ERP: It’s Challenges and Advantages in Bangladesh

Introduction
Enterprise Resource Planning (ERP) systems, in contrast to operating areas, comprise a number of
distinct units that provide support. Incorporated within the database are modules for such areas as
customer affiliation management, fiscal accounting, SCM (Supply Chain Management), and
individual assets. These modules access the database to obtain precise information about their
respective areas. Businesses using ERP solutions may choose which modules they want to install
based on their requirements, and the modularity of these systems allows them to begin utilizing
certain portions of the ERP system in conjunction with other systems in order to save money. A
typical ERP process is expensive and time-consuming to implement in its entirety; nevertheless,
the benefits of comprehensive integration of information throughout the company's different
operating areas outweigh the costs and time commitment.

Figure 1. Information integration through ERP systems

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 Figure 2. The function of MRP software

From the 1980s forward, MRP-II (Manufacturing Resource Planning) systems began to appear.
The MRP-II concept was based on the MRP techniques, but new qualities were added to make it
more comprehensive. The techniques focused on the quality of the products, and they were able to
schedule and track the implementation of their production strategy. Later, the emphasis of MRP-
II programs turned more toward meeting the needs of clients, and the software's capacity to change
production processes in order to meet specific client requirements on a timely basis has been tightly
regulated by the program. ERP systems were developed in the late 1990s to encompass all of the
data flows within a company, and the concepts of e-business and enhanced data sharing across
enterprises' data systems were incorporated into the ERP concept in the late [Link]
Enterprise Resource Planning (ERP) systems were initially designed for manufacturing
companies, their use is no longer restricted to a single kind of business or organization, and ERP
systems are now being used by a wide range of enterprises and organizations. Service firms are
increasingly relying on enterprise resource planning (ERP) systems to improve their decision-
making and efficiency. Manufacturing firms are still employing ERPs, but
they are now depending on them to handle the whole process associated with a client purchase
from beginning to end. Regardless of whether a company is small, medium-sized, or large, modern
ERP systems are capable of performing a wide range of activities and duties for diverse
departments.

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As firms are creating systems to maximize their actions, the demand for incorporations between
unlike data systems develops. Now ERP systems stay expected to assist in governing company
networks. Here figure exemplifies how companies’ applications and functionalities have emerged.

Figure 3. ERP history and the evolution of ERP functionalities

ERP Function and Advantages

According to Statistics Finland (2011), 75 percent of Finnish firms with more than 100 employees
use enterprise resource planning systems (ERP systems). Employers with 50-99 employees have
a 56 percent adoption rate in this category. Given these data, it is reasonable to assume that
adopting an ERP system is advantageous for organizations. From a business perspective, the
following is a list of common ERP advantages.

Figure 4. Before, during, and after the deployment of an ERP system, how well a company
performs

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1: Before ERP Implementation.
2 & 3: During Implementation.
4: After Implementation, during training
5. After training and going live completely

However, it should be emphasized that the efficiency of an ERP system is only proportional to the
degree to which its users cooperate with one another. Another way to phrase it is that the success
or failure of an ERP program is determined by the manner in which its users interact with it.

There are a multitude of ways in which an Enterprise Resource Planning system (ERP) may be
useful to a company. Consequently, it is difficult to attribute each of the benefits to the machine in
a clear manner. ERPs have the potential to boost revenues and decrease expenditures in ways that
are difficult to measure. A few of the edges, on the other hand, could not show until a considerable
time after the first execution, making them difficult to detect during the brief run.

As can be seen from the figure number 1.4, the operation of a firm will deteriorate as a result of
the execution. This reduction can be attributed to the difficulties that employees regularly have in
adapting to new means of communication and new corporate communication methods. Workers
who are required to carry out their regular duties while participating in the implementation project
may get distracted as a result of the project's implementation. Although the decline in this
organizational operation is only a short stage, it is possible that the firm will rapidly become more
successful than it was before the ERP installation provided the new system is properly
implemented and utilized.

The integration of data across the distribution chain is, without a question, the most significant
advantage of an ERP system, as it has the potential to enhance operational efficiency while also
reducing costs and inventories. As an example, the capacity to swiftly access stock levels, product
information, client credit histories and past purchase histories through order input has increased
the efficiency of inventory management.

Working with data systems that do not "communicate" with one another is made easier when using
a well-functioning ERP system. Information shared across various business objectives is precisely

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the same across the firm with ERP systems, but information shared between different departments
with non-integrated systems may have varying meanings is the case with non-integrated systems.
ERP (Enterprise Resource Planning) solutions are becoming increasingly prevalent.

