have largely
selected and deployed their ERP backbones, but many of them still rely on legacy MRP and MES
investments within certain geographies, divisions, or individual facilities. With the focus on standardizing
IT architectures across the entire company, centralized ERP systems are replacing many of the
midmarket plant applications. The traditional large enterprise vendors have started to attack the market
perception that their products are too big and complex, and they’re making inroads into the midmarket
through rapidly growing reseller channels. The midmarket is one of the key areas where the larger
enterprise vendors believe they have an opportunity to accelerate growth, even as ERP opportunities at
the higher end of the market decline. For vendors like Cincom and QAD that have traditionally served
this segment, we see a focus on selling additional functionality into their installed bases in order to stave
off the advances of larger vendors.
SAP’s and Oracle’s revenue came mainly from enterprise management and customer management
applications. This is the general trend among most companies in the segment.
The actual revenue segmentation of ERP sales by company size showed very little change in 2006, with
the midmarket still the major growth leader. Major growth also came from the small business segment
(less than $30M in annual revenue) with 27% growth and the lower end of the midmarket (annual
revenue between $30M and $250M) with 18%. The large enterprise group (more than $1B in annual
revenue) also grew at 18%, a reflection of the internal ERP consolidation and standardization projects, as
well as ongoing investments in add-on functionality and additional seats from ERP vendors.
The midmarket is expected to continue to be a major growth category—and heated battleground—for
the ERP vendors. In 2006, this segment allowed companies like Sage Group and Microsoft Business
Solutions to grow at 19% and 18%, respectively.
They continue to push up market to compete with firms like CDC Software and Epicor, which grew 18%
and 23%, respectively. Lawson is expected to show strong growth in the next year as the combined
Lawson-Intentia organization enjoys its first year as a merged company. Additionally, Infor intends to
gain market share through additional acquisitions, while Oracle and SAP continue to rely on reseller and
partner programs. These programs, specifically Oracle’s Accelerate and SAP’s PartnerEdge, are meant to
reach more buyers and provide their partners and resellers with the appropriate resources to help them
gain increased market share.
ERP technology trends, 2006 Conventional wisdom indicates SaaS will primarily appeal to SMBs, while
large enterprises will choose traditional licensing and on-premises deployment. That view is changing as
many larger organizations get more comfortable with the SaaS model. SaaS-based ERP however raises
the question of what data companies is comfortable storing outside their firewalls, especially when it
comes to financial data where any manipulation or adjustment can carry painful ramifications.
While SaaS is a hot topic, we cannot overlook the impact of service-oriented architectures (SOAs) on the
ERP market. Most buyers are wary about new architectures and are becoming even more risk averse,
especially now that their ERP systems support most of the critical business processes and key company
data.
Despite the slow buyer uptake, SOA is still a major priority for ERP vendors. While the efforts of
Microsoft, Oracle, and SAP have received the most attention, the ERP market as a whole has embraced
SOA.
While the vendor approaches tend to differ, the end result will not: more flexible and adaptable
products. The vendors will benefit from a more productive development environment as they find it
much easier to configure applications for specific markets and even individual customers. For vendors
with sizeable installed bases of customers on legacy technology platforms, SOA also provides a vehicle
to upgrade their customers to newer, modernized products without major business disruptions.
2006 ERP Market Structure, Oracle and SAP continue to command the lion’s share of revenue from the
ERP market.
• Infor’s growth cannot be underestimated. The company relies on an innovative business model that
centers on acquiring products to generate additional maintenance and license revenue, as well as
increasing cross-selling opportunities within its ever-growing installed base.
• Sage Group is bringing to its customer base CRM functionality plus business intelligence through the
inquiry and analysis tools Business Insights Analyzer and Explorer. The Analyzer is the drill-down, basic
reporting tool that has some wizards to build queries, and Explorer is the role-based, personalization-
driven reporting structure.
• Microsoft Business Solutions, while focused on the midmarket, continues to be pulled into larger
enterprise deals.
Customer retention rates remain in the 90% range for many vendors, and maintenance revenue
continues a steady growth at 15%. But a software vendor can only survive on maintenance for so long.
ERP vendors, as part of their evolution toward portfolio providers, must find new ways to not only
service their customers, but compete in new markets.
For the mass market vendors, the increased reliance on partner networks to help drive volumes of new
license sales will be crucial. For the ones focused on specific industries and manufacturing styles,
providing a portfolio of industry-specific functionality that can keep clients competitive in the global
economy will be crucial.
An 11% CAGR for the global ERP market is predicted through 2011. No drastic changes are expected to
take place to the dynamics of this market over the next five years, although it is expected that revenue
growth will come from ERP extension segments such as CRM, HCM, and SCM. Several ERP vendors will
increase revenue from manufacturing operations.
Shifts in revenue type will also continue. Alternate pricing revenue will continue growing at the expense
of license revenue, which is expected to grow at a 10% CAGR as software becomes a larger part of the
revenue mix and installed bases continue to grow.
Geographically speaking, North America is expected to regain some of the market share that was lost in
prior years to emerging markets in Asia-Pacific and Latin America, especially as the spending trends for
the midmarket continue on their upward course. Also, Europe’s overall share is forecast to remain
steady at 39%, but as Eastern European countries like Russia, Poland, and the Czech Republic continue
to be low-cost centers for global firms, they will take some share from Germany, France, and the UK.
SAP, 24.50%
Others, 38.80%
Oracle, 21.70%
Infor, 2.10%
Microsoft, 2.50
% SAGE, 10.40%
Business Monitor International (BMI), a market Leader in Country Risk, Industry Intelligence and
Company Research, estimates that the UAE's software spending will boom from US$236mn in 2005 to
US$471mn in 2010. The central geographic areas for the software industry are Dubai, Abu Dhabi, and
Sharjah, with global software companies drawn to the UAE’s free trade zones for tax-free, relatively
unhindered competition. Outside of the free trade zones, however, the software market is fairly
modest.
The growing maturity of the UAE IT services market is underlined by a significant trend of major
outsourcing contract awards, particularly in the government sector, which remained at the forefront of
spending in 2005. This was exemplified when Dubai Municipality unveiled a new outsourcing strategy in
Q2006. Driven by the buoyant IT services sector, the total size of the UAE IT market is expected by BMI
to increase from US$1.3bn in 2005 to around US$2.6bn in 2010. Aside from local government, spending
should be strong in the financial, and oil and gas verticals, with a trend towards larger projects, such as
the recent project by Dubai’s new International Financial Exchange. Investment in more advanced IT
products has enforced logic of using external providers to ensure the secure running of mission critical
processes.
