Research goals and objectives: to carry out the analysis of the market of ERP-systems and to make scientific and practical recommendations for their choice for successful introduction at domestic machine-building enterprises. Subject of research: design, implementation and use of ERP-systems at the machine-building enterprises of Ukraine. Research methods: statistical, systematic and comparative analysis, modular design, analytical and expert methods. Results of the research: The advantages of implementing ERP-systems at the machine-building enterprises have been evaluated, the most significant impact on individual indicators of enterprises has been determined and the advantages and disadvantages of automation of business processes at machine-building enterprises, depending on their separate types, are described. Examples of integration of subsystems on the basis of information flows and interaction of automated systems with external entities are given. It is proved that the success of the implementation of ERP-systems depends on the correct choice of the system class, the type of production, set priorities for the automation of business functions, taking into account the factors of criticality, readiness, speed and value. As a result, the maximum effect from the implementation of the ERP system potentially depends on: the completeness of its compliance with national legislation, the user interface's convenience and clarity, the ability to adapt to the industry-specific features and the specifics of the operation of a particular enterprise, the possibilities of integration into the system of external and internal modules, etc. It is important to involve the consulting companies, industry specialists and employees of the enterprise in the process of implementation.
Currently, the Ukrainian market has a large selection of high-class systems for
automation of enterprises’ functioning. The worldwide leaders in this field, represented in
Ukraine, are products of SAP, Baan, Oracle and Microsoft companies. They are
correctly localized and implemented, or are successfully implemented at the Ukrainian
enterprises. The products of such Ukrainian companies as "Information
Technologies", Sirius System, IFS Ukraine and others are also common [
The current global trend towards building integrated enterprise management automation systems is the creation of the Enterprise Application Suite (EAS). This approach allows the most efficient use of the capabilities of accounting systems (ERPsystems, systems of financial and economic management, accounting programs) and OLAP-systems (planning and budgeting, knowledge management systems, data warehouses) and others.
However, most Ukrainian enterprises have different automated enterprise
management systems that have been introduced long ago, they are inefficient and do not
fully meet modern business management concepts and therefore can be classified by
software capabilities. Among these systems are the following [
Current demands for the operation of such systems require the use of advanced
tools, a strong technological base, mobility, accessibility, reasonable price for the
acquisition and service, taking into account relevant national standards [
The aim of the article is to describe scientific and methodological foundations and practical recommendations on key selection criteria for the modern ERP-systems of a machine-building enterprise. 2
The Main Requirements for Modern ERP Systems
The analysis shows that for the Ukrainian enterprises the most relevant concepts of
enterprise management systems are MRPII and ERP, which actually became world
standards. They represent a set of general rules set out in 1980-1990 years [
It is difficult to calculate exactly what the ERP-system gives to the company, taking into account the diversity of systems, different conditions of enterprises before introduction, and the complexity and uniqueness of each project. An expert survey of specialists of machine-building enterprises of Khmelnytskyi region was conducted by us at the beginning of 2019. We asked about the effectiveness of the ERP-systems, introduced by them and the results of the survey showed positive results (Table 1).
Since the authors did not aim at assessing the effectiveness of embedded IT technology ERP-systems, then the calculation of the values of changes in table indicators did not apply common methods such as Return on Investment (ROI), Total Cost Ownership (TCO), Cost-Benefits Analysis (СВА) etc. Instead, the comparison of the values of the indicators of economic characteristics before the implementation of the ERP-system and after the startup of the system at the enterprises was made. The assessment of qualitative and quantitative indicators was carried out on the basis of the points put forward in the questionnaires by experts of the enterprises, and also on the basis of statistical data of their financial reports.
As a result, as shown in table 1, the introduction of ERP systems in machinebuilding enterprises has had the most positive effect on the deadlines for closing the accounting period, the general culture of management, the use of optimal business process schemes, delivery in the exact terms, transport and procurement costs, aftersales service. For such a conclusion we have taken only those indicators, the growth rate of which exceeds 60%.
