ERP_v8.doc

7/27/2019 ERP_v8.doc

1/40

1

Lesson Learned from the Adoption of an Enterprise Resource Planning System

Jeannie Pridmore

Jeannie Pridmore Page 1 8/19/2013

7/27/2019 ERP_v8.doc

2/40

2

ABSTRACT

Enterprise Resource Planning systems have the potential to integrate all functions

of an enterprise under a uniform system and a common database. These types of systems

are normally implemented to replace fragmented legacy systems that support different

business functions. By removing departmental separation and focusing on business

processes, ERP systems have the potential to provide many advantages. However, to

gain a competitive advantage from an ERP system requires a great deal of effort by the

users to learn and to appropriate. In addition, it depends on the organizations ability to

exploit the potential benefits that such a system has to offer. Therefore, researchers have

emphasized the importance of looking past the technical implementation of enterprise

systems to focus on issues necessary to achieve a competitive advantage such as user

empowerment, decision support, and knowledge integration (Baskerville, 1999). The

purpose of this study is to go pass the benefits seen in the literature by expanding on the

concept of what can be accomplished when an integrated system is implemented.


7/27/2019 ERP_v8.doc

3/40

3

Introduction

Organizations are constantly facing challenges to create and sustain a competitive

advantage through the adoption of new technologies such as enterprise software. For

example, organizations invest in enterprise technology in an effort to manage data

overload and to generate knowledge that can be leveraged as a competitive advantage

(Cody et. al, 2002). However, investing in and implementing new technology does not

ensure that a competitive advantage will be achieved. The benefit an organization attains

depends on how well the organization and its users exploit the investment.

In 2001, the market for Enterprise Resource Planning (ERP) solutions generated

over $9 billion in sales and is estimated to stay in the $9 billion area through 2006

(Industrial, 2002). Despite huge investments in ERP software, there are many instances

of failures and unsatisfactory productivity improvements (Davenport, 1998). A

frequently cited cause for ERP failures is end-user unwillingness or reluctance to use or

adopt the new system (Barker & Frolick, 2003; Krasner, 2000; Scott & Vessey, 2002;

Umble & Umble, 2002; Wah, 2000). The lack of user adoption can lead to basic use of

the system, work arounds, and dissatisfied employees. Therefore, a better understanding

of users role in the adoption process of an ERP system would be useful to other

organizations implementing enterprise systems. Specifically, we are interested in

investigating an organization after their implementation of an ERP system to better

understand the role that the user plays in the adoption process and ultimate success or

failure of an ERP system.

Our paper is organized as follows. First, we discuss previous studies regarding

ERP and the IT adoption process. A longitudinal case study was executed to investigate


7/27/2019 ERP_v8.doc

4/40

4

this phenomenon. Then, we discuss the findings and implications of this examination.

The paper concludes with a discussion of the limitations and future research directions.

Enterprise Resource Planning

ERP systems are complex systems that can consist of several different modules.

These modules include financials, human resources, production, purchasing, and

scheduling. ERP systems have been publicized as systems that involve the managing and

planning of an organizations resources in the most efficient, productive, and profitable

way (Barker & Frolick, 2003). These systems have the potential to integrate many

functions of an enterprise under a uniform system and a common database. ERP systems

are normally implemented to replace fragmented legacy systems. By removing

departmental separation and focusing on business processes across functions, ERP

systems have the potential to provide many advantages.

It can be tempting for a company to assume that a technically successful rollout of

an ERP system will be accompanied by the appropriate organizational benefits.

However, implementing an ERP system does not necessarily give an organization any

operational benefits. Obtaining the desired benefits depends on the organizations ability

to infuse the system into its culture and its ability to exploit the potential benefits that

have been discussed in the ERP literature (Hitt, 1999; Baskerville, 1999, Al-Mashari et

al., 2003). Therefore, researchers have emphasized the importance of looking past the

technical implementation of ERP systems to focus on issues necessary to realize the

benefits of an ERP system such as user empowerment, decision support, and knowledge

integration (Baskerville, 1999).


7/27/2019 ERP_v8.doc

5/40

5

One important issue that has often been discussed, particularly in the practitioner

literature, is the failure rate of ERP systems. The failure rate for ERP has been reported

as high as 70 in some studies (Lewis, 2004). However, maybe a more important concern

than the reporting of a number for failure rate is determining just what is meant by

failure. An ERP system can be implemented successfully from a technical standpoint,

that is rountinized into regular use by mandatory edict. However, that same system can

be a failure from an operational standpoint because users are avoiding use as much as

possible, or using the system in some dysfunctional way. The ERP system may simply

not provide timely, accurate, or useful information to the user, not to mention other

problems that could occur such as lost production and lost revenue. Therefore, to

accurately evaluate the success of an ERP implementation, an evaluation of the use of an

ERP must be added to the evaluation of the technical implementation to get a true picture

of overall success. The high failure rates of ERP implementations coupled with mixed

results from ERP systems promote studies that will enhance the understanding of issues

involved in gaining benefits from such complex information systems.

There are several proposed reasons for the demand of ERP applications:

competitive pressures for low cost producing, revenue growth demands, achieving and

maintaining a competitive advantage, global competition, and replacing out-of-date

technology (Ioizos, 1998). ERP systems have the potential to provide users with greater

access to current, accurate data on a timely basis thus increasing employee empowerment

and improving decision-making (Hitt, 1999). Baskerville stated (1999) that ERP users

are more knowledgeable about what others do, since the users have to share the same

knowledge base. Resources could potentially be shifted from busy work such as


7/27/2019 ERP_v8.doc

6/40

6

inputting, processing, organizing, and validating data, to value-added work such as

analyzing, problem solving, and knowledge accumulation. ERP benefits can be divided

into tangible and intangible benefits. Tangible benefits include productivity

improvements, inventory reduction, reduction of personnel, increased revenue, and

reduction in logistic costs (Al-Mashari et al., 2003). Intangible benefits refer to improved

business processes, increased customer responsiveness, system integration, and

standardization (Al-Mashari et al., 2003). The benefits of an ERP system can be

significant. For example, in one case, the median annual savings from ERP systems was

$1.6 million based on a study of 63 organizations (Koch et al., 1999).

