Group-5 Challenges in ERP for Small and Medium Businesses 5th Dec

Challenges of ERP: SMB Market in UAE - Vendor and Customer perspective

Challenges of ERP - SMB market in UAE

SP JAIN CENTER OF MANAGEMENT 2

Cover page

Dissertation Submission

Course : Information Technology Management

Participants:

Abhay Bawa – GMBA07E137

Chandrika Kanwar - GMBA07A098

Mohit Chhabra - GMBA07E157

Nisha Koshy - GMBA07E116

Saikiran Vedula - GMBA07E166

Year of Submission: December 2007

Dissertation Title: Challenges of ERP in the SMB Market in UAE – Vendor and Customer Perspective



ACKNOWLEDGMENTS Working on this Dissertation has been a great learning experience. Many people have been a part of this

journey and helped in making it a success. First and foremost, we sincerely thank Dr. Vijay Sethi who has

been a constant source of ideas and inspiration. His vast knowledge pool and invaluable experience have

provided us with significant insights and his critical opinion and structural guidance constantly refined

our focus and provided us with a sense of direction.

We are grateful to Mr. Mohamed Yousouf, who has continually extended his support despite being in

Singapore.

We would also like to express our gratitude to our Dean, Mr. Sanjay Dalvi for his continual support and

guidance.

We wish to thank all the participants (ERP solution vendors, Channel Partners and Customers) from

diverse domains who spared their valuable time to talk to us and provide us with primary data. Their

insights and knowledge helped us in coming out with guidelines and recommendations for

implementing an ERP package successfully.

We extend thanks to Ms Arunita Paul and Ms Firdose Husain for coordinating and informing us of all

dissertation related deadlines and details. Ms. Menchie Aplaca, our librarian has been very helpful

throughout the course of this project. We extend our heartfelt gratitude to the entire faculty and

management of S.P Jain Center of Management for the immense support they have given us throughout

the project.

We wish to thank Mr. Navneet Tandon, Vice President, Raqmiyat who has been there to guide and

encourage us every time we spoke to him.

Last but not the least, we also wish to thank our friends and colleagues who provided us with significant

information from time to time.



Table of Contents

EXECUTIVE SUMMARY .................................................................................................................................. 6

OBJECTIVE ..................................................................................................................................................... 7

RESEARCH METHODOLOGY .......................................................................................................................... 7

INTRODUCING ERP ...................................................................................................................................... 10

WHY ERP? .................................................................................................................................................... 11

PHASES OF ERP IMPLEMENTATION ............................................................................................................ 13

MARKET RESEARCH ..................................................................................................................................... 16

GLOBAL MARKET FOR ERP ...................................................................................................................... 16

MARKET ANALYSIS OF UAE ..................................................................................................................... 23

SMALL AND MEDIUM BUSINESSES ............................................................................................................. 25

GLOBAL SMB ........................................................................................................................................... 25

SMB IN UAE ............................................................................................................................................. 25

ERP MARKET FOR SMB ............................................................................................................................ 26

STAKEHOLDERS ........................................................................................................................................... 27

VENDORS ................................................................................................................................................. 27

VENDOR COMPETITION PARAMETERS IN UAE ................................................................................... 29

ERP SOLUTIONS FOR SMALL AND MID SIZE COMPANIES ................................................................... 31

CHANNEL PARTNER ................................................................................................................................. 41

ROLE OF CHANNEL PARTNER .............................................................................................................. 41

FACTORS CONSIDERED IN CHOOSING A CHANNEL PARTNER ............................................................. 41

UAE CHANNEL PARTNERS ................................................................................................................... 43

CUSTOMER VERTICALS/TARGET MARKET ............................................................................................... 44

CHALLENGES IN ERP .................................................................................................................................... 45

THE SMB PERSPECTIVE ............................................................................................................................ 45

VENDOR PERSPECTIVE ............................................................................................................................ 48



RECOMMENDATIONS AND CONCLUSION ................................................................................................... 55

GUIDELINES FOR CUSTOMERS ................................................................................................................ 55

GUIDELINES FOR VENDORS ..................................................................................................................... 59

APPENDIX .................................................................................................................................................... 66

Disclaimer and References .......................................................................................................................... 69



EXECUTIVE SUMMARY

There is a general trend of most big league ERP vendor focusing on SMBs are their new clientele.

The SMB segment is large and offers substantial potential to the ERP vendor. However, this segment is

also extremely price-sensitive and is generally intolerant of high gestations on realizations from

investment.

SMBs now seriously consider ERP as panacea for all their present day ills and as an imperative to retain

their competitive edge. Some of the factors that have catalyzed this process are globalization,

competition, need for faster response to the market place and the pressure to contain costs and

improve efficiencies. SMBs are looking to mature in terms of processes and move to global market

channels.

However, the third trend is highly worrisome in the market today. Most ERP implementations are failing.

Most SMBs are unhappy with ERP solution they have adopted in their organization. The bottom line of

the Vendors is coming down as the margin per SMB is much smaller and the effort in most cases is the

same. In addition, there are limited guidelines for the three stake holders involved in an implementation

of an ERP system.

This is the reason why we chose this topic as our subject for research.

The objective of this research work was to study the ERP implementation from three perspectives, from

the vendor perspective, from channel partners’ perspective, and from the SMBs perspective itself to

understand the various challenges faced by the three of the core stake holders.

We have formulated a set of guidelines for the three stake holders in an ERP implementation project

that are the ERP Vendor, Chanel partner, and the SMB itself. These guidelines have been documented at

the end of this research documentation.



OBJECTIVE

The objective of this study is to analyze the challenges faced in the ERP market for SMB - a perspective

from the three main stakeholders - vendors, channel partners and the customers.

At the end of the study, we have developed a set of guidelines for both the vendors and the SMB

customers to enable the ERP process - right from vendor selection phase to that of post implementation

RESEARCH METHODOLOGY

Approach

This section of the report describes the research methodology and the overall approach followed in the

project. The outline of the overall approach and research methodology process in shown in the given

flow:

Fig1. Research Methodology

Problem identification - Challenges faced by

the ERP Vendors and SMB Customers during the

various phases of an ERP implementation

Problem identification

“ ERP market analysis based on ERP vendors

and customers”

Research Problem

“ To understand the GCC market in terms of

the

parameters related

to …..

Study Customers Study Vendors/

Channel Partner

Understand the ERP

Market in UAE

Reports

Journals

White Papers

Data Consolidation and Analysis

Data Consolidation and Analysis

Guidelines &

Recommendations

GITEX

Personal Interviews



Definition of the Research Question:

The objective of this study is to analyze the challenges faced by both the Small and Medium Businesses

(SMB) customers of Enterprise Resource Planning (ERP) solutions and the ERP solution providers. This

involved study of the customers who had ERP implemented in their organizations, vendors of different

ERP solutions available in the market and the channel partners who implemented the software.

Research Design and Strategy:

Research design comprised of:

Identifying the parameters to base the questionnaire

Framing the questionnaire based on the identified parameters.

The questionnaire was formed to:

Understand the major drivers for a customer to implement an ERP

Understand the challenges faced by the vendors during the various phases of the ERP

implementation

Understand the challenges faced by the customers during the various phases of the ERP

implementation

Understand the change management mechanism followed by the customers

Understand the feedback mechanism in place after the implementation of the ERP

Data Collection and Preparation:

Once the research design and strategy was decided, the sources for the collection of data for the

research were identified.

We approached the ERP vendors and their channel partners through GITEX Trade show, personal and

telephonic interviews. To understand the ERP market better, data was also sourced from secondary

sources like Company’s website, annual reports, research reports, journals and other independent

reports.

We also referred to several research reports from sources like Gartner, IDC, Datamonitor and Aberdeen

to understand the market conditions.



Data Analysis and Interpretation

The results were analyzed to look for patterns and trends in the result. For recommendations and

suggestions, information was sourced looking at all the primary, secondary analysis documents and also

at the findings for the research questions.

Recommendations:

Based on the research carried out, we have formulated a framework of guidelines to be followed by the

customers and the ERP vendors for the successful implementation of ERP for a Small and Medium

Enterprise.

Fig 2: The Road Map

Phase A: Problem/ Scope Definition

Phase B: Literature Review -->

• IDC

• Aberdeen

• Gartner

Phase C: Primary Data Collection -->

• GITEX

• Interviews

Phase D: Data Consolidation and Analysis

Phase E: Suggestions and Recommendations



INTRODUCING ERP

Enterprise Resource Planning (ERP) comprises of a commercial software package that promises the

seamless integration of all the information flowing through the company - financial, accounting, human

resources, supply chain and customer information.

ERP has its origins in the concepts associated with Manufacturing Resource Planning (MRP) packages

and their antecedents from the 1970s, Materials Requirement Planning packages. A fundamental

feature of the package is a high level of integration, with all applications sharing a single corporate

database. The system is designed for an on-line client/server environment. A high level of application

functionality, richly configurable to the needs of the individual customer is an important objective

embedded in the package. The package is also intended to provide best practice, in a global sense,

through a range of standardized business processes.

Fig 3: ERP Structure



WHY ERP?

As defined above, ERP applications help streamline business processes within an organization to

enhance the competitive edge. Other advantages of ERP applications are:

Cost Advantage: One of the many reasons organizations implement ERP applications is to achieve

cost savings. Most savings are achieved by overall efficiencies that are put in place, reduction in

inventory levels, better management of resources, and by strategic alignment achieved by the

inherent nature of the ERP system. Some of these savings are intangible and hard to measure, but

can play a key role in gaining competitive edge.

Modular and Open: ERP systems are designed with open system architecture. This means that a

module can be interfaced or detached as needed without affecting the other module’s

performance. ERP systems may support multiple hardware platforms for those organizations with a

heterogeneous collection of systems. It should also support some third party add-ons.

Standardized Business Processes: ERP applications are generally designed to offer the best business

processes applicable worldwide. When focusing on a particular process to be streamlined by ERP,

the organization is forced to assess their current processes and standardize as needed for all those

points of business implementing ERP. Re-engineering of processes may be a result of the need to

standardize. Standardization as a result of packaged applications offer the advantage that "as the

state of the art moves, you move with it".

Empowers Users: ERP provides accountability and responsibility to users in ways not available

before. With the integration and flow of data, more information is available to users. User screens

may provide data which allows users the ability to make informed decisions, whereas before they

were just a conduit for keystrokes. For example, when placing an order for a client a service

representative may not have had access to inventory stock. Therefore they would just take the

order, and if not in stock, the client would find out at a later date. With integrated systems, the

service rep is able to tell that the item is out of stock and when it is expected. The information can

be relayed to the customer, whereby they can make a decision to still purchase the item or decline.

This information empowers the service rep.

Real time financial data: ERP applications facilitate the real-time movement of financial data

throughout the company. General ledger interfaces between processes such as accounts payable,



payroll and purchases allow for ease in recording and monitoring these transactions. Additionally,

the interfaces allow for consistency of reporting when tracking back GL source data.

Internal Management: ERP can improve analytical and planning capabilities for management by

storing data in a common, consistent format that can be accessed quickly. As a result of the

implementation process, many business processes and data requirements were standardized. This

standardization allows for the ability to extract, manipulate, and analyze information at a more

comprehensive level. Management is provided valuable information from which to make decisions.

On the flip side, it is important to remember that data integrity, one aspect of the value of

information, can be at risk if users are not properly trained or process requirements not fully

explored in the course of the ERP implementation.

