Is ERP a Luxury? Evaluating the financial impact of ERP adoption in Bangladeshi SME’s supply chain

Abstract

This research paper investigates the issue of whether Enterprise Resource Planning (ERP) systems are luxury or necessity to small and medium-sized enterprises (SMEs) in Bangladesh. ERP is widely adopted in large firms, but SMEs have financial and technical barriers to using it. Since SMEs make up 90 percent of businesses and 20 percent of GDP in Bangladesh, the problem is urgent to economic development.

The study employed a survey of 78 subjects and a case study of La Ting Ting, a restaurant in Dhaka. The results indicate that awareness of ERP is high, but opinions on the necessity vary: those who are knowledgeable find ERP as a necessity, whereas those who have not had any experience with it tend to view it as a luxury. This split was evident in the case study where the restaurant owner recognized the value of ERP but decided on less complex tools because his operations were rather small in scale.

The cost was found to be the most significant obstacle compared to the issue of technical complexity. Senior users however reiterated the importance of ERP towards enhanced accuracy, efficiency and minimizing of errors. There was also a high rate of replying that they would recommend ERP, showing its perceived value.

The study finds that ERP is not a luxury but a strategic necessity to SMEs, as long as it becomes affordable, modular, and as long as it is backed by focused training and vendor adaptability