Overall, BMI predicts that IT services will be the fastest-growing segment of the region's IT industry,
rising to US$380mn in 2006, as vendors shift their focus away from simply shifting boxes. Services are
becoming an increasingly important component of many deployment contracts, as evidenced by recent
projects by leading UAE corporations such as Emirates Airlines and Etisalat. Outsourcing is also predicted
to be a growing trend, with global vendors such as IBM Global Services competing with local companies
such as Injazat Data Systems. Niche players specializing in specific technology solutions or vertical
industries are rapidly emerging.
Gartner’s preliminary estimate for the size of the ERP software market in Europe, the Middle East and
Africa was approximately $8.1 billion in total software revenue in 2006. Through 2011, the market will
grow at a compound annual growth rate of 7.4% to a size of about $11.6 billion.
The market will have a CAGR of 15% between 2005 and 2010, with the UAE being the region’s fastest
growing ERP market, as more businesses realize the benefits of efficient management of resources
within their internal processes. BMI predicts plenty of room for growth in the forecast period as
numerous untapped sub sectors still exist. CRM will account for approaching 20% of enterprise
application sales. Fewer than 2% of small-to-medium size companies in the Middle East region have a
specialized CRM application in place. However, the UAE is seen as being ahead of other regional markets
by six months to a year in terms of CRM adoption. During the next five years, in addition to CRM and
ERP, high growth categories are set to include storage and security products.
GLOBAL SMB
To qualify as SMBs, companies must have headcount or turnover that fall within certain limits. For
example the traditional definition in Germany had a limit of 500 employees, while in Belgium it could
have been 100. But now the EU has started to standardize the concept. Its current definition categorizes
companies with fewer than 50 employees as "small", and those with fewer than 250 as "medium". By
contrast, in the United States, when small business is defined by the number of employees, it often
refers to those with less than 100 employees, while medium-sized business often refers to those with
less than 500 employees.
SMBs have unique needs for ERP that distinguish them from larger enterprises. While enterprise ERP
systems can have over 10,000 data tables and more than 250,000 individual fields, the needs of the SMB
are more modest. The typical SMB does not have a legion of IT staff that can configure, deploy, manage,
and maintain a system of that size and scope.
Rather, SMBs require systems that can be configured and deployed in weeks instead of months, have
intrinsic management capabilities, and are flexible and adaptable enough to grow with the business as
the company evolves. Most importantly, SMBs require ERP systems that meet the business process
objectives of the company, now and well into the future.
SMB IN UAE
While the global definition for an SMB is more or less consistent across locations (an organization with
revenues less than 1 billion USD and employee strength between 500 and 2500), the MENA region and
UAE in particular, offered a range of different perspectives to define the same. From the primary
research we conducted among vendors and channel partners of ERP solutions in the UAE, we arrived at
the conclusion that there isn’t one common and fixed definition of the parameters that classify
establishments as SMBs.
The defining criteria vary not only with place but also based on industry or a given organization’s view.
Captured below are some of the perspectives:
Our interview with SAP Arabia revealed that, In MENA, an establishment with revenues of $ 200
million could be called an SMB, however the challenge is that there are no statutory
requirements to submit the financials. Thus, as our interview with Epicor also affirmed,
information about revenues/turnover is not readily available in the UAE and classification based
on this parameter becomes difficult. Also, clients do not like to be termed an SMB as it sounds
disparaging. Other determinants could be the number of power users and the scope of a
project, the latter being more commonly used.
The size of the deal in combination with the number of power users is another way of defining
an SMB. This perspective was gained through our interview with Triad which is a channel
partner for SAGE’s ERP solutions.
Raqmiyat defined an SMB as an establishment that would not accept or require a tier 1 package
like SAP or Oracle. Thus, buying culture of a company helped qualify it as an SMB.
Epicor has definitions that vary by industry; for example, labor intensive industries would have a
small number of PCs and services industries would have a large number of PCs. Thus, while a
figure of less than 100 PCs on an average could define an SMB, industry specifications would
also have to be kept in mind.
The number of larger companies without ERP now is virtually zero due to the awareness created by
vendors and IT researchers and hence the large enterprise market became saturated. These bigger
companies were not providing the required business to ERP vendors. Even though there are many big
companies the number of vendors was always greater in multiples. This is when larger players like SAP
and Oracle decided to move into the SMB market and came out with scaled down versions of their Large
Enterprise solutions.
The competition for ERP market in SMBs is quiet fierce. The vendors have increased considerably with
the influx of bigger players in the fray. Formerly only the smaller vendors catered to SMBs. However the
situation is totally reversed in the current scenario. The numbers of vendors is increasing not only due to
the intervention of bigger players but also due to the intrusion of many smaller ones. This makes it
difficult for all of them to compete as the best only get to strike a deal. This market scenario has thrown
more demands from the companies because they now have many vendors to choose. On the contrary,
the emerging increase has also resulted in more complexions in the market because each vendor is
different and unique when it comes to the issue of software.
STAKEHOLDERS
VENDORS
In this section, we try to get a glimpse of the processes and challenges that ERP vendors face the world
over as well in the Middle East region in particular.
Support &
Lead Generation Sales Cycle Implementation
Maintenance
Implementation cycle
Implementation can be onshore, offshore or a combination of both depending on the cost factors,
project feasibility and requirements.
Once the sale has been closed, the delivery team from the vendor side is brought in. There would be
a kick off meeting where the key stakeholders are identified and project managers from both sides
are selected. Requirement study is initiated to freeze the lower level specs and functionality and a
requirement document is signed off. Then a detailed level project plan with estimated time lines is
prepared and this document called the Project Plan is signed off. This would also be the time when
the both parties agree about change management and any process re-engineering that would be
required as part of ERP implementation. Each phase is delivered as per plan and simultaneously
testing of each phase would begin which also includes the user acceptance test in the end. Training
is a very critical part of implementation. Dummy data might be entered into the system and users
are initiated into the new systems, navigation etc. There can be initial hiccups as people adapt and
get the feel of a new way of working. Finally there would be the project sign off after completion of
all the phases.