Shang and Seddon (2000) developed a comprehensive framework for classifying

the benefits of ERP systems. This framework was developed to focus on the users

perspective. To develop this framework, Shang and Seddon began with a review of the

IT value literature starting in 1970. Next, they reviewed practitioner-based articles from

the trade press and the Internet that related to ERP benefits. Practitioner cases were used

because they present the issues from the business users point of view. The framework

developed included five main classifications of benefits:

1) Operational

2) Managerial

3) Strategic

4) IT Infrastructure

5) Organizational


7/27/2019 ERP_v8.doc

7/40

7

The results of the interviews will be discussed in context with the five benefits categories.

Next, we will discuss the IT adoption process, and how it relates to ERP system

implementations.

IT Adoption and Innovation

In the IS literature, the model best-known for describing IT adoption and

implementation in organizations is the model proposed by Zmud and his colleagues

(Kwon & Zmud, 1987; Cooper & Zmud, 1990). The six stages in this model of

organizational adoption and implementation are defined as follow (Cooper & Zmud,

1990):

1) Initiation

2) Adoption

3) Adaption

4) Acceptance

5) Routinization

6) Infusion

From this stream of research, it has been recognized that technology adoption or even

acceptance and routinization may not yield the expected benefits from an ERP

implementation when the innovation being studied is mandatory. Mandatory meaning

that use of the ERP system is commanded and that the use of the organizations legacy

systems has been terminated, leaving the ERP system the only way to access

organizational data and reports. The expected benefits in many implementations may

only be achieved when an ERP system is used in innovative ways by users to facilitate

analyses, problem solving, and knowledge accumulation. Researchers have generally


7/27/2019 ERP_v8.doc

8/40

8

referred to this as the infusion stage of an innovation (Fichman & Kemerer, 1997).

Infusion can be defined as deeply and effectively embedding an IT application within an

organization or individuals work system in a more comprehensive and innovative

manner (Copper & Zmud 1990) to improve organizational performance (Wynekoop,

1992).

It has been argued that ERP systems are mandatory (Brown et al, 2002) since it is

usually the only system users have to access daily organizational data and reports.

Therefore, a user generally does not have the option to not use the system. In this type of

situation, usage does not necessarily equate benefits. Therefore, for the purpose of this

study, we ask about the benefits following the adoption and implementation of an ERP

system and investigate the steps taken by the organization to push the system into where

the most likely benefits are to be found.

Technology users are generally treated as passive recipients of IT systems (Satish

et al. 1999). In addition, it has been argued that the center of IT creative and IT

innovation relies in IT departments; however, recent studies indicate that technology

users could represent a large source of IT creativity and innovation within an

organization (von Hippel 1988). Prior research has shown that new, powerful, and

innovative uses are discovered when business expertise and technical skill converge

which is consistent with evidence from high tech industries that indicate technology users

can be a highly promising source of innovation (Urban & von Hippel, 1998; von Hippel,

1988).

Empirical research in several fields has shown lead users to frequently be the

first to develop and use prototype versions of what later becomes commercially


7/27/2019 ERP_v8.doc

9/40

9

significant products or processes (von Hippel, 1976, 1977, 1988; VanderWerf, 1990;

Shaw, 1985). Lead users are defined as having two main attributes (von Hippel, 1986;

Urban & von Hippel, 1988):

1) They expect attractive innovation-related profits from a solution to their needs

2) They encounter needs before the majority of the target market

In the IS literature, studies concerning user involvement and participation in

information technology processes have focused on the requirements analysis process and

the implementation view (Cavaye, 1995; Ives & Olson, 1984). The role of the user in

other stages of IT innovation and adoption has received little attention (Swanson, 1994).

Given that for new products or services to be successful, they must accurately meet the

needs of the users, it can be assumed that users possess a significant amount of control of

whether or not an ERP system is infused through out an organization. We posit that in

order for an organization to move into the infusion stage of the adoption cycle with an

ERP system and to experience the desired benefits from that system, a shift in project

lead may be necessary. We speculate that in the early stages of the adoption cycle, the IT

department will lead the project due to the technical complexity of an ERP system, but

then once the ERP system is adopted for use, the project may yield expected benefits

much quicker if the project transitions to a user-led process.

Research Setting and Methodology

An in-depth case study was conducted to investigate how organizational members

responded to the companys ERP system after their implementation. The grounded

theory research methodology was chosen for the pursuit of this investigation (Glaser and

Strauss, 1967; Strauss and Corban, 1990). Grounded theory uses a qualitative approach


7/27/2019 ERP_v8.doc

10/40

10

and techniques of induction, deduction, and verification to develop or elaborate a theory

about a phenomenon (Schwandt 1997).

Site Information

The selected organization was a division of MeadWestvaco Corporation,

headquartered in Stamford, Conn., with annual sales of $8 billion and is a leading global

producer of packaging, coated and specialty papers, consumer and office products and

specialty chemicals. MeadWestvaco consists of four major manufacturing business units,

a forestry and corporate division. It operates in 33 countries, serves customers in

approximately 100 nations, employs more than 30,000 people worldwide, and owns 3.5

million acres of forests managed using sustainable forestry practices. Mead Corporation

and Westvaco Corporation merged in January 2002.

