In the following article we will take a quick tour of the emergence of ERP and its predecessors, as well as the impact it is having on companies around the world due to its great benefits. Later we will see what the situation is in Mexico and the 2 main obstacles that companies face in order to implement this type of solutions.
Introduction
As we move forward today we see the importance of Information Technologies. When we talk about decision-making tools, we refer to a wide range of solutions, they can be methodologies, work groups or Information Technologies. We will focus mainly on this last item since it seems that the technologies are advancing faster than the same time.
We live in a time of change and global where we cannot miss the advancement of technology. Currently talking about the Internet is something so common among people, something that at the end of the 90s we could not affirm. Now, if only 3% of people in Mexico use the Internet (INEGI 2002), how many companies will be thinking about IT solutions to increase productivity for their company?
Talking about statistics is talking about cold numbers, where we realize that most of the SMEs in our country that are more than 50 thousand (INEGI 2002), only a small part of them rely on Information Technologies. There are a number of impressive solutions that help companies to be more productive, generate less operating expenses and therefore be competitive in their market.
There are success stories that allow us to realize the benefits and advantages of implementing this type of solution. ERP's, CRM's, Groupware, are just some of them. In the following article we will focus on one of them, which is ERP and because the impossibility of most SMEs has not trusted this solution.
What is an ERP
Let's start by defining what an ERP is. Based on what several authors comment in the book E-Business and ERP, Transformig the Enterprise, (Norris, Hruley, Hartley), ERP is a system that optimizes the internal value chain and is through software installed through the business network that allows sharing the database of 5 main areas of the company:
1. Finance
2. Manufacturing
3. Logistics
4. Sales and Marketing
5. Human Resources
If we go to the beginnings of ERP, we will meet its predecessor, the MRP and the MRPII, which were a system that allows control over manufacturing planning, later the utility is seen and it begins to be developed under the same ideology for the 5 areas main of a company.
Now, what is the objective of these solutions, call it MRP, MPRII, or ERP ? Its purpose helps to cover several aspects that are:
- Reliability in the information and reports generated by the system Speed in the information process Reduction of time and operating expenses Speed and greater certainty for making managerial decisions
How an ERP helps for decision making
We already spoke that an ERP makes a connection of the databases of the 5 areas or department of the company. Having this type of automation allows to have a higher index of certainty when defining a strategy or an action plan in any of the areas involved.
In previous times, the strategy of the different companies varied according to time, there was a time when the number of production generated power and competitive advantage, later the quality of the service gave rise to the boom in this aspect to the companies certified with the different world-class standards. But currently the strategy to follow is determined by the information, having the correct information, at the correct time and for the correct person gives a power that can surpass the competitors.
ERP in visionary companies
This type of solution seems to be aimed at large corporations, and seeing the different solutions that exist in the market and their implementation costs that mostly exceed one million pesos and in others one million dollars it seems to us indicate that only companies that are not part of SMEs but large corporations are the natural market for this type of solution.
It is a fact that regardless of the size of the companies, whether due to their number of employees or money invoiced, companies have a common denominator in the type of problems and the handling of information. Currently, the leading companies in each branch have people dedicated to visualizing the future and making strategic plans on how to attack the market, they also designate people to analyze how this objective can be facilitated and it is here that Information Technology specialists see different proposals and analyze the different solutions on the market.
Dual problem
Once we have established that it is an ERP and its objective, we will focus on the 2 main problems that I detect as barriers to the implementation of this type of solutions.
