ERP benefits capability framework: orchestration theory perspective

Amgad Badewi (Kent Business School, University of Kent, Canterbury, UK)
Essam Shehab (Cranfield University, Cranfield, UK)
Jing Zeng (Kent Business School, University of Kent, Canterbury, UK)
Mostafa Mohamad (Manchester Business School, University of Manchester, Manchester, UK)

Business Process Management Journal

ISSN: 1463-7154

Publication date: 2 February 2018

Abstract

Purpose

The purpose of this paper is to answer two research questions: what are the ERP resources and organizational complementary resources (OCRs) required to achieve each group of benefits? And on the basis of its resources, when should an organization invest more in ERP resources and/or OCRs so that the potential value of its ERP is realised?

Design/methodology/approach

Studying 12 organizations in different countries and validating the results with 8 consultants.

Findings

ERP benefits realization capability framework is developed; it shows that each group of benefits requires ERP resources (classified into features, attached technologies and information technology department competences) and OCRs (classified into practices, attitudes, culture, skills and organizational characteristics) and that leaping ahead to gain innovation benefits before being mature enough in realising a firm’s planning and automation capabilities could be a waste of time and effort.

Research limitations/implications

It is qualitative study. It needs to be backed by quantitative studies to test the results.

Practical implications

Although the “P” in ERP stands for planning, many academics and practitioners still believe that ERP applies to automation only. This research spotlights that the ability to invest in ERP can increase the innovation and planning capabilities of the organization only if it is extended and grown at the right time and if it is supported by OCRs. It is not cost effective to push an organization to achieve all the benefits at the same time; rather, it is clear that an organization would not be able to enjoy a higher level of benefits until it achieves a significant number of lower-level benefits. Thus, investing in higher-level benefit assets directly after an ERP implementation, when there are no organizational capabilities available to use these assets, could be inefficient. Moreover, it could be stressful to users when they see plenty of new ERP resources without the ability to use them. Although it could be of slight benefit to introduce, for example, business intelligence to employees in the “stabilizing period” (Badewi et al., 2013), from the financial perspective, it is a waste of money since the benefits would not be realised as expected. Therefore, orchestrating ERP assets with the development of organizational capabilities is important for achieving the greatest effectiveness and efficiency of the resources available to the organization. This research can be used as a benchmark for designing the various blueprints required to achieve different groups of benefits from ERP investments.

Originality/value

This research addresses two novel questions: RQ1: what are the ERP resources and OCRs required to achieve the different kinds of ERP benefits? RQ2: when, and on what basis, should an organization deploy more resources to leverage the ERP business value?

Keywords

Citation

Badewi, A., Shehab, E., Zeng, J. and Mohamad, M. (2018), "ERP benefits capability framework: orchestration theory perspective", Business Process Management Journal, Vol. 24 No. 1, pp. 266-294. https://doi.org/10.1108/BPMJ-11-2015-0162

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Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited


1. Introduction

Although at the end of the twentieth century, there was some debate about the impact of investing in information technology (IT) on organizational performance (Carr, 2003), it is now axiomatic that IT creates value for organizations (Kohli and Grover, 2008) by affecting the process of organizational performance (Schryen, 2013) and the organization as a whole (Nevo and Wade, 2011). Although we know how to create this value, the financial performance of firms is still uncorrelated with investment in IT (Chae et al., 2014). Indeed, although the value of IT investments is divided into costs, benefits and risks (Badewi and Shehab, 2013), the main component of the value creation comes because the benefits outweigh the costs of implementation (Tiernan and Peppard, 2004).

Although the benefits management approach was widely believed to be critical for realising success (Ward and Daniel, 2006; Ward et al., 1996; Baccarini and Bateup, 2008), some writers argue against this (Breese, 2012; Haddara and Paivarinta, 2011) and empirical research led to disappointing findings compared to those of the project management approach (Badewi, 2014, 2016; Badewi and Shehab, 2016). However, combining benefits management practices with project management practices in a single project benefits governance framework enhances the value of IT investments more significantly than project management frameworks alone do (Badewi, 2015). Moreover, studying the connection between project management and benefits management can lead to new and fruitful ways of overcoming the current failing rates of IT investments. According to Badewi (2016), the main connection point between project management and benefits management is the “blueprint,” or future snapshot of what an organization will look like after implementation, including the processes, information, culture and attitudes toward the IT artefact. This blueprint (the To-Be state) aims at delivering the kind of organizational capability at the end of the day that realises the benefits (Ward and Daniel, 2006; Serra and Kunc, 2015).

The resource-based theory (RBT) lens has been found useful for understanding the relationship between the organization’s differential benefits (competitive advantage) and the emergent capability from the new blueprint which comes from integrating IT into organizational processes. This emergent capability can be the source of competitive advantage when it is valuable, rare, inimitable and non-substitutable (Seddon, 2014). But investment either in technology or IT department competences, on its own, will never be rare nor non-substitutable if it is merely expended; rather, it becomes irreplaceable through the complementary resources (organizational complementary resources (OCRs)) of the organization (Melville et al., 2004; Schryen, 2013). For instance, IT department competences are not a source of competitive advantage regardless of their rareness or non-reproducibility unless they are mediated with organizational agility (Chen et al., 2013). Consequently, synergizing both IT resources (e.g. hardware, software, IT department competences) and OCRs (e.g. organizational culture, structure) is believed to be an inevitable source of competitive advantage because it creates unique capabilities (Nevo and Wade, 2010). In order to realize the benefits from IT projects, Melville et al. (2004) developed a business value model for doing so. According to this model, IT resources (technological IT resources (TIR) and human IT resources (HIR)) can achieve the expected benefits so long as OCR exist, such as non-IT organizational structure and culture. The ERP system subjects it to a special and critical look because it requires (and leads to) a radical change in the organizational culture, structure and power (Morton and Hu, 2008; Ke and Wei, 2008), besides making it possible to integrate various information systems and technologies into a single harmonized system.

ERP benefits are heterogeneous in the mechanism of their realization and the required organizational characteristics: these benefits can be classified into operational, managerial, strategic, IT infrastructure and organizational benefits (Shang and Seddon, 2000, 2002). However, this research adopts Zuboff’s (1985) framework, classifying them into automation, planning and transformation benefits, as used by Uwizeyemungu and Raymond (2009) for ERP systems. The rationale for using this classification is that it classifies ERP benefits into three groups only, each group requiring its own capabilities (Uwizeyemungu and Raymond, 2012) and thus a special blueprint (detailing ERP resources and OCRs). Given this framework, the first research question is:

RQ1.

What are the ERP resources and OCRs required to achieve the different kinds of ERP benefits?

At the same time, the sustainability of a certain resource (or capability) as an enduring source of competitive advantage can be questioned (Makadok, 2001; Teece, 2007). In other words, each organizational capability may have a limited lifecycle (Helfat and Peteraf, 2003). In this case, the ability of the CIO (Peppard et al., 2014) or CEO (Chadwick et al., 2015) to design, develop, expand and retire the portfolio of resources/capabilities would be the source of sustainable competitive advantage.

Resource orchestration theory in general gives us very general guidelines for the role of management in orchestrating (e.g. expanding, building, etc.) the organizational resources in such a way as to optimize performance (Sirmon et al., 2011). The root of this theory comes from contingency theory (Sirmon and Hitt, 2009). In contingency theory, superior performance is an output of the “fit” between different organizational factors, different assets and/or different capabilities (Keller, 1994; Drazin and Van de Ven, 1985; Brush and Artz 1999). Likewise, the fitness between ERP and organizational function affects performance (Seddon et al., 2010; Morton and Hu, 2008). This fit should be a dynamic construction (Albu et al., 2015) to reflect continuous growth and evolution until the “critical mass” is achieved (Davenport et al., 2004). Thus, the second research question is:

RQ2.