Brand Name
Vendors like SAP, Oracle and SAGE play on the brand factor. Many companies here would also go for
the product as the market is highly brand conscious and would prefer a Tier One product than go for
a relatively unknown ERP product. The reasoning also goes that an internationally known vendor
would also be consistent in its upgradation and support terms
Vertical Expertise
Solutions like Orbit ERP have “verticalized” their product from day one and are specialists in specific
domains like hotels or trading establishments. This would result in ERP packages that are very
specific to a customer industry resulting in faster implementation time of about 2-3 months and
faster ROI
Cost
SAP has trimmed not only its solution for the SMB market but the price as well. Its Business One, All
in One solutions are competitively priced. But even then companies like Epicor that play in the mid
market zone globally say that they are more in tune with this segment and can effectively position
their product cost wise. Cost is also another factor where local home grown products like Analyst
ERP of EBiz have a major advantage.
smaller implementation time of about 6-7 months and faster ROI. Also the product is positioned as
customizable as per client processes and standards which is not an easy sales pitch for an SAP or
Oracle.
SAP All-in-One: SAP's complete business solution, SAP All-in-One, has been enhanced to meet the
needs of midsize companies. Based on SAP ERP 6.0 and SAP CRM, SAP All-in-One can address the
business software requirements of the most demanding midsize organizations. This ERP software
provides a fully integrated system to support core business processes, from financials and
purchasing to inventory, production, and human resource management. The solution also includes
business analytics and reporting capabilities, to give full visibility into the business operations and
performance.
A1S: SAP is expanding its portfolio of successful solutions for small businesses and midsize
companies through the development of a new solution, code named "A1S."
Based on the SAP NetWeaver platform, "A1S" is an on-demand solution. It is designed specifically
for fast-growing midsize companies with limited IT resources. With the new "A1S" solution, SAP will
help companies that have not traditionally considered integrated suites enjoy the business-building
benefits they provide. This on-demand solution is being introduced through a phased launch, and
early customers are actively working with the solution. Development of "A1S" will add another
highly effective solution to SAP's small and midsize company product portfolio. Sixty-five percent of
SAP's customers are small businesses and midsize companies.
SAP Business One: SAP Business One is an integrated, affordable, business management solution
built from the ground up to meet the immediate and long-term needs of small businesses. It
provides a true and unified view of operations across customer relationship management,
manufacturing, and finance. Simple to use yet powerful, SAP Business One puts business users in
charge, arming them with the critical, up-to-the-minute information they need to make smart
business decisions.
Oracle E-Business Suite: Oracle E-Business Suite which aims at small and medium businesses, and
government entities, is a comprehensive, industry-focused suite of business applications for the
enterprise. It is an integrated and scalable solution with industry best practices that can be rapidly
implemented. It is easy to buy, implement, use and maintain, providing better business information
for effective decision-making.
JD Edwards EnterpriseOne: Oracle's JD Edwards EnterpriseOne for small and medium businesses and
government entities is an integrated applications suite of ERP software that combines business
value, standards-based technology, and deep industry experience into a business solution with a low
total cost of ownership (TCO).
JD Edwards World: Oracle's JD Edwards World for small and medium businesses and government
entities is built for the IBM iSeries platform. A world-class enterprise solution, JD Edwards World
delivers the same advanced functionality that's available to larger enterprises, not a stripped-down
version of a larger solution. It is easy to buy, implement, use and maintain, thus providing better
business information for effective decision-making.
Oracle PeopleSoft Enterprise: Oracle's PeopleSoft Enterprise for both small and medium businesses
and government entities is a comprehensive, industry-focused suite of business applications for the
enterprise. PeopleSoft Enterprise applications offer Web services integration to fit seamlessly into a
heterogeneous applications environment and a broad choice of technology infrastructure. Simple
configuration helps ensure that the most unique customer requirements are met. Oracle PeopleSoft
Enterprise is an integrated and scalable solution with industry best practices that can be rapidly
implemented. No matter how many modules are applied — one at a time, several, or the complete
suite — Oracle PeopleSoft Enterprise is easy to buy, implement, use and maintain, providing better
business information for effective decision-making.
programs such as the Microsoft Office system and Microsoft Windows SharePoint Services,
Microsoft Dynamics NAV 5.0 helps people work more efficiently and make sound decisions quickly.
Vantage: Epicor Vantage is an easy-to-use solution designed to meet the needs of progressive make-
to-order and mixed-mode manufacturing companies. Vantage is delivered ‘out of the box’ with
built-in workflow processes that enable manufacturers to manage the entire order cycle: from
Marketing and Sales through Production and Planning, Sourcing and Procurement, Installation and
Service, and finally Financial recognition. Vantage also offers a range of supply chain management
and distribution capabilities, delivered within a single business platform. Built on a 100% service-
oriented architecture (SOA), Vantage enables continuous performance initiatives, real-time
connectivity between supply-chain applications and partners, and greater business agility.
iScala: Epicor iScala is a comprehensive end-to-end suite of proven industry-specific solutions for the
global mid-market enterprise. From customer relationship management (CRM) and service
management to financial and supply chain management (SCM), Epicor iScala provides adaptable and
agile solutions for real-time enterprises, helping them address their important business challenges.
Ramco’s ERP offerings are based on the innovative business process platform (BPP) that provides
companies of all sizes with the flexibility they need to rapidly respond to evolving corporate imperatives,
regulatory changes, and market conditions. The Ramco SMB Series is composed of Ramco SMB –
Corporate and Ramco SMB – Discrete Manufacturing. Each of these products directly addresses the
needs of the small to mid-sized company.
Many non-manufacturing small to medium-sized businesses (SMBs) do not need a full ERP suite to run
their operations. Rather, a complete financial system along with the ability to buy, sell and manage
inventory addresses the core business processes for a large segment of the market. Whether a company
is a product distributor, wholesaler, retailer, or service provider, Ramco SMB – Corporate provides a
comprehensive back office solution.
Ramco SMB – Corporate: Ramco SMB – Corporate provides complete Financials like General
Accounting, Banking Operations, Accounts Payable, Accounts Receivable, Fixed Assets and
Management Accounting
Ramco SMB – Corporate Demand Fulfillment adds Order Management and Outbound Logistics
Ramco SMB – Corporate Procurement includes Purchase Administration, Purchasing and
Inbound Logistics
Ramco SMB – Corporate Inventory adds Item Administration, Warehousing and Physical
Inventory/Cycle Counting
Together, financials, demand fulfillment, procurement, and inventory give SMBs the business process
capabilities they need, packaged in a form that is easily adopted, at a price point tailored to the mid
market. Ramco SMB – Corporate is a perfect solution for mid-market service industries.
