Does ERP systems achieve a significant change in ROI in Egypt? Research Proposal
The ERP systems today are forming the highest level of integration between the business and the IT technology, Many companies all over the world are now are implementing ERP systems in order to get the benefits of this new technology. This technology will offer organizations many benefits like conveniently run their businesses with advanced functionality, a modern supportable operating environment with, reduced inventory, improved ability to satisfy customer orders on time, ability to generate custom reports, and increased data access. Many of these benefits can fall under the umbrella of perception you may find some people resist the change ,others don’t have a feasible facts about the benefits of these systems, and many reasons can limit the expansion of these systems.
Imagine a business owner have a very big successful business and you are a salesman work at ERP provider company and want to make persuade this owner to buy your ERP solution package, you’ll explain the benefits and the add values from this ERP solution but the owner will simply ask you about two main things, first: how much it will cost me? And how much I will earn from your ERP package?. Actually your answer will be very confusing as the cost will be very high and you can not know how much approximately this business owner will earn.
Another thing we have to know is how efficient are the ERP systems, how we can compare between different ERP providers and what are the modifications needed to enhance the performance of these ERP systems.
First we will define the ERP and its benefits, and then we shall define the ROI and what it measures.
Then we will define:
· the research question
· new knowledge added from this study
· major implications
· And, finally methods and approaches that will be used.
Shanks and Parr (2000) defined ERP implementation as "the process of developing the initial business case and planning the project, configuring and implementing the packaged software, and subsequent improvements to business processes". ERP implementation is considerably different from any traditional information system implementation for many reasons: (1) the integrated nature of ERP applications causes dramatic changes on work flow, organizational structure and on the way people do their jobs; (2) ERP systems are not built but adopted, this involves a mix of business process reengineering and package customization, (3) ERP implementation is not just a technical exercise but it is a socio-technical challenge as it poses new set of management procedures. In that sense, it has become clear that ERP implementation differs from traditional systems development where the key focus has shifted from a heavy emphasis on technical analysis and programming towards business process design and human elements (Gibson, 1999).
Critical Success Factors (CSFs) approach was first used by Rockhart (1979) in IS area. Critical success factors for ERP projects have been studied from a number of different perspectives. Many researches were conducted about the critical success factors of ERP implementations, many researches focused on the topic from different perspectives. fiona fui-hoon nah and santiago delgado critical success factors for enterprise resource planning implementation and upgrade, the place and key success factors of enterprise resource planning (ERP) in the new paradigms of business management john Gunson and jean-Paul de Blasis , the place and key success factors the impact of critical success factors across the stages of enterprise resource planning implementations Toni m. Somers and Klara nelson, supply management: the ROI in ERP by frank O’nell, Consona corporation it emphasis only on supply chain and prove that there is a benefit from the ERP, the “secret sauce” that maximizes ROI for ERP how to jumpstart software updates or installations with strategic business process improvement and self-fund improvements by Tim Allen, what's so hard about calculating the ROI of ERP? and why the controversy over ROI from ERP? by r. Michael Donovan.
The most important research that this study will be built on is, nucleus research the real ROI from SAP.
The critical success factors cited from many researches in ERP implementation and upgrade to identify a comprehensive list of factors and then organized them into seven main categories - (I) Business Plan and Vision, (2) Change Management, (3) Communication, (4) ERP Team Composition, Skills and Compensation, (5) Project Management, (6) Top Management Support and Championship, and (7) System Analysis, Selection and Technical Implementation.
All researches talks about the critical factors of successful ERP implementation and all measurements are based on the time frames budgets and sometimes the effect on ROI the research question in our study is Does ERP systems achieve a significant change in ROI in Egypt?
Since implementing an ERP is considered as a capital investment like any capital investment organizations can invest in we will use the accounting methods to measure the effectiveness of this investment
What Does Return On Investment - ROI Mean?
A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio.
The return on investment formula:
A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio.
