top of page
Writer's pictureRyan Tern

Enterprise Resource Planning (ERP) Systems in Malaysia

Updated: Sep 6, 2020




According to the Journal of Information Technology Management, ERP systems are currently in high demand among Malaysian companies especially those in manufacturing and service-based industries because it provides an effective management system leading to improvement in productivity.


The term ERP was first invented by Gartner in 1990 and its roots date to the 1960s. Back then, software engineers develop programs to monitor inventory, reconcile stock balances, and report the status. In the 1970s, the concept evolved and include more features such as material planning, scheduling and management and in turn, it was term as Material Requirement Planning (MRP). In the 80s, MRP evolved and became Manufacturing Resource Planning (MRPII). In the 1990s, the famous US-based consultancy firm, Gartner Group coined it as ERP.


The initial meaning of ERP indicated software applications that govern different departmental functions such as finance and human resource. However, the term ERP today implies a widespread integrated information system applied to any organization regardless of size and geographic location. It is referring to as a business management solution or software for enterprises that supports both operational and administrative processes of organizations along with comprehensive, core enterprise resource planning (ERP) functionality for financial, supply chain management, manufacturing, project accounting, customer relationship management, and human resources management.


At the most basic level, an ERP system comprises a central state-of-the-art, comprehensive database that collects, stores and disseminates data across all business functions and activities in your organization. By integrating all business functions of your organization, economies of scale can be obtained, and business shall gain significant operating cost reductions, in addition to improved capabilities and information transparency. The increased business trends of globalization, mergers, and acquisitions demand that companies must have the ability to control and coordinate increasingly remote operating units. An ERP system can help you to achieve this by enabling the sharing of real-time information across departments, currencies, languages and national borders, facilitate error-free transactions and production.


Enterprise Resource Planning system offers a high degree of synchronized reporting and automation. Some systems like Microsoft Dynamics 365 allow staff to pull reports from one database, staffs at the respective departments can focus on their own tasks and need not to maintain various databases and spreadsheets to merge and generate reports. For example, when sales orders flowing into the financial system, the order management can process the orders quickly and accurately without needing to manual obtaining data from the sales department. This helps to smoothen the operations of an organization and improve its efficiency and effectiveness. Other common features of ERP include a portal or dashboard to enable the top management to quickly understand the business' performance on key metrics.


Benefits of ERP Software/System

ERP Software Provides a wide of benefits for your business, among others, including:

  • Streamlined operations – ERP Software stores and tracks data across your entire organization, from material planning, procurement, production, warehouse, logistic, to sales and marketing. In general, these functions can be found in a standard ERP system solution package.

  • Workflow automation - ERP systems today are much more advance than before, incorporating and leveraging new technology like artificial intelligence (AI) technology, it can automate routine business processes and freed up useful human resources to focus on more sophisticated tasks.

  • Advanced Analytics - ERP is an integrated system and therefore is able to offer a greater depth of business analysis compared to any standalone system. ERP system is able to pull a wealth load of data from across your business into details and easy-to-decipher analytics dashboards that provide both macro and micro insights of your business.

  • Enhanced accessibility - With the increasing number of cloud-based options and Internet of Things (IoT) enabled featured like mobile access, ERP system offers business unprecedented accessibility and visibility into day-to-day operations anywhere and anytime.


Over the years, ERP systems have expanded and encompasses business intelligence (BI), some even build with the capability to integrate with devices that support the latest Internet of Things (IoT) technology and with Cloud technology. Most of the ERP systems are also built-in with the capability of handling functions such as sales force automation, marketing automation, and eCommerce. In a rapidly evolving technology landscape, businesses which utilize ERP software streamline their operation often reap benefits such as:


  • Increased operational efficiency - ERP system could significantly boost operational efficiency and productivity through process automation and efficient workforce management.

  • Better and more systematic organization - With an ERP system, processes, and functions across departments are better integrated, which could further minimize, if not eliminating data mismanagement and disorder in an organization that often stagnates businesses.

  • Better informed business decision - With the customizable reporting and dashboard features of the ERP system. Top management could better monitor key performance indexes/metrics and make business decisions based on informed near real-time information from the shop-floors.


As your business grows and expands, you need to ensure that your ERP system or software is able to support and enhance your business models. This means that identifying the system or software is not only suitable for your business today but also needs to take into consideration the ability of the software to support the future growth of your business as implementing an ERP system is an organization-wide project which involves not only costs for the system but also the employees' participation in various aspects during system implementation. Successful implementation of an ERP system requires the combination of the right ERP software and also the right implementation partner.