Strategic placement: Most organizations are moving toward internet, intranet and extranets in their

business. ERP lays the back end groundwork to support business on the "net". This is most evident

with the material/inventory processes. Many companies are online with suppliers where the

tracking of materials becomes a crucial process as items are often in "virtual warehouses". ERP

provides the flow of information between the sales departments, inventory, purchasing, on to

outside suppliers who need to know when to ship materials. ERP also supports globalization and

helps transcend across geographic or language barriers.

All the above reasons offer why organizations choose to move from traditional, segmented business

functions to ERP’s integrated systems. However, as we know, ERP is not all bells and whistles. There

have been numerous organizations that have had a less than pleasant experience in implementing ERP

applications.



PHASES OF ERP IMPLEMENTATION

The problem of an ERP solution not meeting expectations could have been due to glitches, unrealistic

expectations, planning errors etc that can be traced back to the time when the company decided to go

for ERP. An understanding of this facet, can help one analyze what key factors have to be kept in mind

from day one of deciding to go for an ERP implementation as well as the pit falls that can be proactively

avoided.

Fig4: Phases of ERP Implementation

PHASE 1: STRATEGIC PLANNING

Assign a project team that consists of employees from sales, customer service, accounting,

purchasing, operations and senior management, each accountable for specific tasks like

developing a timeline, finalizing objectives, formulating training plans.

Examine current business processes: Have the team perform an analysis on which business

processes should be improved. To start the team discussion, consider questions such as: Are

your procedures up to date? Are there processes that could be automated? Do your sales force

and customer service personnel have real-time access to customer information? The team

members should also conduct interviews with key personnel to uncover additional areas of

improvement needed.



Set objectives: The objectives should be clearly defined prior to implementing the ERP solution.

ERP systems are massive and you won’t be able to implement every function. You need to

define the scope of implementation. Examples of objectives would include: Does the solution

reduce backlogs? Can the solution improve on-time deliveries?

Develop a project plan: The team should develop a project plan which includes previously

defined goals and objectives, timelines, training procedures, as well as individual team

responsibilities. The end result of the project plan should be a “to do” list for each project team

member.

PHASE 2: PROCEDURE REVIEW

Review software capabilities: intensive review of the software capabilities for the project team.

Train on every aspect of the ERP software to fully educate the team on capabilities and identify

gaps. Determine whether modifications are needed prior to employee training.

Identify manual processes: Evaluate which processes that are manual and should be automated

with the ERP system.

Develop standard operating procedures (SOPs): for every aspect of the business. These

procedures should be documented. The documents are modified as the SOP changes. This is a

huge task, but it is critical to the success of your implementation.

Examples of SOPs:

o How do you handle global price changes?

o What are the processes for inputting new customer records?

o How do you currently handle the paperwork on drop shipments?

PHASE 3: DATA COLLECTION AND CLEAN UP

Convert data: You can’t assume 100% of the data can be converted as there may be outdated

information in the system. Determine which information should be converted through an

analysis of current data.

Collect new data: Define the new data that needs to be collected. Identify the source

documents of the data. Create spreadsheets to collect and segment the data into logical tables

(Most ERP systems will have a utility to upload data from a spreadsheet to their database).



Review all data input: After the converted and manually collected data is entered into the ERP

database, then it must be reviewed for accuracy and completeness. Data drives the business, so

it is very important that the data is accurate.

Data clean-up: Review and weed out unneeded information such as customers who haven’t

purchased in a while or are no longer in business. Now is the time for improving data accuracy

and re-establishing contact with inactive customers.

PHASE 4: TRAINING AND TESTING

Pre-test the database: The project team should practice in the test database to confirm that all

information is accurate and working correctly. Use a full week of real transaction data to push

through the system to validate output. Run real life scenarios to test for data accuracy.

Occurring simultaneously with testing, make sure all necessary interfaces are designed and

integration issues are resolved to ensure the software works in concert with other systems.

Verify testing: Make sure the actual test mirrors the Standard Operating Procedures outlined in

step 2, and determine whether modifications need to be made.

Train the Trainer: It is less costly and very effective if one trains the trainer. Assign project team

members to run the in-house training. Set up user workstations for at least 2 days of training by

functional area. Provide additional tools, such as cheat sheets and training documentation.

Refresher training should also be provided as needed on an ongoing basis.

Final Testing: The project team needs to perform a final test on the data and processes once

training is complete and make any needed adjustments.

PHASE 5: GO LIVE AND EVALUATION

Develop a structured evaluation plan which ties back to the goals and objectives that were set in the

planning stage. In addition, a post-implementation audit should be performed after the system has been

up and running for the first week for reconciliation purposes and three to six months following to test

whether or not the anticipated ROI and business benefits are being realized. Comparing actual numbers

with previously established benchmarks will reveal if the software tool does what it is intended to do -

add value to the business. It is important to periodically review the system's performance to maximize

ROI.



MARKET RESEARCH

GLOBAL MARKET FOR ERP

Total ERP market revenue grew to over $28B in 2006, driven by a combination of strong customer

demand and leading vendors expanding their product portfolios through acquisition.

The ERP market had a spectacular year, with total revenue growing by 14% and license revenue up an

amazing 18% from 2005. While sales of traditional ERP applications were very healthy in 2006, many

vendors also saw substantial revenue growth from the acquisition of other software companies.

Globalization, centralization, and regulatory compliance were the key drivers for continued ERP

investment among large corporations. In the small and midsize business (SMB) segment, which

continues to outgrow the overall market, companies are buying new ERP systems in response to new

customer requirements and the desire to participate in the global market.

Figure 5: ERP application revenue estimates for the year 2006 through 2011.



Here are some major trends from the 2006 global ERP market:

• ERP vendors that traditionally offered a single, internally developed product line now go to market

with a broad portfolio of products targeted to specific industry and departmental buyers.

• Oracle and SAP continue to dominate the market among very large global companies. In the

increasingly important SMB segment, though, they face formidable competition from Infor, Sage Group,

Microsoft, Lawson and Epicor.

• New pricing and deployment models, such as software as a service (SaaS) and enterprise licensing, are

starting to gain acceptance. Most ERP vendors are expected to begin offering on-demand in addition to

on-premises options in the near future.

• The fundamental ERP concept of a single-vendor, pre-integrated suite of packaged business

applications is making excellent headway in non-manufacturing markets such as retail, financial services,

and public sector. As ERP vendors buy and build the necessary industry functionality, their available

market rapidly expands.



Fig 6: ERP vendors ranked by application revenues for 2005-2006

As is clear, SAP is the global market leader with a revenue share of 41%, followed by Oracle (21%), Infor

(7%), Sage Group (6%) and Microsoft (3%).



Fig 7: Revenue share of the top ten ERP vendors.

Traditionally, the ERP market has been segmented by the size of customers the vendors targeted: large

enterprise vendors, midmarket vendors, and small business vendors. It was thought that the same

vendors and products couldn’t serve multiple segments, but that notion has been disproved recently.

Many ERP vendors are now competing effectively in all segments. The Fortune 2000 have largely

selected and deployed their ERP backbones, but many of them still rely on legacy MRP and MES

investments within certain geographies, divisions, or individual facilities. With the focus on standardizing

IT architectures across the entire company, centralized ERP systems are replacing many of the

midmarket plant applications. The traditional large enterprise vendors have started to attack the market

perception that their products are too big and complex, and they’re making inroads into the midmarket

through rapidly growing reseller channels. The midmarket is one of the key areas where the larger

enterprise vendors believe they have an opportunity to accelerate growth, even as ERP opportunities at

the higher end of the market decline. For vendors like Cincom and QAD that have traditionally served

this segment, we see a focus on selling additional functionality into their installed bases in order to stave

off the advances of larger vendors.

SAP’s and Oracle’s revenue came mainly from enterprise management and customer management

applications. This is the general trend among most companies in the segment.

The actual revenue segmentation of ERP sales by company size showed very little change in 2006, with

the midmarket still the major growth leader. Major growth also came from the small business segment

(less than $30M in annual revenue) with 27% growth and the lower end of the midmarket (annual



revenue between $30M and $250M) with 18%. The large enterprise group (more than $1B in annual

revenue) also grew at 18%, a reflection of the internal ERP consolidation and standardization projects, as

well as ongoing investments in add-on functionality and additional seats from ERP vendors.

The midmarket is expected to continue to be a major growth category—and heated battleground—for

the ERP vendors. In 2006, this segment allowed companies like Sage Group and Microsoft Business

Solutions to grow at 19% and 18%, respectively.

Fig 8: Application segments of ERP vendors based on total revenue

They continue to push up market to compete with firms like CDC Software and Epicor, which grew 18%

and 23%, respectively. Lawson is expected to show strong growth in the next year as the combined

Lawson-Intentia organization enjoys its first year as a merged company. Additionally, Infor intends to

gain market share through additional acquisitions, while Oracle and SAP continue to rely on reseller and

partner programs. These programs, specifically Oracle’s Accelerate and SAP’s PartnerEdge, are meant to



reach more buyers and provide their partners and resellers with the appropriate resources to help them

gain increased market share.

ERP technology trends, 2006 Conventional wisdom indicates SaaS will primarily appeal to SMBs, while

large enterprises will choose traditional licensing and on-premises deployment. That view is changing as

many larger organizations get more comfortable with the SaaS model. SaaS-based ERP however raises

the question of what data companies is comfortable storing outside their firewalls, especially when it

comes to financial data where any manipulation or adjustment can carry painful ramifications.

While SaaS is a hot topic, we cannot overlook the impact of service-oriented architectures (SOAs) on the

ERP market. Most buyers are wary about new architectures and are becoming even more risk averse,

especially now that their ERP systems support most of the critical business processes and key company

data.

Despite the slow buyer uptake, SOA is still a major priority for ERP vendors. While the efforts of

Microsoft, Oracle, and SAP have received the most attention, the ERP market as a whole has embraced

SOA.

While the vendor approaches tend to differ, the end result will not: more flexible and adaptable

products. The vendors will benefit from a more productive development environment as they find it

much easier to configure applications for specific markets and even individual customers. For vendors

with sizeable installed bases of customers on legacy technology platforms, SOA also provides a vehicle

to upgrade their customers to newer, modernized products without major business disruptions.

2006 ERP Market Structure, Oracle and SAP continue to command the lion’s share of revenue from the

ERP market.

• Infor’s growth cannot be underestimated. The company relies on an innovative business model that

centers on acquiring products to generate additional maintenance and license revenue, as well as

increasing cross-selling opportunities within its ever-growing installed base.

• Sage Group is bringing to its customer base CRM functionality plus business intelligence through the

inquiry and analysis tools Business Insights Analyzer and Explorer. The Analyzer is the drill-down, basic

reporting tool that has some wizards to build queries, and Explorer is the role-based, personalization-

driven reporting structure.

• Microsoft Business Solutions, while focused on the midmarket, continues to be pulled into larger

enterprise deals.



Customer retention rates remain in the 90% range for many vendors, and maintenance revenue

continues a steady growth at 15%. But a software vendor can only survive on maintenance for so long.

ERP vendors, as part of their evolution toward portfolio providers, must find new ways to not only

service their customers, but compete in new markets.

For the mass market vendors, the increased reliance on partner networks to help drive volumes of new

license sales will be crucial. For the ones focused on specific industries and manufacturing styles,

providing a portfolio of industry-specific functionality that can keep clients competitive in the global

economy will be crucial.

