Local vs Foreign: The Question of Choosing the Right ERP in Pakistan

In my previous article “Battle of ERP dominance in Pakistan”, I pointed out the motivations of selecting ERP software and the working factors behind such motivations.

It is time we took a deeper look at the issue. I detail how organizations in Pakistan should go for a certain ERP product, after considering all the important factors that help them reach that decision.

Pakistan has a diverse business market. In the earlier piece, we noted how generally speaking, Pakistan is clearly labelled as an agricultural business domain. But now the scene has changed. Textile, Pharmaceuticals, FMCG, Food, Clothing, Finance, Equipment, Constructions, Mining, Energy, Human Resource, E-Commerce, and Information Technology all are making waves in their respective business arenas.

As businesses grow in size, data, customers, geo locations, and transactions, the demand for acquiring an enterprise resource software becomes pressing. And so does a business’ very survival.

An Interesting Fact

It is funny when you go around asking people in the business about the best and most suitable ERPs for business process re-engineering. So far so good.

But the real kicker comes later when you realize that people around the tech community suggest Oracle EBS, SAP, and MS Dynamics, yet almost none of them would go for the Local ERPs as their favorites. And here’s why.

Words are one thing. If one takes a look at what market and business owners are buying, you would be astonished to find that most of them are using Local ERP products.

Now for the million-rupee question – Why?

The Game Changing Factors

One of the top food and related goods manufacturer in Pakistan is using a local ERP. When I asked the solutions providers why your client has not shifted to foreign brands, they answered that there are two major factors in play here.

1. Under the domains of Sales, Purchase and Inventory the standards can be adapted, but the real challenge for foreign ERPs is the Production Module. Every manufacturing industry has its own diverse manufacturing practices; therefore going for customization in Foreign ERPs is much expensive then doing it in the local ERPs. The only industry with standard practices in manufacturing and quality control is Pharmaceuticals.
2. On the other hand, the local ERPs are offering lower price with open arms towards enhancements and customization, which any business man would love to have. On the flip side of this picture, the context shifts at 180 degrees when we have to keep in mind the concerns of the multi-national corporate sector.

While questioning about deploying a foreign ERP, we must understand that these products are built on hard lined SOPs (Standard Operating Procedures), which a business setup has to adapt and then conduct major change management activities over their current business practices. The cost of the applications v/s the change management activities is not something which local business leaders adapt to that easily. Here is a reflection of the contrast between the choices:

I am sorry, but most of the local products are ‘so-called’ ERPs. In short there is a difference in vision.  Unfortunately they don’t get the opportunity to excel. Oracle and SAP have evolved over time, they had vast industry to practice their approaches and ideas and then they learn from failures and convert those failures to ‘success stories’. Do you think that local ‘Saiths’ would give you this opportunity? Apart from this, I don’t know about SAP but most of the successful EBS implementations are published by Oracle you can read those and get an idea about it.

The business sector here is mixed when it comes to ERPs. For MNCs, ERPs like SAP and Oracle EBS are deemed favorable especially where the technology implications are already in line and the decisions to acquire solutions hinge more or less on the outcome of a board meeting.

The key influencers in this case are people who understand the market values, what your parent company uses and impact of the solutions they are bringing on table. But even with the here, now and then on the table, the roll of the dice leads to unexpected directions!

In my opinion, here are some factors which can direct the sales and purchase of ERP in a Pakistani market:

1. Transactions and Data Load:

The first and foremost KPI (Key Performance Indicator) for any business in its growth state are the number of transactions it is processing on a daily basis. Same transactions then result in stress over the data and cross functional transactions, and businesses are unable to cope up. When the situation in a business comes to these points, the management is forced to sit and decide upon automating their systems.

The catch comes with the size of the company in terms of business expansion. Usually the entrepreneurs (Saiths, no pun intended) go for a safe and small bet first, and this is the reason that the locally developed ERPs are still surviving in Pakistan.

Also, when it comes to the selection criteria for foreign ERPs in Pakistan, usually Oracle E Business Suite and SAP are seen in terms of concerns arising in data handling and implementation management. On International forums, the discussions are usually targeted towards ROI.

2. Geographical Factor:

There is also a geographical factor, which forces a business owner to go after foreign ERPs. This is mainly keeping in mind the distribution of their business in several locations. In this respect, local ERPs are still lagging behind as keeping the data on the cloud is questionable for auditors and getting remote servers is costly as well.

Companies who are going for it are either cutting off budgets in other areas, or are relying on multiple versions running on several locations.

3. The Brand Ambassador Syndrome:

All of the foreign ERPs come with the perk of certifications. Don’t believe me? Go and visit any solution provider site offering SAP and Oracle for sale. They will also offer training and certifications as well. It is a good strategy, as you can build your own brand ambassadors.

There are several examples in our industry where a newly hired brand ambassador of a certain ERP product has knocked off an in-house developed solution and driven the whole company infrastructure in a completely new direction. It usually results in high-level political palace intrigues, but that’s a story for another time.

In Pakistan you will only hear about these failure stories, but will not see them going public. Several examples of ERP failures are available online, and that too for the same products we sing our songs for all the time.

What’s the Verdict?

Personally speaking, the process of selecting an ERP for your business in Pakistan is highly contextual. There are several factors you need to take under considerations. The certifications and brand ambassadors play a vital role, whereas the mindset of business owners plays another.

To get the answer, I also initiated discussions on social media, and got good comments, but mostly it was filled with motivated marketers trying to get my attention to Oracle, SAP and MS Dynamix. Surprisingly there are no comments regarding Local ERPs.

Here is one interesting comment:

If this (question) would have been that simple that why organizations in the world would go for Pre-Sales analysis and opt AS-IS studies to understand their needs. With my limited knowledge, SAP is market leader in some of the functional areas like Production Planning and to some extent Supply Chain but when it comes to EAM and Financials people do recommend Oracle. For medium scale Organizations, people also go for JD Edwards which is also owned by Oracle. I would again say that it all depends on your needs, budget and especially functional area where you want implementation.” – Abdullah Bin Masood

My friend missed out the Local ERP here, but then my question was about Oracle and SAP. If you look at International blogs and discussion boards, you may find several success and failure stories of ERP implementations and comparisons as well.

No matter how we put up our arguments, in the end what really matters is how the triangulation of Business Analysts, Developers and Clients work together and get the most out of the decisions made by their management.