Cost Analysis on ERP System Implementation amongst Malaysian SMEs

Abstract

Abstract-The advancement of information system led era and increased competition have forced SMEs to reengineer and integrated their business processes for better efficiency and productivity. The SMEs has begun to look into the potential of implementing enterprise software systems in adding value towards their businesses. Thus, the objective of this paper is to investigate the cost drivers of ERP implementation among the Malaysian SMEs through three main classifications: enterprise, people and implementation. Second, the study has also examined the relationship among each one of the classifiersenterprise, people and implementation. This was aimed at identifying if each one of the factors were significant in influencing the others. This study examines the objectives, via an exploratory survey of 111 companies based in Klang Valley, Malaysia. The findings has revealed that the major cost drivers for ERP implementation among the Malaysian SMEs were caused by the external ERP consultants, upgrading of skills among the employees, reengineering of business processes and the selection of ERP modules. The data and our analysis points out that people factor such as consulting experience and their involvement with the internal employees have a major impact on the ERP cost. The results have also shown that there is a significant correlation between the two cost classifiers -human resource and implementation. This study provides an avenue for further exploration on the financial aspects of ERP implementation which could have an impact on the return on investment (ROI).Index Terms-Enterprise resource planning, small and medium sized enterprise (SMEs), business process, consultant.

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