An 11% CAGR for the global ERP market is predicted through 2011. No drastic changes are expected to

take place to the dynamics of this market over the next five years, although it is expected that revenue

growth will come from ERP extension segments such as CRM, HCM, and SCM. Several ERP vendors will

increase revenue from manufacturing operations.

Shifts in revenue type will also continue. Alternate pricing revenue will continue growing at the expense

of license revenue, which is expected to grow at a 10% CAGR as software becomes a larger part of the

revenue mix and installed bases continue to grow.

Geographically speaking, North America is expected to regain some of the market share that was lost in

prior years to emerging markets in Asia-Pacific and Latin America, especially as the spending trends for

the midmarket continue on their upward course. Also, Europe’s overall share is forecast to remain

steady at 39%, but as Eastern European countries like Russia, Poland, and the Czech Republic continue

to be low-cost centers for global firms, they will take some share from Germany, France, and the UK.



MARKET ANALYSIS OF UAE

Share of vendors in the ERP market – Middle East region

Fig9: Share of vendors in the ERP market – Middle East region

Source: Gartner, 2006

Business Monitor International (BMI), a market Leader in Country Risk, Industry Intelligence and

Company Research, estimates that the UAE's software spending will boom from US$236mn in 2005 to

US$471mn in 2010. The central geographic areas for the software industry are Dubai, Abu Dhabi, and

Sharjah, with global software companies drawn to the UAE’s free trade zones for tax-free, relatively

unhindered competition. Outside of the free trade zones, however, the software market is fairly

modest.

The growing maturity of the UAE IT services market is underlined by a significant trend of major

outsourcing contract awards, particularly in the government sector, which remained at the forefront of

spending in 2005. This was exemplified when Dubai Municipality unveiled a new outsourcing strategy in

Q2006. Driven by the buoyant IT services sector, the total size of the UAE IT market is expected by BMI

to increase from US$1.3bn in 2005 to around US$2.6bn in 2010. Aside from local government, spending

should be strong in the financial, and oil and gas verticals, with a trend towards larger projects, such as

the recent project by Dubai’s new International Financial Exchange. Investment in more advanced IT

SAP, 24.50%

Oracle, 21.70%

SAGE, 10.40%

Microsoft, 2.50%

Infor, 2.10%

Others, 38.80%



products has enforced logic of using external providers to ensure the secure running of mission critical

processes.

Overall, BMI predicts that IT services will be the fastest-growing segment of the region's IT industry,

rising to US$380mn in 2006, as vendors shift their focus away from simply shifting boxes. Services are

becoming an increasingly important component of many deployment contracts, as evidenced by recent

projects by leading UAE corporations such as Emirates Airlines and Etisalat. Outsourcing is also predicted

to be a growing trend, with global vendors such as IBM Global Services competing with local companies

such as Injazat Data Systems. Niche players specializing in specific technology solutions or vertical

industries are rapidly emerging.

Gartner’s preliminary estimate for the size of the ERP software market in Europe, the Middle East and

Africa was approximately $8.1 billion in total software revenue in 2006. Through 2011, the market will

grow at a compound annual growth rate of 7.4% to a size of about $11.6 billion.

The market will have a CAGR of 15% between 2005 and 2010, with the UAE being the region’s fastest

growing ERP market, as more businesses realize the benefits of efficient management of resources

within their internal processes. BMI predicts plenty of room for growth in the forecast period as

numerous untapped sub sectors still exist. CRM will account for approaching 20% of enterprise

application sales. Fewer than 2% of small-to-medium size companies in the Middle East region have a

specialized CRM application in place. However, the UAE is seen as being ahead of other regional markets

by six months to a year in terms of CRM adoption. During the next five years, in addition to CRM and

ERP, high growth categories are set to include storage and security products.



SMALL AND MEDIUM BUSINESSES

GLOBAL SMB

To qualify as SMBs, companies must have headcount or turnover that fall within certain limits. For

example the traditional definition in Germany had a limit of 500 employees, while in Belgium it could

have been 100. But now the EU has started to standardize the concept. Its current definition categorizes

companies with fewer than 50 employees as "small", and those with fewer than 250 as "medium". By

contrast, in the United States, when small business is defined by the number of employees, it often

refers to those with less than 100 employees, while medium-sized business often refers to those with

less than 500 employees.

SMBs have unique needs for ERP that distinguish them from larger enterprises. While enterprise ERP

systems can have over 10,000 data tables and more than 250,000 individual fields, the needs of the SMB

are more modest. The typical SMB does not have a legion of IT staff that can configure, deploy, manage,

and maintain a system of that size and scope.

Rather, SMBs require systems that can be configured and deployed in weeks instead of months, have

intrinsic management capabilities, and are flexible and adaptable enough to grow with the business as

the company evolves. Most importantly, SMBs require ERP systems that meet the business process

objectives of the company, now and well into the future.

SMB IN UAE

While the global definition for an SMB is more or less consistent across locations (an organization with

revenues less than 1 billion USD and employee strength between 500 and 2500), the MENA region and

UAE in particular, offered a range of different perspectives to define the same. From the primary

research we conducted among vendors and channel partners of ERP solutions in the UAE, we arrived at

the conclusion that there isn’t one common and fixed definition of the parameters that classify

establishments as SMBs.

The defining criteria vary not only with place but also based on industry or a given organization’s view.

Captured below are some of the perspectives:

Our interview with SAP Arabia revealed that, In MENA, an establishment with revenues of $ 200

million could be called an SMB, however the challenge is that there are no statutory

requirements to submit the financials. Thus, as our interview with Epicor also affirmed,

information about revenues/turnover is not readily available in the UAE and classification based

on this parameter becomes difficult. Also, clients do not like to be termed an SMB as it sounds



disparaging. Other determinants could be the number of power users and the scope of a

project, the latter being more commonly used.

The size of the deal in combination with the number of power users is another way of defining

an SMB. This perspective was gained through our interview with Triad which is a channel

partner for SAGE’s ERP solutions.

Raqmiyat defined an SMB as an establishment that would not accept or require a tier 1 package

like SAP or Oracle. Thus, buying culture of a company helped qualify it as an SMB.

Epicor has definitions that vary by industry; for example, labor intensive industries would have a

small number of PCs and services industries would have a large number of PCs. Thus, while a

figure of less than 100 PCs on an average could define an SMB, industry specifications would

also have to be kept in mind.

ERP MARKET FOR SMB

Enterprise Resource planning was a term restricted purely to elite class. This scene was witnessed in the

IT market for some long time ever since ERP was introduced.

The number of larger companies without ERP now is virtually zero due to the awareness created by

vendors and IT researchers and hence the large enterprise market became saturated. These bigger

companies were not providing the required business to ERP vendors. Even though there are many big

companies the number of vendors was always greater in multiples. This is when larger players like SAP

and Oracle decided to move into the SMB market and came out with scaled down versions of their Large

Enterprise solutions.

The competition for ERP market in SMBs is quiet fierce. The vendors have increased considerably with

the influx of bigger players in the fray. Formerly only the smaller vendors catered to SMBs. However the

situation is totally reversed in the current scenario. The numbers of vendors is increasing not only due to

the intervention of bigger players but also due to the intrusion of many smaller ones. This makes it

difficult for all of them to compete as the best only get to strike a deal. This market scenario has thrown

more demands from the companies because they now have many vendors to choose. On the contrary,

the emerging increase has also resulted in more complexions in the market because each vendor is

different and unique when it comes to the issue of software.



STAKEHOLDERS

VENDORS

In this section, we try to get a glimpse of the processes and challenges that ERP vendors face the world

over as well in the Middle East region in particular.

The vendor business consists of the following processes:

Fig 10: Vendor Business Cycle

Lead Generation

This is the process in which prospective customers are identified by the vendors with an initial

introduction about their ERP offering and the advantages of the same. Interesting leads are then

passed on to the sales team for follow-up. Some of the techniques used in lead generation include

o Sales person prospecting

o Events , Trade shows – GITEX

o 3rd Party / Contracted lead generation

Sales Cycle

The lead generated is qualified by product manager or presales team. An initial analysis of the

company and suitable solution is developed. The sales person along with the presales team gets into

a process of demo/positioning/mapping/objection handling/ referencing. An estimation of the level

of customization and high level functionalities are made and agreed upon. This is also the time when

a high level project plan and time lines are set. Finally after multiple rounds of negotiation, the

vendors and the customers agree on the terms and conditions and the sale is closed

Lead Generation Sales Cycle ImplementationSupport &

Maintenance



Implementation cycle

Implementation can be onshore, offshore or a combination of both depending on the cost factors,

project feasibility and requirements.

Once the sale has been closed, the delivery team from the vendor side is brought in. There would be

a kick off meeting where the key stakeholders are identified and project managers from both sides

are selected. Requirement study is initiated to freeze the lower level specs and functionality and a

requirement document is signed off. Then a detailed level project plan with estimated time lines is

prepared and this document called the Project Plan is signed off. This would also be the time when

the both parties agree about change management and any process re-engineering that would be

required as part of ERP implementation. Each phase is delivered as per plan and simultaneously

testing of each phase would begin which also includes the user acceptance test in the end. Training

is a very critical part of implementation. Dummy data might be entered into the system and users

are initiated into the new systems, navigation etc. There can be initial hiccups as people adapt and

get the feel of a new way of working. Finally there would be the project sign off after completion of

all the phases.

Support & Maintenance

From a vendor perspective, it is the AMS contract that provides him his bread and butter and forms

the main source of income rather than the initial project deal. Depending on the type of contract

signed, the terms and conditions in the Annual Maintenance Support contract would vary. There

could be an initial 2-3 months of free support till the product stabilizes. There might be also

conditions where part of the sign off amount is paid only after about six months after

implementation depending on the performance and ROI obtained. Multiple training sessions can be

provided as part of the support because an ERP system is only as good as its usage.



VENDOR COMPETITION PARAMETERS IN UAE

UAE was saturated with a number of small ERP players as well as local home grown products of vendors

in this region. Realizing the potential of the market in the GCC and UAE, larger players have decided to

set shop as well. Thus SAP and Oracle entered the market but through channel partners. The

competition is fierce and there are a number of parameters that vendors and channel partners compete

on. Based on our primary research we can qualitatively define these parameters to be

Brand Name

Vendors like SAP, Oracle and SAGE play on the brand factor. Many companies here would also go for

the product as the market is highly brand conscious and would prefer a Tier One product than go for

a relatively unknown ERP product. The reasoning also goes that an internationally known vendor

would also be consistent in its upgradation and support terms

Local Market Awareness

Home grown products as well as local channel partners claim to have a feel of the local market.

Knowledge of government regulations, governance laws, and export and import restrictions would

all play to its advantage when developing or offering an ERP solution specially tailored for this region

Vertical Expertise

Solutions like Orbit ERP have “verticalized” their product from day one and are specialists in specific

domains like hotels or trading establishments. This would result in ERP packages that are very

specific to a customer industry resulting in faster implementation time of about 2-3 months and

faster ROI

Cost

SAP has trimmed not only its solution for the SMB market but the price as well. Its Business One, All

in One solutions are competitively priced. But even then companies like Epicor that play in the mid

market zone globally say that they are more in tune with this segment and can effectively position

their product cost wise. Cost is also another factor where local home grown products like Analyst

ERP of EBiz have a major advantage.

