Sap feasibility in SMEs

SMEs make up 97% of companies in Mexico and constitute the base of the economy, becoming potential job developers and reactivators of it. SAP now offers comprehensive and accessible software solutions for SMEs, achieving that by implementing the technology they become competitive and profitable, the great challenge is to build the financing structure and the change of mindset necessary to achieve growth objectives. It is important to review several options before buying an ERP since there are tailored software that cover the specific needs of each company.

Introduction

Small and medium-sized enterprises (SMEs) have lagged behind and are unable to compete and participate in the markets because they are not prepared for the demands that globalization imposes.

In this article investment in technological solutions is proposed as a possible solution to seek their competitiveness.

Specifically, we will focus on talking about one of the most important: SAP, which until now has been seen as unattainable due to its high cost of acquiring software and training the personnel who must use it.

About SMEs

SMEs in Mexico constitute 97% of the total companies, generating employment of 79% of the population and generating income equivalent to 23% of the Gross Domestic Product (GDP), the above is a clear signal that we must pay attention to this type of companies and see them for what they really are: the base of the Mexican economy. In Table 1 we can see the composition of Mexican companies by size and by sector in percentage terms.

In Graph 1 we can see the composition of Mexican companies according to the employment they generate and the amount of GDP they represent in percentage terms.

Table 1. Classification of companies in Mexico by size and by sector in percentage terms

Composition by size and sector (percentage share)
Size	Sector	Total
	Industry	Commerce	Services*	2,844,308
Micro	94.4	94.9	97.4	95.7
Little	3.7	4.0	1.6	3.1
Median	1.7	0.9	0.5	0.9
Big	0.4	0.2	0.4	0.3
Total	100	100	100	100

Source:

Graph 1. Composition of Mexican companies according to the employment they generate and the amount of GDP they represent in percentage terms

Source:

What is SAP?

SAP is the fourth largest software developer for comprehensive solutions in the world. It is a German company created in 1972 that employs more than 27 thousand people in 50 different countries.

Some people have the perception that implementing the SAP system is unattainable due to its high cost and lack of technological and technical-human resources, however, for some years the company has focused on offering accessible and easy-to-implement solutions to SMEs.:

MySAP All-in-One. Preconfigured solutions suitable to the industry sector where the company where the promise of profitability is located. SAP Business One. Business management software based on Microsoft Windows with customization tools, ability to integrate with other systems, obtain information from different databases and link them to the desktop, plus it promises to be an economically acceptable investment.

Basically SAP offers solutions tailored to each company that integrate all the internal processes of a company, in addition to connecting it with other companies, whether suppliers or customers, through the Internet, achieving increased sales and profits.

Advantages and Disadvantages of SAP

Once installed and knowing how to use it, it is a simple tool to understand and that significantly improves the performance of the company so that the difference is clear and marked.

Francisco Guzmán, project manager in the supply chain of Sintec, in the article published by Mario Roca Puente “The secret of planning with strategy, Myths and realities of the ERP and the MRP”, mentions that theoretically the main contribution of the MRP «would be the simplicity of its algorithm and the logical structure that facilitates its administration. However, although that is its main advantage, it is not its main contribution to manufacturing systems. The concept behind the MRP is its great contribution: separating dependent demand from independent demand (which originates outside the system and its variability cannot be controlled); that is to say, to plan the production of the dependent demand (of the components that assemble the final products) only to the extent that this is linked to the satisfaction of independent demand. "

SAP points out that one of the main problems with software implementation is resistance to change, in addition to the economic investment in the package and training, the company must invest time and effort in making the change in the way of working of its members.

Another disadvantage is that many times the company focuses a lot on technical training but neglects all other variables, which in the end gives the perception that the software does not work when the expected results are not obtained.

When the system is not completely adapted to the needs of the company or is not fed with the appropriate information, it can produce erroneous results that lead to making wrong decisions.

