Enterprise Resource Planning (ERP), is, in simple terms, an integrated software suite that ties together every part of a business.
Thomas Thiebault, the ERP implementation project manager at multinational distribution company Europ-Continents, puts it like this: “The ERP system is big software. Usually a company has software for sales people, software for logistics people, accounting software for the financial people. The ERP system is one software for everything.”
Chamnap Koy, from leading software company First Cambodia, describes ERP as “an integrated solution for finance and accounting, for managing factories and warehouses, for managing production, and human resources and payroll, all in one single package.”
For people unaware of ERP, that might sound a bit daunting. But Thiebault says it isn’t. “Basically what it means is that instead of having people working on different problems between departments, everyone is working on the same software.”
Why Cambodian businesses need ERP
While ERP is a key part of business models around the world, it still has not been completely accepted in Cambodia, according to Thiebault, leaving many at a disadvantage. “Not a lot of companies are using ERP yet in Cambodia; a lot of companies should be using it. It’s going to start happening,” he says.
Having worked in ERP implementation across the region, Thiebault believes Cambodia has a lot of ground to make up. “In Singapore, almost all the companies there use ERP systems; in Thailand, a lot also; in Laos there are perhaps only five companies in the country. In Cambodia, there are maybe a few more, but for sure they are going to have to use it.”
Christope Dalla Riva of local firm Innovation K says the point of ERP is simple: “If companies install ERP, it’s to earn money. With an ERP everything is connected, and so top management can have a global view of the company to allow them to increase revenue. With intelligent data from a global ERP tool, you can maximise your profit by taking the right decisions, adjust your company strategy and improve efficiency of all departments.”
It takes time and money to implement an ERP system across a company. Europ-Continents began installing its ERP in October 2012, and it wasn’t fully functional until January 2014. But Thiebault says that his company is proof that the wait is definitely worthwhile. “We’re happy, especially the managing director. At the beginning it was a bit difficult to convince him, because you have to put money up, and in the beginning it’s a big amount. But after two years, now he’s very happy.”
Spending money to save money
The costs of ERP software can be quite high, and you have to pay the vendor a percentage of that original fee every year for maintenance. But more importantly, Thiebault says, firms that take up ERP must also budget for a member of staff to monitor and maintain the system. “What I find when I read articles about ERP is they never insist that you have someone in the company to manage this. Having a staff member to manage your ERP is the most important thing.”
“Some big companies waste millions of dollars on their software because no one consolidates it across the group; they don’t put enough people behind it. So you don’t just buy the software, but you have to budget for someone. You can’t just say that the finance director will be in charge of the ERP – it’s a full-time job.”
Pressed on how much money the company has saved thanks to ERP, Thiebault is reluctant to put a figure on it, but says the benefits have been tangible: “For us, after two years, I couldn’t give you a figure and say we saved this money or that money, but what I can say is that our organisation is much better; we make fewer mistakes, we have better stock management, and this for sure makes us save a lot of money. And also, something that’s difficult to estimate with figures, but customer satisfaction is up.”
Raise your business to international standards
Thiebault believes that ERP will soon gain acceptance and become widely used in Cambodia, bringing local companies into line with those international firms that they do business with.
“Most of our suppliers are using ERP systems, whether they’re Asian or European; that’s the only way to manage your business today. How can you make strategic decisions when your figures are wrong? How can you be sure that your business is running correctly if you have a lot of transactions and you can’t trust your figures or your financial statements? That’s how you survive.”
Looking to the future, Thiebault says ERP software will provide a crucial competitive advantage to those who are first to take advantage of the benefits. “In Cambodia today, in some domains, we can see that the competition is not too hard, but it will become so. I think some companies in Cambodia will die because when you think like this, if you’re the only supplier, you will not last forever.”
Dalla Riva also believes that ERP could separate successful Cambodian businesses from the rest. “The ASEAN Economic Community is coming, and Cambodia’s economy is growing fast. Cambodia must be seen as an international country, connected to ASEAN, with international standards. Install ERP will quickly become an obligation as the market will demand it, and if you don’t have a powerful tool to help you to improve the efficiency of your company, your could be out of the game.”
Enterprise Resource Planning in Cambodia
An enterprise resource planning system (ERP) is computer software used to organise your business by streamlining the exchange of information across all departments and business functions, from accounting to human resources to sales and beyond.
The ERP software market is large and complex. There are hundreds of vendors offering different ERP applications to meet the unique requirements of specific industries, such as manufacturing, distribution and retail.
Average cost to implement ERP in Cambodia:
- $50,000 – $200,000 for small to mid-sized firms
- $200,000 – $500,000 for large sized firms
Average timeline to implement ERP in Cambodia:
- 3 months for mid-sized enterprises
- 6 months for large enterprises
Recommended ERP Systems
Made in Germany, SAP solutions are best suited to large corporate enterprises. SAP software automatically bridges barriers of currency exchange and language, making it popular globally and easy to integrate data with suppliers and buyers.
Sage: In 2012, Sage streamlined and rebranded its diverse set of ERP software as four main products: Sage ERP 100, 300, 500 and X3. Each of the four solutions is designed to handle different sized business interests, from the smallest family company to the global giant.
GP: Formerly called Great Plains, Microsoft Dynamics ERP was built to serve small to mid-sized businesses. Originally accounting software, Microsoft Dynamics has been expanded to include specialised features for financial management, human resources and supply chain management.
NetSuite: Originally designed as an accounting system, NetSuite has gradually grown into a full-suite ERP with CRM, HR and business intelligence functionality. NetSuite can be highly customised, which takes time but greatly increases usability.
Text by Rupert Winchester | Illustration by Cedrick Ragel