A maturity model for implementation and application of Enterprise Resource Planning systems and ERP utilization to Industry 4.0

Abstract

This study analyzes the evolution of ERP systems and the current trends of their implementation and application, also the organization's readiness for further digitalization. Throughout the study, it is identified that there are many critical factors that have an impact on the process of implementation and application of ERP systems. There are different studies and reports that confirm that organizations are struggling with this process. The researchers have identified and proposed different stages of implementation and application of ERP systems. Moreover, three maturity models are identified, which aim to measure the ERP maturity level in the organizations, but they lack defining the complete process which supports the organizations to check their maturity level of ERP systems by themselves. On the other hand, Industry 4.0, as a new technological concept, aims to support organizations to complete digitalization and automation of their processes and functions, specifically in the manufacturing industry. Based on the undertaken study, a new ERP Maturity Model (ERPMM) is developed with the aim to measure the maturity of implementation and application of the ERP system in the organizations. With the purpose to check the reliability and validity of the developed model, the quantitative methodology was applied. The proposed model (ERPMM) to measure the maturity of ERP system implementation and application will support organizations in generating a clear picture of their organization status related to the implementation and application of the ERP system. In this way, they are able to evaluate the benefits of implementation and application of an ERP system, and whether they should do anything in the way they are applying such a system. The study also analyzes the impact of different factors that have an effect on a successful ERP system implementation and application. In addition, this study has investigated whether strategic use of IT positively affects the ERP selection, implementation, and application process, as well as if appropriate ERP selection has a positive effect on the implementation and application and the role of ERP implementation on the application. Also, the impact of the ERP application on Business Performance. The study shows that there is a relationship between all the stages of ERP implementation and application, starting with the organization's IT strategy to the ERP application. The results of the study present that the ERP application has a positive impact on business performance. Also, the study presents an analysis of the integration of ERP and Industry 4.0, which is done based on secondary data. Industry 4.0 is seen as the beginning phase, where computers and automation become connected and as an opportunity to increase the efficiency and effectiveness in the manufacturing industry, with the application of real-time data and information by integrating physical machinery and devices with networked sensors and software to predict, control and reduce costs in a long-term view. Primary data was used to analyze if the ERP application can be used to predict the readiness of the organizations for Industry 4.0. Based on the statistical analysis, it is proved that partially ERP application can be used to predict the readiness of the organizations for Industry 4.0. Based on the findings, there are many challenges related to the integration of Industry 4.0 and current ERP systems, especially when it comes to machine to machine, machine to ERP communication, and the security of the data. Based on the proposed ERP Maturity Model (ERPMM), a prototype is developed, which supports the organizations in evaluating their status of ERP system implementation and application by themselves. The prototype is a web-based application that is developed on PHP and MySQL database. The main contributions of this study are:  Identifies and presents the current status of implementation and application of the ERP system and ERP maturity models;  Analyzes the role of strategic use of IT in the process of ERP selection, implementation, and application;  Analyzes the impact of ERP selection on implementation and application also the effect of ERP implementation on the application;  Identifies the ERP application effect on business performance also the ability of the organization to evaluate their readiness for further digitalization based on the ERP application;  A new ERP Maturity Model (ERPMM) to support the organizations for the evaluation of implementation and application of the ERP system is developed;  A developed prototype that applies ERPMM to support organizations for ERP maturity level assessment.