When, and on what basis, should an organization deploy more resources to leverage the ERP business value?

Thus, this research aims to develop an ERP capability process model, using the orchestration theory lens (i.e. the dynamic and evolving fitness perspective), to advise professionals when they should invest in ERP resources and when they should invest in ERP OCRs. Process theories shed light on the sequence of activities and thus explain how particular outcomes evolve over time (Shaw and Jarvenpaa, 1997). This process model is believed to be able to help us understand how ERP resources should be structured and developed over time to realize the ERP benefits. To sum up, to answer the first question, this research contributes to knowledge by extending the Melville’s (2004) concept of IT business value to consider the resources required to realize each group of ERP benefits. Then, to answer the second research question, the orchestration theory, combined with the framework of synergizing the IT resources with OCRs, should indicate the emergence of new capabilities (Piccoli and Ives, 2005).

2. Literature review

2.1 ERP business value model

IT business value is the impact of IT investments on organizational capabilities through the different levels of the organization (Schryen, 2013) and thus organizational performance (Melville et al., 2004). Likewise, ERP, besides its ability to reduce a firm’s risk in uncertain circumstances (Tian and Sean, 2015), is perceived to have a positive impact on organizational performance including the improvement of productivity and profitability (Nicolaou et al., 2003; Nicolaou, 2004); of inventory reduction (Madapusi and D’Souza, 2012); and of other measures of performance (Shang and Seddon, 2000), together with improving organizational capabilities such as renovation (Ma and Dissel, 2008), and leanness (Powell et al., 2013) capability. Therefore, conditioned by many factors, it affects organizational profitability (Dehning et al., 2006), the organization’s market value (Anderson et al., 2006) and therefore a higher stock market return (Ranganathan and Brown, 2006). Thus, if it is implemented, integrated, used, absorbed and assimilated appropriately, it can be a source of competitive advantage (Stratman, 2007; Romero et al., 2010) . Therefore, the ERP business value could be defined as the impact of ERP on organizational capabilities which affects the organization’s financial and non-financial performance.

There are different business value models and frameworks (Soh and Markus, 1995; Dedrick et al., 2003) for understanding how IT investments create value for organizations. The IT business value model of Melville et al. (2004) and the subsequent research (Schryen, 2013; Nevo and Wade, 2011) are used in this study because they consider both kinds of resource (organizational and IT). Indeed, a misfit between the ERP package (ERP resources) and the organizational functions (OCRs) affects both the success of implementing an ERP project (on time within budget) and project investment success after its implementation (Gattiker and Goodhue, 2005). Therefore, ERP should be customized to a certain level and organizational processes should be changed to keep the fit between the two (Soh and Sia, 2004). Therefore, this conceptual demarcation of resources by Melville enables us to use orchestration theory to make a certain IT group of resources contingent on a set of OCRs.

2.1.1 ERP resources

IT resources are IT investments in hardware, software applications and IT department skills, with the aim of achieving a specific business objective (Aral and Weill, 2007; Wang et al., 2012). ERP resources may be defined as the ERP functions and features that enable an organization to record and process data accurately, along the supply chain (Forslund, 2010) and/or it may be that the ERP features of integration, flexibility and transversality enable organizations to automate, inform and transform ways of doing business (Uwizeyemungu, Raymond, 2012). Furthermore, an ERP system such as SAP has not only its own integrated modules but also other extended modules such as supply chain management, customer relationship management and other business intelligence applications (Holsapple and Sena, 2005; Snabe et al., 2008). The existence of one module affects the entire performance: the more the modules are implemented and integrated, the higher the benefits realised (Madapusi and D’Souza, 2012).

Human IT resources are also found to have an impact on ERP performance such as the ability to deal with any lack of fit between the organization’s business processes and the ERP package (customization) (Chou and Chang, 2008). Furthermore, the IT competences in project management are found to be critical for delivering a ERP project within time and cost (Dezdar and Ainin, 2011a) in a way which satisfies the users and assures them of its quality (Tsai et al., 2011, 2012) thus realising the benefits (Velcu, 2010; De Toni et al., 2015).

2.1.2 ERP OCRs

Since ERP implementation does not happen in a vacuum, the existence/lack of the various OCRs is argued to be critical for the variation in the levels of success (Albu et al., 2015). OCRs that are found in the literature to be necessary are the organization’s strategy, structure (Albu et al., 2015), control system (Kallunki et al., 2011), compensation system (Silveira et al., 2013), people (Sammon and Adam, 2010) including their demographics (age, cognitive style, education, gender and work experience) (Jasperson et al., 2005), peer advice ties (Ann Sykes, 2015) and their psychological factors (e.g. readiness to change in attitude (Stratman and Roth, 2002)) and top management roles (Law and Ngai, 2007; Zhong Liu and Seddon, 2009; Dezdar and Ainin, 2011b) (e.g. their role in the continuous alignment between the organization’s strategic objectives and the long-term capabilities of the ERP (Chou and Chang, 2008)).

Since benefit realization from investment in an ERP system, i.e., the maturing of the capability to yield sustained benefits, depends on the effective use of the system (Somers et al., 2003), the factors that affect the effective use of the system should be considered as OCRs in achieving such benefits. Not only is the negative impact of breaching the psychological contract with the users considered (Klaus and Blanton, 2010), but also psychological factors such as perceptions of ease of use, usefulness, quality of vendor, quality of service and expected benefits in realising the desired benefits should be considered (Petter et al., 2008; DeLone and McLean, 2003). Kamhawi (2008) found that the perceived shared benefits affect the perceived ease of use and usefulness of an ERP system. As predicted by the theory of reasoned action (TRA) (Montano and Kasprzyk, 2002), the theory of Bagchi et al. (2003) uses TRA to show that user involvement and attitude to the ERP system affect the way in which it is used.

2.2 ERP benefits dynamic capability model

There are two main schools of thought about understanding how benefits can be realised. On the one side, the benefits management school focuses on identifying, planning, executing, reviewing and exploiting benefits (Ward et al., 1996). On the other, the capabilities school focuses on identifying and assessing the impact of the organization’s capabilities, competences and resources required for realising benefits (Doherty et al., 2011; Uwizeyemungu and Raymond, 2012). However, ways of reconciling the two schools are hardly to be found in the literature. Studies which have attempted to bridge the gap between them are Seddon et al.’s (2010) study, which shows that while current ERP resources and OCRs (i.e. functional fit and overcoming organizational inertia) are necessary for realising short-term benefits, long-term benefits will not be felt unless benefits management is imposed through the implementing of improvement projects. In addition, Velcu (2010) found that when ERP resources are aligned with the organizational strategy, they affect the performance of internal business processes and therefore customer benefits and financial benefits.

2.2.1 Dynamic vs first operational capabilities

Capabilities are of two types: operational and dynamic. While the operational capabilities are involved in the routine of performing individual tasks, the dynamic capabilities are involved in the routine of coordinating, integrating, expanding and retiring these tasks (Helfat and Peteraf, 2003). Amit and Schoemaker (1993) defined operational capability as the ability of an organization to deploy, integrate and make use of its assets toward a specific goal. According to this definition, which this paper adopts, IT capability is the ability of an organization to deploy, integrate and make use of its IT resources to enhance organizational performance (Wang et al., 2012). Furthermore, the capability does not count as a full organizational capability until it becomes a routine integrated in the organization processes to the point where it permits the “repeated, reliable performance of an activity” (Helfat and Peteraf, 2003).

