Systems in SME

Today's blog is an overview of the introduction of systems in Small Medium Enterprises (SME). It will briefly reflect some of the decision processes implicated in the implementation system or systematisation of an organisation.

Before starting, just to have an idea of the statistical analysis of small businesses in the UK and information on small businesses government policy, it is said that in 2012, there were 4.8 million businesses in the UK; over 99% of these businesses were small or medium sized businesses, employing less than 250 people; 4.6 million or 96% of all businesses were micro-businesses – employing 0-9 people.

It has been discussed some objectives of Systematisation in Small Business. Just to mention some of them: Enables work to be allocated to the lowest possible cost resource, improving profitability; frees up the owner (s) to work more on growing the businesses; provides a platform for further growth; allows measurement and improvement of the business processes; reduces risk by enabling employees to perform a range of processes by following the procedures; systemise the business, is the first step towards Knowledge Management, making explicit the knowledge of the owner and key staff; aid forecasting and allow greater control; systems that the owner can access when he is away from the business.
 According with their needs, aims and goals, businesses decide what systems to have, or according their needs, they are advised to have different systems for their different functions withing the organisation.

 

For instance, a small business will have an accounting system that enables then to keep track of financial performance; it may be used only for looking at recent past data and historical trends; larger organisations may use it to forecast revenues and costs, etc.

Those systems may be either 0n-site software e.g. Sage or Quickbooks, or a Cloud based solution like Kashflow.

 

 Moreover, when communication between managers, sales, prospects, current customers, suppliers, etc. might be complex even in small organisations, therefore, at this stage the business may well be looking at Customer Relationship Management (CRM) software to support the tracking of sales and managing a growing number of client relationships.

 

Further, ERP systems enable the enterprise to streamline and integrate virtually all operations and functions from order processing to vendor and customer relationship management. These relatively expensive and sophisticated computer-based systems were afforded only by large business organisations in the past. But recently, as they proved to be very effective in providing large enterprises significant competitive advantage over those that did not implement ERP solutions, they became more available and affordable for SMEs as well (Olsen and Saetre, 2007).

Enterprise resource planning (ERP) systems are increasingly becoming commonplace in the small and medium enterprise (SME) sector and are being viewed as one of the prime ways to achieve competitive advantage and to re-engineer processes (Gable and Stewart, 1999).

Furthermore, ERP software is aimed at combining the disparate sources of information within an organisation into a central database. Since each data element is populated only once it eliminates multiple data entry and ensures better data visibility within the organisation. The ERP systems typically encompass all functions including finance, sales, CRM, accounting, manufacturing, payroll, etc. (Al-Mashari, 2003; Chung and Snyder, 2000).




 

Additionally, effective planning and utilization of IT resources involves analysis of available IT sourcing options to effectively respond to environmental changes and exploit IT for gaining competitive advantage. SMEs are subject to similar outsourcing decision considerations as large businesses to ensure their ongoing survival. This includes choosing the optimal software sourcing option when implementing new enterprise software systems. Organizations need to weigh their options relative to their capabilities. (SME ERP system sourcing strategies: a case study).

 



 

 Software as a service (SaaS) means that cash strapped SMEs do not need to make large investmentsin software, can upgrade when they want while cloud computing minimizes their legacy systems. They can use what they need and then discard it at will, assing new facets to their systems as they grow. (Mellor, 2011)

 

 Furthermore, the edges between technologies are becoming blurred so choice of a particular functionality may well follow available resources, which change in a developmental fashion as the organisation evolves and grows: For example, with work sharing in a particular environment one may wish to start with a free collaborative mashup - like Google Wave - then later progressing to a more secure widget system like e.g. Work Light while for a similar function a large and more solvent organisation may prefer an out-of-the-box solution like MS Groove similarly an organisation may choose a free CRM like SugarCRM before they invest in e.g. MS Dynamics CRM, these again may usefully have links to other corporate services, typically the IT helpdesk, which in turn may be running a proprietary product like Hewlett Packard Open View or open source alternatives like Request Tracker or Summit Seven. (Mellor, 2011)

 

 

As an example of a SME and the needs and selection of sofware, it is Albion Fabrics Ltd.

 

After having various issues regarding their Knowledge sharing amonsgt the workforce, clients ans suppliers; an appropiate KMS that meet the business needs; an appropiate technologies to support the initiatives and the management challenges in implementing the KM initiatives, the CEO received couple of recommentations. However, there were more challenges after all, and other needs were identified such us: 

• Information System (IS) to support key business processes of CRM and Sourcing (suppliers, etc.).
• Potential software for Albion and approach.
• Cost for Albion.
• Process to implement the new systems

 Therefore, other reccomendations were made:

 

First of all the approach sugested was CLOUD, because of its cost savings, universal access, up to date software, choice of applications, potential to be greener and more economical, flexibility. Other approaches are: on-site, hybrid. Different software were suggested.

 

 

 

Moreover, there are different factors that SME or any other organisation may have in mind when choosing an enterprise software:

• Price
• Payment terms
• Ease of use/ease of deployment
• Does it do what we need? Fit of the product to the company requirement
• Is it flexible? Can they buy certain modules now, and add news ones later  
• Does it scale? As they grow will the solution still be a good one 
• How is the company that provides the software doing? Are they growing? Will they continue to have money to invest in the product?
• Do they have customers like us using this?

 And finally, the process to implement a new system coul be:

 

1. Select: Organisation Requirements
2. Project Management and Communication: Identify internal activities
3. Contracting and Software Licensing
4. Customisation: according to the organisational needs
5. Data Migration
6. Training and Support

 

 

References:

Amerpohl, N (2005) Systems for your company. 17(5), 14-17.

Chris Rhodes (2012) Small businesses and the UK economy Economic Policy and Statistics.

Deep, A, et al (2008) Investigating factors affecting ERP selection in made-to-order SME sector. Journal of Manufacturing Technology Management. Emerald Group Publishing Limited Vol. 19 No. 4, 2008. pp. 430-446.

Mellor, R. (2011) Knowledge Management and Information Systems: Strategies for Growing Organizations. Palgrave Macmillan.

Sledgianowski, D, et al. (2008) SME ERP system sourcing strategies: a case study. Source: Industrial Management Data Systems. Volume: 108 Issue: 4.


Youtube: Small Business CRM. http://youtu.be/FoLHsExMGhk