1

Dissertation

Adoption of Enterprise Resource Planning (ERP) in Vietnam



Table of Content
Table of Content .................................................................................................................................. 1
List of tables 4
List of figures 5
Abstract 6
Chapter 1. Introduction .................................................................................................................. 7
1.1 Rationale for Chosen Topic ......................................................................................... 7
1.2 Research Background .................................................................................................. 7
1.3 Research Aim and Objectives ...................................................................................... 9
1.4 Research Significance ................................................................................................ 10
1.5 Research Structure ..................................................................................................... 11
Chapter 2. Literature Review....................................................................................................... 12
2.1 Introduction to ERP and Related Concepts ............................................................... 12
2.1.1 Definition of ERP ........................................................................................................ 12
2.1.2 Concepts related to ERP .............................................................................................. 12
2.1.3 Benefits of ERP............................................................................................................ 12
2.2 Construction Project ERP .......................................................................................... 13
2.2.1 Status of implementation of ERP ................................................................................. 13
2.2.2 Considerations for successful ERP implementation .................................................... 14
2.2.3 Implementation of ERP - The difference between solutions ....................................... 14
2.2.4 ERP & Scale Deployment of enterprise ....................................................................... 15
2.2.5 Summary of cost ERP solutions on the market ........................................................... 16
2.2.6 Comparison between domestic and foreign ERP......................................................... 17
2.2.7 Selection process of ERP systems ............................................................................... 17
2.2.8 Develop ERP project for Vietnamese businesses. Factors for success and failure ..... 17
2.2.9 Example of Failed ERP implementation...................................................................... 17
Chapter 3. Research Methodology .............................................................................................. 18
3.1 Research Strategy....................................................................................................... 18
3.2 Research Design ......................................................................................................... 19
3.2.1 Secondary Data ............................................................................................................ 19
3.2.2 Primary Data ................................................................................................................ 19
3.3 Data Collection Methods ........................................................................................... 19
3.3.1 Qualitative Methods ..................................................................................................... 19
3.3.2 Quantitative Methods ................................................................................................... 19
3.4 Validity and Trustworthiness ..................................................................................... 19
3.5 Limitations ................................................................................................................. 19
Chapter 4. Results and Discussion .............................................................................................. 20
4.1 Target, Cope and Requirement of Overall System .................................................... 20
4.2 Functions and Advantages of Provided Software ...................................................... 21
4.2.1 Functions and available advantage system .................................................................. 21
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4.2.2 System Administration Application architecture model: ............................................. 22
4.2.3 Modules provide functionality according to PV needs Error! Bookmark not defined.
4.3 Technical Solutions Application System ................................................................... 26
4.4 Schedule and Budget Implementation Project ........................................................... 26
4.5 Discussion .................................................................................................................. 28
Chapter 5. Conclusions and Recommendation ............................................................................ 29
Learning Statement ............................................................................................................................ 30
5.1 Personal Opinion ........................................................................................................ 30
5.2 Development .............................................................................................................. 30
5.3 Contribution ............................................................................................................... 30
References Error! Bookmark not defined.
Appendix 1 Error! Bookmark not defined.
Appendix 2 Error! Bookmark not defined.
Appendix 3 Error! Bookmark not defined.




List of tables
Table 2-1 Advantages of ERP system ......................................................................................... 12
Table 2-2 Summary of research result about ERP solutions....................................................... 14
Table 2-3 Satisfaction of ERP solutions ..................................................................................... 14
Table 2-4 Overall comparison between SMEs and large enterprises ......................................... 15
Table 2-5 Comparison of ERP solutions ..................................................................................... 16


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List of figures

Figure 2-1 A graphical view of ERP ........................................................................................... 12
Figure 2-2 Major elements in ERP implementation ................................................................... 13
Figure 2-3 ERP governance framework ...................................................................................... 14
Figure 3-1 Characteristics of a Research ..................................................................................... 18