According to the statistical portal Statista, the entire world market of large and
medium ERP was income from the sale of software $ 82.1 billion in 2015 and the results
of 2016 rose to $ 82.3 billion [
Modern enterprise management system that meets the ERP concept should have the following modules: Supply Chain Management (SCM), Advanced Planning and Scheduling (APS), Sales Force Automation (SFA), Stand Alone Configuration Engine 1
Created by the authors based on the results of the expert survey of 28 machine-building
enterprises of Khmelnytskyi region.
(SCE), Finite Resource Planning (FRP), Business Intelligence (BI), Online Analytic
Processing (OLAP), E-Commerce (EC), Product Data Management (PDM) [
Recently, one can observe the trend of intensive management technologies development aimed at improving the interaction with external entities: customers, suppliers, partners and others. These information systems are based on the management of a full cycle of production: from designing according to customer requirements to guarantee and service. These technologies in modern terms are: Customer Synchronized Resource Planning (CSRP), Supply Chain Management (SCM), Customer Relationship Management (CRM). 3
ERP Selection Based on the Type of Production and Scale of Automation In order to consider all the needs of a machine-building enterprise, the choice of ERP must begin with the analysis of production and, depending on its characteristics, focus on different management concepts and automated information systems. In the evaluation of existing trends in production planning, it can be noted that the individual production is the most difficult, which requires constant technological change, recruitment and changes in work processes and therefore, the use of ERP in this case is inappropriate. Here it is better to apply PERT (Program/Project Evaluation and Review Technique) methods and network planning methods, especially for analyzing the time for each individual task and minimizing the time spent on the whole project (Fig. 1). ∞ e g n a r t c u d o r P 0
PERT methods and network planning methods 2
Small-scale production 3
Serial production ERP methods 4
Large-scale production JIT methods 5
Mass production
∞ 0
P R E f o r e w o p l a n o it c n u F
The three following types are different versions of serial production, in which, when the seriality increases, the versatility of the equipment decreases and the spe
cialization of workers shrinks, consequently, the number of types of finished products decreases, and the volume of output increases. The fifth type is characterized by mass production, the availability of specialized equipment, conveyors, technological complexes, the minimum number of types of products with maximum output volumes.
Research has shown that the use of modern flexible and powerful algorithms for the distribution of production processes has led to the development of Advanced Planning and Scheduling (APS). Therefore, the enterprises of the second, third and fourth types of production need to apply the concept of ERP, and for the fifth type JIT-methods (Just-In-Time), because ERP-techniques for such production are too powerful. The scale of automation introduction at the machine-building enterprises of Khmelnitsky region can be divided into partial automation, by individual areas, by the chosen sphere of activity and full automation (Table 2).
certain local complete solution.
business pro- Disadvantages: lack of strategy; task locality; probability of Partial cesses getting pieces of unfinished infrastructure; additional costs due to functions duplication and servicing of unfinished modules; inefficiency of investment.
individual cant economic benefit; saving investment resources.
By individu- aprreoadsuoctrioadnmin- type of manufacturing and its standards; frequent viewing of
al areas istrative units strategic and operational plans of automation on functional grounds.
the chosen tion; all subdivisions of the chosen sphere of activity are insphere of activ- volved; emerging information and communication structure of By sphere of ity. the company; a re-engineering of business processes and creatactivity areas ing a business model.
integrated procedures, functions and operations to a single system based on enterprise database; integration of the mathematical software on the basis
We have proved that in today's competitive processes ERP application helps optimize operations, reduces errors, improves forecasting and planning, and aims to significantly reduce costs and improve production processes. However, analyzing the advantages and disadvantages of automating business processes at an enterprise, it
must be emphasized that everything depends on the needs and financial capabilities of each particular enterprise. 4
ERP-Systems Selection Based on Their Capabilities
Since the beginning of the 21st century, new functional capabilities of the ERP
system have begun to evolve in the world, which went beyond the traditional features of
automation and optimization of business processes of the ERP methodology. The
traditional concept of ERP envisaged primarily work with internal enterprise
resources, resource planning, careful inventory management and insurance of
transparency of manufacturing processes. The functional of modern systems has been
supplemented by modules such as SCM and CRM, responsible for optimizing external
communications of the enterprise. There was a separation of concepts: the traditional
ERP management was called back-office, and external applications that appear in the
system - front-office. Thus, a new standard has appeared - ERP II (Enterprise
Resource and Relationship Processing) [
Our analysis confirms that new ERP really provides comprehensive management
of key business processes, often in real time. Typically, these systems are represented
by a set of integrated applications that the enterprise can use to collect, store, manage
and view data about many types of their own activities. These systems monitor
business resources (cash, raw materials, manufacturing facilities and the status of business
liabilities (demand for products and materials) [
The analysis showed that the new ERP was complemented by the following
modules [
In general, there are three main areas that determine the development of the class ERPII: deepening the functionality of ERP; the emergence of technologies that simplify the creation of specialized industry solutions; creation of new and improvement of existing management modules between corporate business processes.