Each operational capability has its lifecycle, starting from the time when it was established. It becomes mature and ends with what is called capability branching. When capability branching occurs, the factors external to a capability (which can be external or internal to an organization) affect its lifecycle, such as a managerial decision to have a “selection event” point which transforms the performance by transforming the capability (Helfat and Peteraf, 2003). Indeed, a managerial decision can reverberate throughout the creation of strategic resources (Sirmon et al., 2011). Thus, Helfat et al. (2009), describing the complementary operational capabilities (at the branching stage) of dynamic capabilities (e.g. to renew or redeploy), underlines the function of top management of structuring, bundling and leveraging the organization’s resources/capabilities for the sake of achieving sustainable competitive advantage. To structure the resources means to acquire, accumulate and divest them. Once acquired, they must be bundled (tailored) into the organization’s system so that the leveraging process (coordinating and deploying) can take place to achieve the organization’s performance targets. Hence, it has been found that it is critical for top management to prioritize, synchronize and support (orchestrate) the resource management activities of managers at all levels of the firm in the interests of organizational performance (Chadwick et al., 2015) and sustainable competitive advantage (Sirmon et al., 2011).

2.2.2 Resources orchestrations

Asset orchestration is the “capacity of managers to create purposefully, extend or modify the resource base of an organization” (Helfat et al., 2009) so that corresponding capabilities can be created (Helfat et al., 2009). Resource orchestration takes a firm one step further toward mixing resources, capabilities and interventions by managers that deploy more resources (Sirmon et al., 2007). Thus, resource orchestration is the integration of asset orchestration and resource management (Chadwick et al., 2015). Each capability has lifecycle started at its foundation stage but they all end differently. They can end by any of the Rs 6 (renewal, retirement, redeployment, recombination, replication or retrenchment) (Helfat and Peteraf, 2003). Thus, by orchestration mechanisms, organizational performance can be transformed from one level to the next by deliberately “branching” the lifecycles of the organization’s capabilities. Each resource orchestrated into an organizational IT portfolio creates a new capability that builds a new organizational environment state that may require a new resource (Cui and Pan, 2015). In other words, resource orchestration theory implies that deploying an extra resource will lead to something (a capability) that leads to incremental performance (benefits) (Davis-Sramek et al., 2015).

Orchestration affects not only a firm’s IT resources, but it can also cover IT resources alone or OCRs alone, or these two combined. Wang et al. (2012) showed that investing in TIR at a time of stability is more effective at such times, whereas investing in HIR is more viable in a dynamic environment. Indeed, Sirmon and Hitt (2009) found that the fit between the resource investment decision (which resource to invest in) and the deployment decision (where to deploy the resource) is more critical to the organization’s performance than simply seeking to maximize any of the decisions alone. Therefore, it can be proposed that synergizing and fitting IT resources and OCRs (which resources should be deployed where and when) is more critical that merely rationalizing the purchase of IT resources one by one or the development of organizational intangible assets (human resources capabilities) at some distance from the strategy of the IT resource management. By applying the same argument to ERP benefits, synergizing an ERP resources plan and plans for developing organizational human resources is expected to have a greater impact than focusing on any of these islands alone.

2.2.3 Benefits management and dynamic capabilities

Benefits management frameworks and models are implicitly inherent in the concept of dynamic capabilities. For instance, researchers spotlight the value of benefits exploitation capability in realising more benefits from the current IT portfolio (Ashurst and Hodges, 2010; Ashurst et al., 2008) and ERP system (Lawrence Norton et al., 2013) by investing in organizational resources (e.g. training) rather than technological ones. Likewise, the active benefits management framework shows that benefits management is a continuous process (Remenyi and Sherwood-Smith, 1998). Davenport et al. (2004) underlined that ERP implementation is an ongoing process until the “critical mass” of implementation is achieved, able to integrate the main function of departments so that the full value of ERP can be realised. Therefore, it is practical to use a benefits review as a mechanism to follow-up implementation and take action so that the organizational fitness with current and new ERP implementation is perceived to be associated with the organizational sustainable financial performance from ERP (Nicolaou and Bhattacharya, 2008).

The factors required to realize ERP benefits are immense. Without a significant capability in the organization to change as it implements the new technology, the benefits will not be realised and thus the value of investing in this technology will not be felt. The activities required for delivering ERP benefits are project management factors (for IT resources) and management factors for business change (for OCRs) (Badewi, 2016). Both should work together in a unified and consistent framework for managing the value curve which underpins the organizational capabilities (Jenner and APMG, 2014; Serra and Kunc, 2015). Figure 1, adopting the value curve, helps to visualize the idea of the different blueprints required for achieving different benefits.

3. Research methods

In this study, we conducted case analysis of 12 organizations that have implemented ERP and 8 consulting organizations in a range of developing and developed countries, namely, Egypt, Saudi Arabia, the UK, the USA and Australia. Table I summarizes the major characteristics of these firms. We used purposeful sampling and considered several factors in selecting the cases. First, information systems in developing countries (ISDC) are quite different from their counterparts in developed countries, in particular in the context of IS innovation (Avgerou, 2008). In addition, scholars working in the interpretive research paradigm believe that the reality of one organization is not the same as that of another (Walsham, 2014). However, selecting organizations from different countries, contrasting and comparing the organizational factors, above all the cultural factors, has been found very helpful in theory development. Second, a UK private organization which was perceived to have shown unusual performance by means of its ERP system was contrasted with another private one from the USA which was perceived to have shown normal performance with the same means. In addition, a UK council which had a relatively well-integrated system was contrasted with an Australian council which had a less well-integrated ERP system. A Saudi ministry which had invested more in IT was contrasted with a Saudi Bank which had invested more in people. Third, five Fast Moving Consumer Goods (FMCG) organizations in Egypt, the Emirates, Saudi Arabia and the UK were contrasted because all of them face the same problems of tracking, planning and innovating in their product lines. Finally, a healthcare organization which had a continuous innovation program was contrasted with the other organizations. Later, eight consultants in the UK and Egypt were approached. They were selected for their long service (15 years or more) and for their experience in international projects involving ERP implementation and/or the management of realising ERP benefits.

We collected data for this study both from interviews and archives. The participants were approached in a snowball process at some public and private organizations where ERP was implemented and/or where they worked as senior ERP consultants. The average interview time was four hours, including initial and follow-up sessions. Interviews were tape-recorded unless informants objected. To assure the accuracy of the interview data, we conducted number check (Lincoln and Guba, 1985) in which the original informants verified our tape transcripts or interview notes. The aim of these interviews was to grasp the social constructions of experts about the different ways in which they implemented the ERP and then to validate and contrast these with the results from the previous stage.

Data have been collected from interviews in 12 organizations which have implemented ERP and 8 consulting organizations in a range of developing and developed countries, namely, Egypt, Saudi Arabia, the UK, the USA and Australia (Table I). The participants were approached in a snowball process at some public and private organizations where ERP was implemented and/or where they worked as senior ERP consultants. The average interview time was four hours, including initial and follow-up sessions. In parallel, relevant documents were collected from each organization. Annual IT reports (such as progress reports on plans for realize benefits) and information about ERP implementation and post-implementation plans were analyzed.

Data analysis used familiar approaches for inductive studies (Eisenhardt, 1989; Glaser and Strauss, 1967). Analysis began with detailed written account and schematic representation of each ERP implementation process. After constructing the case histories, we conducted within case analysis, where the basis for developing early constructs surrounding ERP implementation process. For this purpose, we focused on analyzing the interview data as well as integrating and triangulating facts from various data sources. Triangulation of archival and interview data enables richer and more reliable description of each case (Jick, 1979) and improves construct validity (Yin, 2003).