Abstract

The main purpose of the research is to identify and analyze the issues and problems that
Vietnamese medium-sized companies will face when implementing an international ERP package.
Two in-depth case studies were conducted for two Vietnamese medium-sized companies: one
which experienced success and the other which experienced failure in implementing international
ERP systems. The research findings suggest that continuous and clear communication, consistent
and determined support from the top executives, concrete project management methodology and
effective change management attitude are the biggest contributors to the success of ERP
implementation in Vietnamese medium-sized companies. On the other hand, the research shows
that problems with system customization and inadequate user training may hinder ERP success.
Based on this analysis, recommendations are developed for Vietnamese companies to consider
when implementing international ERP packages.

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Chapter 1. Introduction

1.1 Rationale for Chosen Topic
Enterprise Resource Planning (ERP), viewed as advanced managerial information systems that
strengthen the company and improve competitiveness, has become the most controversial topic
among Vietnamese executives in Vietnam today. However, the success rate of ERP
implementation in Vietnamese companies is still not very high. Implementing ERP in
Vietnamese companies is much more challenging than it is in well-organized companies in
developed countries. The low success rate of ERP implementation in Vietnam is caused by a
number of problems which cannot be solved by simply applying the success factors of ERP
implementation used in Europe or the United States due to the specific complexities and
complications of a very unique combination of organizational structure and local business culture
characteristics. Careful adaptation with methodological adjustments is required.
1.2 Research Background
In 1990, the Gartner Group first used the acronym ERP (Enterprise Resource Planning) is an
extension of material requirements planning (MRP), later manufacturing resource planning and
integrated production computer. If there is no alternative to these terms, ERP represents a larger
whole, reflecting the development of application integration beyond manufacturing. Not all ERP
software is developed from a manufacturing core. Different vendors started with maintenance,
accounting and human resources. In the mid-1990s, ERP systems addressed all core functions of
the business. In addition to companies, governments and non-profit organizations also started to
use ERP systems.
ERP systems have experienced rapid growth in the 1990s because the 2000 issue and the
introduction of the Euro disrupted legacy systems. Many companies took this opportunity to
replace such systems with ERP. ERP systems initially focused on automating office functions that
do not directly affect customers and the general public. Front office functions such as customer
relationship management (CRM) dealing directly with customers, or e-business systems, such as e-
commerce, e-government, e-telecom, financial electronic, supplier relationship management
(SRM) became integrated later, when the Internet simplified communicating with external
partners. "ERP II" was coined in the early 2000s. It describes web-based software that allows both
employees and partners (such as suppliers and customers) real-time access to the system. The Role
of ERP II extends the optimization of resources and of traditional ERP transaction processing to
make use of the information related to the resource in the efforts of businesses to partner with
businesses other, not only to carry out e-commerce buyers and sellers. Compared with the first
generation of ERP, ERP II is said to be more flexible rather than confine the capabilities of the
ERP system in the organization, it is designed to break through the walls of the company and to
interact with the system other systems. "Enterprise application suite" is an alternative name for
such a system.
Many questions reflected the concerns of businesses threshold "computerization of enterprise
management", namely that implemented ERP system or not? If implemented, how to choose the
solution? Once businesses do not understand the nature of the ERP system, as well as the business
will be when equipped with ERP systems, businesses cannot decide on the deployment of ERP.
Many businesses only vague "need to computerize business tomorrow", or before the trend of
integration and WTO accession, enterprises are eager to upgrade management system by using the
"buy faster ERP Software as possible!". But ERP is actually a complex system, there are many
abstract concepts is not easy to understand and fast deployment decisions. In fact, the Vietnamese
businesses today are in need of counselling than the right ERP system deployment. However, the
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"also" is lower than "demand" because the company does not have many professional activities in