Ramco ERP OnDemand: Delivered as a subscription service, ERP OnDemand is available for small to
mid-sized businesses looking for a low initial investment and reduced overhead and maintenance. It
is available in select markets. ERP OnDemand can be delivered in two forms: as a managed service
on customer equipment on the customer premises, or through a web browser entirely through the
Internet. Either way, Ramco ERP OnDemand is the same robust, full-featured ERP solution
customers in over 1,000 locations use every day. Best practices built into the business processes in
the ERP OnDemand solution ensure companies leverage the experience of hundreds of Ramco ERP
deployments. Configuration of the application to tailor it to specific company requirements typically
takes less than a week. And, as the company expands, the solution can expand to accommodate
multiple locations, currencies, and organizations. Its modules include: Financials, Supply Chain
Management, Manufacturing, Customer Relationship Management, and Multi-Entity Management
Business Analytics.
ORION Enterprise: ORION Enterprise, which is an ERP II solutions offering, is structured to also meet
the organization’s future needs in different processes ranging up to SCM, e-Procurement, e-Business
and CRM applications. It also provides the power to combine individualized customer and supplier
management processes with transactional fluidity across organizations. ORION Enterprise has
options for various industries and processes such as Manufacturing, Contracting, Energy, Retail,
Ports, and Distribution.
The ORION Advantage suite: The ORION Advantage is a ready-to-deploy, single-window, micro-
verticalized ERP solution package. The package comprises hardware, operating system, database
and a micro-verticalized ERP application. It is designed for Small and Medium Businesses (SMBs) to
save costs, time and resources from day one, in order to deliver maximum ROI. With ORION
Advantage, customers can take advantage of strategic alliances with various technology leaders, by
enjoying a range of special rates and service terms. ORION Advantage comes with pre-installed
Oracle database, an HP dual processor Xeon server usage package, and a Windows 2003 server,
among other things.
3i InfoTech offers ORION Enterprise solutions for companies in industries and verticals like Wholesale
Distribution, Field Service, Process Manufacturing, Contracting, Retail, Energy, Job Shop Engineering and
FMCG.
GEMS: GEMS is an open system, fully integrated, industry standard software. It is an extremely
stable product with multiple smoothly running installations and offers immediate short-term
benefits as well as long term protection for a customer’s investment. GEMS can effectively manage
customers, partners and employee relationships, financials, operations, logistics and e-commerce
business activities in one single integrated solution. This process based system helps customers
define business processes and automate them so that customers can focus on their core processes.
GEMS provides fully integrated and easy to use first tier functionality for mid-market enterprises.
Unlike Traditional systems it is organized to map onto the typical business processes. It is provided
as a complete, integrated unitary system rather than a series of loosely coupled modules with data
transfer between them. The long-term benefits are secured by the highly flexible nature of the
package that is ensured by allowing changing Business Rules to be defined. This ensures that the
package will continue to support the customer’s business as it evolves and engineering of the
business process is performed, with minimal IT intervention. Short-term benefits are derived from a
quick, smooth and well-defined implementation path. Highly user friendly screens with online help
and single point data entry ensure ease of operation and transition. This results in an ability to focus
rapidly on key Management Information Systems and reporting leading to Decision Support for
Management. Its features include high visibility for key business, internet enabled browser based
interface, customization toolkit and ability to meet Middle East business requirements. Its main
benefits are that if allows for better and faster decisions, easy global access, increased productivity
and efficiency, automated task and information routing and modern, open and scalable
architecture. GEMS has various modules integrated in one solution- Workflow Management,
Application Customization tool, Escalation rules, Scheduler, Alerts and e-mail, Financial
Management, Material Management, Sales Management, Procurement Management, Production
Management, Project Management, Warehouse Management, Relationship Management, Web
store (e-commerce), Point Of Sales, Payroll & HRMS, Property Management, Smart Report
Customization and Document Management.
Focus RT: A unique product of Focus Softnet, Focus RT is an Enterprise Resource Planning package
that seamlessly integrates all facets of the business, including planning, manufacturing, finance,
sales, marketing and HR through the various modules of Focus RT. It flawlessly combines the
functionalities of Supply Chain Management (SCM), Financial Management System, Human
Resource Management System (HRMS) and Customer Relationship Management (CRM). Its modules
include General Ledger, Budgeting, Accounts Payable, Accounts Receivable, Cash / bank,
Procurement, Inventory Management, Sales Management, POS, Manufacturing, HR & Payroll and
Fixed Assets. Its target market includes companies with annual revenues between $10and $250
million or 10+ employees. The industries it targets are - Wholesale distribution, Food Distribution,
Hard Goods Distribution, Process manufacturing (paints and coating, chemicals, coSMBtics, food,
Pharmaceutical) and services. It also serves companies with complex structures, consolidated
entities, inter-company functionalities and multi currency needs.
Some differentiating features of the company include World Wide Presence and hence
implementation Experience of 14 years across multiple Locations, Multi Vertical industry
Implementation expertise, delivering solutions as per client (A client base of 18,000 across the
globe) requirements, Direct representation (Product, Implementation and Support), expertise with
various prestigious Software applications (Seibel, BAAN) and expertise in delivering significant
improvements in core operational processes through business integration across the company
enterprise. Focus Softnet has state Of the Art technical base for handling big and long-term projects
and expertise in deploying Online, Integrated and Web Based solutions.
Orbits ERP Solution is a complete business solution for both small and medium business enterprises.
A core suite of resource management modules covering Financials, Human Resources and Materials
Management, it integrates seamlessly with a number of front office operational modules to provide
an ideal solution that can be implemented at a rapid pace. Its flexible architecture allows easy
integration of additional modules for both horizontal and vertical functionality enhancements.
ORBITS runs on the best of breed technology Oracle, and is highly scalable. It is based on client
server architecture and can be implemented with full functionality on a single server or over a large
corporate network with several servers spread over LAN and WAN. The industries served by Orbits
include Manufacturing, Taxi Operations, Trading/Warehousing, Port Operations, Automotive
workshop, Healthcare, Retail, Ship & Cargo operations, Cement, Auto Trade, Transport & Fleet
Management and Oil & Gas.