Our system analysis revealed that the main differences between ERP and ERPІI arose from the rapid development of e-commerce and increased interaction between all subjects of financial and business processes via the Internet, so the modern system received a Web-based architecture (Fig. 2).
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Changing role of ERP Automation of internal and external business processes, free interaction with partners - customers, suppliers, banks and others.
To replace the closed monolithic platform came open, multi-level applications, built on the principle of component model.
Internal processes become open. Business activity data may be available to all members of the business community.
All business processes of the enterprise are subject to automation.
Adaptation of any type of the enterprise system and scale.
In our opinion and in the opinion of many scientists enterprise resource
management requires a comprehensive review of all business processes within a single
information system [
We have proved that an important aspect of implementing the chosen ERP is the level of integration between its subsystems. As an example, consider a scheme of integration of subsystems based on information flows (Fig. 3).
Product warehouse product composition
planned nomenclature purchase order required time, release required time
Schedule e l b a t e m ti Requirements planning customer orders list of configurations available for order
fulfillment order status special order sales order stock status confirmation productive reserves required time arrival
Order book
Customers payments s u t a t s r e d r o e s a e l e r Inventory management l a v i r r a e s a e l e e r s a e l e r , s u t a t s k c o t s
Accounting 5 Supply actual costs
Payments to suppliers procurement of goods, services
Operational management unfinished production routing technology, standards C O S T
M A N A G E M E N T
P L A N At the same time, we believe, it is necessary to be aware how the chosen enterprise management system integrates with external objects and systems (Fig. 4).
Common information model
State authorities, regulatory frameworks
ERP Service system
Distribution system Suppliers
Customers
Human resources management System Training and retraining
systems Vendors and software
developers Consulting companies
Marketing and e-commerce Financial system Fig. 4. An example of interaction of ERP system with external entities and their systems 6
With schemes given above and on the basis of functional features one can create an implementation plan of all subsystems, which eventually will become a powerful tool for managing financial and economic activity of the enterprise. 5
Built by the authors, based on the analysis of the functional structures of industrial enterprises of Khmelnytskyi region
Built using [
Criteria of Criticality, Readiness, Speed and Costs in the Enterprise Management System The analysis shows that most companies are choosing ERP for help with specialized consulting companies, but even with the involvement of external consultants, the company should also attract its own experts who can influence the final decision.
Among the wide range of criteria to select the ERP system should be the following: functionality of the system; total cost of ownership (acquisition costs, implementation and support); guarantees of successful implementation; reliability, performance, system perspective; efficiency and payback period of the project; support level by integrator after implementation; level of service and the possibility of further development of the system by our own specialists. The maximum effect after implementing ERP is potentially dependent on selected priorities in automation of business processes at the enterprise. In our opinion, analysis of possible automation steps should be carried out according to the criteria of criticality, readiness, speed and cost.
With the criticality criteria one can identify "problem areas" in the company, usually subsystem of sales, marketing and advertising are analyzed to attract new customers and retain existing ones. To enhance the efficiency of controlling over financial resources you must first carry out automation of financial management and cost of production. First and foremost, priority should be given to automation "problem areas" in view of the relationship of their business processes with other enterprise activities (Fig. 5).
Cost planning for staff training and retraining
Planning for maintenance costs ...
Planning the advertising cost Financial planning
Planning marketing costs
Planning proceeds from financing activities
...
