ERPs and their role in the post-war evolution

By Cassandra Mascarenhas

In the face of the massive amount of change that Sri Lanka is currently undergoing, the dynamic software engineering, business consulting and IT services provider Providence Network and Solutions (Pvt.) Ltd along with Abas Software AG held a forum titled ‘The Post-War Evolution of Integrated Systems in Sri Lanka,’ last week which highlighted the importance of high-end integrated systems in economic development at both macro and micro levels.

Abas Software AG, a German ERP provider for SMB with the seventh biggest market share in Germany, represented by the Sri Lankan company Providence, in handing over of a cheque for US$ 200,000 by Peter Forscht, COO of Abas Software Germany to the Department of IT, University of Sri Jayewardenepura. The company previously donated an ERP system to the Industrial Management (IM) Department of the University of Kelaniya. These donations were arranged as part of the global corporate social responsibility activities of ABAS and were facilitated by their local partner Providence.

Enterprise resource planning (ERP) is a software system that manages both internal and external resources, including financial resources, tangible assets, materials and human resources. It builds on a centralised database that utilises a common computing platform. ERP systems bring all business operations into one uniform and enterprise-wide system environment.

 “Sri Lanka has been going through a lot of changes in the last two years, with the economic surge brought about by peace in the country. The ground is now ready for a strong harvest and we need to reap the rewards of the fertile environment. In harnessing this growth, companies will require high-end integrated system solutions,” said the Managing Director of Providence Network and Solutions (Pvt.) Ltd. Vaz Gnanam while addressing the audience at the forum. “Organisations need to be transparent and accountable and another challenge is to service their customers as well as their internal and external stakeholders. They need to be able to track their processes all the way to the value chain and have visibility, accountability as well as profitability.”

Business Development Consultant at Cisco Systems while delivering a presentation on ‘The Smart Business Road Map’ pointed out that with the speed of the business changes being much faster and markets changing more rapidly, the frequency of change is in turn becoming shorter. Competitive pressure is a challenge which in turn disturbs existing business models. Customers too are becoming more demanding and real time information is now at their fingertips so they get to know about a company’s services as well as those of their competitors. “IT can address your business challenges. Together with IT, you bring in complexity into your environment as you tend to choose a platform that is complex and not easily manageable,” he said.

The other keynote speakers included the General Manager of HBS, hSenid Business Solutions, Sampath Jayasundera who spoke about ‘The Role of ERP in Competitive Business’ and Averil Ludowyke from Ernst & Young discussed the accountant’s role in ensuring ERP success.

Key factors in choosing a good ERP system    

Founder and COO of Abas Business Software, Peter Forscht while addressing the gathering, outlined the key factors in choosing a good ERP system for an organisation. Abas is strategically headquartered in Karlsruhe, Germany out of which five of 10 of the major ERP systems in the world comes from. Although an ERP can offer companies a distinct advantage, its rate of failure is still somewhat high.

“When we started the development of the ERP system, we had one idea – to view a profit and loss account and a balance sheet at the press of a single button; but where do the figures come from? At the end of it all we wanted to have the ultimate accountancy system,” he explained.

Some of the major goals of an ERP system are to reduce lead time, increase delivery liability and increase productivity. An ERP also reduces the margin for error to occur as it relies on a single source of data, which in turn avoids data input errors and also allows the fast availability of information. The quick availability of information is vital, Forscht pointed out, especially in times of trouble. However, the bigger a company becomes the more complex the systems become and ERPs assist in handling that complexity.

He then listed out the key factors companies should look for when investing in ERP software. Flexibility is a must as ERPs can be expensive and choosing one that could adapt to future requirements is cost effective and less time consuming. Upgradability and international availability are other factors, especially for companies with international operations so that the software can adapt to operations in different countries. Finally, it is also important to invest in a company with a long term strategy.

 “We first installed an Abas system in 1985. The customer was using one of the first unix machines on the market. He has the data that he entered in 1985 and he is still using our software that we kept upgrading for him over the years. Installing ERP software can be quite costly and if you have to keep replacing it every three to five years it could be very expensive. The customer I mentioned earlier has been using our systems for 26 years to date,” Forscht said.

The COO wrapped up by explaining that implementation of the ERP was yet another vital aspect; 75% of the failed implementations have occurred because of a lack of strategy on how to implement the software within the organisation. An ERP also requires a strong organisation within a company as it is a top management project.