Next, cross-case analysis was conducted, looking for similar constructs and themes in the cases (Eisenhardt and Graebner, 2007). In order to preserve the integrity of replication logic across cases (Eisenhardt, 1989; Yin, 2003), we began cross-case analysis after most data had been collected. We relied on constant comparison across multiple informants and over time to detect concept patterns (Glaser and Strauss, 1967). We also used archival data in order to enable richer and more reliable description of each case (Jick, 1979) and improve construct validity (Yin, 2003). In an iterative fashion, we analyzed the data by continuously visiting the consistency between the data and an emergent structure of theoretical arguments (Miles and Huberman, 1994). We also presented the inductive model to informants inviting their feedback and comments. These interactions were conducted through face-to-face meetings, telephone discussion and e-mail dialogue.

ISDC are quite different from their counterparts in developed countries, in particular in the context of IS innovation (Avgerou, 2008). In addition, scholars working in the interpretive research paradigm believe that the reality of one organization is not the same as that of another (Walsham, 2014). However, selecting organizations from different countries, contrasting and comparing the organizational factors, above all the cultural factors, has been found very helpful in theory development. In the present study, a critical realist paradigm was used, which contrasted transcripts. As shown in the interview guide (Table AI), peers were asked about what others had done, to see whether they agreed or disagreed and why, on the principle of “revealing and challenging prevailing beliefs and social practices” (Myers and Klein, 2011). In fact, getting rich input from different countries improved the process of theory development since different experiences in different contexts helped to explain the differences in realising the benefits from the use of ERP.

A UK private organization which was perceived to have shown unusual performance by means of its ERP system was contrasted with another private one from the USA which was perceived to have shown normal performance with the same means. In addition, a UK council which had a relatively well-integrated system was contrasted with an Australian council which had a less well-integrated ERP system. A Saudi ministry which had invested more in IT was contrasted with a Saudi Bank which had invested more in people.

Moreover, five FMCG organizations in Egypt, the Emirates, Saudi Arabia and the UK were contrasted because all of them face the same problems of tracking, planning and innovating in their product lines. Finally, a healthcare organization which had a continuous innovation program was contrasted with the other organizations. Later, eight consultants in the UK and Egypt were approached. They were selected for their long service (15 years or more) and for their experience in international projects involving ERP implementation and/or the management of realising ERP benefits. The aim of these interviews was to grasp the social constructions of experts about the different ways in which they implemented the ERP and then to validate and contrast these with the results from the previous stage.

4. Findings

RQ1.

What are the ERP resources and OCRs required to gain the different kinds of ERP benefits?

ERP benefits in this research are divided into automation, planning and innovation benefits, while automation benefits concern the productivity of organizational processes, better management of warehouses, informational (planning) benefits concern improvements in production scheduling and in decision making (Uwizeyemungu and Raymond, 2010). Transformational (innovative) benefits, for their part relate to the development of new products. This framework is used in the literature that deals with understanding ERP effects (Uwizeyemungu and Raymond, 2009, 2010, 2012). Building on this area of research, this research divides benefits into automation, planning and innovation benefits

4.1 ERP automating benefits

ERP automating benefits are benefits that are realised once an organization automates its value-engineered business processes. Automating current processes does not add much value in itself; rather, automating the new processes that are value-engineered is the main way to derive value from automating benefits (Peppard and Rowland, 1995):

The problem that we faced in ERP implementation in our company is automating the AS-IS. We did not have at that time the vision of the To-Be. Indeed, it was a very big mistake which costs us a lot, later. Without understanding why do we do what we do, we will not be able to “fit” the ERP in a way that would let the benefits be realized

(ERP consultant in the UK from the food industry).

Automation benefits of ERP are seen in the productivity of the organizational processes, better management of warehouse space and better integration of resources (Uwizeyemungu and Raymond, 2010), cost reduction through time reduction, elimination of double entry, reduction of errors and less time in the cycle of purchasing and selling.

4.1.1 ERP automating OCRs

Regardless of the importance of ERP resources to achieve automating benefits, they are not sufficient unless they are complemented by the organization’s capacity to realize these benefits. Therefore, to be able to have ERP automating, ERP automating OCRs should first be available. ERP automating capability is defined as the ability of an organization to map all business processes on tits ERP system in such a way that all data from their origin to their destination are recorded and analyzed using ERP resources.

The ultimate automating benefits can emerge only when the users of the system integrate its use in their practices in such a way as to minimize the manual work. These practices can be valid only if there is a positive attitude (based on ease of use, usefulness and the need to use) to the system, which inclines the users to use it. This attitude may be governed by the organization’s values vis-à-vis changes and organizational transformations (Besson and Rowe, 2012). Likewise, this research has found that cultural factors such as openness to new ideas and readiness to change are critical for accepting the ERP as a concept. A disciplined culture (with its routinization of the organization’s processes) is found critical for successfully mapping the business functions on an ERP system. Indeed, openness and readiness to change usually come if one is self-confident enough to be able to control the environment (the fear of the unknown represented by new technology and new business processes):

Before implementing the ER […] [we tried] to make business process re-engineering before implementing the ERP. By doing so, we could hedge the risk of the negative perception by the users and their reactions to the new processes and the risks of new technology

(ERP Consultant in Egypt).

This may explain why Ram et al. (2015) found a positive relationship between the readiness to change and successful business process re-engineering and system integration. Indeed, this culture was found to have affected the different factors such as the users’ age, education and background:

You know what is our problem in integrating the processes of ERP in our employees DNA? They are less familiar with technology. Although we had an easy system before implementing SAP, but SAP for them has been overwhelming. This company as you see is in a very remote area. The human resources available are not qualified to use such technology […] To be honest, when you see a company dominated by old mature people it is not really easy to change them

(CIO of an Egyptian food manufacturing company).

4.1.2 ERP automating resources

The ERP resources required to achieve automating benefits are classified under technologies, features and IT department requirements. The features that appear to be important are features that enable workers to adapt quickly to the system from the psychological perspective, features such as the convenience and comfortable interfaces and self-help support features, to reduce the anxiety of the users and decision makers about adopting a new system. Although ERP is known in automation software, some organizations are not able to experience its automating benefits. Such benefits need not only to be integrated in a certain department, but also needs integrating as a whole which functions as a single system in the enterprise. Thus, if ERP cannot be integrated in this way, it fails to confer the automating benefits.

The technologies that are perceived to be required are scanning and text reading technologies and tracking technologies such as RFID and Bar Code, which connect an organization via technologies with other external organizations and, most important, which integrate one technology with others. For instance, unlike the British local authority body which has a “scanning” system (to digitalize the manual invoices and external documents with an external stakeholder which is not integrated with the current system), the Australian governing council struggles hard to integrate its own system with those of its vendors, citizens and other external parties because they do not have a suitable integration platform:

I mean we would have focused on our software suppliers to move much faster into the area of connecting with the core system. For example, let’s say the taxation system – make that available for citizens as well itself: mobile applications hifi applications and IPad applications android, all that is very, very slow to come forward. I mean that is one of the problems

(CIO Australian Government).

