SME ERP system sourcing strategies: a case study

8/10/2019 SME ERP system sourcing strategies: a case study

1/26

SME ERP system sourcing

strategies: a case study

Submitted To: Prof. Gunmaa Suri

Submitted !y: "es#a$ "umar


2/26


3/26

!A %&'erations ( Mar)eting* Setion+

SME ERP system sourcingSME ERP

system sourcing

strategies: a case study

strategies

Deb Sledgianowski and Mohammed H.A. Tati

De!artment o "normation Technology and #uantitati$e Methods%

&'(

)rank *. +arb School o ,usiness% Hostra -ni$ersity%

Hem!stead% ew /ork% -SA% andRecei$ed ' Se!tember '001

2im 3ierstead

Re$ised '& o$ember '001

Acce!ted 4 December '001

3anebridge 5or!oration% 6akland% ew 2ersey% -SA


4/26

ose o this !a!er is to identiy ERP system sourcing strategies a$ailable to SMEs and to !ro$ide insights rom a case study o the!ractices a!!lied and decisions made by an SME in using a hybrid o sourcing resources to im!lement the successul con$ersiono their legacy ERP system to a new inormation technology 8"T9 en$ironment.

Designmethodologya!!roach 7 This research is a case study utili;ing $arious data sources including ace


5/26

ms has brought about

(0B%&se$eral o!tions or SMEs in sourcing inormation technology 8"T9 solutions such as ERP

that until recently% ha$e only been within the reach o large organi;ations. 6n the other

hand% se$eral new !ro$iders o ERP solutions ha$e Foined SAP and other !ro$iders to

oer $arious o!tions or SMEs in im!lementing their ERP systems 8DePom!a% '00C9.

&''These recent de$elo!ments ha$e o!ened new windows o o!!ortunities or SMEs in ERP

sourcing strategies including the use o outsourced sotware 8,ryson and Sulli$an% '00C9.

This !a!er discusses case study research conducted at 3anebridge 5or!oration 8www.kanebridge.com9. 3anebridge% amedium


6/26

client


7/26

integrate enter!rise

The sourcing o!tions o !urchasing a !ackaged system or leasing the system rom an ASP assumethat a decision to buy has been made or the acJuisition o the sotware. 5hen and Soliman 8'00'9de$elo!ed a make


8/26

ani;ationnerallyct to

ce theirall "Ts% ocusheir core!etencies

d gain

su!erior technical resources when outsourcing !art or all o their "T unctions. Among allreasons to outsource% the one that has emerged as the !rime reason in recent years is to gaincom!etiti$e ad$antage through !artnershi! by sharing inormation and knowledge 8)ish andSeydel% '009. Howe$er% without a careul consideration o the $arious risks associated withoutsourcing% any gain in the abo$e areas can be oset by signiicant risks in$ol$ed. Some othe risks associated with outsourcing include loss o "T e=!ertise% hidden costs% ina!!ro!riatecontract% limitation o control and loss o !ri$acy and security. "n the 3anebridge case% therisk actor has been addressed and mitigated by management in $arious ways including

!ro$isions to retain intellectual !ro!erty right to source code% choosing a $endor o similarsi;e as well as establishing close !roessional relationshi!s% and making sure

as a clear and accurate understanding o their ERP !roFect obFecti$es. These areas areamong the eight characteristics 8)igure (9 discussed in this !a!er.

5ase study: background5om!any background

3anebridge 5or!oration is a leading wholesale distributor o industrial asteners 8nuts%bolts% screws% etc.9. They are a !ri$ately held cor!oration with 10 em!loyeesheadJuartered in 6akland% 2 with branches in 5aliornia and "llinois. Their currentannual sales e=ceed (C.4 million 8the com!any reJuested to withhold s!eciicinancial data9.

The com!any was incor!orated in (L14 by owners 2oe Mc*rath and ,obby Iilliamswho saw a demand or ins business

!rocesses.

SME ERPsystem sourcingstrategies

&'4

ti$itydecisionri!tion

(L1"nce!tionAutomated in$entory andsales tracking(LB(ogistics system5ollaborated with Dyma=


9/26

ms to de$elo!

logistics system% a !recursor o ERP

nction establishedbridge decides to maintain and enhance

ics system in PowerHouse &* tool to

o! and im!lement custom ERP on HP

aSer$er

ors announce sun setting o !roductsannouncement o !hasing out the

For im!etus or change leading to theaSer$er% and the resulting 5ongnos>

urcing decision9ion to mature their PowerHouse &*

uct on 6!enMS leads 3anebridge to

consider $arious "Tsourcing o!tions'00CMake or buyN *oingoshore

Decided to Gmakesotware using new

de$elo!ment en$ironmentwith ins sales grew and their business transactions increased% they needed to makesome decisions about their "T resources. 3anebridge knew that any com!etiti$e ad$antagethey were reali;ing rom the Dyma= turnkey logistics system would Juickly diminish as thesystem became !ublicly a$ailable to any other com!any in the astener distribution industrythat wanted to buy it. Additionally% like other SMEs% they reali;ed the growing im!ortance omanaging their su!!ly chain and su!!lier !erormance 8okurka and +ank% '009.3anebridge had to decide whether to continue using the Dyma= logistics system as


