The Study on Evaluation Module Architecture of ERP for Chemical Enterprises Yongbin Qin 1, 2, a, Jiayin Wei 1, b

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1 Internatonal Conference on Educaton Technology and Informaton System (ICETIS 2013) The Study on Evaluaton Module Archtecture of ERP for Chemcal Enterprses Yongbn Qn 1, 2, a, Jayn We 1, b 1 College of Computer Scence and Informaton, Guzhou Unversty, Guyang, , Chna 2 Postdoctoral Workstaton, Chtanhua Group Company, Guyang, , Chna a emal: ybqn@foxmal.com, b emal: wejayn05@sna.com Keywords: Assessment and Evaluaton; ERP; Evaluaton Module; Evaluaton Indcators Abstract. Good assessment and evaluaton of ERP s very mportant for us to know the effect of mplement ERP. In ths paper, we brng forward evaluaton module archtecture of chemcal enterprses ERP based the actual stuaton of some chemcal enterprse. Enterprses can make comprehensve assessment and evaluaton of ERP through the module ncludng sx evaluaton ndcators. Introducton The ERP system s the core of enterprse nformatzaton constructon. The orgnal ntenton of enterprse ERP s to change the tradtonal management model. Wth nformatzaton as the carrer, promotng the management effcency of enterprses, enhancng the management level and compettveness and then enterprses can gan greater benefts. Before the ERP s put nto practce, we usually need to do systemc analyss and nvestgaton for the current stuaton of enterprse. So, we can set up the overall objectves and quanttatve objectves of actualzng ERP n order to make sure that we can carry out comprehensve assessment and evaluaton after the ERP system s deployed formally. We should make sure that the deployment of the ERP s a beneft rather than a burden. For a company, any nput should generate returns. Otherwse, the nterests of company wll be damaged and the mplementaton of ERP wll lose ts sgnfcance. So, for a company, what and how many returns do enterprses get from the mplementaton of ERP, t s the most concerned problem for enterprse decson makers. The nput of enterprse ERP system s a long-term process. The nput ncludes hardware costs, software costs, mantenance costs and tranng costs of nternal staff, especally mantenance costs and tranng costs of nternal staff are a long process. The mplementaton of ERP relates to all aspects of the company. Thus, t s a systemc and complex work to evaluate the performance of some enterprses. Ths s very mportant for enterprse decson makers to mplement ERP frmly. So, how to evaluate the performance plays a crtcal role n promotng enterprse nformatzaton constructon. Promotng the applcaton performance effectvely requres enterprses to carry out regular assessment and evaluaton for performance of ERP n or after the process of the mplementaton of enterprses ERP. The am of objectve and scentfc analyss of the ERP performance s facng the problems and solvng them. So then we can strengthen the subject awareness of enterprses and enhance enforcement and applcaton. Through qualtatve analyss, quanttatve calculaton and objectve and far evaluaton, we can reveal the performance of ERP from dfferent standponts scentfcally. Ths s good for the applcaton of ERP n enterprses and then the success rate of ERP can be rased enough. Ths paper studes on the chemcal enterprses of Guzhou, combnng wth the stuaton of enterprses and performance of ERP, we brng forward a new evaluaton module of chemcal enterprses ERP. Ths module concentrates on enhancng effcency and nterests of enterprses. The Stuaton Analyss of ERP Assessment and Evaluaton The study of assessment and evaluaton method of the ERP s concentrated on the work The authors - Publshed by Atlants Press 476

2 achevement and effectveness after the ERP s put nto effect. The purpose of the assessment and evaluaton s based on objectve and strategy of the mplementaton of ERP and examnes the effect of the admnstraton and management. The man purpose of ERP assessment and evaluaton s lyng n some ponts as follows. 1) The enterprses can fully understand progress and status of the mplementaton of ERP through the assessment and evaluaton; 2) Through comparng wth the objectves and standards set before mplementaton, we can fnd the effect and shortage of the mplementaton of the ERP, and then mprove and deepen the mplementaton of the ERP. The assessment and evaluaton of the ERP system s system engneerng. Snce the emergence of ERP system, many scentfc researchers do a systematc study on the assessment and evaluaton methods. For example, the Amerca scholars, Delone and McLean brng forward a success model of nformaton system n 1992 [1][2]. The model s called D&M model. The D&M model s based on the analyss of 180 papers about successfully measurng nformaton systems and summarzes sx man dmensons about success of nformaton system. The sx man dmensons are system qualty, nformaton qualty, system usng, user satsfacton, personal nfluence and organzatonal nfluence. System qualty measures stablzaton, response tme and usablty of system tself. Informaton qualty measures effectveness, tmelness and accuracy of the nformaton generated