Because the ERP option requires just a single entry of information into the system, the information
will be readily available to anybody who uses a computer from that point forward. This removes
the need for wasteful manual operations such as repeatedly typing the same precise data into a
computer.
ERP systems are typically linked with high prices; however, one advantage of utilizing an ERP
system is that data technology maintenance expenses as well as permit fees may be reduced when
compared to the costs associated with the use of several different systems. Different techniques
must be maintained individually, which is expensive, time-consuming, and complex. The yearly
permit fees might become prohibitively expensive, despite the fact that each individual system is
charged just a little fee.

It is the primary motive for the existence of businesses in the first place to generate profits. To be
expected, after a business has made a big investment in technology, such as in the implementation
of an ERP plat form, they would seek information on how to increase profitability throughout the
computer system. As we all know, the only way to increase profits is to either decrease costs or
increase revenues. The ERP program makes a major contribution to improved data quality in a
number of dimensions such as accessibility, accuracy, and timeliness, among other things.

Improvements in the quality of advice have an impact on a variety of aspects of an organization,

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 Figure 5. Realization of profits through ERP

Disadvantages of ERP

Despite the fact that ERP systems may be highly useful to the businesses who employ them, the
implementation of those systems has, as previously said, usually proven to be dubious. There are
a variety of disadvantages connected with ERP alternatives to consider in addition to worries about
the ERP implementation process. The high cost of ERP systems is, without a question, the most
major disadvantage of modern technology. The entire cost of this implementation project can be
quite costly, and ERP systems are frequently finished late or over budget, increasing the likelihood
of failure. The implementation of an enterprise resource planning system is a
multimillion-euro project for big businesses, with consulting costs often exceeding the amount of
the original ERP permit price. When comparing small and midsize businesses to giant companies,
ERP installation costs are lower for small and midsize businesses, but the expenses will be
significant for any company that decides to use an ERP system in its operations. Even after the
high-cost execution, The systems are frequently prohibitively expensive to maintain and operate.
ERP systems exhibit "best practices," which are procedures that are commonly believed to be the
most effective ways to carry out certain activities in a given circumstance, as opposed to "best
practices" that are not displayed. Despite the fact that best practices can assist employers in

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improving their company operations, they can also present barriers for ERP deployments because
the system imposes regulations on the businesses that use it. The typical processes contained in
ERP systems replace old processes, which very frequently enhance the operations of an
organization; nevertheless, these new procedures also replace corporate processes that have
historically served as a source of competitive advantage in an organization's operations. A
particular conventional way of conducting business, for example, may allow for
more adaptability and distinction from the competition in some areas where competition is severe
and Enterprise Resource Planning (ERP) technologies are frequently utilized. It is possible that
using an ERP solution in this situation may result in a loss of competitive edge. The most effective
ERP methods may also be incompatible with the business culture, resulting in a "culture clash"
and the creation of new challenges. Businesses must constantly modify their practices in order to
fit ERP systems in order to make the most of the best approaches that are incorporated into them.
This generally leads in immunity from employees when utilizing the best methods included into
ERP systems. Because resistance to change has been identified as a key contributing factor to the
failure of information system deployments, it is an issue that has to be addressed and dealt with in
the proper manner, as described above. ERP benefits include the reduction of the need for manual
labor on the part of the company, which is another aspect that may contribute to user immunity
because a number of employees may fear being fired off as a result of the adoption of a new system.
One of the most challenging aspects of ERP is that it may be difficult to tailor it to the particular
requirements of individual businesses. In reality, only a tiny number of businesses are able to
utilize ERP straight out of the box, and in the majority of situations, it must be modified to fit the
unique requirements of the organization. Both the setting of the machine and the alteration of the
machine may be considered tailoring in this context. The modification of this program, which may
be performed by altering the code of the software, may be very time-consuming and expensive to
undertake. When it comes to enterprise resource planning systems, one of the most prevalent
criticisms is that they are too rigid and inflexible when it comes to adapting to the unique workflow
and business processes of different businesses. Implementation of ERP may result in a lack of
flexibility and the necessity for users to reconsider their daily routines under such circumstances.
As previously said, ERP solutions are only as effective as the customers' ability to utilize them
effectively. Undoubtedly, some of the applications are complicated and difficult to operate without
proper training, which is both time-consuming and expensive.

