THE ECONOMIC BENEFITS OF KNOWLEDGE VALIDATION OF ERP TO LOW TECH SMES

Knowledge Validation is a challenge in Small to Medium Sized Enterprises (SMEs), as most of the available information is held in people’s minds as tacit knowledge, or saved on each employees PC without sharing or common validation. This case study is based on a company in Leicester who installed an enterprise resource planning (ERP) system after two previous failed trials with different type of software. The underlying reasons for the problems were due to the distributed and tacitly held knowledge where the assumptions in one part of the company were inconsistent with other parts. The research goes through three years of ERP implementation and analyses the main problem of validating knowledge in more detail and identifies the consequences of failing to do this. It also describes the potential economic benefits for installing enterprise resource planning system in SMEs and investigates the claim of ERP vendors that their ERP solutions increase the performance of their customers, increase profitability and efficiency of work processes. It discusses the effects of ERP on the company’s overall performance, what the benefits are, and where there could be an enhancement to SMEs from the ERP system. The major benefits accrue from the more accurate estimates the system is able to provide and the resulting improvement in quotes. Challenges are discussed and highlighted in the paper, which concludes at the end the importance of Knowledge Validation and identifies benefits of doing it.

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