This study was conducted at MeadWestvaco Coated Board Division (CB), located

in Phenix City, AL. The Mahrt Mill is the sole manufacturing facility for CB and is

located in Cottonton, AL. Coated Natural KraftTM (CNK) paperboard is produced at

the mill and is shipped around the world. CNK is converted into folding cartons and

beverage carriers. The Mahrt Mill produces over 1,000,000 tons per year at a site that

covers nearly 1,400 acres and operates 24 hours a day, seven days a week for

approximately 355 days a year. CB was chosen for this study because it had a flawless

cut over to SAP (Shaw, 2001), hence a successful technical implementation.

MeadWestvacos executive board mandated that its business units would follow a

corporate developed model, which specified that all divisions would implement SAPs

ERP system in the same way. This standardized configuration would greatly reduce

implementation cost, but it also introduced many challenges because the business units


7/27/2019 ERP_v8.doc

11/40

11

operate in very different ways. For example, some of the facilities are continuous

manufacturing operations, which produce one or two product lines while other facilities

produce more than ten product lines, which are made to customer order in a batch

operating process. To tackle the development and implementation of the ERP system

through the MeadWestvaco required model, a corporate core project team was

established that consisted of sixty employees and thirty-five consultants. CB dedicated

more than 70 employees to assist in the implementation process. The SAP modules

chosen include sales and distribution, materials management, financials, asset

management, production planning and scheduling, plant maintenance, advanced planning

and optimization, quality management, and costing/profitability analysis. CB

implemented an ERP system, SAP R3, in May 2000.

After the ERP system had been in use for a little over two years, management

noticed that the desired operational benefits were not being realized. CB management

identified key success factors necessary to obtain these benefits and to reach the next

level of operation through the use of SAP. The next level of operation consisted of

focusing on the following specific high-level goals:

1. Optimization of current processes and technology

2. Discovery of the potential ways to get information impacting business

performance from the system

3. Implementation of ways for Coated Board to work more effectively

with partners

To accomplish these goals, management launched two initiatives, a business warehouse

and training of division IS personnel as SAP report builders. Due to the extensive nature


7/27/2019 ERP_v8.doc

12/40

12

of a business warehouse and the time needed to design, build, and implement one, the

division trained IS personnel to build SAP reports to help fill the gap in SAP until the

warehouse was complete.

Data Collection

Data collection was tightly interwoven with data analysis, as required in grounded

theory research (Strauss and Corbin, 1990). The techniques used to collect data were

interviews and analysis of documents. Nineteen interviews with organizational members

holding a variety of roles within the division were conducted. The selected members

were affected by the implementation of the ERP system differently, some used it

intensively and others using it indirectly. These members were drawn from different

hierarchical levels, with some responsible for clerical work while others were more

involved with the companys strategy.

The interviews lasted on average, one hour. They were conducted on site and

focused on the ERP system and addressed the interviewees role, usage, and attitude

towards the ERP system. The interviews were semi-structured in their format, with early

interviews having more general, open-ended questions, and the later interviews having

questions that were more specific, but still open ended. This increasing specificity

reflects two practices of the grounded theory methodology: the circular process of

induction and deduction and the theoretical sampling procedure (Boudreau & Robey,

2001). All interviews were recorded and fully transcribed. The follow up interviews

were conducted four years after the implementation and two years after managements

decision to take steps to reach the next level of operation. Two of the original

interviewees were contacted for the follow up interviews. During these interviews, four


7/27/2019 ERP_v8.doc

13/40

13

additional users were suggested as good contacts for the follow up interviews. These

suggestions were based on the functional areas in which the business warehouse had been

implemented and on success of the team initiative. Due to the limited implementation of

the business warehouse to date, there were only six follow up interviews. However, this

overcomes a key limitation of previous studies that companies were in the early stages of

adoption.

The interviewees were chosen based on suggestions from CB, and each individual

was contacted and asked to participate and anonymity was ensured. The interviewees

were encouraged to talk about examples to help elaborate on their experiences with the

ERP system. In addition, the examples were supplemented with questions probing

particular issues. Interviewing the users of the system overcomes another limitation of

information about benefits coming from second hand sources.

Data Analysis

The analysis of grounded theory is composed of three major types of coding

open, axial, and selective (Boudreau & Robey, 2001). Open coding is a method that

consists of breaking down, examining, conceptualizing, comparing, and categorizing

data. The coding was performed by breaking down the information in the transcripts

based on quotes, events, and incidents. Axial coding is used to group the coded

comments into one of the five benefit categories identified in the model.

The focus of the analysis in this study was the everyday practices of the systems

users. The interview questions centered on the benefits expected as outlined by Shang

and Seddons (2000) benefit framework. The interview transcripts were examined to


7/27/2019 ERP_v8.doc

14/40

7/27/2019 ERP_v8.doc

15/40

15

1. Cost reduction due to automation and removal of redundant

processes.

a. Labor cost reduction due to reduction of work force in

each functional area.

b. Inventory cost reduction and improved inventory turns.

2. Cycle time reduction in customer service, order fulfillment, billing,

delivery, and monthly reporting.

3. Productivity improvement based on production per employee or

based on labor cost.

4. Quality improvement due to error reduction or reliability

improvement.

5. Customer service improvements due to ease of customer data

access.

The respondents explanations of operational benefits ended up with a total twenty-

five comments. Of these comments only one was positive. The following comments are

included to give a better illustration of the users experience with the ERP system.

I spend about eight hours per week just building logical reports. These reports are

not for any specific problem or question. They are necessary reports to operate on a

daily basis

We do not have the ability in SAP to make comparisons such as roll width. Being

able to do these types of comparisons would be beneficial to the bottom line. It

would also reduce the time spent with the customer questions, would open up better

communication, would help us better manage customer relations, and would improve

strategic alignments.