Flexibility of solution offered

The big players are viewed to be mammoths that would require huge implementation time and

effort. This is where smaller products like Orbit ERP or GEMS position themselves with having



smaller implementation time of about 6-7 months and faster ROI. Also the product is positioned as

customizable as per client processes and standards which is not an easy sales pitch for an SAP or

Oracle.

Support & Maintenance

Customers are concerned about the post implementation scenarios which include handling the

initial hiccups, annual support and maintenance etc. On one hand the big players offer the pitch

about having local channel partners to handle things while smaller players say that claim that their

smaller size enables them to be more responsive to customer requirements and offer a more

intimate relationship as of a trusted partner.



ERP SOLUTIONS FOR SMALL AND MID SIZE COMPANIES

Solutions from SAP:

SAP All-in-One: SAP's complete business solution, SAP All-in-One, has been enhanced to meet the

needs of midsize companies. Based on SAP ERP 6.0 and SAP CRM, SAP All-in-One can address the

business software requirements of the most demanding midsize organizations. This ERP software

provides a fully integrated system to support core business processes, from financials and

purchasing to inventory, production, and human resource management. The solution also includes

business analytics and reporting capabilities, to give full visibility into the business operations and

performance.

A1S: SAP is expanding its portfolio of successful solutions for small businesses and midsize

companies through the development of a new solution, code named "A1S."

Based on the SAP NetWeaver platform, "A1S" is an on-demand solution. It is designed specifically

for fast-growing midsize companies with limited IT resources. With the new "A1S" solution, SAP will

help companies that have not traditionally considered integrated suites enjoy the business-building

benefits they provide. This on-demand solution is being introduced through a phased launch, and

early customers are actively working with the solution. Development of "A1S" will add another

highly effective solution to SAP's small and midsize company product portfolio. Sixty-five percent of

SAP's customers are small businesses and midsize companies.

SAP Business One: SAP Business One is an integrated, affordable, business management solution

built from the ground up to meet the immediate and long-term needs of small businesses. It

provides a true and unified view of operations across customer relationship management,

manufacturing, and finance. Simple to use yet powerful, SAP Business One puts business users in

charge, arming them with the critical, up-to-the-minute information they need to make smart

business decisions.

Solutions from Oracle:

Oracle E-Business Suite: Oracle E-Business Suite which aims at small and medium businesses, and

government entities, is a comprehensive, industry-focused suite of business applications for the

enterprise. It is an integrated and scalable solution with industry best practices that can be rapidly



implemented. It is easy to buy, implement, use and maintain, providing better business information

for effective decision-making.

JD Edwards EnterpriseOne: Oracle's JD Edwards EnterpriseOne for small and medium businesses and

government entities is an integrated applications suite of ERP software that combines business

value, standards-based technology, and deep industry experience into a business solution with a low

total cost of ownership (TCO).

JD Edwards World: Oracle's JD Edwards World for small and medium businesses and government

entities is built for the IBM iSeries platform. A world-class enterprise solution, JD Edwards World

delivers the same advanced functionality that's available to larger enterprises, not a stripped-down

version of a larger solution. It is easy to buy, implement, use and maintain, thus providing better

business information for effective decision-making.

Oracle PeopleSoft Enterprise: Oracle's PeopleSoft Enterprise for both small and medium businesses

and government entities is a comprehensive, industry-focused suite of business applications for the

enterprise. PeopleSoft Enterprise applications offer Web services integration to fit seamlessly into a

heterogeneous applications environment and a broad choice of technology infrastructure. Simple

configuration helps ensure that the most unique customer requirements are met. Oracle PeopleSoft

Enterprise is an integrated and scalable solution with industry best practices that can be rapidly

implemented. No matter how many modules are applied — one at a time, several, or the complete

suite — Oracle PeopleSoft Enterprise is easy to buy, implement, use and maintain, providing better

business information for effective decision-making.

Solutions from Microsoft:

Microsoft Dynamics GP 10.0: Microsoft Dynamics GP 10.0 delivers a cost-effective business

management solution that streamlines business processes for everyone associated with the midsize

business. With Microsoft Dynamics GP 10.0, people and teams can collaboratively work together,

sharing files and information that help effectively manage and integrate finances, e-commerce,

supply chain, manufacturing, project accounting, field service, customer relationship management,

and human resources functionality.

Microsoft Dynamics NAV 5.0: Microsoft Dynamics NAV helps streamline day-to-day processes, so

that people can perform business operations more accurately. Designed to work with familiar



programs such as the Microsoft Office system and Microsoft Windows SharePoint Services,

Microsoft Dynamics NAV 5.0 helps people work more efficiently and make sound decisions quickly.

Solutions from Epicor:

Vantage: Epicor Vantage is an easy-to-use solution designed to meet the needs of progressive make-

to-order and mixed-mode manufacturing companies. Vantage is delivered ‘out of the box’ with

built-in workflow processes that enable manufacturers to manage the entire order cycle: from

Marketing and Sales through Production and Planning, Sourcing and Procurement, Installation and

Service, and finally Financial recognition. Vantage also offers a range of supply chain management

and distribution capabilities, delivered within a single business platform. Built on a 100% service-

oriented architecture (SOA), Vantage enables continuous performance initiatives, real-time

connectivity between supply-chain applications and partners, and greater business agility.

iScala: Epicor iScala is a comprehensive end-to-end suite of proven industry-specific solutions for the

global mid-market enterprise. From customer relationship management (CRM) and service

management to financial and supply chain management (SCM), Epicor iScala provides adaptable and

agile solutions for real-time enterprises, helping them address their important business challenges.

Solutions from Ramco:

Ramco’s ERP offerings are based on the innovative business process platform (BPP) that provides

companies of all sizes with the flexibility they need to rapidly respond to evolving corporate imperatives,

regulatory changes, and market conditions. The Ramco SMB Series is composed of Ramco SMB –

Corporate and Ramco SMB – Discrete Manufacturing. Each of these products directly addresses the

needs of the small to mid-sized company.

Many non-manufacturing small to medium-sized businesses (SMBs) do not need a full ERP suite to run

their operations. Rather, a complete financial system along with the ability to buy, sell and manage

inventory addresses the core business processes for a large segment of the market. Whether a company

is a product distributor, wholesaler, retailer, or service provider, Ramco SMB – Corporate provides a

comprehensive back office solution.



Ramco SMB – Corporate: Ramco SMB – Corporate provides complete Financials like General

Accounting, Banking Operations, Accounts Payable, Accounts Receivable, Fixed Assets and

Management Accounting

Ramco SMB – Corporate Demand Fulfillment adds Order Management and Outbound Logistics

Ramco SMB – Corporate Procurement includes Purchase Administration, Purchasing and

Inbound Logistics

Ramco SMB – Corporate Inventory adds Item Administration, Warehousing and Physical

Inventory/Cycle Counting

Together, financials, demand fulfillment, procurement, and inventory give SMBs the business process

capabilities they need, packaged in a form that is easily adopted, at a price point tailored to the mid

market. Ramco SMB – Corporate is a perfect solution for mid-market service industries.

Ramco ERP OnDemand: Delivered as a subscription service, ERP OnDemand is available for small to

mid-sized businesses looking for a low initial investment and reduced overhead and maintenance. It

is available in select markets. ERP OnDemand can be delivered in two forms: as a managed service

on customer equipment on the customer premises, or through a web browser entirely through the

Internet. Either way, Ramco ERP OnDemand is the same robust, full-featured ERP solution

customers in over 1,000 locations use every day. Best practices built into the business processes in

the ERP OnDemand solution ensure companies leverage the experience of hundreds of Ramco ERP

deployments. Configuration of the application to tailor it to specific company requirements typically

takes less than a week. And, as the company expands, the solution can expand to accommodate

multiple locations, currencies, and organizations. Its modules include: Financials, Supply Chain

Management, Manufacturing, Customer Relationship Management, and Multi-Entity Management

Business Analytics.

Solutions from 3i InfoTech:

ORION Enterprise: ORION Enterprise, which is an ERP II solutions offering, is structured to also meet

the organization’s future needs in different processes ranging up to SCM, e-Procurement, e-Business

and CRM applications. It also provides the power to combine individualized customer and supplier

management processes with transactional fluidity across organizations. ORION Enterprise has

options for various industries and processes such as Manufacturing, Contracting, Energy, Retail,

Ports, and Distribution.



The ORION Advantage suite: The ORION Advantage is a ready-to-deploy, single-window, micro-

verticalized ERP solution package. The package comprises hardware, operating system, database

and a micro-verticalized ERP application. It is designed for Small and Medium Businesses (SMBs) to

save costs, time and resources from day one, in order to deliver maximum ROI. With ORION

Advantage, customers can take advantage of strategic alliances with various technology leaders, by

enjoying a range of special rates and service terms. ORION Advantage comes with pre-installed

Oracle database, an HP dual processor Xeon server usage package, and a Windows 2003 server,

among other things.

3i InfoTech offers ORION Enterprise solutions for companies in industries and verticals like Wholesale

Distribution, Field Service, Process Manufacturing, Contracting, Retail, Energy, Job Shop Engineering and

FMCG.

Solutions from Raqmiyat:

GEMS: GEMS is an open system, fully integrated, industry standard software. It is an extremely

stable product with multiple smoothly running installations and offers immediate short-term

benefits as well as long term protection for a customer’s investment. GEMS can effectively manage

customers, partners and employee relationships, financials, operations, logistics and e-commerce

business activities in one single integrated solution. This process based system helps customers

define business processes and automate them so that customers can focus on their core processes.

GEMS provides fully integrated and easy to use first tier functionality for mid-market enterprises.

Unlike Traditional systems it is organized to map onto the typical business processes. It is provided

as a complete, integrated unitary system rather than a series of loosely coupled modules with data

transfer between them. The long-term benefits are secured by the highly flexible nature of the

package that is ensured by allowing changing Business Rules to be defined. This ensures that the

package will continue to support the customer’s business as it evolves and engineering of the

business process is performed, with minimal IT intervention. Short-term benefits are derived from a

quick, smooth and well-defined implementation path. Highly user friendly screens with online help

and single point data entry ensure ease of operation and transition. This results in an ability to focus

rapidly on key Management Information Systems and reporting leading to Decision Support for

Management. Its features include high visibility for key business, internet enabled browser based

interface, customization toolkit and ability to meet Middle East business requirements. Its main



benefits are that if allows for better and faster decisions, easy global access, increased productivity

and efficiency, automated task and information routing and modern, open and scalable

architecture. GEMS has various modules integrated in one solution- Workflow Management,

Application Customization tool, Escalation rules, Scheduler, Alerts and e-mail, Financial

Management, Material Management, Sales Management, Procurement Management, Production

Management, Project Management, Warehouse Management, Relationship Management, Web

store (e-commerce), Point Of Sales, Payroll & HRMS, Property Management, Smart Report

Customization and Document Management.

