CHAPTER 1 INTRODUCTION

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1 CHAPTER 1 INTRODUCTION Background Business is a continuously changing environment. The simplest way to start to do business is by starting a small business owned by a person even with no employee at all. Only minimum set up cost and minimum management are involved therein. Nowadays, even with the existence of major established corporations, small businesses continue to flourish or growing over the last decade. In Indonesia alone the number grew from 16,780,631 in 1996 to 17,145,244 in 2004 [1]. Specifically in Jakarta areas the number has grown from 852,073 in 1996 to 1,053,427 in 2004 [2]. Along with the development of information technologies such as the development of Enterprise Resource Planning software such as Microsoft Dynamics AX that aims to help business in general to automate and ease business operations, there supposedly also lays the hopeful possibilities for this software to be used in small businesses, possibly for a better supported business operations. However, the fact remains that many if not possibly almost all of the small business have not used such technology advancement such as Enterprise Resource Planning software to support their daily operations.

2 2 Nevertheless, it does not necessarily mean that such Enterprise Resource Planning software are not suitable, not needed or better not to be implemented in small business. Given there are many services area and types of businesses provided by the small businesses therein with differed attached nature, there still lays the possibility that such Enterprise Resource Planning software will give benefit to small businesses if implemented. This is also in consideration with the possibility of business operations effectiveness and faster future development and expansion of the small businesses. Seemingly dominant among the small businesses are small retail industries [1]. Therefore in regard of the fact, it is worth examining the possibility of implementing Enterprise Resource Planning software in small retail industry as the most prominent part of small business nowadays. Further, we will specifically consider only to analyze further the small retail industry of bookstores given that nowadays it is quite a common form of small retail industry. Moreover, since they have the possibility and faster prospect of development of implementation of customer relationship management compared with other common small retail businesses. Therein, they may enable more analysis mapped to the business operations supported by the Enterprise Resource Planning software for a better understanding also if further to be a general template. Whereas, for the scope of this notion, we will consider Microsoft Dynamics AX (to be further referred as MSDAX) as the only Enterprise Resource Planning software that will 2

3 3 be further analyzed, even though it is acknowledged that the main aim of MSDAX is for medium to large industries implementation. This is given the noted strength of MSDAX which is perceived to be beneficial for small businesses which is easy customization and the ability to work with relatively small number of users. Therefore, to be exact, the premise the following paragraphs and chapters which will try to find is the possibility and suitability of implementing MSDAX in small retail industry of bookstores through analyzing the benefits or costs involved Scope The scope of this thesis is limited only to data gathering and an analysis conducted from research and the found data within small retail industry of bookstores. The analysis will go as far as determining the possibility and suitability of implementation of MSDAX in small retail industry of bookstores through considerations of the strengths and weaknesses of MSDAX related to implementation and costs and benefits analysis after generalising the problems and data found from the data gathering. We will use a single approach to solve the problems found by having MSDAX as the Enterprise Resource Planning software. The subject of the research for the data gathering will be limited only to small business in which to be specific; to small retail bookstores. 3

4 4 Our research will also use clustered samples which is limited to small retail bookstores within the areas of Jakarta and Tangerang. In this thesis, we assume that we have access to the business owner or at least managers of the stores, with clear answers to our question. We also assumed that there will not be any Sampling Error, which is the differences between the sample and the actual population, and also Non-sampling Error, which is mistakes that is made in the acquisition of data due to improper selected sample [3]; when selecting candidates for data gathering. Another assumption is that the managers and the business owner that are involved in the data gathering have deep knowledge about their business, along with their needs, business processes, and business requirements. Lastly, we also assume that we get enough data, information, and understanding about MSDAX. 4

5 Aim / Objective For the writers, this paper was mainly created as a requirement in completing the Bachelor Degree in BINA NUSANTARA UNIVERSITY INTERNATIONAL. Also to have a better understanding in how Enterprise Resource Planning (ERP) Software, MSDAX in specific, may be able to help small businesses in automating their business processes, along with the possibility, suitability, costs and benefits of implementing it to small businesses. Further, this paper is also aimed to help small businesses, especially small retail bookstores industry. This paper will try to analyse the possibility and suitability of implementing MSDAX to small retail bookstore industries. We will provide the parameter guidelines if such integrated Enterprise Resource Planning software, specifically discussed MSDAX, is implemented, given a certain benefits of what is considered as small retail businesses of bookstores. This parameter guideline can then be used to help them determine whether they are in need of an implementation of MSDAX or some other integrated Enterprise Resource Planning software in general. Moreover, it is also an expectation of the writers that other small scale businesses other than the types of retail we discuss here may also have beneficial information through the data and discussion presented. 5

6 Research Method The approach that will be used to gather and construct the analysis will be of survey and document and literature study approaches. More specific methods that will be used for surveying are through interviews and field reviews. Document study, if any, will be gathered from the documents given by the small bookstores surveyed, whereas literature study will be gathered through books, journals, articles, or any other means obtained printed or through the internet. In a breakdown; the research of the definitions of Enterprise Resource Planning, the definition of small retail industry of bookstores will be conducted as a literature study, and the research of understandings and facts regarding small retail bookstores and its environment will be derived through interviews, field review, and if any, document study. Whereas the research for the understandings and facts regarding MSDAX and its basic implementation will be gained through literature study, interview, and personal tries of the writers using the software Structure Chapter one deals with the overview of the paper, background and the paper objectives. Included are the scopes of our research and general methods of our research. Chapter two is the theoretical foundation needed to begin the analysis, comprising of the overview of Enterprise Resource Planning including Microsoft Dynamics AX 6

7 7 explanation, features, and modules, along with the overview of small retail industry of bookstores and its characteristics. Chapter three analyses the data elicited from the data gathering process of interviews with small bookstores. It will then to be able to refine the characteristics of small retail bookstores environment as compared to what was gathered from the theories in chapter two, and define the problems that small retail bookstores face in its business operations in order to determine the causes and general causes of the problems. Chapter four maps the characteristics and problems along with the problem causes found in chapter three into the minimum requirements and modules of MSDAX. Chapter four is developed in the notion when MSDAX has been implemented in the business. The objective is to be able to find the solutions that MSDAX can provide to the business. Chapter five is the section to discuss the result of the analysis. The parameters for small business to use MSDAX will also be presented and the suitability of MSDAX be determined. If possible, a better solution other than MSDAX will also to be offered. Chapter six summarises the conclusion; stating the most important findings in the research, also suggesting some recommendations based on the writers known experience on how future researches may be conducted to better solve the problems 7

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