Comparison for top ERP system in Malaysia

common ERP systems in Malaysia

Business Sizes and ERP Software Selection

Because of the costs and resources involved in acquiring and implementing an Enterprise Resource Planning system, ERP often viewed as a luxurious piece of software or solution which only affordable by large or multi-nation enterprise businesses. However, with the increasing availability of cloud base solutions an software-as-a-service (SaaS) subscription model, the typical buyer profile has expanded and extended to include businesses such as:


  • Small-business buyer (SMB) - These are companies with 2-100 employees that make less than RM50 million per year and have a minimum or no in-house IT resources or department.

  • Midsize business buyer - These are companies typically with 50 - 100 employees, making more than RM50 million but less than RM200 million per year and have an IT department

  • Large enterprise business buyer - These are all time ready buyer for an ERP system as their business is having more than 100 employees and making more than RM200 million per year and have a decent and dedicated IT department.


You might have noticed that in the three criteria above, IT resources/departments are mentioned consistently and included in all three categories. This is because despite ERP software is often viewed as a business system, its backbone actually depends on the smooth and uninterrupted flow of digital information in and across the organization. Thus, IT resources/department plays a crucial role in determining the success of an ERP system implementation in your organization.

Common ERP Pricing Models

The table below lists the common pricing model for ERP software, these are model which are commonly adopted by companies in Malaysia.

  • Perpetual License – An upfront sum for the license to own the software and use it in perpetuity. This is the traditional model that is the most common and on-premise applications.

  • Subscription – A monthly fee to use the software for a specific amount of time. Subscription pricing became popular with the advent of Software as a Service (SaaS).

  • Open Source – Licenses are usually free of charge, which reduces upfront costs. Implementation, integration and on-going maintenance, however, can be major expenses. Most of the open-source buyers in Malaysia are govern organizations.

Characteristic of Pricing Models

Characteristic of different ERP Systems' Pricing Models

Total Cost of Ownership

Based on our experience and calculation, compared to the subscription package, the perpetual license may cost more upfront, but the total cost of ownership typically converges with the subscription packages in about 7-10 years.



Price simulation of On-Premise vs. Software as a Service shows both trends converge in about 7-10 years


ERP Trends

The released of new technology trends in recent years has profoundly shifted the landscape of ERP software. The following upcoming and continuing computing trends have an impact on the growth and development of ERP software:

  • Mobile ERP - With the wide adoption of mobile devices these days, top management, executives and employees want to have real-time access to the business key performance metrics anytime, anywhere. The mobile trend has encouraged the development of lightweight, mobile-friendly reporting and dashboard features of ERP systems.

  • Cloud ERP - The cloud technology has been advancing into the enterprise for some time, but many business owners have been quite reluctant to place business data in the cloud. Those reservations and concerns have gradually been evaporating as the advantages of the cloud becoming apparent.

  • Social ERP - ERP Software vendors are now in dilemma to either include the integration of social media in their software package. The usage and social media have become so pervasive these days and they are often used for brand building. Thus, the ability to integrate with various social media platforms to monitor feedbacks and comments related to business branding could be a huge additional advantage for business owners.


Finding the right ERP system implementation providers or ERP companies in Malaysia

As there is no one-size fit all approach in finding the right ERP system implementation service provider in Malaysia. The ERP selection criteria are not limited purely by the product itself but is a combination of both a solid product and the consultancy services that comes accompanied with it. Therefore, a combination of the right people and the right product pave the way to successful ERP deployments. Below are the main consideration factors or criteria for the selection:


  • The Track Record of the ERP software implementation provider in Malaysia

  • The experience of the provider's ERP team

  • Any related industry knowledge or implementation experience?

  • What are the ERP system functionalities?

  • How is the ERP system integration?

  • What is the Future Direction of the ERP software?

  • What are the ERP system Deployment Options?

  • How much is the total cost of ownership for the ERP software?

  • Licensing options

  • Deployment options


Perfect Model Solutions (PMSSB), one of the dedicated ERP software implementation companies in Malaysia, has implemented various ERP projects using one of Microsoft top-notch ERP products namely, Microsoft Dynamics 365 for Finance and Operations, Perfect Model Solutions has rich experience in implementing ERP solution for various customers across different industries such as Automotive, F&B, Agriculture, Recycling, Pharmaceutical, Textile and so on.


Being the Microsoft ERP services provider in Malaysia, PMSSB has team with average 15 years of Microsoft Dynamics ERP, PMSSB has seen the growth and evolution of Microsoft ERP software from the very first version until the full-grown Microsoft Dynamics 365 Enterprise Solution software. The well-trained team in PMSSB has experienced with various versions of Microsoft ERP software, ranging from the earlier version such as Microsoft AX 3.0, AX 4.0, AX 2009, Microsoft Dynamics AX2012 R3 and the most contemporary Cloud version of Microsoft Dynamics 365 for Finance and Operations.


To get a deeper understanding of how ERP solutions can transform your business, contact Perfect Model Solutions, we provide pre-implementation consultation to our client and would be delighted to hearing from you.


1,139 views0 comments

Comments


bottom of page