Although ease of use and perceptions of usefulness are psychological factors, ERP resources can ease the way a job is done by using simple customized systems in routine places, as a Point of Sales system does. Unlike the Egyptian food company in which users were challenged in using the system because it caused a bottleneck in the processes of their sales functions, a pharmaceutical company in its marketing department overcame this problem by implementing an “easy-interface” system for sales representatives and integrating this system with the ERP:

Yet our marketing department has struggled a lot in implementing the ERP. After discussing that with the XYZ consulting company, we implemented a very easy point of sale [application] which is integrated with ERP. Doing this mad the implementation very successful and now the marketing and sales people are using the ERP in virtually all their transactions

(MM (Material Management) SAP consultant at an Egyptian pharmaceutical company).

The IT department competences required are technical competences such as the ability to synchronize the systems effectively and efficiently without breaching, so that users can trust the reliability and adaptability of the process.

4.2 ERP planning benefits

Planning and controlling benefits are benefits that are realised from the ability to use the ERP system to understand, and therefore to predict, the behavior of the internal and external environment so that an organization can plan and therefore control, its environmental factors. ERP, according to the literature, can, it is argued, affect the forecasting quality (Dorantes et al., 2013). Nevertheless, this research found that this statement is based on many assumptions. The assumptions can be classified into OCRs and ERP resources as illustrated in Figure 3.

4.2.1 ERP planning OCRs

ERP planning capability is the ability of an organization to use ERP planning resources so as to understand and therefore control, the external and internal environment. OCRs were found to be critical for building ERP planning capability (being part of the organizational routine) and were found to be either users’ factors (skills and attitudes) or organizational factors (characteristics and culture).

Capability needs to be mature before it can realize its benefits and be self-sustainable. This will not happen until it is integrated in the organizational routine or becomes part of the users’ practices. For it to be a part of the users’ routine, they must value the use of it and perceive the ease of use in the planning process. Both perceptions are required for a positive attitude toward it (Badewi et al., 2013). Without knowing how to use it, these perceptions will undervalue it lowest and therefore will not use it effectively enough for gain the expected benefits (Burton-Jones and Grange, 2012). In this research, it has been found that, to use it, employees need to be IT qualified (and able to work on reports) and qualified in business practices (able to recognize planning models in sales and/or inventories). As the quotation in Table II shows, the reporting skills of an IT-user are his/her ability to comprehend and use the ERP reporting features smoothly, whereas the business reporting skills are the his/her ability to understand and to apply the business planning principles and concepts of ERP reporting functionalities.

Hence, the quality of the planning system is found in some studies not to be critical for using these systems (Popovič et al., 2012), where the knowledge share culture could be the missing link (Popovič et al., 2014). In this research, we found that a negative knowledge share culture affects management policies in setting different permissions and accessibilities regarding data in different departments in such a way as may hinder effective planning:

The problem in planning through the system is that decision-makers want to hold on to the information: they do not want to share information across different department

(ERP Implementation Consultant at an Egyptian Company).

In my experience, there is no clear intention to enable organizations to share data. As a supply chain manager I cannot see the demand forecasts from the marketing department although we have an integrated system. That is why we are still working on a push inventory. You cannot imagine how much we lose because of that. I have talked to top management a million times but no way

(Supply Chain specialist in Food Manufacturing at an Emirates company).

Furthermore, if an organization does not value the planning function of management, it cannot be expected to plan using ERP, which poses more challenges in learning and adopting. This idea was triggered when an Egyptian expert claimed that the first reason for not achieving any planning benefits from ERP is that the organization in itself does not have any manual/or structured method of planning. This argument was scrutinized by the other interviewees and found to apply to Arabic organizations at least:

Planning!! They do not have any structured planning system. Planning in best cases is for the week. I have never seen any of them using any ERP planning tools. Organizations should know how to plan first before using ERP for planning

(ERP Oracle Consultant in Egypt).

Thus, we found an organization that applies lean principles in Egypt has a strong planning system to minimize its costs. This indeed helped the organization in question to realize planning benefits that were beyond its peers. Furthermore, organizations which strongly believe in the power of technology in planning and scheduling activities outperform others which do not. This is consistent with another research belief that pre-implementation expectations affect the use of the system in the post-implementation phase (Saeed et al., 2010; Veiga et al., 2013). However, there are organizations that value the culture of planning, but do not believe in the value of using ERP for planning:

The users undermine the use of ERP in planning. They believe that ERP is not for planning. It is just to automate the processes. They still plan using Excel. There is no clear motivation to explore or exploit the ERP planning features

(MM specialist at an Egyptian food company).

4.2.2 ERP planning resources

ERP resources are technologies, features and IT department competences. The features found to be most important are their convenient statistical reporting features, convenient at least from the perspective of users and visual tools in reporting features. In one organization:

I think one of the weaknesses of the ERP system is that sometimes tools for planning are not too easy to use. Planning data can be overwhelming to the user and I know upnext?? in my other company, we have reliable custom reports and custom screens to help users really be comfortable with planning that are provided by the ERP system

(ERP Analyst at an American company producing safety equipment).

In the same vein, since planning is almost about using historical data to predict and therefore to control future behavior, the power of ERP to provide high level statistical abilities conveniently for the average person, with easy-to-use statistical interfaces in an organization will help ERP to be incorporated in its normal daily planning and controlling practices:

Now, after we upgraded the Oracle ERP, we have convenient and easy-to-use features that enable normal users to use the statistical power of the ERP system. This has enhanced many planning activities

(ERP Manager of a Nuclear Power organization in the UK).

Technologies that are perceived to be relevant are the capacity to store data, speed of receiving and sending data and reporting technologies:

If that were much more closely coupled with the finance system, it would be beneficial everywhere, because at the moment it is a whole section doing that. All its performance is to report on it. That is the next step, reporting, because there are many different systems and different databases. We now have to develop our own data warehouse that we report from. And that form would sort out a lot of problems as well.

Finally, IT technical competences are needed to ensure the integrity of the system as well as the real-time information availability. IT business partnership competence (Chen et al., 2013) is the ability of the IT department to collaborate with other business functions; this is required, in particular the ability to develop a business case. Business case development should take account of different internal stakeholders in estimating the impact of a new planning system. It should do so not only to make them buy into the system but also to let them plan how the benefits could be realised in terms of the time required to realize the expected level of performance, responsibilities, duties and accountabilities:

Yes, business case! You know we bought a planning system for our ministry costing millions. Nobody used it for ages, until a consultant discovered it. After that this consultant made a plan for us to use it. I agree with you, benefits management helped us to bring life back to this dead system. Once the benefits were identified, the senior staff brought the system in and the business plan was developed to use this the system. Now it is working and integrated with the current IT infrastructure (an ERP system)

(IT member of the senior staff in a Saudi ministry).

But of course it is not advisable to wait until a consultant company “discovers” a purchased system. Without the IT ability to develop a business case in such a way as to buy the sponsors in and assign responsibilities for realising the benefits for the expected IT purchases, this IT is built for failure (Maklan et al., 2015).

4.3 ERP innovation benefits

Business innovation benefits in this research come very close to the type III IS innovation of Swanson’s (1994) typology, which is embedded in core business technology, is contingent by IS strategy to business and IS business oriented. Achieving IT business innovation is not a matter of IT innovation only; rather, it is a matter of the organizational capacity to innovate using IT as well (Ashurst et al., 2012).

4.3.1 ERP innovation OCRs

ERP innovation capability is the ability of an organization to innovate in its business functions and processes by means of ERP resources. Indeed, once the organization practices (routines) help an organization to innovate, they become the most robust enablers of innovation through ERP (Srivardhana and Pawlowski, 2007). This routine is mainly based on the following organizational mind-set:

What you can say to create a routine of innovation by a continuous alignment and improvement of business processes using IT

(SCM of a healthcare service in Saudi Arabia).