Solutions from Focus Softnet:

Focus RT: A unique product of Focus Softnet, Focus RT is an Enterprise Resource Planning package

that seamlessly integrates all facets of the business, including planning, manufacturing, finance,

sales, marketing and HR through the various modules of Focus RT. It flawlessly combines the

functionalities of Supply Chain Management (SCM), Financial Management System, Human

Resource Management System (HRMS) and Customer Relationship Management (CRM). Its modules

include General Ledger, Budgeting, Accounts Payable, Accounts Receivable, Cash / bank,

Procurement, Inventory Management, Sales Management, POS, Manufacturing, HR & Payroll and

Fixed Assets. Its target market includes companies with annual revenues between $10and $250

million or 10+ employees. The industries it targets are - Wholesale distribution, Food Distribution,

Hard Goods Distribution, Process manufacturing (paints and coating, chemicals, coSMBtics, food,

Pharmaceutical) and services. It also serves companies with complex structures, consolidated

entities, inter-company functionalities and multi currency needs.

Some differentiating features of the company include World Wide Presence and hence

implementation Experience of 14 years across multiple Locations, Multi Vertical industry

Implementation expertise, delivering solutions as per client (A client base of 18,000 across the

globe) requirements, Direct representation (Product, Implementation and Support), expertise with

various prestigious Software applications (Seibel, BAAN) and expertise in delivering significant

improvements in core operational processes through business integration across the company

enterprise. Focus Softnet has state Of the Art technical base for handling big and long-term projects

and expertise in deploying Online, Integrated and Web Based solutions.



Solutions from ETA InfoTech:

Orbits ERP Solution is a complete business solution for both small and medium business enterprises.

A core suite of resource management modules covering Financials, Human Resources and Materials

Management, it integrates seamlessly with a number of front office operational modules to provide

an ideal solution that can be implemented at a rapid pace. Its flexible architecture allows easy

integration of additional modules for both horizontal and vertical functionality enhancements.

ORBITS runs on the best of breed technology Oracle, and is highly scalable. It is based on client

server architecture and can be implemented with full functionality on a single server or over a large

corporate network with several servers spread over LAN and WAN. The industries served by Orbits

include Manufacturing, Taxi Operations, Trading/Warehousing, Port Operations, Automotive

workshop, Healthcare, Retail, Ship & Cargo operations, Cement, Auto Trade, Transport & Fleet

Management and Oil & Gas.

The features and benefits of Orbits ERP Solution are:

o It is a fully integrated ERP solution

o It is a user friendly application and has modular design

o It is based on best of breed technology “Oracle”

o It supports multiple users, locations, currencies and company environments

o It is an ideal solution for Small and Medium Enterprises

o It supports Arabic

Solutions from e-Business Applications (eBiz):

Analyst: Analyst is an integrated package of business activities and financial accounting. It is a

product of e-Business Applications. It is ready to use and further customizable according to client

business. Unlike any other accounting package, which just automates financial accounting, Analyst

automates both business operations and financial accounting. Analyst is developed by experienced

software engineers under the guidance of Chartered Accountants, Auditors and Managers with the

experience and expertise in understanding the needs of different business domains. Analyst e-ERP is

specially made for large enterprises using latest .NET technologies. This e-ERP can be accessed from

any part of the globe through the internet. Analyst caters to the following industries in the SMB

space - Real Estate, Contracting & Construction, Trading, Service Industry, Insurance Brokerage,



Shares Management, Engineering Consultancy, Printing press, Hotel, Transport, Cargo and Auto

spare parts. Analyst also offers the following Non Accounting Business solutions:

Cheque printing software (English/Arabic)

Multi Document expiry alert mgt software

Human resource mgt software

Payroll mgt software

Petty cash mgt software

Purchase order software(PO/LPO)

Invoice Printing software

Time Attendance Machine

Document Management Software

Motor quotation software

e-time sheet with payroll

Civil engineering estimation software

Solutions from EBM International:

VISUAL ACE-GOLD is jewel management software. It has been designed, developed, marketed and

supported by E.B.M. International (EBM), Dubai. EBM has more than 95% market share for its most

popular VISUAL ACE-GOLD accounting software in Dubai. Almost the whole Jewel market is using

VISUAL ACE-GOLD for more than a decade. It has been in use by more than 1000 satisfied jewelers

world-wide for more than 10 years and covers all the requirements of jewel business management.

It is developed, supported and approved by qualified Accountants, Auditors, System Analysts and

Managers and has more than 10,000 trained Users. Full Training & Online Modem Support are

available for it. Any jewel business of any size or type can be supported using VISUAL ACE-GOLD. It

has Multi-User, Multi-Company and Multi-Currency capabilities along with Online & Integrated

Modules. It supports functionalities of Search by any String in Reports, save any Report, Add any

comments and/or Merge Reports etc. One can also View/Print/Fax/E-mail any Report and it has

definable Menus & Icon Bars. VISUAL ACE-GOLD offers a very unique range of modules, specially

focusing on the Jewel Business, like: Picture Cataloguing, Bar-Code/Normal Label Printing, Weighing

Scale Interface, Online Documents Printing, Jewelry Anti-Shoplifting Solution, Jewelry Picture Studio,

Retail Customer Database Analysis, Retail Customer Loyalty Cards & Sales Schemes, Touch Screen

Solutions, Payroll & Personnel Management, Jewelry E-Commerce & Online Shopping, Business-to-



Business E-Commerce, Direct E-mail/Faxing of Reports, Viewing/printing/communication of reports

in world-famous Adobe Acrobat (PDF) format and Report-Writer / Query Builder.

Fusion Systems and Security Solutions:

It is an IT infrastructure development and integration company of the Joyalukkas.

Manufacturing is the core solution offered by Fusion System Solutions targeted at the

Manufacturing Industry. The comprehensive integrated solution comes with a definable production

flow with the following modules - Financial Accounting, Internal Audit, Inventory, Enquiry,

Estimation, Job order processing, Machine Management, Payroll Processing, HRM, Time &

Attendance and Fixed Assets Management. The Solution is further customizable to the specific

functional and business requirements of the clients. Fusion’s ERP for the Man-Power Supply industry

takes care of their complicated HR, Project and Camp Management. The solution is integrated with

the Financial and inventory modules and also to other supplementary modules which are required

for the day to day operations in the an-power supply industry. The solution makes operational tasks

easier and provides MIS reports that assist in quicker decision making. Focus also has a range of

accounting software solution like:

JEMS: Accounting software targeted at the Jewelry Industry

PriMA: An exclusive system designed and developed to provide an effective solution to the Printing

Industry

ReEMA: An Integrated solution for the Real Estate Industry and is divided into Real estate and

Financial Accounting modules

Solutions from IFS:

IFS is one of the world’s leading providers of component-based business software developed using open

standards. IFS’ industry-focused solutions are optimized for ERP, enterprise asset management, and

MRO. An integral part of IFS Applications, IFS’ solutions seamlessly work together enabling companies to

employ lean enterprise concepts, control costs, manage projects, increase efficiencies in their supply

chain, and measure their performance.

IFS Applications is an on-demand business application. Its component-based architecture provides

for fast, step-by-step implementation, which lets companies get rapid payback by adding new

functionality without waiting for a major overhaul. IFS' industry solutions are based on the

functional breadth of IFS Applications, with the addition of cutting-edge features and packaged



industry know-how. This gives their customers the tools and processes that they need to set them

apart from the competition and delivers fast payback on their investment. The Industries served are

Aerospace & Defense, Automotive, Commercial Aviation, Construction, Contracting & Service

Management, Energy & Utilities, High Tech, Industrial Manufacturing, Life Sciences, Oil & Gas,

Process Industry, Project Centric Businesses, Rail & Transit, Retail and Wholesale Distribution,

Service & Facilities Management and Telecommunications.



CHANNEL PARTNER

ROLE OF CHANNEL PARTNER

Many of the global ERP players find Middle East to be a lucrative market. But rather than setting up a

sales shop of their own, they bring in the local flavor through partnering with channel partners. This

helps in easing the sales processes by identifying key people who can connect with the local customers.

For example, ERP vendors like Epicor, 90% of the sales come from channel partners while it handles only

strategic accounts or those customers who insist on dealing with the vendor themselves.

Channel partners can take on varying roles depending on the contract with the vendors.

Channel Partner Role Vendor Role

1 Sales Implementation + Support

2 Sales + Implementation 1st and 2nd Support

3 Sales + Implementation + 1st level support 2nd level Support

Fig 11: Varying models of Vendor – Channel Partner responsibilities

FACTORS CONSIDERED IN CHOOSING A CHANNEL PARTNER

Channel partners are the vendor’s brand ambassadors. So vendors take into consideration a number of

parameters when choosing the local partners they want to associate themselves with. From our

interviews with vendors, following are some of the parameters that they have factored in

Financial Stability

Getting into the ERP business requires cash rich reserves to sustain one-self for the initial 1-2 years.

As the sales and implementation cycle is about a year, you would have high costs sunk in without

any initial cash inflow. This is where companies like Raqmiyat which have the backing of Al Ghurair

enterprises have a vantage over other small local players who might have to close shop due to the

financial pinch



Resources

The vendor would give prime importance to the infrastructure as well as human resources that a

channel partner possesses. Implementing an ERP requires highly specialized IT resources that are

not only scarce but also expensive to get hold off.

Brand Name / Reputation

Channel partners that have a well established reputation would find it easier to sell and convince

local clients as compared to hitherto unknown players. Also this market is known to be brand

conscious and have a tendency to go for big names that have a reputation to back up.

Reach of the company

At the end of the day it is about relationship selling. A glimpse into the existing client contacts gives

the vendors an idea about the potential of channel partner.

Industry focus

ERP is getting to be a game of “verticalization”. Many of the large vendors like SAP with years of

industry and domain expertise have incorporated the best of breed practices into their solutions.

Many of the home grown products like Analyst ERP cater to only specific industries that are of

relevance in UAE like Trading, Hospitality, and Manufacturing etc

So channel partners who have a focus on the relevant domains will have more to offer the

customers in terms of the end solutions

Avoid partners of other products

It becomes a conflict of interest when multiple solutions are being offered by the same partner.

Channel partners then become consultants who would offer the best solution in terms of

requirements fitment rather than pushing any one product. This is good from a customer

perspective but from a vendor perspective, it results in loss of business for them. Epicor specially

follows a strategy where they avoid partners of other ERP vendors.



UAE CHANNEL PARTNERS

Channel Partner Solutions Offered

Al Hoshan SSA Global (Baan implementation)

Axon Global SAP

Bahwan Cybertek FZ-LLC Oracle

Emirates Computers Microsoft Dynamics

ETA Infotech Oracle

Link Development Microsoft Dynamics

V2 Infotech Authorized Navision solution center

Al –Falak Electronic Equipment & Supplies Co J D Edwards

DBA Infotech Oracle

ePeople Consulting Middle East Value added services for PeopleSoft

implementations

Experts Computer Consulting Oracle

GTFS Microsoft Navision, Sage ACCPAC ERP

Hyperlink Oracle E-Business suite implementations

Intelligent Corporate Solutions (ICS) Oracle

Intertec Systems LLC Oracle

Mideast Solutions SAP

Mindscape Information Technology Oracle Certified Advantage partner

Msharie IT Division SSA Global (Baan implementation)

Raqmiyat Oracle

Seal Infotech SAP



CUSTOMER VERTICALS/TARGET MARKET

From the graph below we can see that Real Estate and Construction industry in the GCC scored highest

among a slew of domains we considered followed by Petrochemicals and Logistics.

Fig 12: Industry Size of different Verticals in UAE

Many of the ERP vendors especially the smaller ones like EBiz and ETAInfotech focusing on preparing

customized or “vertalized” solutions catering to the niche requirements and specific processes of the

above said domains.

