TOWARDS INDUSTRY 4.0 Challenges of ERP Systems For SMEs

1. OHIO STATE UNIVERSITY EXTENSION
TOWARDS INDUSTRY 4.0
Challenges of ERP Systems For
SMEs
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTER
4th International
MANAGEMENT INFORMATION SYSTEMS
CONFERENCE
17-20 October, 2017
Gülay EKREN
Sinop University
Alptekin ERKOLLAR
Sakarya University
Birgit OBERER
Sakarya University

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTERCo-workers
Prof. Dr. Alptekin ERKOLLAR
Sakarya University, TURKEY
Faculty of Management, Department of Management Information
Systems
erkollar@sakarya.edu.tr
Assoc. Prof. Dr. Birgit OBERER
Sakarya University, TURKEY
Faculty of Management, Department of Management Information
Systems
oberer@sakarya.edu.tr
Gülay EKREN
Sinop University, TURKEY
Departmant of Computer Technologies, Vocational School of Ayancık
gekren@sinop.edu.tr

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTER
• The challenges and possible solutions for ERP systems
of SMEs under the vision of Industry 4.0 are presented
by reviewing literature.
• Then the identified challenges and solutions are
organized in terms of four different phases of an ERP
system as
• system preparation & design,
• system installation & implementation,
• system adaption,
• system operations & maintenance.
INTRODUCTION
In this study

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTER
Scope
• Industry 4.0
• Challenges Faced by ERP Systems for SMEs
• The specific phases of a typical ERP system
• Possible challenges and solutions according to identified
phases of an ERP system
INTRODUCTION

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTER
• High-Tech Strategy 2020 Action Plan 2011
INTRODUCTION
Industry 4.0

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTERCHALLENGES FACED BY ERP SYSTEMS FOR SMEs
• Common characteristics of a full functioning ERP
system
• using a centralized database,
• variety of integrated modules,
• scalability in line with the size of the organization,
• and providing user customization.

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTERCHALLENGES FACED BY ERP SYSTEMS FOR SMEs
• Like ERPs, SMEs have also common characteristics
• fewer employees,
• less order or customers,
• low revenues.

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTERCHALLENGES FACED BY ERP SYSTEMS FOR SMEs
• What is the challenges as well as solutions faced by
ERP systems for SMEs in the vision of Industry 4.0?
• Lack of unified standards and protocols
• Lack of using business intelligence capabilities of ERP
systems
• ERP as a huge investment for companies
• Complexity of ERP systems
• Changes and uncertainty during ERP system
implementation

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTER Lack of unified standards and protocols
• Unified global communication standards are required
• ERP systems have not got a standard interface
• the usage of web standards in collaboration with
automation systems or CPS must be considered

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTER
 Lack of using business intelligence capabilities of
ERP systems
• From ERP I to ERP II
• Business intelligence capabilities offered by new ERP
systems
• data integration,
• controlling activities,
• flexible decision making

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTER ERP as a huge investment for companies
• ERP systems often requires high investments, and
corporate time and resources (i.e. infrastructure,
qualified staff).
• costly licenses (for both server and web)
• high installation costs
• the cost and time required for training staff
• Major players: SAP, Oracle Applications, Microsoft
Dynamics, the SAGE group, and Infor Global Solutions.
• Open source ERP systems as an alternative for SMEs
• Return on investment (ROI) of ERP systems are
considered to be invaluable for SMEs.

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTER Complexity of ERP systems
• ERP systems are highly complex business information
systems
• End-users usually need more time
• The technical level of ERP systems must be considered
• ERP architecture in total,
• ERP customizing issues for interface to production line
Complexity
for SMEs
Infrastructure
resource
planning
Education about ERP
systems and training
facilities
Human
resource
planning Top management
commitment
Right people for
the
implementation

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTER
 Changes and uncertainty during ERP system
implementation
• Creating a risk management schedule can be a solution
• Effective communication can be a solution to explain
changes
Uncertainties
of SMEs
No knowledge on
whether the required
budget is secured
Inappropriate
software selection
Inexperienced project
leaders Unclear role and
responsibility for
vendor and internal
staff
Poor teamwork,
poor project
planning
Non-committed
project partners
False software
configuration or
system integration

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTERTHE SPECIFIC PHASES OF AN ERP SYSTEM
• Define
specifications, and
objectives
• Select ERP
vendors and
software packages
• Establish contacts
with consulting
firms
• Elaborate required
budget
• Define relevant
standards and
protocols
• prototyping
• the installation of
ERP modules
• testing and final
validation of the
prototype
• Appropriate
testing for
modules
• integration tests
for inter-modules
• Operational
starting
• Including BPR
• Users’
understanding
and assimilation
of the new
system
• define key users
• customers’ and
suppliers’
demands are
taken into
account
• BPR pushes
radical change
• Improve
processes
and flows in
areas such
as sales,
purchasing,
accounting,
planning,
controlling,
supplying etc.
• Control the
company’s
operational
activities

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTER
Possible challenges and available solutions for ERP
systems
System
preparation
& design
System
installation &
implementation
System
adaption
System
operations &
maintenance

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTER
Possible challenges and available solutions for ERP
systems
System
preparation
& design
System
installation &
implementation
System
adaption
System
operations &
maintenance

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTER
Possible challenges and available solutions for ERP
systems
System
preparation
& design
System
installation &
implementation
System
adaption
System
operations &
maintenance

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTER
Possible challenges and available solutions for ERP
systems
System
preparation
& design
System
installation &
implementation
System
adaption
System
operations &
maintenance

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTER
• Industry 4.0 will not only strengthen companies’
competitive position, but also drive solutions to both
global and national challenges (Wan & Zhou, 2015;
Deshmukh et al., 2015).
• To address this, a set of challenges and available
solutions of ERP systems in the face of SMEs presented
in this study.
• In addition, with regards to the possible solutions
presented here, an ERP system might be tailored to the
requirements of SMEs to meet their business processes.
In Closing

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTER
• A set of suggestions in the case of SMEs as follows:
• ERP systems must be adapted to the requirements of SMEs,
• Financial constraints play a major role in the usage ERP
systems for SMEs, thus there is an urgent need for flexible
pricing policies,
• Open source ERP systems may be an alternative solution for
customization as well as reduction of high initial costs for setup
and support,
• End-users of ERP systems in SMEs should be trained to gain
more experience and competence as well as to handle new
system and reduce complexity.
• The functionality of the ERP systems must be in smaller size,
less complex as well as having special features in order to
fit common characteristics of SMEs,
• ERP software usually forces a rigid structure, but it is required
to be more flexible for SMEs.
In Closing

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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTERReferences
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OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTERReferences
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OHIO STATE UNIVERSITY EXTENSION
OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTER
Any question?
Corresponding author: gekren@sinop.edu.tr