Once an organization is able to understand its environment (and has incorporated this in its routines) or examine its understandings using its IT resources and to buy and integrate the “novel” IT resources to enhance its organizational processes, products and services, it will be able to tackle innovation from its experience of investing in ERP and its ancillary systems. Indeed, the mentality which creates this “routine of innovation” is conditioned by the organization’s belief (that of its top management, IT staff and non-IT staff) in the power of technology to make organizational innovation possible. This belief is reflected in the organizational attitude to using technology in setting the organization’s strategy and in its organizational culture. It was clear from the innovative organizations that their culture had an intimate knowledge of information technologies and their use.

However, some organizations share this same attitude but do not have the ability to use the data available in data sets since they do not share the scientific approach to dealing with data; for example, they have no culture of testing hypotheses to differentiate between the valid and invalid ones (scientific culture). The organizations that are not interested in understanding their environment are not expected to innovate using their data. Seeking to understand and examine one’s surroundings is the cornerstone of innovation.

ERP, if it is well integrated, can help in understanding and examining one’s circumstances by providing reliable, valid and timely data. Nevertheless, the ability to use statistics in creative ways to understand these data patterns so that the new realities/perspectives/insights can be understood is the main bottleneck. Creativity in using the data for decision making opens the potential for unleashing opportunities that have not so far discovered cross-sectional analysis, through correlating different aspects in different departments. For instance, one UK respondent extolled:

[…] cross company data scientists, justifying the job role of an analytical center of excellence. We have got health and safety analysts that can do Chi-square and do it from a health and safety viewpoint. If we can combine the health and safety with procurement information we can now say just one very simple thing, which is that the contractors working for us have more accidents

(Expert user in the UK; Nuclear Power).

An Innovative Support Unit, also called a Centre of Excellence, allows innovative ideas to be filtered and shared across departments. Furthermore, if data need to be translated into projects or programs, the Innovative Support Unit will sponsor the programs (Govindarajan and Trimble, 2010). Although one of the Saudi companies uses an innovation-supporting unit, under the name “business development unit,” the lack of a clear strategy impairs the alignment between the new initiatives that lead to contradictions between different programs, leading to unsatisfactory performance.

Furthermore, we found that a highly centralized bank in Saudi Arabia was unable to realize innovation although it had ERP innovation resources, whereas a decentralized Ministry of Finance in Saudi Arabia tended to achieve more innovation from its ERP. This evidence supports the research findings of Tambe et al. (2012) that organizational practices such as decentralization act as enablers for achieving innovation and productivity using IT.

4.3.2 ERP innovation resources

Besides the ERP innovation OCRs, ERP innovation resources are required, as illustrated in Figure 4. ERP resources range from the IT ability to customize the current system reliably and validly and the scalability of the system (its ability to extend and keep pace with the growth and functions of the organization (Mital et al., 2014)) to the deployment of “novel” technologies (i.e. being the first to use and integrate them).

One of the main problems of a traditional ERP system is that it is too strict to enable an organization to use it in planning and innovation, as is widely accepted in the literature (Davenport, 2000). As a CIO at Australian Council says:

However people normally do not like that because it means that they have to follow a very strict path how the system works. If it is outside the system, there is more flexibility.

At the same time, we found that organizations which have a more flexible ERP infrastructure are more agile in seizing new opportunities. For instance, a Saudi enterprise has adapted a cloud ERP system in the belief that the staff will become flexible enough to implement a road map of the IT projects that will be integrated in its ERP system. The same applies to the safety and security equipment manufacturing organization in the USA:

One brand factory cannot produce finished goods for the other brand. This introduces a transformation project which is included in the ERP implementation. The ERP system helps facilitate the continuous transformation of our business because they are more flexible and rather than automate the business processes, I would agree that the ERP system could be a vehicle for transformation

(ERP analyst in safety and security equipment manufacturing).

Gaming technologies, using Kinect technology, were used in one Saudi organization in a limited way; however, this gave it superiority to its competitors in the short run. We believe that this superiority will not be sustained once the competitors buy this new technology; however, the ability of an organization to be superior in purchasing and fitting novel technologies is the main source of competitive advantage. To tell the truth, the ability to purchase the best technology at the right time by the IT department is sometimes limited by its ability to develop a business case that addresses this need. Since the business-IS linkage is critical for innovation processes (Tarafdar and Gordon, 2007), we have found in this research that when the job specification and description of the IT staff identify this competence, innovation capabilities through ERP are improved:

“I had a very good background in supply chain management before being a SAP consultant. My understanding of the current business processes enabled me to talk to functional managers to introduce new ideas in business by using the unused ERP functionalities. Now it becomes part of my business to help users to introduce new services to the customers […] part of my job description is to train business users and help them to increase their performance by innovating new ways for doing tasks […]. Now my job is not technical troubleshooting; rather my task is to improve business processes through the ERP

(SAP SCM of a healthcare service in Saudi Arabia).

RQ2.

When, and on what basis, should an organization deploy more technologies to leverage the ERP business value?

The ERP organizational resources required for all groups of benefits are not the same, as shown in Figures 2-4. But they are complementary. In other words, as supported by Figure 1 and as the quotations show in Table III, the expected planning blueprint (which is based on ERP planning resources and ERP planning OCRs) will not create the expected planning capability without having the automation blueprint. Likewise, the required blueprint for business innovation benefits will not achieve the desired capability until the planning capability is mature enough. The rationale of the need for automating (integrating) ERP resources for planning is that the production planning is based on the sales and material planning data (Günther et al., 2006). Without such data, the production manager will not be able to plan (understand) the production patterns using ERP-enabled features.

In the same vein, the ERP automation OCRs are important for the ERP planning capabilities. If there is a negative attitude to the system (a positive attitude is required for the successful realising of automation benefits) and users are not skilled enough in business or IT to plan through the system, it is difficult to expect these users to innovate their processes and products/services using the data in them. Likewise, in ERP resources, without having an integration platform to collect the current and accurate data from the source and send it to the data use locations (for automational benefits) and without the ability to synchronize a huge amount of data from across the organization and its supply chain (a requirement for planning), the ability to identify new opportunities for improvement through the ERP data (ERP innovation benefits) decline.

By comparing and contrasting the five manufacturing companies, the lower the level of an organization’s capabilities the more it can gain higher-level benefits. For instance, EGY F has a medium level of ERP resources since it lacks tracking technologies but the systems are integrated. It does not have ERP OCRs because staff strongly resist the system. Its readiness to change is the lowest of the five cases and its ability to use technology is lower than theirs because it is dominated by old and less skilled labor (being located in a remote area). This organization achieves the lowest level of automational benefits. Furthermore, although it has invested a great deal in planning ERP resources (such as a huge capacity for data storage, very advanced reporting systems, advanced data analysis systems and visual reporting), it has not realised any planning benefits. The same applies to its innovation benefits (from ERP).

EGY P and Saud P are similar in their ERP resources and OCRs for automation and planning. However, unlike EGY P, Saud P invests more in training users for business certificates and IT skills. The business skills of EGY P’s employees can be considered the major bottleneck for enabling users to plan using ERP, since the users are unfamiliar with forecasting, analytic and different inventory systems in the SAP. This is why they import files to Excel sheets to plan using the traditional methods that they used before ERP. Indeed, although neither has ERP innovation resources nor OCRs, Saud P is able to innovate from ERP because it could continuously enhance its pricing systems in line with seasonal demand.