7/27/2019 ERP_v8.doc

16/40

16

If you work with the system every day, its OK, but if you go away even just for a

short vacation, when you get back most likely you will not remember how to work the

system. SAP is a system that you constantly have to re-learn.

The users comments were very negative. The users did not experience the

operational benefits that were expected in the initial adoption stages. The ERP actually

appeared to hurt their operational efficiencies. There also seemed to be some resentment

in transitioning from their legacy systems to the ERP system.

Managerial Benefits

Since ERP systems have a centralized database and built in data analysis

capabilities, ERP systems should present management informational benefits throughout

all dimensions (Shang & Seddon, 2000). Managerial benefits include the following:

1. Better resource management such as asset management and workforce

management.

2. Better operational and strategic decision making, and improved

response time for customer decisions.

3. Better performance control throughout all business levels due to real

time cost accounting methods.

The total number of managerial comments was twenty-three. Of these comments,

two were positive. Comments are included here to give a better understanding of the

experience of the user.

SAP was a big negative on inventory management. We lost efficiency. We lost

revenue due to poor business decision. There is just so much that we have to keep up

with manually.


7/27/2019 ERP_v8.doc

17/40

7/27/2019 ERP_v8.doc

18/40

18

The total number of strategic comments was nineteen. The number of positive

comments was one. The following are user comments relating to strategic issues.

SAP is terrible about giving data on a summary level. If you really want a detailed

analysis of information from SAP, you need to be very good in Excel.

One project took approximately 2000 screens to look up 600 rolls. Then it is almost

impossible to share this information internationally. For large product returns, they

are tracked back through the system, but since it is so timely, this is not done for

small returns.

Based on the users comments is appears they did not experience the strategic benefits

that were expected during the early stages of adoption. The ERP actually appeared to be

more of a transaction processing system to the users during the initial adoption stages

instead of offering any real strategic advantages.

IT Infrastructure Benefits

One of the fundamental objectives in IT investment is IT infrastructure (Weil &

Broadbent, 1998). IT infrastructure includes shareable and reusable IT resources that

provide a foundation for present and future business needs (Keen, 1991). ERP systems

integrated and standard architecture supports business flexibility, reduced IT costs, and

economic implementation of new applications (Shang & Seddon, 2000). Specific

examples include the following:

1. Business flexibility due to quick response to internal and external

changes.

2. Business stability due to a standardized platform and continuous

improvement in processes and technology.


7/27/2019 ERP_v8.doc

19/40

19

The total number of IT infrastructure comments was thirteen. There were three

positive comments. This dimension received the fewest comments of the five. This is

due to the fact that the users are customer/process-focused not IT focused, and they were

commenting on their experience with the system. The following are a couple of their

comments from this dimension.

When problems are found in the system, it is difficult to get them fixed. Only the high

or critical issues are usually fixed. These are the issues that we can actually

quantify. The other problems tend to never get fixed. It is hard to quantify the

significance of some problems because customer service is a more touchy feely issue.

The system is set up in a way that we cannot modify or adopt the reports as needed.

The users frustration in dealing with the system was apparent in their comments. The

users were not empowered to innovate the system, which appeared to generate some level

of resentment among them when using the ERP system.

Organizational Benefits

IT is a key facilitator for organizational learning, and for empowering users

(Baets & Venugopal, 1998). ERP systems integrated capabilities should support

employee communication and empower users (Shagg & Seddon, 2000). More

specifically ERP systems should support the following:

1. Employee empowerment due to more value-added work and greater employee

involvement in management

2. Improve interpersonal communication and a consistent vision across different

business levels.

3. Improved employee morale and satisfaction due to better decision-making tools.


7/27/2019 ERP_v8.doc

20/40

20

The total number of organizational comments was twenty-three. Of these comments,

two were positive. Again, comments are included to give a better picture of the users

experience.

Even though we have an ERP system, it is not truly an integrated system. Several

people have to get someone else to get the data out of the system and into a useful

format for them.

The data in SAP is not presented in a useable format and a lot of the data is not

meaningful. Excel and Access are used to turn data into information because SAP is

transactional. A lot of behind the scene stuff is done to generate information, but this

is not usually shared.

The users did not see the systems as a truly integrated system due to the arrangement of

data and reports. Their experience with the SAP system appeared to be significantly

more manual than using their legacy systems were during the initial stages of ERP

adoption.

Overall

None of the dimension from the ERP benefits framework was seen in the user

comments at this site. Why were none of these benefits experienced? One respondent

made the following comment:

SAP will fit any business unit; however, you cannot build one system that will fit multiple

business units. The divisions through out this corporation are too different to run on one

system. Dupont did it right. Their finances run together, but each division was able to

map to their system to their product and customer needs.

The following is a comment from another interviewee:


7/27/2019 ERP_v8.doc

21/40

21If SAP was what we thought it would be, a truly integrated real time system there would

be a lot of positives. This is not the case. We thought we would be able to track cost

hour-by-hour and even from operator to operator. The integrated SAP is far, far less

than what we thought it was. The system is very invasive and its involved in every

business aspect. However, SAPs capability to actually do something useful is far less

then we thought several years ago. SAP was really no major improvement to the cost

management system from the legacy systems.

Overall, the users comments were very negative during the initial stages of adoption.

The majority of users wanted to be empowered to innovate the system as needed to best

fit their business process flows. The overwhelming sentiments were that the system must

be great for one of the corporations divisions, but it just did not align close enough to

their business process needs to be an improvement over their legacy systems or even to

offer division benefits from system use.

Follow Up Interviews

The ERP system implemented did not meet the divisions business flow process

needs. During the initial interviews, this was mostly attributed to the development of an

ERP system core that had to meet the needs for the entire corporation. The CB system

users were very vocal about the problems they were experiencing. To address these

issues, the divisions management took the concerns to corporate IS and the corporations

executive board.

