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ERP for SMEs: Adopting Technology for Competitive Advantage

In Bangladesh,SMEs are like Sukanto Bhattacharya’s 18 years age-youth.Whatever the situation is they will not bow their head down.Hundreds of problems act like Octopus with SMEs here.But SMEs are always slippy and with much strength to carry on.These words are about audacity for survival of SMEs.But when you survive you have to adapt with the changes.When you think about the competitive advantages to keep your greater adaptibility to changes, step in the world of technology.
But,because of resource constraints adoption of latest technology is always critical for SMEs.Generally,SMEs are late-adopter of the lates technology. But when technology offers you competitive advantage,greater benefits over costs then you have to rethink about it.Here comes the issue of ERP (Enterprise Resource Planning) adoption for SMEs.Though ERP adoption is a very important factor to large corporations, SMEs are not so familiar to it.
According to Wikipedia, Enterprise resource planning (ERP) systems integrate internal and external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software application. The purpose of ERP is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders.

SME entrepreneurs need to contract with ERP vendors and make them understand their total business process. It takes time and different types of cost to understand, develop and implement ERP in business. Better clarification of your business process leads to the better customization of ERP. But there is a phrase “Best Practices” in ERP industry. As ERP vendors work with many businesses in the same industry they can develop best business process in the soft environment that SME entrepreneurs can follow. Despite that ERP vendors are trying to develop ERP solutions which are more affordable to SMEs with the help of latest technologies.

Advantages of ERP

The fundamental advantage of ERP is that integrating the myriad processes by which businesses operate saves time and expense. Decisions can be made more quickly and with fewer errors. Data becomes visible across the organization. Tasks that benefit from this integration include:
• Sales forecasting, which allows inventory optimization
• Chronological history of every transaction through relevant data compilation in every area of operation.
• Order tracking, from acceptance through fulfillment
• Revenue tracking, from invoice through cash receipt
• Matching purchase orders (what was ordered), inventory receipts (what arrived), and costing (what the vendor invoiced)

ERP systems centralize business data, bringing the following benefits:

• They eliminate the need to synchronize changes between multiple systems—consolidation of finance, marketing and sales, human resource, and manufacturing applications
• They bring legitimacy and transparency in each bit of statistical data.
• They enable standard product naming/coding.
• They provide a comprehensive enterprise view (no "islands of information"). They make real–time information available to management anywhere, any time to make proper decisions.
• They protect sensitive data by consolidating multiple security systems into a single structure.

Cost factors of ERP
ERP implementation needs a clarification of the costs involved with it. Developing project, allocating budget and time efficiently is critical here. Failing to realize total cost factors can cause a great damage in implementing the ERP. It is not only about purchase, implementation and maintenance cost but also about developing human resources to utilize the technologies in a way that will lead them to the competitive advantage.

ERP for SMEs: Adopting Technology for Competitive Advantage

After realizing the cost factors and doing efficient cost-benefit analysis, if it is positive, don’t take time to decide what to do. Taking risk and eating its tasty fruit is a part of business that you always do.

Mr. Julfikar Islam is currently studying Marketing (4th year) at University of Dhaka. He is truly an organizational being. He has been working with a number of knowledge-based organizations for last 3 years within the University. His area of specialization is Supply Chain Management. He also has an effective knowledge about Branding, Current Market trends. He has been blogging for last 1 year about these issues in a number of national blog and community website.

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