Importance of information systems in SMEs

Among all the lags that Mexico suffers today, the technological lag is one of the most important for two main things: globalization, which requires being up-to-date in technology to survive, enter the markets and then really compete and be profitable; and the use of technology as the main solution to achieve this.

It is evident that we need to be effective, the era of the boom in trade with the United States is over, today the entire world is a great market and our main buyer is no longer looking to the south to satisfy his needs.

SMEs are the basis for the development of jobs and businesses in our country and the goal is not to compete with large corporations, that would lead them to extermination, but there is a great opportunity to become their suppliers, and to achieve this it is necessary to have technology that adapts to your systems, a big difference with the competitors will be made by those small or medium-sized companies that adapt as quickly as possible.

Being realistic as a country we do not have the structure to financially strengthen SMEs, in addition to this there are the cultural differences that do not allow us to have a business vision, companies hardly focus on subsisting, let alone planning. We also have the fact that the majority of small and medium-sized companies continue to be “family” companies and where command of them continues to be passed down from generation to generation, often preventing the company from becoming its raison d'être and ceasing to Being the "little business" that squeezes until it gives triple what it could, since up to 3 generations of the family that owns it live from there.

Reinforcing this type of companies will achieve the strengthening of the Mexican economy due to the generation of wealth and jobs, however, you must have entrepreneurial managers, opinion leaders and change leaders who make your companies really productive and competitive.

The empowerment of these companies can only come faster through the integration of technologies in them, bringing with them innovation and competitiveness.

Before the software…

It is very important that before making an investment in any comprehensive solutions software, a careful evaluation of the company framework is made in order to make an appropriate decision, and we can do this by asking ourselves questions such as:

What areas and processes of the company will be involved, what are those areas that need to be promoted? What are the main drawbacks that I will have to involve these areas in my project, what are the technical, human and economic resources that I estimate to use? What objectives do I intend to achieve, with which of the company's strategies would I be working on? What is the budget I have to invest? In addition to the cost of the software, all additional expenses that may be incurred must be considered. In how many stages will I install the software and for how long should it be used 100%? Once installed, it must be evaluated if the established objectives are being achieved.

It is important to highlight that the more exhaustive the information we have on hand, the better the decision we will make to implement any type of technology in the company.

In general, there is a great variety of ERP systems, all of them are tailored to the company and seek to satisfy specific needs, so the most important thing is not to stay with the first option, but to take the time to find the most suitable one.

Success stories

Grupo Botao is a textile industry company created twelve years ago, it has 80 employees and offices in the Federal District and Guadalajara, before implementing SAP it used two other ERP systems without the expected success, now they have been able to automate 90% of its processes and achieve strict inventory control and above all, have the information to make appropriate decisions. For more information you can consult the company page: www.grupobotao.com/historia.html.

Propasa Dunosusa is a wholesaler and distributor of grocery supermarkets in southeastern Mexico. With the help of SAP, it monitors 61 warehouses with which it was able to lower its inventory levels and increase its profits, being satisfied with its implementation time and cost. This success story can be further reviewed at www.sap.com/mexico/smb/success.asp.

Detailed information on each of these stories and some more, as well as all the information from SAP can be found on its website www.sap.com/mexico/.

conclusion

Despite the fact that SAP is offering more accessible packages to SMEs and is making a great effort to reach this market, my point of view is somewhat pessimistic since I believe that without some type of financial support few companies will be able to implement the software.

Perhaps some medium-sized companies that currently already have some type of software that is not very up-to-date but that have knowledge of its management and have obtained real benefits would see the feasibility of making an investment in SAP, but for the rest of the SMEs the first thing would be to implement software that covers only some areas of the company and much more accessible costs.

It is essential that Mexican companies are updated in technology, specifically in comprehensive technological solutions that allow them to be competitive and integrate with large companies, the difference is not to say success but survival will be made by those who join as quickly as possible.

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