Corporate IS worked with the divisions management to establish a team to focus

on getting to the next level of operation with their SAP system. This team was made

up of seven division employees and five corporate employees from the emerging

information systems group. The seven division employees consisted of mill operations


7/27/2019 ERP_v8.doc

22/40

22

management, marketing operations management, six sigma management, and special

project management. This team worked to validate prior process mapping, match the

original system design to the divisions processes, identify critical gaps, and work

together for resolution of outstanding system issues. This team was given the following

critical success factors as their guide to help make the ERP system operate effectively for

their division.

1) Free up resources to do more value added work

2) Generating/having actionable information to run the business

3) Non-expert ease of access

4) Eliminate dissatisfied customer

5) Accessibility to comprehensive data

6) Timely, negotiated response to requests

The team set out to identify problems for visibility, to prioritize the problems

based on need and payback, and set up a process to address these needs. The process

established consists of issue identification, problem identification, impact/justification,

and problem solution. The corporate ERP group then took the list and narrowed it down

for optimization of the system.

Corporate listened to the users feedback and decided to develop a business

warehouse. The business warehouse group was established at the corporate level to

develop an enterprise warehouse system. Corporate IS also decided to slightly

decentralize ERP report development by training three division IS employees to improve

SAP reporting deficiencies.

The Divisions Team Initiative


7/27/2019 ERP_v8.doc

23/40

23

Usually during the internalization of the ERP system, the new business flow

processes will conflict with pre-existing business rules and it is up to the users to adjust to

the conflicts (Lee & Lee, 2000). Due to the time and effort needed to develop an

enterprise business warehouse, the division decided to establish teams to address some of

the SAP issues without having to wait for the warehouse to be completed and

implemented. Currently there are 15 teams working to improve business processes.

Each of these teams focused on system shortcomings that had been identified by

management, customers, or users after the implementation of the ERP system. These

shortcomings were all perceived to be financially significant and were identified as

improvements that could impact the organizations bottom line.

Teams consisting of systems users were created and rolled out in phases such as

diagnostic, breakthrough, and then to report back. The teams were made up of a

management sponsor, a project leader, a process area expert, and various other members

to serve as resources and support. The teams typically consisted of 6 to 15 people

depending on the working phase of the team.

In the diagnostic phase, each teams mission was too focused on understanding

the business process and the current issues/obstacles that surrounded them. This phase

mostly focused on understanding the new business flow process that was created due to

the adoption of the ERP system. Once the users understand the workflow process setup

by the ERP system then they were able to move to the breakthrough phase. In the

breakthrough phase, the teams worked to overcome the identified system obstacles

usually through the creation of ERP reports. These reports were developed to meet the

needs of the divisions users. During this phase, the users began to feel as if their


7/27/2019 ERP_v8.doc

24/40

24

opinions and needs did matter and were going to be met by the ERP system. The division

has trained three internal IS people to build reports from the SAP system. Having these

people on site have greatly improved the response time to user requests. A couple of

their comments are listed below.

Having IS personnel on-site who can build reports for us has greatly improved

the time and accuracy for getting the information we need from the SAP system

The division IS personnel who are training to build reports in SAP are great and

very quickly respond to our needs

Once the new reports are in place and are being routinized by the users, the teams

are moved to the report back phase. In the report back phase, the process improvements

were monitored so the operational benefits could be accounted for and rationalized to

management. These division teams are empowered with the necessary resources to direct

the development of reports from the ERP system as needed. A list of the 15 teams and

their strategic area of importance is as follows:

1. Wet Rolls Logistics/Inventory Management

2. Venlo Finished Goods Inventory Inventory Management

3. Non-Strategic Blocked Rolls Inventory Management

4. Transit Loss Claim Logistic Management

5. Out of Round Roll Team Logistics/Inventory Management

6. Mode Optimization - Logistic Management

7. Port Inventory - Inventory Management

8. Solid Wood Products Finished Goods Inventory Team Inventory Management

9. Rail Damage to Buena Park Logistics Management


7/27/2019 ERP_v8.doc

25/40

25

10. On Time Delivery Customer Satisfaction

11. WHOM Inventory - Inventory Management

12. Complete and Accurate Delivery Customer Satisfaction

13. Vehicle Utilization Logistic Management

14. CNK Express Inventory Management

15. 5x4 : SWP Revenue and Recovery Inventory Management

Mostly, these teams have strategically focused on the business processes that effect

customers and customer satisfaction.

The teams set up through out the division have been quite successful. For

example, the Out of Round Roll Team worked through the process and found deficiencies

in ERP system reporting. They determined what information was needed, where the

information proceeded, and how to present it. Through the creation of this key report,

daily operations have been greatly improved.

The Port Inventory Team worked to reduce the number of days that assets were in

on the organizations books. By verifying the data in SAP and understanding the

reporting deficiencies in the system, which took about 9 months to fully accomplish, the

team was able to reduce the days in inventory by 7 days, which equated to over $800,000

in asset reduction. To maintain this level of operations, a report is generated every

Monday morning that provides information on the rolls in inventory at the ports. This

reports provides the customer service representative with the needed information to work

much more efficiently. So far, these teams have focused on the business side of the

division. Work needs to be done to address the integration of the manufacturing side.

The Business Warehouse


7/27/2019 ERP_v8.doc

26/40

26

The business warehouse is being developed and implemented throughout the

corporation in functional phases such as financial, sales, etc. The users in the sales group

reported that the business warehouse had greatly improved the reporting capability in the

Sales department. The users reported that the warehouse was quicker, more user friendly,

and easier to understand. Comments from two of the sales people interviewed are listed

below.