the field of counselling. However, businesses can consult directly from the company providing
ERP solutions.
One thing that businesses are concerned is present in Vietnam does not have many businesses
successfully implemented ERP to other businesses get to "mirror" and "follow". They just heard
that ERP is something "very complex" and many ERP projects fail than succeed. So at this time,
Vietnamese businesses who decide to conduct business ERP implementation will be truly
pioneering and very "brave". This also happened with the previous accounting Software. And
business pioneer in the application of accounting software are all successful businesses. Everything
has its price!
1.3 Research Aim and Objectives
This dissertation is based on:
The experience of deployment on the enterprise managing system for the big customers
is in the same business field with PV.
The information is given by PV through many surveys and evaluates the requirements of
two representatives.
The document describing the whole process of professional management and PVs the
business scope that PV is requested.
Enterprise Resource Planning (ERP), viewed as advanced managerial information systems that
strengthen the company and improve competitiveness, has become the most controversial topic
among Vietnamese executives in Vietnam today. However, the success rate of ERP
implementation in Vietnamese companies is still not very high. Implementing ERP in
Vietnamese companies is much more challenging than it is in well-organized companies in
developed countries. The low success rate of ERP implementation in Vietnam is caused by a
number of problems which cannot be solved by simply applying the success factors of ERP
implementation used in Europe or the United States due to the specific complexities and
complications of a very unique combination of organizational structure and local business culture
characteristics. Careful adaptation with methodological adjustments is required.
1.4 Research Significance
Vietnam is on track to join the global economy, especially with the preparation for WTO
membership in 2005 and full AFTA membership in 2014. In this context, Vietnamese companies
will face stronger market pressure from both domestic and international competitors. Companies
are pressed to control costs in all business activities, to have a good control of inventory, to expand
products and services, to improve product quality, and to provide better customer service. In
short, to survive as well as to remain competitive and develop in the global market, Vietnamese
companies will need to improve their business practices and procedures. A strong and robust ERP
system is one of the important factors which will help determine the success or failure of
companies in the global economy because it allows them to make the best use of all necessary
business recourses. However, not all Vietnamese company managers fully understand the
importance of properly designing, selecting and implementing ERP systems for better inter-
departmental collaboration and business decisions. A recent study about 12 state-owned companies
conducted by the Ministry of Post and Telecommunication reported that managerial applications in
these companies are not standardized, consistent or integrated with each other (Ministry of Post
and Telecommunication, 2003). Thus, at this point the urgency to organize and successfully
implement an ERP package to be competitive and efficient is very important to Vietnamese
companies.
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ERP can improve the quality and efficiency of a business. By keeping the internal business
process of a company running smoothly, ERP can lead to better outcomes would be beneficial to
the company as customer service, and manufacturing. ERP provides support for upper
management to provide them with information to make important decisions. Support this decision
will allow upper management to management options will strengthen the business down
duong.ERP also create a more agile company that can better adapt to situations and change. ERP
makes the company more flexible and less rigid structure in an effort to allow different parts of an
organization to become more binding, in turn, strengthen the business both internally and
externally.
1.5 Research Structure
This research attempts to analyze implementations of international enterprise resource planning
packages for Vietnamese medium-sized companies. The research has total five chapters. Chapter
one is about the background, scope, methodology, limitation and sampling design of the thesis.
Then, literature is reviewed in chapter two in the context of ERP and ERP implementation. The
author has selected two Vietnamese medium-sized companies that have sufficient resources to
implement and utilize ERP as case study. The two cases are studied in detailed in chapter three and
chapter four. Chapter five is about findings and recommendation from the cases.