Sales planning Core business planning
Production planning Procurement planning
HR planning
Research [
Here, in our opinion an important evaluation criterion is the readiness of enterprises to introduce an integrated information system, which consists of professional and psychological readiness of employees and managers. Lack of professional readiness could lead to the rejection of the project or hiring third-party developers that will increase the cost of implementation. Psychological readiness may be due to a significant increase in the functional responsibilities of staff and promote responsibility, especially at the stage of development and implementation.
Another criterion that we have defined is speed implementation solution, when automating site is chosen because of the simplicity of the design and subsystems implementation.
Cost component is generally perceived by management as an investment, and taking into account the fact that ERP has a modular structure, it is recommended to start a project with low-cost modules, in order not to risk losing the invested funds if for some reason the project fails. Therefore, ERP introduction should be carried out on areas of the enterprise where the maximum economic effect is expected, the implementation process will take place quickly and with minimal cost, and the staff is ready to change and will be able to use benefits.
Selecting the type of ERP is difficult and responsible task, since these systems are
usually implemented for quite a long time (the average lifetime is 9 years) [
When purchasing ERP, you must consider the TCO, which in turn consists of the
following costs [
Since these types of costs can increase the cost of the system by times, compared with the cost of the software itself, therefore, it is necessary to make a full precalculation of costs. 6
Use of Advanced Economic Security
Development
Tools and
Support
of
The analysis of information technology used in ERP is equally important. If the system
is based primarily on its own development, then there may be a strong dependence on
the supplier company [
Considering the current tendency to increase competition in the market, you should also take care of the security system to prevent unauthorized access and so on. It is necessary to examine mechanisms for data exchange between structural divisions, set a distributed data access, organize work in the sphere of identifying leaks or external threats and so on. Of course, the organization of information security is based not only on the use of software, but also on logistical organization, users’ experience and their corporate culture.
Effective functioning of ERP depends on the quality of service, including: the ability to
select the necessary and appropriate level of service for the customer; prompt response to
requests and ordered system of control over them; providing advice in real time;
completeness of orders execution; free and prompt elimination of errors by the developer;
availability of favorable conditions for the supply of new versions, etc. [
Research has shown that for automation systems of large and medium enterprises in Khmelnytskyi region, the quality of service and support comes to the fore in the long run, and so, when choosing ERP, you can sacrifice a certain functionality of the system, but not the quality and completeness of the service and support.
In our opinion, as practical recommendations to domestic enterprises, before choosing and implementing an ERP system, you need to use the following criteria and pre-verify: the completeness of reflection in the system of national legislation, the compliance with the procedure for the implementation of operations adopted in the enterprise, the clarity of the interface and documentation to users, the functionality of the system on similar enterprises, taking into account branch characteristics and specifics of own production, the possibility of branching out within affiliates, integration with other management systems. 7
Conclusions Based on the research and analysis of existing scientific approaches, the article assesses the advantages of implementing the ERP system at the enterprises of mechanical engineering, expertly determines its most significant impact on individual indicators of the enterprises, determines the main criteria for modern management system requirements to compliance with the resource planning concept. The authors offered scientific and methodological approach to the application of planning methods for various types of production depending on the volume of output and assortment, and also described the advantages and disadvantages of automating business processes at the enterprises in Khmelnytskyi region depending on the individual types of automation. The article defines a list of modules that appeared in modern ERP II, singles out differences between ERP and ERP II, and also provides examples of integration of subsystems based on information flows and interactions with external business entities. The authors systematized the criteria for providing benefits of the development or acquisition of ERP and suggested the use of advanced tools for developing and maintaining the economic security of enterprises, and presented practical recommendations on the use of ERP at the enterprises.
The results of the conducted research confirm that the introduction of the modern ERP-system at the enterprise allows you to obtain competitive advantages and ensures compliance with modern world standards for improving the company's rating, leads to an increase in the market segment, sales growth, creates the ERP-system compliance with the expectations of the head of the company, because it is the head of the enterprise who is responsible for setting the task and goals. The introduction of the modern ERP-system also finds the factors of the false work of some departments of the enterprise; weakens internal audit, as the quality of external audit increases.