Its the same information as what SAP has, but its in a much more friendly

environment.

The warehouse gives us the flexibility that SAP lacks

Since the business warehouse has been such a success in the functional areas that it has

been implemented, the organization is planning on moving all of the reporting from SAP

to the warehouse. Therefore, all of the report and data gathering will come from the

business warehouse instead of coming from the SAP system directly.

During the follow up interviews, the users were positive about the progression of

the ERP system and about the strides that had been made over the past year. The overall

feeling was that the ERP system was becoming a system that the division could use to

improve their business unit. Managements steps to allow the users to take the lead in

developing in the use of the ERP system was being seen and felt by the users.

Conclusion and Discussion

The high cost and lengthy implementation process to customization ERP systems

leads most organizations to align their business processes with the ERP provided

functionality rather than attempting to customize the package to meet their own current

requirements and processes. Forrester Research reported that only 5% of organizations


7/27/2019 ERP_v8.doc

27/40

27

among Fortune 1000 companies who purchased ERP applications customized them to

match their business processes (Davis, 1998). While customization is not impossible, the

expansive scope and connectivity of all associated functions make customization quite

costly (Davenport, 1998; Davis, 1998). It may be prudent for organizations to consider

customization if expected benefits are to be achieved. The organization will have to

justify the cost of customization, but it could be that the cost of the ERP system cannot be

justified without the additional customization expensive.

This study shows the importance of looking past a technically successful

implementation. In other words, a technically successful ERP implementation does not

imply that an organization will achieve the desired or expected benefits. With systems as

large and in-depth as enterprise systems, it is necessary to look past the vendor

information to get a true picture of the achievable benefits, and the steps necessary to

attain those benefits such as management sponsorship and user-led devilment processes.

The results of this study shed light on the importance of user empowerment to infuse new

IT uses into an organization, and that the IS department should not necessarily lead the

implementation of such IS during the infusion stage.

The results could also point to the fact that not only should different industries be

treated differently but also even different divisions within the same organization should

be treated differently. Alternatively, organizations should at least empower the systems

users to lead the development of the system at their division, to innovate the system as

necessary to fit their needs, thus supporting the infusion of the system into the

organization. For example, just because company A has a successful system and

achieved the desired benefits does not mean that company B could achieve the same


7/27/2019 ERP_v8.doc

28/40

28

results with the same configuration. The success of such a system is greatly dependent

on user innovation, user persistence, management support, and continued perseverance.

This study shows a very different picture than previous literature on this subject.

Even though the data comes from first hand experiences, limitations do exist with the

study. First, this is a case based research project. It focused on one division from one

corporation. Therefore, further research is needed to improve the generalizability of the

findings from this study. Second, cost reductions and cost issues were not considered in

this study although implications can be drawn from the users comments. Lastly, there

were a limited number of follow up interviews that were conducted. This was due to the

early stages of the business warehouse development and implementation. Future research

should work on overcoming these limitations.

In conclusion, this study opens up several research questions to address. Do the

achievable benefits from an ERP system different by industry and even by division

within a single corporation? What are the actual benefits a company can expect to

achieve from an ERP system? Are the achievable benefits from an ERP system

significant to a companys bottom line? Are the costs of customization justifiable and

necessary to achieve the desired business benefits? What further steps are necessary to

fully obtain organizational benefits from an ERP system?


7/27/2019 ERP_v8.doc

29/40

29

REFERENCES

Al-Mashari, M., Al-Mudimigh, A. and Zairi, M. (2003). Enterprise Resource Planning: A

Taxonomy of Critical Factors.European Journal of Operational Research. 146, pp. 352-

364.

Baets, W. and Venugoapl, V. An IT. Architecture to Support Organizational

Transformation, in Information Technology and Organizational Transformation,

Galliers, R. D. and Baets, W. R. J. Wiley, 1998, pp. 195-222.

Barker, T. and Frolick, M.N. (2003). ERP Implementation Failure: A Case Study.

Information Systems Management. 20 (4), pp. 43-49.

Baskerville, R. (1999). Enterprise Resource Planning and Knowledge Management: Convergence

or Divergence? Georgia State University Working Paper.

Boudreau, M-C., and D. Robey. Enabling Organizational Transition with Complex Technologies:

Understanding Post-Implementation Learning. Proceedings from The Academy of Management

Conference, Washington, DC. 2001.

Brynjolfsson, E. and Hitt, L. (1996) Productivity, Business Profitability and Consumer Surplus:

Three Different Measures of Information Technology Value. MIS Quarterly, pp. 121-142.

Cavaye, A. (1995). Participation in the development if interorganizational systems

involving users outside the organization.Journal of Information Technology. 10 (3), pp.

135-150.


7/27/2019 ERP_v8.doc

30/40

30

Cody, W., Kreulen, J., Kirshna, V., and Spangler, W. (2002) The Integration of Business

Intelligence and Knowledge Management.IBM Systems Journal, 41 (4), pp. 697-713.

Cooper, R.B., and Zmud, R.W. (1990). Information Technology Implementation

Research: A Technological Diffusion Approach. Management Science. 36, pp. 123-139.

Davenport, T. (1998) Putting the Enterprise into the Enterprise System. Harvard Business

Review, 76(4), 121-31.

Davenport, T.H. (2000) In Search of ERP Paybacks, Computerworld, 34(8), 42-3.

Davis, J. (1998). Scooping up Vanilla ERP: Off-the Shelf Versus Customized Software.

InfoWorld, 20(47), pp. 1-4.

Earl, M. J. The Management Strategies for Information Technology, Prentice-Hall,

London, 1998.

Fichman, R.G., and Kemerer, C.F. (1997). The Assimilation of Software Process

Innovations: An Organizational Learning Perspective. Management Science. 43(10), pp.