The return on investment formula:
ROI =
Return on investment is a very popular metric because of its versatility and simplicity. That is, if an investment does not have a positive ROI, or if there are other opportunities with a higher ROI, then the investment should be not be undertaken.
This research aims to measure the real ROI( Return on investment) of organizations in Egypt that implemented different ERP (SAP ,Oracle and Great plains only) systems for 3 years or more neglecting the scope of implementation, the size of the organization.
By conducting this research we will prove the effect of ERP systems on organizations in Egypt. This study will encourage business owners to have a better decision about investing in ERP systems, it will guide them whether to invest in ERP systems or invest in other forms of investment.
Also this study will help ERP systems providers to know how their solutions impact on business in Egypt and will work on improving their solutions in way that makes the ROI higher.
I think this study can be the starting point for a new era of competition between ERP providers on introducing new ERP systems with higher ROI effect on organizations in Egypt.
Finally the most benefit will go to organizations and governments because this severe competition will result in very integrated and powerful ERP systems that increase organizations profits and efficiency.
To measure the effect of ERP systems on ROI in organizations in Egypt we will take a sample of organizations, we will contact Sap, Oracle and Microsoft and get the customers who bought their licenses in Egypt for more than 3 years
Measurements
Sample of ERP systems customers that implemented a full ERP system or only some modules will be interviewed, the interviews will include CEO’s, CFO’s, departments’ managers and normal end users.
The interviews will be about the ERP implementation and its impact on ROI, the interviews will include questions about :
· Why and when did you select your ERP?
· Which ERP solutions have you implemented?
· How long did your ERP deployment take?
· Did you stay within your deployment budget?
· What are the most significant returns and benefits from your ERP applications?
· How much did you spend on the project; in particular, how much did you spend on software, hardware, consulting, training, and personnel?
· What were the key deployment challenges?
· Do you think that the costs of your ERP deployment have been outweighed by the returns?
Other questions may be used based on the design of the interview questions.
In order to make sure the measuring tool is reliable More than one person is interviewed within the same organization
This interview asks directly on the return from ERP, the results of this research are based only on the answers of the interviews questions not on actual calculations.
Since many companies implemented SAP, ORACLE, and Great plains in Egypt we will take a sample of 40 companies and if possible to take more it will be better
Stratified Sampling is used because we have three groups of samples, companies running SAP, companies running ORACLE and companies running Great Plains
Each group members will be randomly selected. the number in each group will not be same but will be taken as a weight of the following equation:
Weight of SAP companies =
Weight of ORACLE companies =
Weight of Great plains companies =
Contact of ERP providers in Egypt, get a list of their customers who implemented ERP for 3 years or more, and then randomly choose from each group based on the equations mentioned before
· This research is applied in Egypt only
· This research measures the effect of ERP systems on ROI based on SAP, ORACLE and Great plains only.
Frank O’Nell, CONSONA CORPORATION, Supply Management: The ROI in ERP
surface mount technology
TIM ALLEN, The Secret Sauce” that Maximizes ROI for ERP, strategic finance 2006
Invetopedia aforobes digital company
Financial accounting standards board (FASB)
John gusnon and jean-paul de blasis, the place and key success factors of enterprise resource planning (erp) in the new paradigms of business management,
toni m. somers and klara nelson, the impact of critical success factors across the stages of enterprise resource planning implementations, Proceedings of the 34th Hawaii International Conference on System Sciences – 2001
M. H. Rasmy , Assem Tharwat and Sondoss Ashraf , Enterprise Resource Planning (ERP) Implementation in the Egyptian Organizational Context
fiona fui-hoon nah and santiago delgado, critical success factors for enterprise resource planning implementation and upgrade, journal of computer information system ,issue 2006
R. Michael Donovan, Why the Controversy over ROI from ERP?, Performance Improvement
If you want to change any thing in software then you can change. You can implement or modification in software.
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