Some aspects of UK F and Emir F are quite similar (all the resources are the same except the lack of tracking resources in UK F and lack of a knowledge sharing culture in Emir F). On the one hand, UK F does not have a good tracking system which obviously affects the quality of its data and leads to trouble in planning by means of ERP. This organization has all the ERP planning resources and OCRs. But because of its invalidated (wrong) data, its capacity to plan through the system is significantly reduced and this negatively affects innovation through the system. On the other hand, Emir F lacks a knowledge sharing culture and hence its top management restricts the accessibility of data from different departments. This radically affects planning and innovation because users and decision makers cannot see over departmental borders. Nevertheless, internally each department plans well, using the available historical data. Innovation is implemented through a central department which has access to all data (Table IV).

5. Discussion

Unlike the prevalent notion in the literature that ERP kills innovation in organizations (Trott and Hoecht, 2004); this research has found evidence that ERP can be a source of innovation. Without the ability to have reliable, timely and valid data from the current IT resources (by matching and integrating ERP functions to organizational functions and processes (Soh et al., 2000)), planning (understanding the data patterns) would be impossible, even new planning if resources are invested in it. Without understanding the patterns, innovation is difficult. This supports and extends the propositions of Srivardhana and Pawlowski (2007), which are based on absorptive capacity theory (Zahra and George, 2002) of the ability of ERP to be an enabler for sustained business process innovation when an organization is able to acquire (by ERP automation OCRs), assimilate (by ERP planning OCRs), or transform and exploit knowledge (by ERP Innovation OCRs innovation) through ERP. Thus, as supported by the literature (Gupta and Kohli, 2006), the organization’s ability to integrate ERP in its current processes so that data are collected from their source to be used (on condition of having the users’ and organization’s ability to absorb and assimilate) in information and knowledge creation is the key to realising the potential value of investment in ERP.

As illustrated in Table V, this research contributes to five streams of research, namely, RBT, IT business value, orchestration theory, benefits management and ERP benefits taxonomy. RBT is based on the idea of identifying the resources that cause rent (abnormal profit beyond that of other competitors) (Seddon, 2014). Unlike previous research, which suggests that ERP is a commodity and cannot be a source of competitive advantage (Seddon, 2005), this research contributes to this argument by suggesting that it can be so if we consider the time factor in orchestrating different ERP resources and OCRs, i.e. when the resources should be purchased, developed or built. Timing depends not only on the IT competence to understand and bring the new technology to the organization (Piccoli and Ives, 2005), but should also be based on the level of maturity of the organization to realize lower-level benefits from the current IT assets portfolio, for instance, maturity in attitude to the ERP. In this research, while the attitude required for automational benefits involves merely an acceptance of technology, this acceptance should be stronger if planning benefits are to recouped and so should the belief in technology as an enabler of transformation by innovation. These findings support Jasperson et al.’s (2005) argument for the implementation of ERP in stages so that users can see the positive outcome from the current ERP implementation before deciding to upgrade/invest in more resources.

Unlike the current resources orchestration theory stream, which suggests that competitive advantage requires adaptation to external environmental factors (Teece et al., 1997), this research spotlights the role of mature internal capabilities (built on internal resources combined with OCRs) in determining the timing for upgrading, transforming or extending current capability.

The IT business value concept of Melville et al. (2004) is extended in ERP implementation which, besides being an infrastructure for other IT projects, entails the management of radical organizational change. ERP resources are found to be features, the technologies attached and IT department competences. OCRs are the organization characteristics that affect the culture and users’ skills. Skills and culture affects the attitude, which is translated into practices.

Combining the Melville framework with the ERP benefits taxonomy of automation, planning and innovation has helped us to provide the three blueprints required for the three organizational capabilities, which ensure that the three groups of benefits are realised. Therefore, this research argues, the role of the benefits management team is not only to audit benefits (Badewi, 2016), but also to manage the evolving process of realising ERP benefits until they reach the “critical mass” (Davenport et al., 2004), which is identified in this research as the innovation blueprint.

6. Conclusion

Although the “P” in ERP stands for planning, many academics and practitioners still believe that ERP applies to automation only. This research spotlights that the ability to invest in ERP can increase the innovation and planning capabilities of the organization only if it is extended and grown at the right time and if it is supported by OCRs. It is not cost effective to push an organization to achieve all the benefits at the same time; rather, it is clear that an organization would not be able to enjoy a higher level of benefits until it achieves a significant number of lower-level benefits. Thus, investing in higher-level benefit assets directly after an ERP implementation, when there are no organizational capabilities available to use these assets, could be inefficient. Moreover, it could be stressful to users when they see plenty of new ERP resources without the ability to use them. Although it could be of slight benefit to introduce, for example, business intelligence to employees in the “stabilizing period” (Badewi et al., 2013), from the financial perspective, it is a waste of money since the benefits would not be realised as expected. Therefore, orchestrating ERP assets with the development of organizational capabilities is important for achieving the greatest effectiveness and efficiency of the resources available to the organization.

It is interesting to note that interviews with people in developing countries enrich the analysis in planning and automating benefits, forming a contrast to interviews with people in developed countries, which focused on the benefits of ERP business innovation. This is one of the main benefits of the critical realist paradigm. Furthermore, diversity in the countries participating in this research allows insightful analysis of new organizations that do not have enough experience with ERP systems to guard against deriving the benefits from automating and planning before seeking to achieve business innovation benefits through buying more ERP resources.

This study is interpretive in its nature; it comes to explore a phenomenon that some organizations outperform others in utilizing ERP asset. Although it reveals many interesting findings, it needs to be backed by a positive research to translate the findings into propositions and hypotheses to be tested using either case studies or survey research. This research comes to create knowledge gaps in other research to develop models and theories to rediscover the power of an ERP system in enabling organization to achieve business innovation.

Figures

Framework showing the capability for realising ERP benefits

Figure 1

Framework showing the capability for realising ERP benefits

Process of realising ERP automating benefits

Figure 2

Process of realising ERP automating benefits

Process of realising ERP planning benefits

Figure 3

Process of realising ERP planning benefits

Process of realising ERP innovation benefits

Figure 4

Process of realising ERP innovation benefits

Interviewees

Organization Country Role Exp System Available systemsa
 1 Pharmaceutical company Egypt ERP manager 5 SAP P, S, A
 2 Healthcare services Saudi Arabia SCM manager 4 P, S, A, D
 3 Pharmacy retailing group Saudi Arabia Corporate Sales manager 20 EPICOR P, S, A
 4 Ministry Saudi Arabia IT manager 15 Best-of-breed All Except Pr
 5 Bank Saudi Arabia ERP integration manager 10 Best-of-breed All Except Pr
 6 Government Australia CIO 17 Best-of-breed All Except Pr
 7 Safety and Security tools manufacturing USA ERP analyst 14 Oracle All
 8 Nuclear technologies UK ERP consultant 15 Oracle All except Pr
 9 Food and beverage production UK ERP manager 7 SAP All
10 Food and beverage production Emirates Supply chain manager 6 SAP All
11 County council (focus group) UK ERP manager 8 Oracle All except Pr
Program manager 12
ERP customer manager (ERP) vendor representative 20
12 Food and beverage production (focus group) Egypt IT infrastructure manager 6 SAP All except O
MM ERP manager 5
SD ERP manager 5
CIO 20

Notes: aP → purchasing, logistics and inventory system; S → sales and customer services; A → accounting information system; D → advanced data analytics; Pr → production; M → fixed assests and maintenance system; and O → other customized systems

