Enterprise Resource Planning (ERP) is a system that helps companies improve competitive advantage in the global world. One proof that this system has many benefits and advantages for the company is the presence of a study conducted at the Small and Medium Enterprises in Central Java. These results indicate that the implementation of ERP systems yanng right will bring a positive impact on the development of SMEs. By using 10 modules, namely modules and savings and loans co-operative management, sales module, purchase module, warehouse module, module manufacturing, module accounting, human resources module, administration module, document management module and the module point of sales can affect the competitiveness of businesses, particularly businesses Small and Medium Enterprises in Central Java in the global world. It is seen that the use and selection of appropriate technology greatly affects the quality of the company. In this modern era, the business development strategy should be planned to achieve project targets set by the company. In addition, the selection of appropriate application for maximum results in running a project within the company.
Keywords: Enterprise Resource Planning System, Module, Small Business, Competitive Advantage.
INTRODUCTION
Business is one of the largest contributor to the state budget Indonesia. Based on the economic development in Indonesia silus, entrepreneurial activity or potential business always increase from year to year. This is shown by the increasing number of young entrepreneurs in Indonesia, which has donated the value of the company to the state budget. In winning the competition among businesses or large companies among small and medium enterprises in make sure each company has a system that effectively and efficiently to support business development. It has been widely used in several large companies such as financial systems, they have implemented accounting software for easy bookkeeping. These systems are used to accelerate the goal is customer service, so that customers feel comfortable. In addition, examples of systems that have been implemented at several large companies are ERP (Enterprise Resource Planning). Implementation of this system has been successfully developed several businesses to compete in a global world.
The concept of ERP has aim to control all enterprise resources through the use of integrated data with an integrated system. In implementing this system, there is no company-specific criteria. Verville and Hallingten (2001) and Pricewaterhouse Coopers (1998) describes as an ERP system that integrates the information packet of information and information-based processes within and outside the functional areas in an organization or a set of modules that connect operations back office and front office. Used only big companies are using this system, but with the growth in time, small and medium enterprises also began to implement an ERP system to achieve competitive advantage in the business world. The main purpose companies implementing ERP is to improve their competitive advantage (Hamilton, 2007).
Effective business strategy centered on utilization of information technology efficient and aggressive. Successful ERP system will streamline the process and improve the company's effectiveness entirely and simultaneously provide a means to boost the performance of the external competitive, improve customer response and can be used as a support initiative srategy (Sandoe et al, 2001). Research Martin et al, 2002 showed some benefit by purchasing the ERP package. Three pieces of the benefits associated with a business problem, two benefits associated with information technology and the benefits associated with the business and information technology together. The three benefits associated with the business are:
1. Integration of data causes data access to other business units, other functions, processes and organization increases.
2. Provides another way to do business through business process engineering and process oriented toward business process cost reduction.
3. Provides global capabilities by providing globalization through common business processes and world-class.
Two benefits related to information technology are as follows:
1. The benefits of buying the package not to build it from scratch. The benefits derived are the benefits faster time, costs are relatively cheap and the ability of the application package itself.
2. The benefits of information technology architecture that is used to save costs. A benefit associated with business and information technology is a gather benefit flexibility using a simple client-server system developed in accordance with business growth.
Many strong evidence that ERP system implementation project can not be completed on time and in accordance with the existing budget (Parr, Shanks and Darke, 1999) and also reported in full that many ERP implementations fail (James, 1997). Although low levels of successful implementation of ERP, but few companies that have successfully implemented ERP the most from ERP and has been fully utilize the potential of ERP in their organizations.
Currently, there has been some ERP modules that have been used by some companies in the category of Small and Medium Enterprises (http://www.mentaya.co.id/2012). Other modules that can be used by Small and Medium Enterprises is a management module and savings and credit cooperatives, sales module, purchase module, warehouse module, module manufacturing, module accounting, human resources module, administration module, module and document management modules Point of Sales.
Based on the explanation of Enterprise Resource Planning systems (ERP) above, this paper will provide information on the successful implementation of ERP systems in small and medium enterprises in Central Java and how to build a competitive advantage through the successful implementation of the system.
MATERIALS AND METHOD
In realizing the successful implementation of ERP systems, there are several determining factors. Critical success factor is something that should be done by the organization in order grabing success in the implementation of ERP systems. Research conducted by Drs. Mudiantono in 2012 regarding the successful implementation of the ERP system for Small and Medium Enterprises in Central Java refers to a factor that is top management support, effective project management, business process reengineering, software and hardware selection, education and training and vendor support.
Effect of Top Management Support
Top management must publish clearly identified as a priority project (wee, 2000). This involves the provision of the necessary resources for implementation and provide time gar job done well (Roberts and Barrar, 1992). Willingness to provide the necessary resources is an indication of the commitment or involvement of the top management of the ERP project. Implementation may fail if some of the critical resources such as staff, funding and supporting tools. Top management must be aware that ERP implementation will improve the effectiveness of the company operasinal in building competitive advantage. Top management must show leadership attitude because its existence may determine the pace of the company. Definition of leadership is showing the way, guiding, directing, persuading and stay ahead.