Chapter 2. Literature Review

2.1 Introduction to ERP and Related Concepts
2.1.1 Definition of ERP

Source: Idea Group Publishing (2002)
Figure 2-1 A graphical view of ERP
2.1.2 Concepts related to ERP
2.1.3 Benefits of ERP
Table 2-1 Advantages of ERP system

13

Source: Idea Group Publishing (2006)
2.2 Construction Project ERP
2.2.1 Status of implementation of ERP

Important successful factors to implement ERP packages


Source: Info-Tech Research Group, 2004
Figure 2-2 Major elements in ERP implementation
.
Source: Info-Tech Research Group, 2004
Figure 2-3 ERP governance framework
2.2.2 Considerations for successful ERP implementation
2.2.3 Implementation of ERP - The difference between solutions
Table 2-2 Summary of research result about ERP solutions
SAP Oracle Microsoft Segment two Average
Time (months) 20 18,6 17,8 19,8 19,8
Implementation costs (Million USD) 16,8 12,6 2,6 3,5 8,5
Satisfaction level (%) 73,0 62,0 69,0 70,0 67,0
Risk level (%) 50,0 56,9 57,7 61,8 54,0

Microsoft Dynamics
Table 2-3 Satisfaction of ERP solutions
15

SAP Oracle Microsoft Segment two Average
Benefits 72,2% 58,0% 68,0% 68,6% 65,3%
The satisfaction level of leaders 76,4% 75,9% 65,4% 67,7% 70,7%
The satisfaction level of staffs 73,6% 60,3% 76,9% 76,5% 67,4%
The general satisfaction level 73,0% 62,0% 69,0% 70,0% 67,0%
The level of risks 50,0% 56,9% 57,7% 61,8% 54,0%

2.2.4 ERP & Scale Deployment of enterprise
Table 2-4 Overall comparison between SMEs and large enterprises
SMEs Large Enterprises
Time for implementation (months) 18,8 25,2
Costs for Implementation (USD million) 3,07 24,07
Expenses/ Revenue (%) 10,5 4,9
Below 5% higher than budget (%) 40,5 35,9
5-100% higher than budget (%) 59,5 64,1
Project participants 14 74
The degree of modifications Low High

2.2.5 Summary of cost ERP solutions on the market



Table 2-5 Comparison of ERP solutions
SAP Oracle
Microsoft
Dynamics
ERP
solutions
segment II
The average deployment time
(months)
20 6.18 18 8.17
Average implementation costs
(million USD)
$ 16.8M $ 12.6M $ 2.6m $ 3.5m
Median ERP Implementation Cost $ 4.5m $ 2.2M $ 0.4m $ 1M
Training costs Highest High Medium Medium
Maintenance costs Highest High Medium Medium
Total cost of ownership (TCO) Highest High Medium Medium
Payback time Dainhat Long Shorter Shorter
The level of benefits 73.60% 63.80% 61.50% 61.80%
Increase performance levels 68.10% 41.40% 57.70% 52.90%
Level of process improvements 75.00% 69.00% 80.80% 91.20%
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Satisfaction of leadership /
management
76.40% 75.90% 65.40% 67.60%
Satisfaction of professional staff 73.60% 60.30% 76.90% 76.50%
Note: This table compares only for reference. When selecting ERP enterprises, in addition to
these criteria, should be based on the specific requirements of production management of
enterprises to be able to select the most appropriate solution.
2.2.6 Comparison between domestic and foreign ERP
ERP systems internal (Vietnamese ERP), advantages and disadvantages
2.2.7 Selection process of ERP systems
2.2.8 Develop ERP project for Vietnamese businesses. Factors for success and failure
2.2.9 Example of Failed ERP implementation

Chapter 3. Research Methodology


3.1 Research Strategy

Figure 3-1 Characteristics of a Research
19

3.2 Research Design
3.2.1 Secondary Data
3.2.2 Primary Data
3.3 Data Collection Methods
3.3.1 Qualitative Methods
3.3.2 Quantitative Methods
3.4 Validity and Trustworthiness
3.5 Limitations