The features and benefits of Orbits ERP Solution are:
o It is a fully integrated ERP solution
o It is a user friendly application and has modular design
o It is based on best of breed technology “Oracle”
o It supports multiple users, locations, currencies and company environments
o It is an ideal solution for Small and Medium Enterprises
o It supports Arabic
Shares Management, Engineering Consultancy, Printing press, Hotel, Transport, Cargo and Auto
spare parts. Analyst also offers the following Non Accounting Business solutions:
Cheque printing software (English/Arabic)
Multi Document expiry alert mgt software
Human resource mgt software
Payroll mgt software
Petty cash mgt software
Purchase order software(PO/LPO)
Invoice Printing software
Time Attendance Machine
Document Management Software
Motor quotation software
e-time sheet with payroll
Civil engineering estimation software
VISUAL ACE-GOLD is jewel management software. It has been designed, developed, marketed and
supported by E.B.M. International (EBM), Dubai. EBM has more than 95% market share for its most
popular VISUAL ACE-GOLD accounting software in Dubai. Almost the whole Jewel market is using
VISUAL ACE-GOLD for more than a decade. It has been in use by more than 1000 satisfied jewelers
world-wide for more than 10 years and covers all the requirements of jewel business management.
It is developed, supported and approved by qualified Accountants, Auditors, System Analysts and
Managers and has more than 10,000 trained Users. Full Training & Online Modem Support are
available for it. Any jewel business of any size or type can be supported using VISUAL ACE-GOLD. It
has Multi-User, Multi-Company and Multi-Currency capabilities along with Online & Integrated
Modules. It supports functionalities of Search by any String in Reports, save any Report, Add any
comments and/or Merge Reports etc. One can also View/Print/Fax/E-mail any Report and it has
definable Menus & Icon Bars. VISUAL ACE-GOLD offers a very unique range of modules, specially
focusing on the Jewel Business, like: Picture Cataloguing, Bar-Code/Normal Label Printing, Weighing
Scale Interface, Online Documents Printing, Jewelry Anti-Shoplifting Solution, Jewelry Picture Studio,
Retail Customer Database Analysis, Retail Customer Loyalty Cards & Sales Schemes, Touch Screen
Solutions, Payroll & Personnel Management, Jewelry E-Commerce & Online Shopping, Business-to-
IFS is one of the world’s leading providers of component-based business software developed using open
standards. IFS’ industry-focused solutions are optimized for ERP, enterprise asset management, and
MRO. An integral part of IFS Applications, IFS’ solutions seamlessly work together enabling companies to
employ lean enterprise concepts, control costs, manage projects, increase efficiencies in their supply
chain, and measure their performance.
IFS Applications is an on-demand business application. Its component-based architecture provides
for fast, step-by-step implementation, which lets companies get rapid payback by adding new
functionality without waiting for a major overhaul. IFS' industry solutions are based on the
functional breadth of IFS Applications, with the addition of cutting-edge features and packaged
industry know-how. This gives their customers the tools and processes that they need to set them
apart from the competition and delivers fast payback on their investment. The Industries served are
Aerospace & Defense, Automotive, Commercial Aviation, Construction, Contracting & Service
Management, Energy & Utilities, High Tech, Industrial Manufacturing, Life Sciences, Oil & Gas,
Process Industry, Project Centric Businesses, Rail & Transit, Retail and Wholesale Distribution,
Service & Facilities Management and Telecommunications.
CHANNEL PARTNER
For example, ERP vendors like Epicor, 90% of the sales come from channel partners while it handles only
strategic accounts or those customers who insist on dealing with the vendor themselves.
Channel partners can take on varying roles depending on the contract with the vendors.
Financial Stability
Getting into the ERP business requires cash rich reserves to sustain one-self for the initial 1-2 years.
As the sales and implementation cycle is about a year, you would have high costs sunk in without
any initial cash inflow. This is where companies like Raqmiyat which have the backing of Al Ghurair
enterprises have a vantage over other small local players who might have to close shop due to the
financial pinch
Resources
The vendor would give prime importance to the infrastructure as well as human resources that a
channel partner possesses. Implementing an ERP requires highly specialized IT resources that are
not only scarce but also expensive to get hold off.
Industry focus
ERP is getting to be a game of “verticalization”. Many of the large vendors like SAP with years of
industry and domain expertise have incorporated the best of breed practices into their solutions.
Many of the home grown products like Analyst ERP cater to only specific industries that are of
relevance in UAE like Trading, Hospitality, and Manufacturing etc
So channel partners who have a focus on the relevant domains will have more to offer the
customers in terms of the end solutions
Raqmiyat Oracle
From the graph below we can see that Real Estate and Construction industry in the GCC scored highest
among a slew of domains we considered followed by Petrochemicals and Logistics.
Customer Domain
15%
16%
14% 11%
12% 10%
10% 9% 9%
8% 6% 6%
5% 5%
6% 4%
4% 2%
2%
0%
Many of the ERP vendors especially the smaller ones like EBiz and ETAInfotech focusing on preparing
customized or “vertalized” solutions catering to the niche requirements and specific processes of the
above said domains.
CHALLENGES IN ERP
o Vendor Credentials/ Brand Name: Vendor’s market share, reputation, number of consultants,
number of installations performed, support infrastructure and demonstration of previous
implementations are critical factors showing the commitment of the vendor to the product.
o Cost: Cost is an important issue since the implementing organization is a SMB that may not act as
comfortable as a large, multi-national organization. ERPs are generally complex systems involving
high cost, so the software should be among the edges of the foreseen budget.
o Implementation Time: SMB require faster implementation time of about 6-7 months. Most of the
bigger brands have come out with pre customized solutions to fit the SMB need. Other smaller
players try to cater to niche verticals and have their products customized for the same.
o Features/ Modules: SMB may not require the full gamut of functionalities that a package offers or
it might require certain modules that are not available in most ERP packages. So the features and
modules of an ERP package is important when considering a vendor’s offering
o Customization: As most SMB have different business processes and many of them still to be
matured, they need to adapt the available software in the market for their own use. But,
customizations shouldn’t cause difficulties in updating to future software releases.
o Flexibility and Scalability: Flexibility denotes the capability of the system to support the needs of
the business over its lifetime. As the business requirements of the organization change, it should
be able to add extra modules. The ERP should be flexible in order to suit the organizational culture
and business strategy.