by the system. System usng measures the tme and frequency of usng system, the number of usng nformaton and the system dependence. User satsfacton can be governor satsfacton or overall satsfacton. Because of strong operablty, satsfacton s a measure of the most wdely used. Personal nfluence ncludes strengthenng the effcency of decson-makng managers. Organzatonal nfluence ncludes the mprovement of fnancal ndcators, such as the enhancng of sales amount, market share, the market value of shares and proft margn, the reducng of the cost, captal turnover tme and nventory, the mprovement of the producton effcency, the servce effcency and the products qualty, or the mantanng and strengthenng of the strategc compettve advantage. The D&M model regards the success of nformaton system as a process that ncludes tme relatonshp and causalty. The nformaton system should be establshed and mplemented frst, ts feature s reflected n the system qualty and nformaton qualty. Users know about the characterstcs of nformaton system through usng systems and then get the judgment of satsfacton about system. So, system qualty and nformaton qualty affect system usng and user satsfacton jontly and separately. System usng and user satsfacton affect personal nfluence drectly and ultmately affect organzatonal performance. D&M model regards the nformaton system as a mult-dmensonal varable. We could not say that a dependent varable s better than another one. We should choose the dependent varable whch wll be nvestgated based on the research objectves, the organzatonal envronment, the concrete study aspect of system, ndependent varables, research method and level of analyss. At the same tme, they also beleve that conductng the research from a comprehensve perspectve s necessary. Markus et al. brng forward that the success of ERP s a mult-dmensonal, dynamc, and relatve concept [3]. In order to solve the mult-dmensonal, dynamc, and relatve problem of the successful estmate of system, Markus et al. brng forward a new most deal successful framework of ERP, that s stage theory of ERP assessment and evaluaton. The stage theory descrbes the best results of mplementng ERP n certan busness condtons. The framework measures the success of ERP system from the followng three aspects. 1) Project Metrcs: the success of ERP system s that the system completes the nstallaton n the scope of tme, budget and plan. The success assessment and evaluaton of ths metrcs s smlar to the assessment and evaluaton of tradtonal project management. 2) Early Operatonal Metrcs: Markus regards that the ERP systems may be a lttle chaos and reducng of performance at the begnnng as a result of the complexty of ERP and maladjustment to the new systems. The ntal operaton stage s from the onlne of the ERP system to returnng to normal operatng level of the orgnal. In ths stage, the success of the system ncludes lttle fluctuaton of key performance ndcators, quckly reachng the normal or expected level, few nfluences to the enterprse and the customers. 3) Long-term Busness Interests: t means that the ERP system has been workng and the 477

3 enterprses get commercal nterests from the mplementaton of ERP system. The success of ths metrcs s that the enterprses get how many and what busness nterests from the mplement of ERP system. The assessment and evaluaton of long-term busness nterests should compare wth the objectve of enterprse or the expectaton of ERP. Markus regards that the objectve of one sngle enterprse may be slghter than the huge potental ablty of ERP. So, the good dea s to compare the average benefts of the mplement of ERP of smlar enterprses wth the commercal nterests of our enterprses. Shang and Seddon brng forward a comprehensve commercal nterests framework of ERP through analyzng 233 ERP applcatons [4]. They regard that the mplementaton of ERP wll have an mpact on the busness nterests of enterprses. It can brng about nterests of fve aspects such as operaton, management, strategy, IT and organzaton. So the enterprse can evaluate the success of the mplement of ERP from the aspects of mplementaton of commercal nterests. These fve aspects can be dvded nto dfferent nterest framework and then form a relatvely complete assessment framework of nterests. Some academcans dd some specal research work on fnancal performance after the mplementaton of ERP and got some research results [5][6][7][8][9][10]. For the assessment and evaluaton of the mplementaton of ERP, many enterprses do not have clear evaluaton crtera. We do not have a scentfc and clear evaluaton crtera on how to accurately and comprehensve evaluate effectveness of mplementaton of ERP project. Some experts and scholars n the Unted States brng forward a lot of standards and methods to evaluate performance of ERP. Although these methods are used wdely, these methods are concerned about the process of the mplementaton of ERP, such as what to do, whether or not be done, normalzaton and accuracy, the functon of ERP software, they hardly concentrate on the content of the effect after the mplementaton of ERP or how to do quanttatve