towards industry 4.0

OHIO STATE UNIVERSITY EXTENSION

TOWARDS INDUSTRY 4.0Challenges 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 AGRICULTURAL RESEARCH AND DEVELOPMENT CENTERCo-workers

Prof. Dr. Alptekin ERKOLLAR

Sakarya University, TURKEY

Faculty of Management, Department of Management Information

Systems

[email protected]

Assoc. Prof. Dr. Birgit OBERER

Sakarya University, TURKEY

Faculty of Management, Department of Management Information

Systems

[email protected]

Gülay EKREN

Sinop University, TURKEY

Departmant of Computer Technologies, Vocational School of Ayancık

[email protected]

mailto:[email protected]



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• 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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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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• High-Tech Strategy 2020 Action Plan 2011

INTRODUCTION

Industry 4.0

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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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• Like ERPs, SMEs have also common characteristics

• fewer employees,

• less order or customers,

• low revenues.

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• 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 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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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 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 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

Complexityfor SMEs

Infrastructureresource planning

Education about ERP systems and training

facilities

Humanresource planning Top management

commitment

Right people for the

implementation

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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

Uncertaintiesof SMEs

No knowledge on whether the required

budget is secured

Inappropriatesoftware 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 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 AGRICULTURAL RESEARCH AND DEVELOPMENT CENTERPossible challenges and available solutions for ERP

systems

System preparation & design

System installation &

implementation

System adaption

System operations & maintenance

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systems



implementation

System adaption


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systems



implementation

System adaption


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systems



implementation

System adaption


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• 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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• 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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Any question?

Corresponding author: [email protected]