Effect of Effective Project Management
Referring to the opinion of Dennis Lock (1996) in Winahyu (2005) which states that "project management activities will increase when applying the planning, coordination and control of activities of different and complex commercial projects and modern industry. Project management is met through the use of processes such as intizializations, planning, execution, control, and end of the project (PMBOK Guide, 2000). Application of the principles of project management is to permit allows senior managers to establish and use an appropriate measure of success, to reverse current measured value equivalent to the cost and optimizing the use of corporate resources.
According to research conducted by Sum, Ang and Yeo (1997), some important terdapar of project management are:
1. Having a formal implementation planning. Described as the project activity, the commitment of personnel and promotional support.
2. Setting a realistic time frame. If the target completion time schedule pressures arise to resolve quickly will result in the implementation will be completed in a hurry. Though successful ERP implementation requires a long time.
3. Conducting periodic meetings to monitor the status of the project. Where each team will report progress.
4. Assign an experienced project leader.
ERP system implementation is a complex set of activities involving all business functions within the company and take a long time so it requires effective project management strategy in order to avoid the release of big budget.
Effect of Business Process Reengineering
Business Process Reengineering (BPR) or business engineering process described by Hammer and Champy (2001) as "rethinking and redesign of business processes in the weeks to improve corporate performance ha cost, quality, speed and service." BPR links business innovation with a strategy for make major repairs on business processes so companies can become stronger and become a more successful competitor in the marketplace. An important factor in the early stages is BPR and minimum customization. Business processes that form adapted to the new system (Bingi et al, 1999). Correlations between business processes to the software is a critical factor in the implementation (Holland et al, 1999: Sumner, 1999). Dimensions that include re-engineering are as follows:
1. Desire to reengineer the company's business. Some studies suggest that the greater the desire it will be successful implementations (Grover et al. 1995).
2. The readiness of the company to make changes to business processes. There needs to be trust between top management and staff within the company that make the process of change will be easy.
3. The company's ability to reengineer business processes because it requires a lot of time, the cost of capital and sufficient resources.
4. Communication is another factor that affects BPR. If people in the company were not given enough information about the purpose of BPR, then they will not have certainty so as to impede the progress of business process reengineering.
According to Willcocks and Sykes (2000), new business models and re-engineering that drives the choice of technology is a factor that plays a role in the success of ERP.
Influence Selection of Software and Hardware
ERP package provides standardized business processes and common solutions to software for its customers. They can not fully meet the needs of the company, especially if the company's unique business processes. Therefore, the need to choose the right software and hardware. First, companies need to analyze what the problem needs to convince remedy dpecahkan and selecting an ERP system that fits the needs of the company.
According to Zhang, Lee and Banerjee (2002) in Winahyu (2005), there are three aspects that must be considered, namely software and hardware compatibility, ease of customization and ease of shifting to a higher version. There must be a sustainable system that does not interfere with the existing system configuration.
Influence of Education and Training
Education and training refers to the process of preparation for the employees and management through an explanation of the logic and the overall concept of the ERP system (Martinson and Westwood, 1997; Sum, Ang and Yeo, 1997). There are three aspects of the training are:
1. The concept and logic of the ERP training will show everyone why the ERP system implemented and why the use of ERP systems need to be done.
2. Advantage ERP software systems.
3. Direct training.
Based on research conducted by Sum, Ang and Yeo (1997), training should not be limited to Specifications training on them alone. Rather it should be taught logic and overall concepts of ERP. Training on ERP concepts will show to employees that’s why change isnecessary, while functional training will help override the fear of the emergence of the computer. Instructors internal company has an important role in training as a liaison between the advantages possessed by the ERP system to the company's ability to face the reality of the operational issues. In addition, users of ERP system package must be clear and understandable.
Effect of Vendor Support
Cooperation premises vendors are very important in the success of ERP projects (Stackpole, 1999). Conformity is better between the software vendor and the user organization and it is positively related to the success of the implementation of the software package (Janson and Subramanian, 1996) and the organization's need to try to remedy continue to maximize their compliance with their vendors (Tong, Yap and Raman, 1994). There are three dimensions to classify vendor in the service of the rapid response from the software vendors, consultants qualified by having a good knowledge of the business processes of the company and information technology of ERP system vendor, and an active role in the implementation of ERP vendors.
The successful implementation of ERP for Corporate Competitive Advantage
Many factors are a measure of the successful implementation of the system. DeLone and Mc Lean (1992) divide the measurement in the success of information systems in the six dimensions of system quality, information quality, system use, user satisfaction, individual impact and the impact on the company. The main role in the business application system is to provide effective support corporate strategy in order to gain a competitive advantage. The role of information systems strategy involves the use of information technology to develop a range of products, services and capabilities that gives the company a great advantage over competitive pressures in the global marketplace.