evaluaton. And these evaluaton crtera have not become nternatonal standard, so we should do some ntensve and wde dscusson and research about assessment and evaluaton of ERP. Ths helps to dong scentfc assessment and evaluaton of ERP, further mprovng the ERP project evaluaton and acceptance specfcaton, well understandng the features and functons, effectvely mprovng the applcaton level of ERP and the management level of enterprses. If we want to carry out the assessment and evaluaton of the enterprses ERP, we should know about the actual stuaton of ERP and establsh reasonable standard of assessment and evaluaton. The tradtonal assessment and evaluaton of ERP based on functon could not be fully applcable to the assessment and evaluaton of ERP. The reasons of t are as follows. 1) The tradtonal pattern of assessment and evaluaton orgnates from fnancal results. There s a certan lag of t. It cannot reflect the dynamc busness operaton. 2) The tradtonal assessment and evaluaton s only for the relevant functonal departments but could not evaluate operaton flow. 3) The tradtonal method could not make real-tme assessment and evaluaton for the busness processes. Whle t focus on ex post analyss. Prncples of Settng Indcator System of Performance Evaluaton for Chemcal Enterprses The chemcal enterprses, especally agrcultural chemcal, have unque busness characterstcs, for example, the supply of resources s relatvely stable and sngle, marketng channel s relatvely stable, they are typcal resource-based enterprses. On account of these typcal resource-based enterprses, combned wth the actual stuaton of a chemcal enterprse, we need establsh the evaluaton standard and model of ERP for the current enterprse. So, we thnk that the chemcal enterprses should follow the followng prncples when settng ndcator system. 1) Relevance prncple: The performance evaluaton ndex can reflect the strategc target of enterprse and can serve the strategc objectves of enterprses. 2) Pertnence prncple: Many enterprses are emphaszed n comprehensve assessment and evaluaton of ERP, whch s comprehensve evaluaton. However, accordng to characterstcs of chemcal enterprses and dfferent requrements of dfferent enterprses, we should set ndcator 478

4 system of performance evaluaton for chemcal enterprses wth pertnence. 3) Core prncple: Maybe enterprses concentrate on many dfferent evaluaton ndcators, but the managers of the enterprses may be concerned wth only some core evaluaton ndcators. So we should enhance the weght of the core evaluaton ndcators and strengthen the ntenton of the enterprses managers. 4) Operablty prncple: Enterprses should take the operablty prncple nto account. Adhere to the prncple of combnng qualtatve and quanttatve, manly usng quanttatve prncple. Make sure that the evaluaton ndcators are feasble. 5) Deducton prncple: The evaluaton ndcators should be forecasted. Enterprses can forecast the performance of enterprses after the mplementaton of ERP through deducton. 6) Relatve stablty prncple: Once the enterprses set the standard of the assessment and evaluaton, they should make sure the relatve stablty. The assessment and evaluaton s effectve and comparable over a perod of tme. Analyss of Evaluaton Indcators for Assessment and Evaluaton of Enterprses ERP Based on the analyss of the prncple of assessment and evaluaton for chemcal enterprses ERP and the present status and features of some chemcal enterprse of Guzhou, we brng forward the evaluaton module archtecture of chemcal enterprse ERP whch nclude sx ndcators. The sx ndcators are fnance ndcators, market ndcators, resource ndcators, effcency ndcators, customer ndcators and human ndcators. The sx ndcators are descrbed as follows. Fnance Indcators Market ndcators TABLE I. Clear accounts Fnancal effcency Stock level Enterprse ncome Operaton ablty Fund utlzaton rate TABLE II. Goods supply Captal recovery rate Market share Development ablty FINANCE INDICATORS Overall nformatzaton of fnance, the accounts are clear and vsble. Whether or not the effcency of accountng accounts s enhanced. The total assets of the enterprse, sales revenue, total proft. Rate of return on Net assets of enterprse, rate of return on total assets. Captal turnover, nventory cycle rate, turnover rate of fxed assets. Enterprse funds utlzaton rate. MARKET INDICATORS Whether or not the supply of goods s secure and tmely. Customer payments after the goods are sold. Whether or not market share s ncreasng. Growth rate of sales revenue, total assets growth rate, growth rate of proft, captal accumulaton rate. Resource ndcators TABLE III. Resources supply Resource nventory RESOURCE INDICATORS Whether or not the supply of producton resources meet the needs of producton. The nventory of enterprse producton resources and goods nventory. Effcency ndcators TABLE IV. Manageral effectveness Employee productvty Busness effcency Resources supply effcency EFFICIENCY INDICATORS To enhance the effcency of the admnstratve management of the enterprse. Whether or not the employee's work effcency, producton effcency and other ndcators are promoted. Market supply effcency, customer effcency. Tmelness for supply of resources of enterprse requred. 479

