Enhancing enterprise resource planning: An empirical analysis of feature utilisation and competitive advantage in small- and medium-sized enterprises

Abstract

Background: Small- and medium-sized enterprises (SMEs) in South Africa face numerous challenges, including limited access to financial resources and intense competition. The adoption of enterprise resource planning (ERP) systems has been posited as a strategic solution to enhance operational efficiency and competitiveness.

Aim: This study aims to examine the strategic utilisation of ERP systems within South African SMEs, focussing on the specific features leveraged to improve business competitiveness.

Setting: The research was conducted across various industries, including manufacturing, retail, information technology (IT), security, construction, oil & gas and transport, providing a comprehensive view of ERP adoption in the South African SME context.

Methods: A mixed-methods approach was adopted, incorporating both quantitative and qualitative data collected via a comprehensive survey of SME owners and IT managers. The survey included Likert-scale items and open-ended questions to capture the frequency of ERP feature utilisation and qualitative insights into their impact on business performance.

Results: The findings indicate a significant correlation between the strategic use of ERP features and improvements in the Cash Conversion Cycle (CCC), enhancing financial efficiency and competitiveness. Key ERP functionalities such as inventory management, customer relationship management (CRM) and financial management were frequently utilised by successful SMEs.

Conclusion: The study concludes that targeted use of ERP systems can substantially improve operational efficiency and competitiveness for SMEs. By focusing on core ERP features that impact financial metrics like the CCC, SMEs can enhance their financial stability and market resilience. Furthermore, integrating CBSI with ERP systems offers a predictive tool for assessing performance, aiding SMEs in strategic planning and decision-making.

Contribution: The study explores the potential integration of the Composite Business Success Index (CBSI) within ERP systems to provide a more comprehensive measure of business performance.