0%2%4%6%8%

10%12%14%16%

15%

11%10%

9% 9%6% 6%

5% 5%4%

2%

Customer Domain



CHALLENGES IN ERP

THE SMB PERSPECTIVE

Vendor selection – multiple selection criteria

Companies have to exercise adequate care in choosing their ERP vendor and Small business ERP

Software. This is a big dilemma for companies because they are unsure of choosing software offered

by a branded player or a small player. That really makes no difference as long as the software and

vendor suits all the requirements. Some companies debate that only a branded player can satisfy

the requirements while the other argues that only small vendors are flexible when it comes to

customizations. Each argument has its own merits and demerits. Some of the factors that are used

in selecting among vendors are as follows:

o Vendor Credentials/ Brand Name: Vendor’s market share, reputation, number of consultants,

number of installations performed, support infrastructure and demonstration of previous

implementations are critical factors showing the commitment of the vendor to the product.

o Cost: Cost is an important issue since the implementing organization is a SMB that may not act as

comfortable as a large, multi-national organization. ERPs are generally complex systems involving

high cost, so the software should be among the edges of the foreseen budget.

o Implementation Time: SMB require faster implementation time of about 6-7 months. Most of the

bigger brands have come out with pre customized solutions to fit the SMB need. Other smaller

players try to cater to niche verticals and have their products customized for the same.

o Features/ Modules: SMB may not require the full gamut of functionalities that a package offers or

it might require certain modules that are not available in most ERP packages. So the features and

modules of an ERP package is important when considering a vendor’s offering

o Customization: As most SMB have different business processes and many of them still to be

matured, they need to adapt the available software in the market for their own use. But,

customizations shouldn’t cause difficulties in updating to future software releases.

o Flexibility and Scalability: Flexibility denotes the capability of the system to support the needs of

the business over its lifetime. As the business requirements of the organization change, it should

be able to add extra modules. The ERP should be flexible in order to suit the organizational culture

and business strategy.

o User Friendliness: Most of the time, the end-users of an ERP system are not computer experts

especially in SMBs thus their opinions about the software are highly valuable. The product



shouldn’t be too complex or sophisticated for an average user since the efficiency of end users

directly affects the efficiency or the organization.

o After Sales Support & Training: The vendor should be providing the training as well as the after

sales support, since ERPs are fairly complex applications for learning by oneself. Also it should be

considered that every department within the organization would have its own piece of software

to use, so a kind of specialized training will be needed for each department

o Systems Requirements: Technology determines the longetivity of the product.2 It is important to

choose an ERP that is independent of hardware, operating system and database systems. At least,

the requirements of the software should worth changing into. The ERP system design should also

not conflict with the organization’s business strategy.

o Reporting & Analysis Features: Besides standard reports, management team should be able to

implement their own reporting and analysis tools and dumps them into the system for later use.

o Integration with Other Software/Applications: The modules should be integrated and provide

seamless data flow among the other modules, increasing operational transparency. In case a third

party application is needed, the ERP should be available to exchange data with the application,

since data import/export is widely used techniques.

o Internet Integration: The software should support e-business, e-commerce and EDI transactions.

At least, even if it doesn’t have as built-in modules, Internet adaptation should be available as

add-on modules.

Lack of IT department/ Tech savviness

Most SMB will not even have an IT department in place. The users are also not tech savvy and are

more used to excel based or elementary software like Tally. So the introduction of an ERP is a

complete overhaul for these organizations from infrastructure – hardware, networks to a new way

of working. Also there would be the need to identify resources that can spear head the project from

the client side.

Data issues

When a new ERP system is set in place, there is always an issue of the historical data that had

existed so far. These are required for audit purposes and for performance analysis. Data had thus far

been maintained manually or with trusted key personnel. These historical data need to be cleaned,

collated, codified and fed into the ERP system to ensure its successful implementation. This process

in itself can be tedious and time consuming part of implementation



Lack of Process Maturity

SMB customers many a times will not have processes or systematic ways of working even though

their businesses will be highly successful in nature. Many SMB have been started from scratch and

the owners might at times not even be able to provide conclusive figures on their profitability

because of the inappropriate documentation or record maintenance. Implementing ERP in such a

scenario becomes challenging from the process of data collection, bringing processes into place and

introducing employees into a radically different way of working

Handling Change Management

Training and change management is the biggest challenge for any SMB. Employees are used to a

particular way of working. There would be initial resistance to introducing an ERP and the success of

the system hinges on user acceptance. Multiple training sessions and considerable time after

implementation has to be spent on handling this issue. At times, there have been instances where

employees would maintain parallel systems and continue using the old system while the ERP system

functionalities remain unexplored



VENDOR PERSPECTIVE

FACTS AND CHALLENGES IN SELLING PHASE

In this section we analyze some of the unique characteristics of selling an ERP solution to an SMB in the

UAE market. These are challenges that have been documented as part of our primary research with the

vendors.

Game of Volumes

ERP sales to SMB are driven by faster sales cycle and quicker implementation time lines. Profit

margins are lesser and it is all about volumes to maintain profits. The key is in having portfolio of

products that are pre-customized, implement and deploy the package in minimum time and service

a larger number of customers.

Brand Conscious Market

UAE tends to be highly brand conscious market where an SAP or an Oracle can sometimes sell purely

on their brand name in the global ERP market. This makes it all the more difficult for smaller players

like Epicor or home grown products like Analyst, Orbit ERPs to position themselves in the customer

mind.

Sometimes there are other factors also playing into consideration like an SMB’s global partners

might be already using an SAP/Oracle. Hence they feel compelled to deploy the same to collaborate

seamlessly with their partners.

Consultative Selling

The challenge in SMB selling is that the process from day one takes on a consultative mode.

Customers may a times will not have processes or systematic ways of working but their businesses

will be highly successful in nature. So an ERP salesperson must be sensitive to the fact that an SMB

entrepreneur would probably not appreciate any direct imposition of so called “best practices” that

many ERP packages have as a prerequisite. Sales to an SMB tend to be informal and later on the

vendor/channel partner takes on the role of a trusted advisor.

Quick Sales Cycle, Fast implementation, Immediate ROI expectations

An SMB entrepreneur is well aware of his business needs and decisions will be taken without much

of a red tape if the vendor can win their trust and their requirements can be met. There are no big

steering committees with multiple sanction levels. Hence the sales cycle is quick.



However SMB expect fast implementation and quicker ROI. SAP has trimmed down its large

enterprise solutions to pre configured 18 processes to fit the mid-market which results in an

implementation time frame of about 2-3 months. Other players like Orbit have taken the route of

having vertical specific ERP solutions which are preconfigured to suit the industry’s needs and

processes. This makes an easier sales pitch when customers see that the vendor has clear

understanding of their business processes as well as an expertise in a particular vertical proven by

their past records in similar companies of the same industry.

Lack of IT Users/ Tech savviness

Most SMB will not even have an IT department in place. When it comes to selling an ERP solution,

there would hardly be anyone on board who could advise the decision makers on the benefits of an

ERP. The sales team will not making a pitch to a CIO or an IT head who could appreciate the benefits

implicitly but to operational heads and entrepreneurs whose main considerations would be business

implications of implementing a particular package, expected time frame of ROI, cost and other

parameters.

Overcoming the price consciousness

SMB in ME/UAE are not cash restricted as compared to a normal SMB scenario in Asian countries

like say India. There would be initial price objections but if the vendor can gain the trust and show

requisite ROI, then they do have cash reserves to invest in projects that would give them a positive

ROI. This gives vendors an opportunity to up-sell or cross-sell at a later period

Local Flavor through Channel partners

In many cases, bringing in the local flavor through channel partners is the best model that works in

the ME.

Channel partners are a vendor’s brand ambassadors in a region. They have to be adequately trained

in not only the product offerings but also the processes involved in sales, implementation and post

implementation scenarios. Vendors like Epicor have “Partner Awards” to recognize their

contributions. The challenge is also maintaining the channel partners in a region so that they do not

cannibalize into each other’s clients.



FACTS AND CHALLENGES IN THE IMPLEMENTATION PHASE

SMB in ME - Complex Businesses with global exposure

Dealing with an SMB doesn’t necessarily translate to easier processes or ERP

implementations.

A typical trading company in UAE, inspite of being an SMB would have global operations

with exports and imports from around the world. An ERP vendor has to keep in mind these

implementation scenarios when catering to the complex needs of the business, handle

multiple currencies, compliance policies etc

Support from all Key Stakeholders

An ERP implementation affects all the departments of an organization – Finance, HR,

marketing. The information and the processes in the departments have to flow and be in

sync. This requires that the key stakeholders we well as the end users should not only

support the ERP implementation but also be open to a new way of handling their everyday

operations.

Avoiding Information Silos

SMB tend to have information silos; the case is not different in UAE where there would be

vital people like accountants who would be on close personal terms with the owners or

would have all the critical information within the organization. It requires skilful probing to

gain the trust and get the right kind of information from these key people.

Lack of Process Maturity

SMB customers many a times will not have processes or systematic ways of working even

though their businesses will be highly successful in nature. Many SMB have been started

from scratch and the owners might at times not even be able to provide conclusive figures

on their profitability because of the inappropriate documentation or record maintenance.

Implementing ERP in such a scenario becomes challenging from the process of data

collection, bringing processes into place and introducing employees into a radically different

way of working



Infrastructure Support

An ERP implementation mandates certain amount of hardware and network requirements.

Most SMB do not have an IT department to put the IT infrastructure in place. So the onus

falls on the vendors. Some vendors use this as an opportunity to up-sell and gain additional

margins through their tie-ups with other partners like IBM or HP

HR Challenges

There is a dearth of skilled ERP resources that have expertise in the requisite verticals in

UAE. As a result vendors face bottlenecks and sourcing resources tend to be tedious and

expensive process with the consultants and implementers charging prime market rates.

Sometimes vendors try to outmaneuver this market condition by adopting an onsite-

offshore model where the development team would be residing in other countries like

India.

Customization Issues

With ERP, there is always an issue of whether to follow the in built “best practices” or to

customize according to procedures that are already being followed by the organization. A lot

depends on the vendors being able to convince the SMB about the advantages of following

certain best practices adopted by similar industries worldwide versus the complications built

into the system through excessive customizations.

Customers in this region have a lot of global exposure and hence their expectations from an

ERP package are that much higher. Once implementation is under way, sometimes

customers demand interim modifications which can result in cost and schedule creeps.

Most of the vendors from our primary survey agreed that there would be about 20- 25%

customization in any ERP implementation.

Schedule and Cost creeps

Capturing the right business requirements in the initial stage itself is key to a successful

implementation. Also the vendors need to set the expectations right about what is possible

with the ERP package and what is out of scope. Otherwise customers tend to put in

demands and new additions at a later stage which will push the estimated timelines and the



costs as well. UAE mostly works in fixed bid system. So extra costs would then result in

additional hassles of renegotiating the terms.

Training Challenges

Vendors have the onus of training and getting the end users to use the system and incorporate a

new way of working into daily operational activities. Initially dummy data is entered into the

system and the users are trained on the navigation, screen look and feel, processes etc. Typically

training takes a major chunk of the implementation time and become critical as this can be the

deciding factor between a successful and failed implementation.

REASONS FOR ERP IMPLEMENTATION FAILURE

As per our primary research some of the reasons listed by vendors for ERP implementation

failures are as follows:

Lack of understanding of the customer’s requirements

Inadequate requirements definition

Specification Creep: Users see all the functionality available and suddenly they want it now.