Chapter 4. Results and Discussion

This chapter is aim to present the results observed from the case study of Phong Vu Computer.
Further discussion on the related issue is provided. In order to achieve the study purpose, the
chapter is divided into five sections as following: (1) the target, scope, and the systems the requested
overall. The target of the project, the scope of the project, the content of the projects and the requested
overalls about the projects; (2) Function description and the advantages of the provided software system;
Mention the function of enterprise managing software provided; (3) The technology solution is applied
by the system according to the requested frame; (4) Plans, progress and funds for implementation;
and (5) Evaluation about the solution.
4.1 Target, Cope and Requirement of Overall System
Board of directors PV
Computer
equipment office
Department
3
Shop specialized
equipment
Warranty service
- repair
Base depot
Consolidated financial report
Statistical
reports,
business
analysis
activities of
each
department
Financial
reporting
systems
The report
details the
functional
modules
Consolidated
financial
reporting
system
Management
reporting
systems of the
company
Financial
statements of
each system
units
Management
reports for
each system
units
Supermarket PV
Department
2
Department
1


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4.2 Functions and Advantages of Provided Software
4.2.1 Functions and available advantage system
System Diagram










Manage
ment
system
Accoun
ting
capital in
cash
Buy &
liabilities
Sales &
Accounts
Receivabl
e
Accounti
ng &
managemen
t of fixed
assets
Invento
ry
Accountin
g
Forwar
d entry
final
closing of
accounting
books
GENERAL ACCOUNTING
The
financial
statements
The
tax
report
Boo
kkeepin
g
system
Informa
tion,
books,
accounts
synthesis
The
report
analyzed
data
Compa
ny-
specific
reporting
Upd
ate
report
Mod
ule
integrat
ed data
Data
Synthesis
Report
4.2.2 System Administration Application architecture model:
SERVER_DATACENTER_HEAD OFFICE
`
Client

`
Client
`
Client
Input data
Data_All the Company
Data
Unit 1
Data_Synthesis of
units
Data
Company main office
(Supermarket PV)
`
Client
Input data Input data
Input data
`
Client
Input data
Data
Unit 2
Data
Unit 3
Data
Unit 4

Automatic processing
Input Data
Input Data
Input Data
SERVER
DATABASE TAX
DATABASE LOCAL
`
Client
`
Client
`
Client

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` ` `
Client 1 Client 2 Client n
SERVER
`
Client 1
`
Client 2
`
Client n
`
Client n
`
Client 1
`
Client 2
`
Client 1
`
Client 2
`
Client n
Draytek 2910
Draytek 2910
Draytek 2910
Draytek
VPN
VPN
VPN
HEAD OFFICE
UNIT 1 UNIT 2
UNIT


Sales
Department
Up vote proposal
buy
Director approved the
proposal
Up purchase orders
Supplier
Agree
Disagree
Send
Total storage
Warehousing
Check bonded goods
Do
started
End

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Customers
To receive
warranty parts
Receiving
Check
Product need
warranty
Longer warranty
Out of warranty
Repair bills
Company
Authorized
Do Send
Return the product warranty
Product need
warranty
Warranty
Repair quotes
Repair bills
Warehousing components warranty
Request form
Product need
warranty
Warranty
Return the product warranty
Product Returns
has warranty

No Report name
1 Materials imported reports detailed by the company (Samsung, Sony, etc.)
2 Reports statistics on the pay of each firm.
3 Statistical report inventory of materials of each company warranty.
4 Statistical reporting agents to customer warranty
5 Report warranty to be delivered.
6 Synthesis report inventory longer warranty.
7 Report warranty so not delivered.
8 Table monitoring contract term maintenance and installation of organs
9 Statistical reports and materials installed for the ABC store
10 Statistical reports of customer repair, not repaired
11 Report track repair history - Detailed warranty customers
12
Detailed service summary report for each employee, each department (office Informatics,
Electronics, Refrigeration, Phone, etc.).
13
Statistical reporting costs: purchase of foreign supplies, buying its supplies and other
expenses (gasoline, etc.)
14 Detailed report aggregate debt service by .
15 Detailed report detailed debt service by .
16 Statistical reporting of revenue, expenses, profit and loss information for each service .
17 .