Competitive advantage is a unique position in an organization that evolved to deal directly with their competitors (Hofer and Shendel, 1978, Q25). Competitive advantage can mean as tools merger, acquisition and transfer are used in order to achieve a measure of profitability. In the classical model of Michael Porter on competitive strategy, any business that wants to survive must develop and implement a variety of strategies to cope with competition in the industry, the threat of new players in the industry and the market, due to the threat of substituty products, the bargaining power of customers and bargaining power of suppliers.
According Portr, Bocij et al .. 2003 major way in the use of information systems to achieve competitive advantages are as follows:
1. Improved operational efficiency
Namely cost leadership strategy, increase productivity through automization companies improve customer service.
2. Hinder new players will enter
That is by creating a complex information system which information systems are expensive and difficult to duplicate.
3. Binding on the customers and the suppliers
That unity and strengthen the closer business relationships with customers and suppliers.
4. Develop business innovation
That is the stimulation of investment information systems and support business innovation.
5. Increasing the cost of replacement
6. Optimal benefit small premises expenses
That is by maximizing the use of resources, leadership in information.
Users find that the biggest advantage of an ERP package is that they force companies to build companies with proven business processes than if the company must draw up their own business processes. By having an ERP system is a competitive advantage because it can provide the foundation for the company running the company's business and then concentrated to seize market share. Companies can move and adjust quickly to market demand (Weston R, 1998). Here is a scheme of thought Enterprise Resource Planning.
Scheme 1 Thought Enterprise Resource Planning System.
RESULT AND DISCUSSION
Type of business incorporated in Central Java SMEs varies from category business group of restaurants, catering and culinary services, shops and other business types. Based on 107 samples of research conducted by Drs. Mudiantono in 2012 on small and medium enterprises, there are 39.25% of respondents were shopkeepers, business services 37.38%, 15.89% is the business of the restaurant and the remaining 7.48%. In the implementation of the ERP system, there are 10 modules that they employ to support the business development process. Of the ten modules are the most widely used modules respondents were administrative module. The following table.
Table 1 Type Modules in Use Small and Medium Enterprises in Central Java.
No Type Module Number
1. Management of savings and credit cooperatives and 1.23
2. Selling 15.54
3. Purchase 9.82
4. Warehouse 8.18
5. Manufacturing 1.64
6. Accounting 12.27
7. Human resources 15.95
8. 17.79 Administration
9. 5.93 document management
10. Point of sales 11.65
Total 100.00
6 factors supporting the success of ERP has been tested by the method of SEM (Structural Equation Model). Based on the six previous hypothesis, the results are as follows:
Hypothesis 1
"The greater the greater the top management support in ERP implementation success." Processing data show that the value of Critical Ratio is 2, 133 and the probability of 0.033 with a regression coefficient of 0.136. The data indicate that top management support has an influence on the success of ERP implementation in small and medium enterprises in Central Java.
Hypothesis 2
"The more effective the greater project management success rate of ERP implementation." Processing data show that the value of Critical Ratio is 2.348 and the probability value of 0.019 with the regression coefficient of 0.138. The data shows that effective project management have an influence on the success rate of ERP implementation.
Hypothesis 3
"The better Business Process Reengineering done by the company, the greater the success of ERP implementation." Results of the analysis of the data showed that the critical value of the ratio is 2.222 and the probability value of 0.026 with a regression coefficient of 0.20. The data shows that business process reengineering affect the success of ERP implementation.
Hypothesis 4
"The right selection of software and hardware, the greater of the success level’s of ERP implementation." Analysis of the data showed that the critical value of the ratio is 1.997 and the probability value of 0.046 with a regression coefficient of 0.133. The data shows that ERP implementation success is also influenced by the selection of the right software and hardware.
Hypothesis 5
"The better for accomplishment education and training for employees, the greater the success rate of ERP implementation." According to statistics, the value of critical ratio is 2.075 and 0.038 for the probability nilap regression coefficient of 0.138. These results indicate that administration of education and training also affect the success rate of ERP implementation.
Hypothesis 6
"The better vendor support, the greater the success rate of ERP implementation." Results of the data shows the value of critical ratio of 3.013 and a probability value of 0.003 with a regression coefficient of 0.182. It also suggests that the success of ERP implementation are also influenced by vendor support.
Conclusion
Based on 6 variables influence the success rate of ERP implementation which we have mentioned above, indicates that the bussiness process reengineering is the main proiritas to be developed because it has the greatest regression coefficient, meaning that the variables that most affect the successful implementation of ERP for SMEs in Central Java. Then followed by vendor support (0.182), effective project management (0.138), education and training (.138), top management support (0.136) and the selection of software and hardware (.133). With the successful implementation of ERP in the competitive advantage of small and medium enterprises in Central Java can be achieved.
The information above shows that the application of technology Enterprise Resource Planning (ERP) properly is very helpful to the project rapid, precise and accurate that can improve the quality of the company in the competitive global world. So that Small and Medium Enterprises are now widely developed to compete in the global world and to improve the country's economy.
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