Scope can get out of control.

Lack of a structured PM (PMI steps, documentation etc )

Lack of co-ordination between implementation and development teams

In Project Manpower turnover: Project changing hands during implementation

Lack of management commitment

Inadequate resources deployed by the client

Resistance to change: Managing organizational culture change of the client

Too much change in the core processes of the company versus too much customization

Unrealistic timelines

Unrealistic expectations of benefits and ROI

Inadequate user training

Very tight budgets: Failure to cover contingency expenses



FACTS AND CHALLENGGES IN POST IMPLEMENTATION PHASE

Stabilizing the solution

There would always be initial hiccups (wrong data entry, navigation issues, and technical

bugs) that gradually get resolved over a period of 5-6 months. Within a year, the product

should get stabilized.

Historical Data issues

When a new ERP system is set in place, there is always an issue of the historical data that

had existed so far. These are required for audit purposes and for performance analysis. But

most users would not be willing to spend the time and effort on such a cumbersome task

which in turn affects the ROI and benefits that an ERP can provide.

Often vendors take on this task as well as part of the contract. This involves huge challenges

in collating past data from multiple sources, cleaning the data from errors, feeding the data

into the ERP system and so on

Change Management

Software is only as good as the usage and acceptance from the end users

ERP implementations would invariably face initial resistance from employees who have to

adapt to a whole new way of working right from data entry. They might even be

apprehensive about the system taking over their responsibilities and making their jobs

redundant. Often the end users wind up using parallel systems where they would continue

with their legacy systems with only basic usage of the ERP system.

Vendors are responsible for ensuring that people get comfortable with the system and

incorporate the functionalities available, into the daily operations. Often multiple training

sessions would have to be taken. It is always better if the vendors take the proactive action

and make sure that the customer uses the system rather than be reactive once the

complaints start coming in.

Handling over expectations

At times customers expect that an ERP system is going to perform “magic”; completely

automate daily operations and provide all their requirements at just a button click away.



This over expectations can lead to a perceived notion that the implementation was a failure

even if the ERP system is working as per business requirements. Vendors have the onus of

setting expectations; right from selling phase to avoid such scenarios later on.

Support and Feedback Mechanisms

Vendors adopt different routes to taking feedback from the customers. Some of the

common methods include

o Surveys

o Assigning Account Manager to clients

o Customer Care Support

Vendors were of the opinion that it is easier to sell but the difficult part is to maintain relations

with clients and constantly keep them happy. And this is necessary not only for obtaining Annual

Maintenance contracts but also in terms of future opportunities with the customer.



RECOMMENDATIONS AND CONCLUSION

GUIDELINES FOR CUSTOMERS

Pre Implementation Guidelines

Identify the need to Implement ERP: In many instances, ERP will not solve the company’s

business problems. Before making a decision as large as implementing a system that will cost

millions and affect the entire company, it's important to have a clear understanding of what the

compelling reason is to accomplish this project. There may be more cost-effective and lower-risk

options such as improving processes, redesigning the organizational structure, consolidating

entire global supply chain, or implementing a performance management system. In these cases,

maybe choosing not to implement ERP is the best solution. On the other hand, ERP may be the

business tool that enables these improvements.

Clarify the Business Requirements: Once the decision to implement an ERP has been made, it is

important to begin by looking at the desired operational model and using that as a starting point

in determining which software to implement. Executives should define and document key

business requirements for any package they may select. This includes not only nice-to-haves,

but also requirements that are "deal-breakers" if the software is unable to accommodate. In

addition, executives should use ERP business requirements definition as an opportunity to

improve current operations, efficiency, and effectiveness. The company should be focused on

achieving a measurable business value for the organization, and should thus choose the

software that enables it to do this.

Identify the Business Case and estimate the ROI: It is important to understand and document

what the total costs will be for each ERP vendor under consideration, as well as anticipated

business benefits. This helps in ensuring that the company realizes the potential benefits of

implementing ERP. All costs, including hidden project costs such as internal project resources,

data conversion, and lost productivity immediately following go-live, should be included in the

business case and ROI calculation for each ERP vendor under evaluation. If the resulting ROI for

a particular ERP vendor does not make sense or meet minimum investment criteria of the

company, then it's probably not a good idea to undertake the project.



Finalizing the Implementation Partner: Typically ERP implementations are taken up either by

the software vendors themselves or by the third-part vendors and the consultants. Companies

have to choose either of the above options by keeping cost and expertise as the prerogative. It is

also important to look at consulting firms that are capable of helping you manage the non-

technical aspects of the project, such as organizational change management, training, and ERP

benefits realization. There are many consulting firms, which are technology neutral and

specialize in providing project planning and business consulting for all types of ERP

implementations. Companies have to work with consulting firms in preparing a Request for

Proposal (RFP) which generally covers almost every aspect of ERP selection criteria from

functionalities, technology, hardware, support, implementation and costing methodologies.

Implementation Guidelines

An appropriate change management and business process management team has to be put in

place

Adopting an ERP system is a metamorphic process in an organization. There are a lot of changes

and standardization that needs to be done with respect to processes. A team out of the pool of

stake holders needs to be made responsible for monitoring the ripple effects and changes

required while fitting in the ERP system into the business organization.

Remain focused on business goal during implementation process

The team should not divert from the business goal of the ERP implementation project. Often,

the stake holders get myopic on the decisions made regarding the implementation and this

leads to a shift from the main business goal of the ERP implementation project.

Appropriate resource and team allocation for project

A technical and a business team needs to blend together and be fully allocated for the ERP

implementation project. The team should be made from a pool of stakeholders and should

understand the processes and requirements of the SMB organization very well. These resources

should be allocated as full time to the project.



Avoid excessive enhancement of ERP’s functions

This is very common with SMB’s. The ERP's scope gets wider as it is implemented in an

organization. There is a call for including many tasks under the purview. This dilutes the ERP

Existing system after modifying it a couple of times. Repeated change in configurations and

systems will only add to the confusions. When the functions are operated by a machine it

becomes increasingly difficult to make the necessary changes. These troubles arise when they

are not foreseen and addressed in the implementation stage. They have to be given a place in

ERP implementation plan.

Post Implementation Guidelines

In-house Technical Expertise

Experience indicates that the lack of internal or always available onsite specialist decreases the

chances of success dramatically. And the explanation should be simple to this fact. Nowadays

ERP system requires minor or major customization, integration and reporting and all these steps

in turn require patient coding and testing in the test environment or on the sample

dataset/database

Dedicated ERP Administrator

This is true that users could be trained and would know how to use the system. However typical

ERP has its own life and somebody should assign new users, setup security roles for them,

modify reports and makes custom reports available for the users, setup printers, try first to

resolve the issue by looking at the techknowledge database, and so on. ERP Administrator

doesn’t have to be IT guru – she/he needs to be trained on how to administer the program and

how to deal with technical support. Imagine for a moment that if you take out manager from

the company – even if all the employees have excellent training and used to work for the

company numerous years – you will still expect performance degradation. The same should be

said about ERP system.

Expect Certain Number of Issues

IT industry is not yet mature and it is probably sad, but the reality that even very experienced

consultant, developer makes errors – or your software environment has something that make



the custom piece malfunction. When you see the consultant being persistent in resolving your

issues – please be patient and try to help him.

Trust Your Consultant

When you decide on somebody to implement the system, you need from this moment on to

trust him and let him have high security access to the ERP hosting server. Complex security

makes consultant suffer from getting connected, installing the patches or custom pieces. So

many times we were spinning our wheels in trying to test new custom business logic, when, say

Windows or MS SQL Server security was restricting us to do the actions we needed.

Do not over negotiate.

This is from the sales cycle. When you purchase the system – you should purchase the software

and implementation from the same company – otherwise your partner will place you on the

second priority list. We saw numerous examples, when client purchases Microsoft CRM licenses

from nation-wide distributor, and then is trying to find somebody to implement the system. Also

if you are cutting software prices – you may see your consulting company rescheduling the work

for you in favor of somebody else.

Organizations non adherence to the stated principles

Organizations largely experience a wide gap between practices and preaching .Infact this has a

negative effect on the entire business scenario itself. The voracity and impact of loss could be

greater and more devastating when this turns out to be true even in the case of ERP. Since ERP

successful functioning is purely based on following the laid down procedures the lag could throw

a serious challenge on ERP'S potential right from the stage of its implementation.

Problem of Transformation due to ERP

Employees find it hard to digest the transformations that place in an organization all on a

sudden due to ERP implementation. Infact employees exhibit positive signs as everything goes

right in the first place. But as one progresses he finds difficult to work as it gets more complex.

The initial interest and expectation turns into apprehensiveness in due course of time. There is

another category of people who did not encourage ERP right from the conceptualization stage.

Their state of mind during these circumstances deserves no special mention.



GUIDELINES FOR VENDORS

ENTERING THE SMB ERP MARKET IN UAE

Understanding the market conditions

UAE has become a highly competitive playing field for ERP vendors especially in the SMB

market. Most of the organizations here by virtue of their size would be classified under the

SMB market; the potential in this market is huge. All the major vendors have set their foot

print in this region from SAP, Oracle, SAGE, Epicor etc. In addition there are a number of

local home grown products that cater to niche requirements or verticals.

A new ERP vendor needs to position itself right when deciding to enter such a competitive

landscape. It is better for the global players to work with a channel partner as they have

better customer reach and market awareness. The local players need to capitalize on their

specializations or vertical expertise in order to capture a share of the market

Deep cash reserves

The ERP business is one that has longer realization times than most software packages. Even

without a single deal in hand, an ERP vendor/ channel partner would require a sales team,

an implementation and development team. The first cash realization would come about 8-9

months after you have done your first implementation.

So vendors entering the market need to have deep cash reserves or financial backing to

sustain themselves at least for a year or two before setting their footprint in this market.

Sourcing the right Human Capital

The biggest challenge in the UAE market is sourcing the right people for your business and

when it comes to highly specialized ERP resources with domain expertise, the task becomes

that much harder.

An ERP vendor would require a strong sales team, Implementation and development team

which again consist of presales, domain consultants, functional consultants, project

manager, developers, testers etc. Sufficient time and effort has to be put into sourcing the

right talent.

Enabling Channel partners



Channel partners are a vendor’s brand ambassadors in a region. They have to be adequately

trained in not only the product offerings but also the processes involved in sales,

implementation and post implementation scenarios. This would require multiple training

sessions and constant interactions to enable them to cater to your product.

Vendors also have to put processes in place to ensure that partners do not cannibalize into

each other’s opportunities and managing such conflicts is key to sustaining your business in

the region.

Need for Specialized/ Verticalized Solutions

UAE market has certain key verticals that are growing at a phenomenal rate. One of the

entry strategies that a new vendor entering the market can adopt is to develop products

around these verticals incorporating the processes and best practices in them. This would

enable them to capture a share of the ERP market without directly competing head on with

the bigger players with generalized ERP.