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Environment for ERP Implementation in Bangladesh

Even though the execution of the Enterprise Resource Planning system is growing quite quickly,
the expansion rate is largely observable in developed nations where the business environment is
very competitive with accelerated financial development, where it's a solid maturity in information
technologies, and it's a solid management commitment. On the other hand, the expansion of ERP
implementation in developing nations is moving upwards, but remains long from the developed
countries. Of the entire ERP market globally; the USA occupies 66 percent; Europe occupies 22
percentages while Asia occupies just 9 percent. On the other hand, the ERP adoption speed is
growing in Asia, because of economic growth; growing nations in Asia and Latin America have
become major goals of significant ERP vendors. Most small and medium scale businesses are now
implementing the systems to realize the operational efficiency of the marketplace. Additionally,
many ERP vendors have also personalized their ERP platform to occupy the fast
increasingly market within this area. This situation isn't distinct in South East Asia.
For Bangladesh, even though a high number of businesses have implemented or are still in the
process of executing Enterprise Systems, there is no reliable source to verify their complete
numbers as well as the research failed to recognize some prior study within this circumstance
addressing this specific matter. But from the web site advice of the top ERP vendors and in the
regional partners in this area it's likely to conceive the increase of execution among different
businesses applying or using the platform, the advantages anticipated, and relevant issues faced by
the companies who have implemented or are still in the process of execution. Interviews with
administration, site info, news releases in the ES system sellers, and the executing organizations
depict that lots of big organizations are already utilizing ERP systems provided by top ERP
vendors such as Oracle, SAP and AX which are being preserved by their regional partners. Several
organizations will also be utilizing ERP techniques developed, executed, and maintained by local
software companies. Presently a vast selection of industries big, moderate and small businesses is
employing ERP systems including subsidiaries of a large multinational company, neighborhood
group of organizations, textiles businesses, government and semi-government businesses, leasing
firms, telecommunication businesses, tourism businesses, knit and clothing sectors. Sometimes it's
been noticed that lots of businesses have implemented their ERP applications without properly

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thinking about the viability of its usage to the business, in which customized applications would
be sufficient as opposed to the integrated ERP systems. This was observed by Davenport as a
significant aspect to consider for effective execution. 'When the business rushes to put in a business
system without companies having a very crystal thorough comprehension of the company
consequences, the fantasy of integration could quickly become a nightmare. The logic behind this
system may struggle with logic about the company, and the execution will collapse wasting huge
quantities of cash causing a lot of disturbance and also the machine will weaken significant sources
of competitive benefits, hobbling the provider.' In certain massive scale associations i.e. group of
businesses, the direction has a lack of knowledge about the machine and they're not even familiar
with the specific function that it will provide for their own company. That's why they have opted
to purchase it without contemplating the company procedure and demands first, and in a lot of the
circumstances, the execution procedure runs without appropriate preparation and therefore much
less efficient as it might be. There's not any obvious thought in their mind that this system can
enable them to attain their strategic aim for their company for a competitive edge. As revealed in
the table of critical success factors by Finney and Corbett, best management participation is just
one of the very repeatedly mentioned factors for effective execution. But an important amount of
management folks thinks of it as a technological artifact as opposed to a management instrument
for attaining competitive edge, to be dealt with by just the IT employees in their own company.
Many correspondences/interviews with directors disclose that in their decision-making process
they haven't considered many significant critical success factors correctly. A number of them don't
have any specific idea once the project is going to be completed after three decades since the
execution began. Oftentimes their investors said their software investment is currently over budget
and suffers from a shortage of sufficient training of their workers that are utilizing the system over
a day to day basis. Additionally, from the stakeholders' views, in several scenarios, the perceived
advantages as promised by ERP vendors are not yet been achieved. Therefore, as a result of the
absence of suitable comprehension of the essential factors for ERP implementation, the gap
between the perceived advantages and fact is rising. However, it ought to be kept in mind that a
copy cat strategy of a western model of execution won't be useful on account of the contextual
topics like economic development, company environment, civilization, IT adulthood, along with
telecom infrastructure, etc., that is discussed in the subsequent paragraph. Careful consideration of

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the problems is also a large challenge for proper execution in a developing country like
Bangladesh.