o User Friendliness: Most of the time, the end-users of an ERP system are not computer experts
especially in SMBs thus their opinions about the software are highly valuable. The product
shouldn’t be too complex or sophisticated for an average user since the efficiency of end users
directly affects the efficiency or the organization.
o After Sales Support & Training: The vendor should be providing the training as well as the after
sales support, since ERPs are fairly complex applications for learning by oneself. Also it should be
considered that every department within the organization would have its own piece of software
to use, so a kind of specialized training will be needed for each department
o Systems Requirements: Technology determines the longetivity of the product.2 It is important to
choose an ERP that is independent of hardware, operating system and database systems. At least,
the requirements of the software should worth changing into. The ERP system design should also
not conflict with the organization’s business strategy.
o Reporting & Analysis Features: Besides standard reports, management team should be able to
implement their own reporting and analysis tools and dumps them into the system for later use.
o Integration with Other Software/Applications: The modules should be integrated and provide
seamless data flow among the other modules, increasing operational transparency. In case a third
party application is needed, the ERP should be available to exchange data with the application,
since data import/export is widely used techniques.
o Internet Integration: The software should support e-business, e-commerce and EDI transactions.
At least, even if it doesn’t have as built-in modules, Internet adaptation should be available as
add-on modules.
Lack of IT department/ Tech savviness
Most SMB will not even have an IT department in place. The users are also not tech savvy and are
more used to excel based or elementary software like Tally. So the introduction of an ERP is a
complete overhaul for these organizations from infrastructure – hardware, networks to a new way
of working. Also there would be the need to identify resources that can spear head the project from
the client side.
Data issues
When a new ERP system is set in place, there is always an issue of the historical data that had
existed so far. These are required for audit purposes and for performance analysis. Data had thus far
been maintained manually or with trusted key personnel. These historical data need to be cleaned,
collated, codified and fed into the ERP system to ensure its successful implementation. This process
in itself can be tedious and time consuming part of implementation
VENDOR PERSPECTIVE
FACTS AND CHALLENGES IN SELLING PHASE
In this section we analyze some of the unique characteristics of selling an ERP solution to an SMB in the
UAE market. These are challenges that have been documented as part of our primary research with the
vendors.
Game of Volumes
ERP sales to SMB are driven by faster sales cycle and quicker implementation time lines. Profit
margins are lesser and it is all about volumes to maintain profits. The key is in having portfolio of
products that are pre-customized, implement and deploy the package in minimum time and service
a larger number of customers.
Sometimes there are other factors also playing into consideration like an SMB’s global partners
might be already using an SAP/Oracle. Hence they feel compelled to deploy the same to collaborate
seamlessly with their partners.
Consultative Selling
The challenge in SMB selling is that the process from day one takes on a consultative mode.
Customers may a times will not have processes or systematic ways of working but their businesses
will be highly successful in nature. So an ERP salesperson must be sensitive to the fact that an SMB
entrepreneur would probably not appreciate any direct imposition of so called “best practices” that
many ERP packages have as a prerequisite. Sales to an SMB tend to be informal and later on the
vendor/channel partner takes on the role of a trusted advisor.
However SMB expect fast implementation and quicker ROI. SAP has trimmed down its large
enterprise solutions to pre configured 18 processes to fit the mid-market which results in an
implementation time frame of about 2-3 months. Other players like Orbit have taken the route of
having vertical specific ERP solutions which are preconfigured to suit the industry’s needs and
processes. This makes an easier sales pitch when customers see that the vendor has clear
understanding of their business processes as well as an expertise in a particular vertical proven by
their past records in similar companies of the same industry.
Channel partners are a vendor’s brand ambassadors in a region. They have to be adequately trained
in not only the product offerings but also the processes involved in sales, implementation and post
implementation scenarios. Vendors like Epicor have “Partner Awards” to recognize their
contributions. The challenge is also maintaining the channel partners in a region so that they do not
cannibalize into each other’s clients.
A typical trading company in UAE, inspite of being an SMB would have global operations
with exports and imports from around the world. An ERP vendor has to keep in mind these
implementation scenarios when catering to the complex needs of the business, handle
multiple currencies, compliance policies etc
Infrastructure Support
An ERP implementation mandates certain amount of hardware and network requirements.
Most SMB do not have an IT department to put the IT infrastructure in place. So the onus
falls on the vendors. Some vendors use this as an opportunity to up-sell and gain additional
margins through their tie-ups with other partners like IBM or HP
HR Challenges
There is a dearth of skilled ERP resources that have expertise in the requisite verticals in
UAE. As a result vendors face bottlenecks and sourcing resources tend to be tedious and
expensive process with the consultants and implementers charging prime market rates.
Sometimes vendors try to outmaneuver this market condition by adopting an onsite-
offshore model where the development team would be residing in other countries like
India.
Customization Issues
With ERP, there is always an issue of whether to follow the in built “best practices” or to
customize according to procedures that are already being followed by the organization. A lot
depends on the vendors being able to convince the SMB about the advantages of following
certain best practices adopted by similar industries worldwide versus the complications built
into the system through excessive customizations.
Customers in this region have a lot of global exposure and hence their expectations from an
ERP package are that much higher. Once implementation is under way, sometimes
customers demand interim modifications which can result in cost and schedule creeps.
Most of the vendors from our primary survey agreed that there would be about 20- 25%
customization in any ERP implementation.
costs as well. UAE mostly works in fixed bid system. So extra costs would then result in
additional hassles of renegotiating the terms.
Training Challenges
Vendors have the onus of training and getting the end users to use the system and incorporate a
new way of working into daily operational activities. Initially dummy data is entered into the
system and the users are trained on the navigation, screen look and feel, processes etc. Typically
training takes a major chunk of the implementation time and become critical as this can be the
deciding factor between a successful and failed implementation.
As per our primary research some of the reasons listed by vendors for ERP implementation
failures are as follows:
Often vendors take on this task as well as part of the contract. This involves huge challenges
in collating past data from multiple sources, cleaning the data from errors, feeding the data
into the ERP system and so on
Change Management
Software is only as good as the usage and acceptance from the end users
ERP implementations would invariably face initial resistance from employees who have to
adapt to a whole new way of working right from data entry. They might even be
apprehensive about the system taking over their responsibilities and making their jobs
redundant. Often the end users wind up using parallel systems where they would continue
with their legacy systems with only basic usage of the ERP system.