Eg : Analyst ERP - EBiz

Explore all possible revenue avenues

Vendors have more than one option to earn additional revenues and increasing their share

of the pie. These include license revenue, Up-selling and Cross-selling opportunities,

Services revenue, AMC revenue, IP revenue : Selling your IP



SELLING/ PRE IMPLEMENTATION PHASE

Analyze the customer business

The first step before approaching any SMB customer is to analyze its operations for

suitability and solution fitment. If the vendor has an idea about the complexity and the

nuances of the customer business, he can pitch in with the unique functionalities that is

solution can offer. Factors considered can include

o Company Size

o Financial Parameters

o Buying Culture – Brand conscious versus price sensitivity

o Appropriateness of the product viz – a viz the complexity of the process

o Scalability of the product viz a viz the company’s future strategies

More importantly, if your product cannot cater to the specific needs, then this is the right

time to back out rather than forcefully customize and sell your solution which could backfire

post implementation.

Consultative selling - Understanding the SMB customers

The challenge in SMB selling is that the process from day one takes on a consultative mode.

Customers may a times will not have processes or systematic ways of working but their

businesses will be highly successful in nature.

The key to selling to an SMB customer is be sensitive to the fact that an SMB entrepreneur

would probably not appreciate any direct imposition of so called “best practices” that many

ERP packages have as a prerequisite. It requires tactful dealing and often informal methods

to convince them of the benefits of ‘slightly’ restructuring their processes and introducing a

whole new system of working.

SMB look for two main characteristics in an ERP package – Faster implementation and how

soon they can reap the benefits i.e the ROI. So the trick is in having template solutions or

“verticalized” solutions which would require minimum customizations and hence lesser

implementation time



Playing on your strengths

ERP vendors of all genre have a possibility of expanding their market in UAE – be it the

bigger players like SAP / Oracle or the smaller players like EBiz or ETA Infotech which are

doing well in their own way.

This is because there are segments of the market that have different considerations when

going for an ERP package. Some are brand conscious and would go only for the big names

while others are more price conscious and are more attuned to catering to their business

needs and would be looking for specialized products.

Gaining Larger Pie of the SMB ERP market

Vendors have a chance to provide end to end solutions for an ERP solution. There are

minimum hardware and network requirements that are prerequisite when implementing

ERP. Vendors can have strategic tie – ups with hardware and network providers. This not

only helps the vendor to position themselves as one stop shop for ERP but also increase the

switching costs for the customers

Setting Expectations Right from Day Zero!!

ERP is often pitched as this magic tool that can automate all the business processes

operations and provide all the customer requirements at just a button click away. This kind

of hyping can lead to over expectations and a perceived notion that the implementation was

a failure even if the ERP system is working as per business requirements. Vendors have the

onus of setting expectations right from selling phase to avoid such scenarios later on.

Getting Terms and Conditions clear cut when deal is closed

Most of the ERP implementations fail as a result of not getting the customer requirements

clearly or the inability to define the same. In addition, customers add on to the

requirements once the implementation is under way and they get a feel of the system

capabilities. While being open to certain amount of modifications and add ons, too much of

the same can lead to huge schedule and cost creeps and the vendor might have to go back

to the negotiating table to re-evaluate the terms. It is always advisable to document the

terms and conditions as agreed upon by both the parties when the deal is closed.



IMPLEMENTATION PHASE

Getting support of all stakeholders

An ERP implementation is only as successful as the end users acceptance of the system. ERP affects

all the departments of an organization - finance, HR, sales, marketing etc and it is imperative to

engage the client side throughout the implementation process. It is the end users who can give clear

ideas of existing processes and the current data entry methods which needs to be incorporated or

replaced by the ERP system. The scenario in SMB is that there would certain key people within the

organization who would have the pertinent information. It requires skilful probing and tact to

identify these resources and extract information from them.

Identifying the right project resources on both sides

Vendors need to ensure that there are resources allocated from the client side during the entire

duration of the implementation. They would be responsible for sourcing the data for the clients,

ensuring project deadlines are met while keeping cost considerations in mind. The implementation

and development teams should also work in sync to ensure that the process goes smoothly.

Setting realistic project timelines and budgets

In a bid to get the deal closed, vendors at times tend to negotiate with unrealistic project timelines

and budgets. This results in issues during the implementation phase when things fall behind

schedule and over the budget. For an SMB for whom budgets are always a constraint, this can be a

big blow and can even lead to a perception that the ERP investment was a bad move.

Vendors need to be transparent in their dealings and provide accurate estimates about the time and

money as these are the kind of considerations that affect future relations with the clients

Tackling Customization – too much versus too little

It is estimated that there would be about 20- 25% customization in all ERP implementations.

Vendors should avoid extremes of forcing pre-built template and the inherent “best practices” on

the customer or customizing to the level that the application becomes complex and drag the

implementation schedule and budget.

Proper Documentation at each phase

It is imperative that there is proper documentation at each phase of the ERP implementation. These

include



o Specification Requirement

o Project schedule and Timeline

o Implementation documentation

o Testing documentation

This is useful for future references and also during scenarios where there is in project manpower

turnover. The project should never be dependent on knowledge base of some people and

documentation ensures that someone else can takeover at an interim stage.

Training – Key to ERP success

Major chunk of the time after implementation goes in training. The end users need to get

familiarized with the system - from data entry to incorporating the system functionalities into daily

operations. Vendors need to invest into sourcing the right resources for training purposes.

Sometimes multiple training sessions might be required before the users get comfortable with the

system

POST IMPLEMENTATION

Handle Change Management

ERP implementations would invariably face initial resistance from employees who have to adapt to a

whole new way of working right from data entry. Vendors are responsible for ensuring that people

get comfortable with the system and incorporate the functionalities available, into the daily

operations. It is always better if the vendors take the proactive action and make sure that the

customer uses the system rather than be reactive once the complaints start coming in.

It is advisable to set up teams that consist of trainers and employees from the client side who would

supervise the entire change management process. They can keep track of signs of under-usage of

the system, existence of parallel systems and take corrective actions or extra training sessions as

and when required.

Constant Feedback

Vendors can improve their service offerings only through feedback. There can be formal and

informal methods of collating feedback. Employee and channel partner incentives are often linked

to the KPI measured through formal feedback.



Consistent and Quality Support

One of the key considerations that any customer would look for is quality and timely support.

Vendors can have multiple levels of support depending on the criticality and the timelines set for

each type of error that can occur. Keeping your customers consistently happy is pertinent not only

for repeat business but for building your reputation as a vendor



APPENDIX

Companies Interacted as a part of our dissertation:

ERP Vendors / Channel Partner Solutions offered

SAP Arabia MySAP, SAP All in one, SAP Business One, SAP Business By Design

Oracle Oracle e-business suite

Epicor Vantage, iScala

SAGE SAGE ERP

Focus Softnet Focus RT

ETA Infotech Orbits ERP

e-business Applications Analyst ERP

Raqmiyat GEMS

Satyam Computers NA

Triad Software Services NA

Ramco Ramco

Microsoft Microsoft Dynamics

IFS IFS ERP

EBM Visual ACE – Gold



Questionnaire: Channel Partner

Questionnaire: ERP Vendor / Channel Partner

Company Name: Interviewee: Designation of Interviewee: GENERAL QUESTIONS

1. Do you implement the ERP solution on your own or through channel partners? 2. What are your criteria for defining an SME (Small and Medium Enterprise)? 3. Who are your main competitors solution-wise ? 4. What are the factors considered while choosing channel partners? What is the strategy behind

it? 5. What are the key verticals that you have catered to in the Middle East region? 6. What are the typical expectations from clients of an ERP solution?

SELLING PHASE

1. What are the challenges and issues that your consultants face to sell the ERP solution? 2. How is the sales strategy different when it comes to selling to an SME? 3. How is selling different in the Middle East/ UAE region?

IMPLEMENTATION PHASE

1. What are the typical problems/ challenges faced in implementation phase by vendors/ channel partners?

POST IMPLEMENTATION PHASE

1. Do you have a formal feedback mechanism? 2. What is the support mechanism that is provided to SME customers? 3. What are the issues that the clients typically bring up after implementation of an ERP package? 4. How would you define a successful ERP implementation?



Questionnaire: Customer (SMB)

Questionnaire: Customer

Company Name: Interviewee: Designation of Interviewee: GENERAL QUESTIONS:

1. What is the annual turnover of your company?* 2. What is the number of power users of the ERP solution in place?* 3. What was the business need for an ERP package? 4. What were the quantitative/ qualitative benefits expected from an ERP package? 5. What were the existing IT solutions (if any) that were replaced as a result of ERP?

BUYING PHASE:

1. What were the selection criteria for choosing the given vendor and ERP solution? 2. What were the other packages considered? What were the factors for rejecting the others? 3. What was the contract type?

IMPLEMENTATION PHASE:

1. Was organizational restructuring/ business process reengineering required as part of the ERP implementation? What was the kind of customization required?

2. What were the typical problems or challenges faced during implementation phase by the vendors/ channel partners?

3. What was the time taken for implementation of the ERP package? 4. Was there resistance to the change within the organization? How was it dealt with? 5. What were the training processes? How were adaptability issues addressed?

POST IMPLEMENTATION PHASE:

1. What was the feedback mechanism used? 2. What are the maintenance/ support mechanisms? 3. Do you feel that the implementation was successful? Why or why not? 4. Are you considering future upgrades / new ERP packages? 5. What is the ROI expected? What is the expected time frame?

*-these questions were used to filter out SMBs from larger enterprises



Disclaimer and References

Multiple research papers, newspapers, and websites along with the corporate website have been

referred to for the creation of this academic paper. The author of this paper does not claim copyright to

any part of the above paper. In addition, the author also respects the copyright reserved with the

original authors of the papers. The author has only used information for academic purposes with no

intention of monetary gains directly from this paper.

The references used for compiling this paper so far are as follows:

Business Monitor International, The UAE Information Technology Report, 2006

Aberdeen Benchmark Repot, ERP in the mid-market, 2006

Simon Jacobson, Jim Shepherd, Marianne D’Aquila, and Karen Carter, The ERP Market Sizing

Report, 2006–2011, 2006

Gartner, EMEA ERP Market Review, 2006

Julie Smith David, William E. McCarthy, and Brian S. Sommer, The Key to the Fittest in the

Software Market, 2007

AMR Research, The ERP Market Sizing Report, 2006-2011, 2007

Baltzan Phillips, Enterprise Resource Planning and Collaboration Systems, 2007

Dr Sudhi Rao, ERP Lumbago, 2006

TechRepublic; 10 things you should know about implementing an ERP system, 2006

Young B. Moon, Avshalom Aderet, 2006

Knowledgestorm, 11 criteria for selecting the best ERP replacement, 2005

Datamonitor, 10 steps strategy for SMB success, 2004

David R. Laube and Raymond F. Zammuto, Business Driven Information Technology, 2003

Avshalom Aderet, A New Approach to ERP Customization, 2003

Haim Mendelson, ERP Overview, 2000

Jennifer Moriarty, Enterprise Resource Planning, 2000

Guy G. Gable and Michael R. Vitale, The Future of Enterprise Resource Planning Systems, 2005

Robert W. Smyth, Challenges to successful ERP use, 2001

Carl Dehlen and Johan ElfssonAn Analysis of the current and future ERP market, 1999

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Raqmiyat, http://www.raqmiyat.com/business_solutions/commercial/gems.asp, 2002

Ramco, http://www.ramco.com/products_erpondemand.asp, 2007

Epicor, http://www.epicor.com/www/products/manufacturing/avante, 2000

Epicor, http://www.epicor.com/www/products/iscala/, 2000

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http://www.indexuae.com/search.php?keytext=ERP&page=1

http://www.sysoptima.com/erp/

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http://www.cio.com/