Sample of quotations showing the skills required for planning using ERP

IT users reporting skills Business reporting skills
“Although we gave them a lot of training on planning features, users do not know how to use the planning features of the system. They are not interested in the system. The training was not effective at all because they were not involved in the system itself” (Production Planning SAP consultant at Egyptian Food manufacturing) “Based on my experience of ERP systems, a significant number of organizations fail to recoup planning benefits not because of the ERP; but because users do not understand the planning concepts in it” (ERP consultant in Egypt)
“Planning activities could be more abstract, as I mentioned before (realising the benefits requires money and time). When I saw MRP implemented that essentially matched supply and demand, I saw the planning people overwhelmed. They planned on a spread sheet and implemented it on ERP. It is more accurate but it is not easy for them. If users do not use it, then you will not get the benefits” (ERP analyst at an American company manufacturing safety equipment) “In the Inventory department, the users and super users do not understand the inventory models. However, in the Accounting and Costing department, the new manager gives cost accountants training in modern accounting principles. This has had a significant impact on users to not only believe in the power of the system, but also this made them start to plan costs using the ERP” (MM SAP consultant at an Egyptian food manufacturing company)

Sample quotations showing the interdependence between automation, planning and innovative ERP blueprints and capabilities

Planning Innovation
Integration “if we could have a better-integrated planning system with 10 year financial and other business planning, etc., a lot of corrections for the moment, because planning is done in isolation. Let’s say this example with us. We plan all our budget scenarios with this thing but we do not actually use the financial system for the planning. We do financial planning outside of our system. So there is a lot of excel spreadsheet and other staff and discussions here and there but it is all outside our financial system and it would be a great benefit having all that in the system (CIO Australian) “So I would consider that this global transformation will – could – not achieve without the ERP system because it is an integrated system, it was a global system. Sales orders from US customer go to the same system, sales orders could be sourced from the Japan factory and they have the same shared system. If it was global systems, sales order were in the US part of the same system as the Japan factory” ERP analyst in safety and security equipment manufacturing (ERP Analyst from a US manufacturing company)
Integration and planning “Recently I went to company X […]. I spoke to the business people. They do not care. A lot of spreadsheets cut into small spreadsheets not in SAP. Spreadsheets were everywhere. No one knows what is going on. The tale is growing, growing and growing. Complexity is growing. Inventory is growing. We have no control. My point is how we can control if we do not understand? How can we innovate and improve while we do not understand? Once you control the data, you can control the environment and thus you can understand what is going on. By understanding you can build the improvement (ERP UK consultant)

Level of benefits for five manufacturing companies

Contributions to knowledge

Stream of research Contribution to knowledge
IT business value (Melville et al., 2004) The IT framework is extended. The OCR resources are classified into practices, attitude, culture, skills and organizational capabilities. IT resources are classified into features, attached (ancillary) technologies and IT department competences
ERP benefits taxonomy of automate, inform and transform (Uwizeyemungu and Raymond, 2009, 2010, 2012) This framework is used, but the required OCRs and IT resources are classified and listed
Orchestration theory (Helfat et al., 2009; Teece, 2007; Sirmon et al., 2011) This research contributes by considering the level of use of the current internal resources before deciding to invest in new technology or develop new organizational resources/capabilities. It is used to understand when the organization should invest in a higher level of capability (OCRs and ERP resources)
Resource-based view (Seddon, 2014) Timing of investment can be a factor in achieving abnormal financial performance
Benefits management (Davenport et al., 2004; Ward et al., 1996; Esteves, 2009; Remenyi and Sherwood-Smith, 1998) ERP benefits management role should be extended until the organization is able to innovate in its processes and products and services through the data held by the ERP databases

Interview guide

Question or statement Rationale for the question or statement
1 Let me introduce myself, my university and my research project To familiarize the interviewee with the interview and to let him/her understand the aim and objectives of the research
2 Could you introduce yourself? To reveal the years of experience, type of experience, which ERP system(s) he/she had experienced and which module(s) he/she had had more experience of
3 What are the benefits of an ERP system? To reveal all the benefits perceived by the respondents without any bias from researcher intervention
4 What are the benefits of the accounting system, procurement system, inventory system, production system? (question modified according to the respondent’s experience) To get in-depth information about the benefits of each module because the previous general question might have led the interviewee to talk about “general benefits.” This question motivated the respondents to talk in-depth about the ERP benefits in his/her area of expertise
5 Of the basis of what you have said, could we classify ERP benefits into automating benefits, planning benefits and transforming benefits? If so, could you give me examples of each? This question comes in a biased way to validate my understanding of what has been said so far. If the interviewee accepts this, he/she will support my argument by more explanation to reinforce this classification. If not, he will advise me what the classes should be
6 Do you think these benefits could come without intervention? Do we need to do something to manage them? The interviewee is expected to remember from his experience how the benefits were realised. Even if his organization has not done anything to manage the benefits, he is expected to say, “although some benefits, such as X & Y were achieved without much effort, realising these benefits needed some management”
7 What was required to gain the automating benefits? (giving examples of other organizations which gained these benefits) To get a list of the factors, capabilities and/or environmental factors that affected the conferring of automating benefits. The interviewee is expected to compare and contrast his/her experience with the experience of others
8 What about planning benefits? (giving examples of other organizations which gained these benefits) …planning benefits
9 What about transforming benefits? (giving examples of other organizations which gained these benefits) …transforming benefits

Appendix

Table AI

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Further reading

Locke, K. (2001), Grounded Theory in Management Research, Sage, Thousand Oaks, CA.

OGC (2011), Managing Successful Programmes, 4th ed., TSO Shop.

Corresponding author

Amgad Badewi is the corresponding author and can be contacted at: a.a.m.badewi@kent.ac.uk

About the authors

Amgad Badewi is a Senior Lecturer at the University of Kent and has completed his PhD from Cranfield University. He is registered as a Practitioner (MSP) in Implementing Transformation Programmes (such as enterprise systems, six sigma, and TQM). Additionally, he is Project Management Professional (PMP) and IT Service Management (ITIL) certified. Furthermore, he is an Active Member of Chartered Institute of Management Accounting (CIMA) and British Academy of Management (BAM). His experience as a Project Management/Benefits Management Consultant covered many European and Middle East countries such as the UK, Switzerland, Austria, Egypt, Emirates and Saudi Arabia.

Essam Shehab is a Professor in Product and Service Engineering. He has published 155 journal and conference papers and edited four books. He has secured over 70 research projects from government grants (the UK, EU and overseas) and industry. He has developed a strong research track record by leading (as principal investigator) a €12 m EU-FP7 project with other partners including IBM and Engineering and Physical Sciences Research Council (EPSRC). He is a Fellow of IET, ACostE, the Higher Education Academy (HEA), and a member of the Egyptian Engineers Syndicate. Her main research interests include emerging strategies in the digital economy, business ecosystem and dynamic capabilities. Her publications appeared in many international journals such as Management and Organization Review and British Journal of Management.

Jing Zeng is a Lecturer at the Kent Business School, University of Kent. Her main research interests include emerging strategies in the new industrial revolution, topics including digital and technological platforms, innovation ecosystems, organization change and corporate entrepreneurship. Her work has appeared in the British Journal of Management, Management and Organization Review, and Strategic Organization and Business Process Management Journal.

Mostafa Mohamad is a Lecturer in Information and Innovation Systems at Manchester Business School. Mohamad has a record of publications and expertise in the digital innovation and international business. His recent studies covered a wide variety of mobile business solutions at the Base of the Pyramid market including, mobile banking and mobile crowd control, and mobile health and pharmaceutical industry. Mohamad’s expertise covers the UK, India, Middle East and sub-Saharan Africa where action research is best invested. Previously Mohamad was the Supply Chain Manager in the Automotive Industry where he managed to develop fully operated ERP systems.