1345-1363.


7/27/2019 ERP_v8.doc

31/40

31

Gattiker, T. and Goodhue, D. (2000) Understanding the Plant Level Costs and Benefits

of ERP: will the ugly duckling always turn into a swan?. Preceedings of the 33 rd Hawaii

International Conference on System Sciences, Hawii.

Gattiker, T. and Goodhue, D. (2002) Software-drive Changes to Business Processes:An

Empirical Study of Impacts of Enterprise Resource Planning (ERP) Systems at the Local

Level. International Journal of Production Research. Vol. 40, Issue 18, pg 4799.

Glaser, B. G., and A. L. Strauss. The Discovery of Grounded Theory, Chicago: Aldine,

1967.

Gory, G. and Scott Morton, M. (1971)A Framework for Management Information

Systems. Sloan Management Review. 55-70.

Grover, V., Jeong, S. R., Kettinger, W. J. and Teng, J T. C. (1995) The Implementation

of Business Process Reengineering,Journal of Management Information Systems. pp.

109-144.

Hitt, L. Information Technology and Firm Boundaries: Evidence from Panel Data.

Information Systems Resource. 1999, 134-149.

http://www.infoweb.state.ia.us/newsletter/erp/erp_apr.pdf. 2002.

http://www.infoweb.state.ia.us/newsletter/erp/erp_apr.pdfhttp://www.infoweb.state.ia.us/newsletter/erp/erp_apr.pdf

7/27/2019 ERP_v8.doc

32/40

32

Industrial ERP: Poised for Growth? (2002).Modern Materials Handling. pp. 15.

Ives, B., and Olson, M. (1984) User Involvement and MIS Success: A Review of

Research.Management Science. 30 (5), pp. 586-603.

Keen, P.Decision Support Systems the Next Decade. Decision Support Systems. 1987.

253-265.

Keen, P. Shaping the Future: Business Design through Information Technology. Harvard

Business School Press. Cambridge, MA, 1991.

Koch, C., Slater, D., and Baatz, E., (1999). The ABCs of ERP. CIO Magizine.

Kogut, B. and Zander, U. (1992) Knowledge of the Firm and the Evolutionary Theory of

the Multinational Corporation.Journal of International Business, 625-45.

Krasner, H.(2000). Ensuring e-Business Success by Learning from ERP Failures.IT

Professional. 2(1), pp. 22-27.

Kwon, T.H., and Zmud, R.W. (1987). Unifying the Fragmented Models of Information

Systems Implementation. In R.J. Boland and R.A. Hirschheim (eds), Critical Issues in

Information Systems Research, New York: Wiley & Sons, pp. 227-251.


7/27/2019 ERP_v8.doc

33/40

33

Lee, Z. and Lee, J. (2000) An ERP Implementation Case Study From a Knowledge

Transfer Perspective.Journal of Information Technology. 15, pp. 281-288.

Lewis, B. (2004), The 70-Percent Failure, 9/3/2004, InfoWorld

Markus, M.L. and Tannis, C. (20 00) The Enterprise Systems Experience From

Adoption to Success. In Framing the Domains of IT Research: Glimpsing the Future

through the Learning from Adopters Experiences with ERP.

McFarlan, F. Information Technology Changes the Way You Compete. Harvard

Business Review, 1984.

Noaka, I. and Konno, N. (1998) The Concept of BA: Building a foundation of

Knowledge Creation. California Management Review, 40, 40-54.

Palaniswamy, Rajagopal, and Frank, Tyler. (2002) Oracle ERP and Network Computing

Architecture: Implementation and Performance. Information Systems Management. Vol.

19 Issue 2, p53, 17p.

Palaniswamy, Rajagopal, and Frank, Tyler. (2000) Enhancing Manufacturing

Performance with ERP Systems. Information Systems Management. Vol. 17 Issue 3, p43,

13p.


7/27/2019 ERP_v8.doc

34/40

34

Rackoff, N., Wiseman, C. and Ulrich, W. (1985) Information Systems for Competitive

Advantage; Implementation of a Planning Process.MIS Quarterly.

Robey, D., and M.-C. Boudreau. Organizational Consequences of Information

Technology: Dealing with Diversity in Empirical Research, inFraming the Domains of

IT Management. Projecting the FutureThrough the Past, R. W. Zmud (Ed.), Cincinnati:

Pinnaflex Education Resources, (2000): 51-63.

Ross, J.W. and Vitale, M. (2000) The ERP Revolution: Surviving Versus Thriving. Information

Systems Frontiers, in press.

Satish, N., Ritu, A., and Mohan, T. (1999) Organizational Mechanisms for Enhancing

User Innovation in Information Technology.MIS Quarterly. 23 (3), pp. 365-395.

Schwandt, T. A. Qualitative Inquiry: A Dictionary of Terms, Thousand Oaks: Sage Publications,

1997.

Scott, J.E., and Vessey, I. (2002). Managing Risks in Enterprise Systems

Implementations. Communications of the ACM. 45(4), pp. 74-81.

Shang, S. and Seddon, P. A Comprehensive Framework for Classifying the Benefits of

ERP Systems. Proceedings of the 6th Americas Conference on Information Systems.

2000. Long Beach, CA.


7/27/2019 ERP_v8.doc

35/40

35

Shaw, B. (1985) The Role of the Interaction Between the User and the Manufacturer in

Medical Equipment Innovation,R&D Management15 (4), pp. 283-292.

Shaw, M. (2001) All Systems Go Meads Supply Chain Project Impacts Culture,

Customers, and Future Strategy.Pulp and Paper.

Sprague, Ralph, and Carlson, Eric. (1982)Building effective decision support system.

Prentice-Hall, New Jersey.