ERP Implementation Challenges in Bangladesh

Developed countries such as the United States, the United Kingdom, and Australia do not appear
to have any noticeable variations in infrastructure for individuals from the developing nations. As
a consequence of infrastructural facilities such as increased IT maturity and a more favorable
computer-based environment, these states may ensure that organizations operating in these settings
are equipped to deal with complex technology. States in North America and Europe have
remarkable infrastructures that effectively mitigate the spread of information technology from an
environmental and national perspective. The desire for innovative technology is fueled even
further by a strong financial basis and expansion. Technology development is fueled by
government information technology policy, deregulation, and organizational enthusiasm for
information technology. On the other hand, according to Rajapakse and Seddon (2005), the reasons
for non-adoption in underdeveloped countries include "comparative national per capita income, as
well as constrained federal infrastructure." Issues such as a lack of ability to properly deploy ERP
systems and a lack of communication infrastructure limit the ability of enterprises in these states
to execute these procedures in an effective and efficient manner. When compared to the developing
nations of South East Asia, such issues are a reality in the case of ERP installation in Bangladesh,
which is quite comparable. When it comes to developing countries, ERP technology confronts
additional obstacles that are connected to cultural, economic, and core infrastructural issues.
According to them, the country's rich economic history provides a good foundation for IT/IS
growth, in addition to ERP deployment. The essential prerequisite for ERP deployment is
infrastructure, which includes both physical and information technology infrastructure. In order to
support comprehensive value chain control enabled by ERP, it is critical that the entire
infrastructure is in good condition. Bangladesh is experiencing infrastructure problems.
Furthermore, a lack of IT maturity and a lack of a business intelligence plan make it
more difficult to deploy ERP. Most firms have a limited understanding of global business training.
The amount of IT maturity could considerably influence a company's strategic decision in
obtaining and deploying IT/IS. IT older organizations having a greater comprehension of IS

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execution can collaborate efficiently with ERP sellers, and also, therefore, are more inclined to be
successful in ERP implementation. As stated previously, related to the dimensions of
companies, ERP is used by big, medium, and tiny organizations. Besides, smaller businesses have
started to utilize ERP because of two factors. First and first, ERP providers are investing more
effort into small and mid-sized enterprises, and secondly, small firms are feeling the need to use
ERP to gain a competitive edge. Because ERP is intended to serve the whole company, business
process reengineering (BPR) is usually necessary prior to ERP implementation. A company with
a greater depth of experience in process management and business process reengineering (BPR) is
considerably more likely to succeed with ERP. In Bangladesh, the absence of appropriate
management engagement and ongoing support continues to be a stumbling block to successful
implementation. Given the complexity and resource requirements, management commitment is
essential to the successful deployment of ERP in both emerging and developed countries.
However, considering the fundamental role of ERP in developing countries, it is possible that it
will be of greater relevance in these countries. In comparison with developed nations, the societal
and organizational principles make execution of new business processes which are connected with
ERP package harder in developing countries, also regarding the local
division of multinational businesses. Many researchers such as Huang and Palvia, Rajapakse and
Seddon, Marcia and Whitley, Thavapragasam have believed civilization is among the essential
factors impacting the implementation of ERP in different nations. In their study, they utilize
Hofstede's work on the federal cultural measurement of translating people's behavior in their
ecological preferences on the grounds of four federal cultures. Rajapakse and Seddon (2005)
asserted that the gap between energy space and the individualism/collectivism dimension can
cause difficulties in the execution of western established ERP systems in Asian nations. Hofstede's
cross-cultural research on Bangladesh also revealed that Bangladeshi culture is
mainly hierarchical using the distinctive cultural measurement of collectivism but restricted to
classes together with higher uncertainty avoidance and a greater amount of energy space. Thus, an
immediate replication of western established implementation wouldn't operate in Bangladeshi
culture.

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Findings that Work as a Barrier to ERP Implementation in Bangladesh

a. Lack of skilled persons in the root label which arises the vital problem for implementing ERP.
b. Every day lot of problem arise while using this ERP system because its UI(user interface) is not
so convenient for the users.

c. A lot of logistic supports are required before using this ERP, but in most of the cases it was
absent for the users. That’s why the total system is segregated. One department can’t access other
departments' data base without permission of the authorized person.

d. Sometimes it’s seen that manual processing is interrupted because of incomplete system
functions.
e. Every department needs to clear their work in this ERP otherwise one department's failure
directly affects another department.

f. Small support team to give technical help.

g. Absence of regular training.

h. Risk of system failure.

Conclusion

It's really challenging to implement the ERP in our country. But we are hopeful that already a lot
of companies have implemented the ERP system in their business. As soon as organizations can
understand the advantage, it will give them a boost in their business. In far future a company or
group of companies without the ERP setup can hardly be imagined. In Bangladesh some of the
software firms develop their ERP system which already gets popularity in domestic market. Hope
this sector will go far which can encourage our business organizations to adopt ERP.

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