4.3 Technical Solutions Application System
List of database systems Assessment backup strategy
Datab Database at the
Company



Data is very large, important, major activities in the daily
working hours (Monday to Saturday, from 7am to 18h). High
instantaneous data centralized, relatively easy to recover
from the insurance data are recorded through vouchers.
4.4 Schedule and Budget Implementation Project
Phase 1: Survey and development of the system as required.
No work People
Progress of implementation of
the first phase (Week)
1 2 3 4 5 6 7 8
1
Survey programming requirements and
correct, supplement function
2
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2
Installation, configuration and operation of
the test system
2

Phase 2: Implementation and support of mining operation
No work People
Progress of implementation of Phase 2 (Week)
1 2 3 4 5 6 7 8 9 10 11 12
3 User Guide 2
4
Support operators and
system operators
3
5
Review, acceptance and
transfer.
2

Warranty and support
using the following test.

Month from the date of acceptance of the whole
program.

Phase 3: Upgrade ERP on-demand use of PV
Time to upgrade every year depending on the demand of each individual company PV is 02 years
Estimated cost of implementation
Products and services offered. Number Price (USD) Money (USD)
Software Asia Enterprise 10.0 (provide from
20 to 100 PCs on LAN / WAN)
1.1Management System Financial
Accounting.

System provides head office
Internal management system
Tax Management System.
System aggregating data across the company.
1.2. Business Management System -
distribution sales.
Manage buying process
Distribution Manager - Sales
1.3 Management System repair service -
warranty
1.4 Human Resource Management System
salaries.
Human Resource Management
Management of Attendance Payroll.
1.5 Asset Management System - equipment.
.Set costs 02 database (internal and taxes) on
the same 01 and set the Link system to
convert data between internal and taxes.
The cost to install and configure the system to
run online between Vp with units.
.System implementation costs (including
consulting, installation, training and manuals
for about 04 05 months).
Use & support 12 months warranty.
VAT (Software is not subject to VAT)

TOTAL ( 1 + 2 + 3 + 4 + 5 + 6)
In words : .. ./.
4.5 Discussion

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Chapter 5. Conclusions and Recommendation

These days ERP is considered to be an indisputably powerful tool which can help companies to
be efficient and competitive. However, ERP is also considered to be one of the most difficult
business solutions to implement and execute internationally. In Vietnam, the challenges are even
greater because of outdated and nonstandard business processes in addition to English language
ability and misinformed perceptions about adopting international ERP packages for Vietnamese
companies. Taking into account these unique differences, the author concludes that ERP is
critical in order for Vietnamese companies to develop and take part in the global economy. Thus,
proper ERP implementations will help Vietnamese companies to stand on the shoulders of the big
giants (Financial informatics magazine, March 2004) and take the advantage of the international
markets.
To make ERP implementation successful and gain advantages that ERP offers, Vietnamese
medium-sized companies should take into account the following factors: clear business objectives
about ERP, clear communication with adequate users input, good project management, top
management support, BPR and adequate customization, English capability, proper training and
update to users, suitable hardware and ERP package, and good input data. In addition, companies
should not procure ERP packages and struggle to implement the system themselves. A proper
engagement of external professional consultants will help companies to make use of existing
industry knowledge in terms of BPR and leverage ERP to enhance their competitiveness and
efficiency. Last but not least, companies should be well prepared for the deep transformation that
new ERP processes will require and get ready for the long run.

Learning Statement

This part indicates the experience of the researcher regarding which skills learnt from the study,
how to transfer these skills to work as well as social situation, and how to improve the quality of
future researches.
5.1 Personal Opinion
Research information:
5.2 Development
5.3 Contribution

This document is provided by:
VU Thuy Dung (Ms.)
Manager

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