Vendors are responsible for ensuring that people get comfortable with the system and
incorporate the functionalities available, into the daily operations. Often multiple training
sessions would have to be taken. It is always better if the vendors take the proactive action
and make sure that the customer uses the system rather than be reactive once the
complaints start coming in.
This over expectations can lead to a perceived notion that the implementation was a failure
even if the ERP system is working as per business requirements. Vendors have the onus of
setting expectations; right from selling phase to avoid such scenarios later on.
o Surveys
o Assigning Account Manager to clients
o Customer Care Support
Vendors were of the opinion that it is easier to sell but the difficult part is to maintain relations
with clients and constantly keep them happy. And this is necessary not only for obtaining Annual
Maintenance contracts but also in terms of future opportunities with the customer.
Identify the need to Implement ERP: In many instances, ERP will not solve the company’s
business problems. Before making a decision as large as implementing a system that will cost
millions and affect the entire company, it's important to have a clear understanding of what the
compelling reason is to accomplish this project. There may be more cost-effective and lower-risk
options such as improving processes, redesigning the organizational structure, consolidating
entire global supply chain, or implementing a performance management system. In these cases,
maybe choosing not to implement ERP is the best solution. On the other hand, ERP may be the
business tool that enables these improvements.
Clarify the Business Requirements: Once the decision to implement an ERP has been made, it is
important to begin by looking at the desired operational model and using that as a starting point
in determining which software to implement. Executives should define and document key
business requirements for any package they may select. This includes not only nice-to-haves,
but also requirements that are "deal-breakers" if the software is unable to accommodate. In
addition, executives should use ERP business requirements definition as an opportunity to
improve current operations, efficiency, and effectiveness. The company should be focused on
achieving a measurable business value for the organization, and should thus choose the
software that enables it to do this.
Identify the Business Case and estimate the ROI: It is important to understand and document
what the total costs will be for each ERP vendor under consideration, as well as anticipated
business benefits. This helps in ensuring that the company realizes the potential benefits of
implementing ERP. All costs, including hidden project costs such as internal project resources,
data conversion, and lost productivity immediately following go-live, should be included in the
business case and ROI calculation for each ERP vendor under evaluation. If the resulting ROI for
a particular ERP vendor does not make sense or meet minimum investment criteria of the
company, then it's probably not a good idea to undertake the project.
Finalizing the Implementation Partner: Typically ERP implementations are taken up either by
the software vendors themselves or by the third-part vendors and the consultants. Companies
have to choose either of the above options by keeping cost and expertise as the prerogative. It is
also important to look at consulting firms that are capable of helping you manage the non-
technical aspects of the project, such as organizational change management, training, and ERP
benefits realization. There are many consulting firms, which are technology neutral and
specialize in providing project planning and business consulting for all types of ERP
implementations. Companies have to work with consulting firms in preparing a Request for
Proposal (RFP) which generally covers almost every aspect of ERP selection criteria from
functionalities, technology, hardware, support, implementation and costing methodologies.
Implementation Guidelines
An appropriate change management and business process management team has to be put in
place
Adopting an ERP system is a metamorphic process in an organization. There are a lot of changes
and standardization that needs to be done with respect to processes. A team out of the pool of
stake holders needs to be made responsible for monitoring the ripple effects and changes
required while fitting in the ERP system into the business organization.
The team should not divert from the business goal of the ERP implementation project. Often,
the stake holders get myopic on the decisions made regarding the implementation and this
leads to a shift from the main business goal of the ERP implementation project.
A technical and a business team needs to blend together and be fully allocated for the ERP
implementation project. The team should be made from a pool of stakeholders and should
understand the processes and requirements of the SMB organization very well. These resources
should be allocated as full time to the project.
This is very common with SMB’s. The ERP's scope gets wider as it is implemented in an
organization. There is a call for including many tasks under the purview. This dilutes the ERP
Existing system after modifying it a couple of times. Repeated change in configurations and
systems will only add to the confusions. When the functions are operated by a machine it
becomes increasingly difficult to make the necessary changes. These troubles arise when they
are not foreseen and addressed in the implementation stage. They have to be given a place in
ERP implementation plan.
Experience indicates that the lack of internal or always available onsite specialist decreases the
chances of success dramatically. And the explanation should be simple to this fact. Nowadays
ERP system requires minor or major customization, integration and reporting and all these steps
in turn require patient coding and testing in the test environment or on the sample
dataset/database
This is true that users could be trained and would know how to use the system. However typical
ERP has its own life and somebody should assign new users, setup security roles for them,
modify reports and makes custom reports available for the users, setup printers, try first to
resolve the issue by looking at the techknowledge database, and so on. ERP Administrator
doesn’t have to be IT guru – she/he needs to be trained on how to administer the program and
how to deal with technical support. Imagine for a moment that if you take out manager from
the company – even if all the employees have excellent training and used to work for the
company numerous years – you will still expect performance degradation. The same should be
said about ERP system.
IT industry is not yet mature and it is probably sad, but the reality that even very experienced
consultant, developer makes errors – or your software environment has something that make
the custom piece malfunction. When you see the consultant being persistent in resolving your
issues – please be patient and try to help him.
When you decide on somebody to implement the system, you need from this moment on to
trust him and let him have high security access to the ERP hosting server. Complex security
makes consultant suffer from getting connected, installing the patches or custom pieces. So
many times we were spinning our wheels in trying to test new custom business logic, when, say
Windows or MS SQL Server security was restricting us to do the actions we needed.
This is from the sales cycle. When you purchase the system – you should purchase the software
and implementation from the same company – otherwise your partner will place you on the
second priority list. We saw numerous examples, when client purchases Microsoft CRM licenses
from nation-wide distributor, and then is trying to find somebody to implement the system. Also
if you are cutting software prices – you may see your consulting company rescheduling the work
for you in favor of somebody else.
Organizations largely experience a wide gap between practices and preaching .Infact this has a
negative effect on the entire business scenario itself. The voracity and impact of loss could be
greater and more devastating when this turns out to be true even in the case of ERP. Since ERP
successful functioning is purely based on following the laid down procedures the lag could throw
a serious challenge on ERP'S potential right from the stage of its implementation.
Employees find it hard to digest the transformations that place in an organization all on a
sudden due to ERP implementation. Infact employees exhibit positive signs as everything goes
right in the first place. But as one progresses he finds difficult to work as it gets more complex.