Strauss, A. L., and J. Corbin.Basics of Qualitative Research: Grounded Theory

Procedures and Techniques, Newbury Park: Sage Publications, 1990.

Stricker, G. and Somary, K. (2001) Projective Methods in Psychology. International

Encyclopedia of the Social and Behavioral Sciences. pp. 12181-12185.

Swanson, E. (1994) Information Systems Innovation Among Organizations.

Management Science. 40 (9), 1069-1088.

Tan, W.T. and Pan, S. L. ERP Success: The Search for a Comprehensive Framework.

Proceedings of the 8th Americas Conference on Information Systems. 2002. Dallas, TX.

Umble, E.J., and Umble M.M. (2002). Avoiding ERP Implementation Failure.Industrial

Management. 44(1), pp. 25-33.


7/27/2019 ERP_v8.doc

36/40

36

Urban, G. and von Hippel, E. (1988) Lead User Analyses for the Development of New

Industrial Products.Management Science, 33, pp. 569-582.

Valentine, V. and Evans, M. (1993) The Dark Side of the Onion: Rethinking the

Meanings of Rational and Emotional Responses.Journal of the Market Research Society,

pp. 125-145.

VanderWerf, P. (1990) Product Tying and Innovation in U.S. Wire Preparation

Equipment.Research Policy, 5, pp. 212-239.

Venkatraman, N. IT-Enabled Business Transformation: from Automation to Business

Scope Redefinition. Solan Management Review, 1994, pp. 73-87.

Victor, B., and Boynton,A. (1998) Invented Here. Harvard Business School Press,

Boston, MA.

Von Hippel, E. (1976) The Dominant Role of Users in the Sceintific Instrument

Innovation Process,Research Policy 5 (3), pp. 212-239.

Von Hippel, E (1977) The Dominant Role of the User in the Semiconductor and

Electronic Subassembly Process Innovation,IEEE Transactions on Engineering

ManagementEM-24 (2), pp. 60-71.


7/27/2019 ERP_v8.doc

37/40

37

Von Hippel, E. (1986) Lead Users: A Source of Novel Product Concepts.Management

Science, 32 (7), pp.791-805.

Von Hippel, E. (1998) Economics of Product Development by Users: The Impact of

Sticky Local Information.Management Science. 44 (5), pp. 629-644.

Wah, L.(2000). Give ERP a Chance.Management Review. 89(3), pp. 20-24.

Weil, P.Do Computers Pay off? International Center for Information Technologies,

Washington, D.C., 1990.

Weil, P. and Broadbent, M.Leveraging the New Infrastructure: How Market Leaders

Capitalize on Information Technology, Harvard Business School Press, Boston, MA,

1998.

Wynekopp, J.L. (1992). Strategies for Implementation Research: Combining Research

Methods. J.I. DeGross, J.D. Becker and J.J. Elam (Eds), Proceedings of the 13th

International Conference on Information Systems, Dallas, TX. pp. 195-206.

Yin, R.K. (1994) Case Study Research: Design and Methods, Sage Publication, CA.


7/27/2019 ERP_v8.doc

38/40

38

APPENDICES


7/27/2019 ERP_v8.doc

39/40

39

A STUDY OF INFORMATION SYSTEMS BENEFITS INTERVIEW

Purpose: Organizations want employees to be empowered and to be able to access dataas needed in daily operations. Decision-making occurs on a daily if not an hourly basis.The purpose of this questionnaire is to study the decision making process throughout an

organization and to determine the positives and negatives currently taking place due tothe information systems.

Task: In the survey you will be asked to describe the decisions that you face everyday,how you make decisions, how you use the information systems, and how the informationsystems assist you in the decision making process. Please be as specific as possible.

Directions: These questionnaires are confidential. Please listen fully to each questionand answer with as much detail as possible. This is critical for the analyses of thesequestionnaires.

Personal Background: This section contains items regarding your personalcharacteristics. They are very important for statistical purposes.

1) Describe your primary career field.

2) Approximately how many years have you worked here? How long have you workedat your present job?

3) What is your highest level of education?

4) What is your age group?[21-25] [26-30] [31-35] [36-40] [41-45] [46-50] [51-55] [56-60] [61-65]

5) What is your gender? Female______ Male______

Questions:

1) Do you frequently deal routine business decisions? How much time?

2) Do you frequently deal ill-defined or non-routine business decisions? How muchtime?

3) Do you frequently deal questions that have not been asked before? How much time?4) When you are dealing with a business problem what steps do you take to solve it?

5) How much time do you spend gather data in to a useful form?

6) How much time do you spend analyzing the data obtained?

7) How much time do you spend building a knowledge base from the analysis?


7/27/2019 ERP_v8.doc

40/40

40

8) Do these problems deal with business function overlap?

9) What are the positives when identifying business problems with regard to the currentinformation systems?

10) What are the negatives when identifying business problems with regard to the currentinformation systems?

11) When generating alternatives for the business problem, what are the positives withregard to the current information systems?

12) When generating alternatives for the business problem, what are the negatives withregard to the current information systems?

13) When evaluating the alternatives for the business problem, what are the positives

with regard to the current information systems?

14) When evaluating the alternatives for the business problem, what are the negativeswith regard to the current information systems?

15) When selecting the solution for the business problem, what are the positives withregard to the current information systems?

16) When selecting the solution for the business problem, what are the negatives withregard to the current information systems?

17) What would you like to be able to get from the information systems you operate fordecision support?

18) What information would be must helpful for the decisions you need to make?

19) How would you like to view the information for decision support?

20) In the future, what additional benefits could be derived from a decision supportsystem?

Date post:	02-Apr-2018
Category:	Documents
Upload:	ltrevino100
View:	217 times
Download:	0 times

ERP_v8.doc

Documents