10/26

nessesses% ortheirulls "Thistory included C0years o in


11/26

build. ERP $endors% ha$ing saturated the market or large

DS%&

The decision to outsource de$elo!ment


12/26

ebridge>sident 2oe

*rath irst

theident orce5odeat ating olnessers.rce5odeis a

wareulting!any

dJuartere

ytown%not ar

mebridge>sdJuarters.two!anyidents

meaintance

drmallyed aboutebridge>scy ERPem$ersionect.ce5ode>

esidentestedhis!anyd !ro$ideebridgecontractram

de$elo!ers to hel! them Juickly com!lete the !roFect% at a third o the cost to de$elo! itonshore.

Source5ode submitted a bid or the !roFect based !rimarily on lines o code and number o

screens. The two com!anies could not agree on a i=ed !rice ee structure% but theye$entually agreed on a timem im!ressed with their G5ustomer )irst attitude. "truly belie$e that ha$ing Source5ode as a long time strategic !artner is a sound and stable businessdecision 8Source5ode "nc.% '0019.

6shoring

Shortly into the !roFect 3anebridge was ready to utili;e additional outsourced 2a$ade$elo!ers. Two de$elo!ers rom Source5ode were added to the !roFect to work at

3anebridge>s 2 location% or a total o three onshore consultants. Source5ode recommendedthat 3anebridge use their oshore ser$ices or additional de$elo!ers. They decided to Gstartsmall and added de$elo!ers in !airs as needed until there was a total o si= oshorede$elo!ers working in "ndia.

The Source5ode onshore !roFect leader handled most communication with the "ndiade$elo!ers. The oshore !roFect team worked in two grou!s o three members each. Eachgrou! worked on a dierent module o the system. They were able to gain


13/26

gy% le$eraging the L and (' hour time dierence by sending !rogrammings!eciications at the end o the onshore work day and recei$ing the code back rom"ndia the ne=t morning. Ihile 3anebridge was able to take ad$antage o the timedierence to increase !roducti$ity% oshore !roducti$ity le$els were two


14/26

0

urces

e=!ectations romtheir outsourcing$endor included notonly !ro!er le$el otechnical skills% butalso a clearunderstanding otheir ERP !roFectobFecti$es. "t wascritical that theoutsourced "T stawere e=!erienced2a$a !rogrammers


21/26

!roicientwiththe

sot

ware de$elo!ment !roducts being used. Ha$ing a !roFect contact !ointknowledgeable o 3anebridge>s ERP needs and the technology being used% whocould successully communicate !roFect reJuirements with the oshore !roFectteam% was a critical actor leading to a successul outsourcing $enture. "n the caseo "S outsourcing% i the !ro$ider does not ully understand what the business isall about the customer>s needs may not be !ro!erly met.

This case re!resents a successul endea$or by a medium


22/26

Aubert% ,.A.%Ri$ard% S.and Patry% M.8'00&9% GAtransactioncost model o"Toutsourcing%"normation@Management%ol. &( o. 1%

!!. L'(


23/26

Da$is%A.%Ren;ulli%

.andAldrich%H.E.8'009

%GMi=ingormatchingN

The inluence o $oluntary associations on the occu!ational di$ersity and density o smallbusiness owners> networks% Iork @ 6ccu!ations% ol. CC o. (% !!. &'s time to ocus on Juality and inormation security% 6ctober%

a$ailable at:www.indiaonesto!.comace'acemark.htm8accessed o$ember'&% '0019.

3oh% 5.% Ang% S. andStraub% D.I. 8'00&9%G"T outsourcingsuccess: a

!sychological contract!ers!ecti$e%"normation Systems

Research% ol. (4 o.&% !!. C4


24/26

Technology:Stra

tegic Decisions Making or Management% Iiley% ew /ork% /.

Mears% 2. 8'009% GSM,s: outsourcing a growth tool% etwork Iorld% ol. 'C o. B% !.'L.

Mirani% R. 8'009% G5lient tryst with outsourcing% The Economic Times% 2anuary (%a$ailable at: www.oshoringtimes.comPages'001oshorenews(&4.html 8accessed

o$ember '&% '0019.

Plant% R. and Iillcocks% . 8'0019% G5ritical success actors in international ERPim!lementations: a case research a!!roach% 2ournal o 5om!uter "normation Systems% ol. &1

o. C% !!. 0


25/26

sourcecodeinc.comclients.htm8accessed

o$ember'&% '0019.

okurka% R.2.and +ank%*.M. 8'009%GA systematica!!roach tosu!!lier

im!ro$ement%

"nternational2ournal oManagement @Enter!riseDe$elo!ment%ol. C os ('%!!. B4s !erce!tion o thetransactional risks o inormation technology outsourcing announcements% 2ournal oManagement "normation Systems% ol. '' o. &% !!. '1(


26/26

SME ERP system sourcing strategies: a case study

Documents

Transcript of SME ERP system sourcing strategies: a case study