First we will start with the problem of lack of visualization in small companies. There are more than 80% of the companies in the country that are micro companies, where they are family businesses with a production that barely allows them to survive at different economic times in the country. Those companies with around 25 to 50 PCs where talking about Information Technology is talking about operating costs for the company and not an investment that can help increase productivity. We have seen it more often in recent years with the arrival of Chinese products where cheap labor and material have allowed them to enter each of the markets that have interference and the most worrying of all the increase in participation in the market. One wonders,What would happen if Mexican companies were as productive as possible, if they had a strategic planning that did not allow this type of commercial attacks by oriental products, we also ask ourselves, how we can attack this market in a way that does not affect the Mexican industry. Undoubtedly one of those answers would be to increase productivity, make the same number of pairs of shoes, the same number of pants or shirts in less time, with fewer resources and with fewer people.make the same number of pairs of shoes, the same number of pants or shirts in less time, with fewer resources and with fewer people.make the same number of pairs of shoes, the same number of pants or shirts in less time, with fewer resources and with fewer people.
How can we be productive if we do not turn to technology to help in that sense? How can we make a shoemaker see that a cutting machine can produce more shoe but it is useless if I am not productive, if not I lower my costs and I do not offer customers a good quality product at a fair price and that people be willing to pay.
The main problem that they have in this type of company is the vision, the culture, the little knowledge but above all the little interest of the top management who generally are the owners, to see this type of solutions, perhaps the age has something To see, most of the people who own small and medium-sized businesses are over 50 years old and when they had their business boom they did not need a single computer to get ahead.
The second problem is when the possible solution that an ERP can give to the industry has already been accepted, when the different solutions, the different brands and the different suppliers that the solution will implement have already been analyzed.
At this stage the main problem is the fear of change, better known as Chaos, people do not want to relearn new working methods, they do not identify if this is going to bring them a benefit, be it less work, less difficulty or higher income, the simple fact of seeing a change in doing things on a computer that was previously done manually is the main obstacle to the implementation of these types of solutions.
It has been detected that SMEs, which are part of 80% of companies in Mexico, are 4 times less efficient than the 20% that are large companies and corporations (ECLAC 2002).
Investment or Operating Expense
After speaking with different senior managers of different companies and integrators of ERP solutions, I ask myself the following question, Is the high cost of implementing an ERP feasible and feasible to be carried out in a company? How many companies have started the implementation of an ERP without even having done a feasibility analysis of the need?
Conclusions
After an arduous reading and seeing different authors and publications, we realize that it is a fact that information technologies are the ones that can help the competitiveness of companies. An ERP in this case is a vital tool for companies that allows saving time in processes that were previously done manually or that were done in an automated way through a computerized solution but in an isolated way where the exchange of information between the departments was manual.
It is also clear that a radical change in the way we see business today is necessary. You cannot turn your back on the rapid changes that are taking place around the world. Globalization has come to shorten distances, and information technologies have come to remove any obstacle. The most important aspect of this issue is culture and the rejection of change, but you cannot continue to ignore these solutions, you cannot live thinking about survival, not thinking about being reactive but proactive.
Competitiveness is increasingly prominent, the neighbor next door, the one across the street, who has the same time as us, the one who has not yet been born, the one who is not here, the one who is to come, all of them go to stand out. to try to be competitive and it is still time to rely on Information Technology to be able to move forward.
Bibliography
1.- Reforma (2003) HELP TO REDUCE BUSINESS COSTS
Available in: INFOLATINA
2.- América Economía Magazine (2003): I-BIZ, THE ONLINE MALL OF THE GOVERNMENT
Available in INFOLATINA
3.- Watson Fraser (2003) STILL NOT EVERYTHING SAID ABOUT THE IMPORTANCE OF CRM IN BUSINESS STRATEGIES
4.- Antoñanzas, Juan Miguel (2003) LOOKING INTO THE EYES OF THE CONSUMER
5.- Venegas Tinoco, Arturo, ERP, A SOLUTION OR A CHARGE FOR THE COMPANIES
6.- De la Fuente García, David. (2002) E-PROCUREMENT: IMPORTANCE AND APPLICATION.
7.- Knight, Amilcar. (2001) CHANGE ADMINISTRATION, A COMPULSORY PRACTICE IN THE IMPLEMENTATION OF AN ERP
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