The initial interest and expectation turns into apprehensiveness in due course of time. There is
another category of people who did not encourage ERP right from the conceptualization stage.
Their state of mind during these circumstances deserves no special mention.
A new ERP vendor needs to position itself right when deciding to enter such a competitive
landscape. It is better for the global players to work with a channel partner as they have
better customer reach and market awareness. The local players need to capitalize on their
specializations or vertical expertise in order to capture a share of the market
So vendors entering the market need to have deep cash reserves or financial backing to
sustain themselves at least for a year or two before setting their footprint in this market.
An ERP vendor would require a strong sales team, Implementation and development team
which again consist of pre- sales, domain consultants, functional consultants, project
manager, developers, testers etc. Sufficient time and effort has to be put into sourcing the
right talent.
Channel partners are a vendor’s brand ambassadors in a region. They have to be adequately
trained in not only the product offerings but also the processes involved in sales,
implementation and post implementation scenarios. This would require multiple training
sessions and constant interactions to enable them to cater to your product.
Vendors also have to put processes in place to ensure that partners do not cannibalize into
each other’s opportunities and managing such conflicts is key to sustaining your business in
the region.
o Company Size
o Financial Parameters
o Buying Culture – Brand conscious versus price sensitivity
o Appropriateness of the product viz – a viz the complexity of the process
o Scalability of the product viz a viz the company’s future strategies
More importantly, if your product cannot cater to the specific needs, then this is the right
time to back out rather than forcefully customize and sell your solution which could backfire
post implementation.
The key to selling to an SMB customer is be sensitive to the fact that an SMB entrepreneur
would probably not appreciate any direct imposition of so called “best practices” that many
ERP packages have as a prerequisite. It requires tactful dealing and often informal methods
to convince them of the benefits of ‘slightly’ restructuring their processes and introducing a
whole new system of working.
SMB look for two main characteristics in an ERP package – Faster implementation and how
soon they can reap the benefits i.e the ROI. So the trick is in having template solutions or
“verticalized” solutions which would require minimum customizations and hence lesser
implementation time
This is because there are segments of the market that have different considerations when
going for an ERP package. Some are brand conscious and would go only for the big names
while others are more price conscious and are more attuned to catering to their business
needs and would be looking for specialized products.
IMPLEMENTATION PHASE
Vendors need to be transparent in their dealings and provide accurate estimates about the time and
money as these are the kind of considerations that affect future relations with the clients
o Specification Requirement
o Project schedule and Timeline
o Implementation documentation
o Testing documentation
This is useful for future references and also during scenarios where there is in project manpower
turnover. The project should never be dependent on knowledge base of some people and
documentation ensures that someone else can takeover at an interim stage.
POST IMPLEMENTATION
It is advisable to set up teams that consist of trainers and employees from the client side who would
supervise the entire change management process. They can keep track of signs of under-usage of
the system, existence of parallel systems and take corrective actions or extra training sessions as
and when required.
Constant Feedback
Vendors can improve their service offerings only through feedback. There can be formal and
informal methods of collating feedback. Employee and channel partner incentives are often linked
to the KPI measured through formal feedback.
APPENDIX
Ramco Ramco
Microsoft Microsoft Dynamics
IFS IFS ERP
EBM Visual ACE – Gold
Company Name:
Interviewee:
Designation of Interviewee:
GENERAL QUESTIONS
1. Do you implement the ERP solution on your own or through channel partners?
2. What are your criteria for defining an SME (Small and Medium Enterprise)?
3. Who are your main competitors solution-wise ?
4. What are the factors considered while choosing channel partners? What is the strategy behind
it?
5. What are the key verticals that you have catered to in the Middle East region?
6. What are the typical expectations from clients of an ERP solution?
SELLING PHASE
1. What are the challenges and issues that your consultants face to sell the ERP solution?
2. How is the sales strategy different when it comes to selling to an SME?
3. How is selling different in the Middle East/ UAE region?
IMPLEMENTATION PHASE
1. What are the typical problems/ challenges faced in implementation phase by vendors/ channel
partners?
Questionnaire: Customer
Company Name:
Interviewee:
Designation of Interviewee:
GENERAL QUESTIONS:
BUYING PHASE:
1. What were the selection criteria for choosing the given vendor and ERP solution?
2. What were the other packages considered? What were the factors for rejecting the others?
3. What was the contract type?
IMPLEMENTATION PHASE:
1. Was organizational restructuring/ business process reengineering required as part of the ERP
implementation? What was the kind of customization required?
2. What were the typical problems or challenges faced during implementation phase by the
vendors/ channel partners?
3. What was the time taken for implementation of the ERP package?
4. Was there resistance to the change within the organization? How was it dealt with?
5. What were the training processes? How were adaptability issues addressed?
*-these questions were used to filter out SMBs from larger enterprises
Multiple research papers, newspapers, and websites along with the corporate website have been
referred to for the creation of this academic paper. The author of this paper does not claim copyright to
any part of the above paper. In addition, the author also respects the copyright reserved with the
original authors of the papers. The author has only used information for academic purposes with no
intention of monetary gains directly from this paper.
The references used for compiling this paper so far are as follows:
David Allen, Thomas Kern, Mark Havenhand,ERP Critical Success Factors: an exploration of the
contextual factors in public sector institutions, 2002
T.R Bhatti, Critical Success factors for the implantation of ERP: Empirical Validation, 2005
Sean W O'Donell, Steps to ERP implementation
Christina Soh, Sia Siew Kien, and Joanne Tay-Yap, Culture Fits and Misfits : Is ERP a universal
solution?, 2000
SAP, http://www.sap.com/solutions/index.epx, 2000
Oracle, http://www.oracle.com/solutions/mid/index.html, 2001
Microsoft, http://www.microsoft.com/business/enterprise/default.mspx, 2002
Raqmiyat, http://www.raqmiyat.com/business_solutions/commercial/gems.asp, 2002
Ramco, http://www.ramco.com/products_erpondemand.asp, 2007
Epicor, http://www.epicor.com/www/products/manufacturing/avante, 2000
Epicor, http://www.epicor.com/www/products/iscala/, 2000
ERPWire.com, http://www.erpwire.com/erp-articles, 2007
http://www.indexuae.com/search.php?keytext=ERP&page=1
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http://www.ameinfo.com/32728.html
http://www.cio.com