5 Customer ndcators Human ndcators TABLE V. Customer satsfacton Market share Customer loyalty Customer proftablty Labor cost Workng famlarty Staff motvaton Employee benefts TABLE VI. CUSTOMER INDICATORS Servce satsfacton, product delvery rate. Market share, new customers. Customer stablty, retenton rate. Proftablty of customers. HUMAN INDICATORS The rate of staff tranng costs ncreasement over enterprse proft ncreasement The famlarty of usng the ERP system for staffs. Staffs work motvaton, enthusasm of usng the new system. The rato of number of employees and enterprse profts. The Evaluaton Module Archtecture of ERP for Chemcal Enterprses Based on the above evaluaton ndcators, we brng forward a new module of assessment and evaluaton for chemcal enterprses ERP. Ths module takes the ncreasng of the enterprse effcency and benefts as the basc standard. We call t FMRRECH-module. The evaluaton formula s as follows. = A * Q 1+ B * Q 2 + C * Q 3 + D * Q E 4 + * Q F 5 + * Q 6 (1) Of whch, B, C, D, E, F stands for fnance ndcators, market ndcators, resource ndcators, effcency ndcators, customer ndcators and human ndcators. Q1+ Q2 + Q3+ Q4 + Q5 + Q6 = 1 (2) The value ofq can be set by the actual stuaton of the enterprse, we can adjust the weghts of them. The evaluaton formula of A s: The evaluaton formula of B s: The evaluaton formula of C s: The evaluaton formula of D s: The evaluaton formula of E s: The evaluaton formula of F s: A B C D E F { A, } { B, B, } { C, C, } { D, D, } { E, E, } { F, F, } A α B β C γ D δ E λ F ρ Takng fnance ndcators A for example, accordng to table stand for clear accounts, fnancal effcency, stock level, enterprse ncome, operaton ablty, fund utlzaton rate. The values of them are 15, 20, 15, 20, 15, 15, total of them s 100. α s the weght coeffcent of FMRRECH-module. The standard of the weght coeffcent s as follows. TABLE VII. WEIGHT COEFFICIENT OF FMRRECH-MODULE Rank Content descrpton Weght coeffcent Complete all the contents of the correspondng evaluaton 1 1 ndcators; 2 Complete 80% of the contents; Complete 60% of the contents; Complete 40% of the contents; Complete 20% of the contents; Complete 10% of the contents; Complete 0% of the contents; 0 8 Complete nothng of the contents; -0.2 The weght coeffcent of table7 consders the postve offset and negatve offset for the 480 (3) (4) (5) (6) (7) (8)

6 assessment and evaluaton. We can set proper weght coeffcent accordng to the actual stuaton of enterprses. Concluson In ths paper, based on the actual stuaton of chemcal enterprses, we brng forward new evaluaton module archtecture of Chemcal Enterprses ERP. Ths module takes the ncreasng of the enterprse effcency and benefts as the basc standard. Enterprses can thoroughly evaluate the performance of ERP through sx evaluaton ndcators. Acknowledgement We thank for the anonymous revewers for ther helpful comments and others for useful dscussons. Thanks for the postdoctoral workstaton of Chtanhua Group Company. Ths paper s supported by the Natonal Natural Scence Foundaton of Chna (NSFC, NO ; No ), the Scence and Technology Foundaton of Guzhou Provnce (NO ), the Scentfc Research Project of Introduce Talents of Guzhou Unversty (NO ) and the Foundaton of Informatzaton of Manufacturng Industry of Guzhou Provnce (NO. GY(2011)3074). References [1] Delone, W. H., and Mclean, E. R. Informaton System Success: The Quest for the Dependent Varables, Informaton System Research [J], [2] Xanghua Lu, Lterature Revew on Evaluaton of Enterprse Informaton System Project, Scence of Scence and Management of S.&.T. 2003, 24(2). [3] Markus M.L., and Tans C., The enterprse systems experence from adopton to success, In R.W. Zmud(ed. ), Framng the Domans of IT Management: Projectng the Future Through the past. Cncnnat, OH: Pnnaflex,2000. [4] Shang S. and Seddon P.(2002) Comprehensve Framework for Classfyng the Benefts of ERP Systemsmercas Conference on Informaton Systems, Long beach, CalfornaUG,2000. [5] McAfee A., The Impact of Enterprse Resource Plannng Systems on Company Performance[C], Paper presented at Wharton Electronc Supply Chan Conference Phladelpha, December [6] Murphy K. E. and Smon S. J., Usng Cost Beneft Analyss for Enterprse Resource Plannng Project Evaluaton: A Case for Includng Intangbles[C], Proceedngs of the 34th Hawa Internatonal Conference on System Scences, [7] Poston R. and Grabsk S., Fnancal Impacts of Enterprse Resource Plannng Implementatons, Internatonal Journal of Accountng Informaton Systems, : [8] Hunton J.E. and Flower L., Informaton Technology n Accountng: Assessng the Impact on Accountants and organzatons, In: Advances n Accountng Informaton Systems, S. C Sutton (ed. ),JAJ Press,Greenwch,CT,1997:3-34. [9] Ncolaou A. I.ualty of Post Implementaton revew for Enterprse Resource Plannng systems [J],Internatonal Journal of Accountng Informaton Systems,2004.5: [10] Delotte Consultng LLC. Delotte Consultng s Perspectve: Makng ERP spell ROI,ERP s Second Wave: Maxmzng the Value of ERP-Enabled Processes[R], 1999: