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Emerald Group Publishing Limited
Copyright © 2001, MCB UP Limited
Enabling process-orientation through enterprise resource planning systems
Enabling process-orientation through enterprise resource planning systems
The increasing level of competition in the global market is forcing many organisations to rethink their business operations and their underpinning information technology (IT) infrastructures. The recent advances in client/server computing and the growing application of business process management (BPM) principles to improve business performance have given rise to the development of enterprise resource planning (ERP) systems. ERP systems promise to provide an integrated application environment with a fast and seamless access to single unified information business-wide, hence representing a catalyst for business process change. Therefore, many organisations are currently considering these systems as the IT platform capable of enabling the shift to an integrated and process-oriented business design.
Slooten and Yap (1999, p. 226) define ERP as:
… an integrated, multi-dimensional system for all functions, based on a business model for planning, control, and global (resource) optimisation of the entire supply chain, by using state of the art IS/IT technology that supplies value added services to all internal and external parties.
ERP is the 1990s' enhancement (with more "back-office" functions) of both the 1980s' MRPII (manufacturing resource planning) and the 1970s' MRP (material requirement planning) systems, which were developed essentially for the manufacturing industry (Shtub, 1999). There are many ERP systems currently available in the IT market, like SAP R/3, BANN, Oracle, PeopleSoft and J.D. Edwards, among others. However, the determining factors of an ERP system's position in the market are its "ability to execute" and the "completeness of its visions" (Gartner Group, 1995). These two factors are forcing ERP vendors to expand the scope of their applications by extending their functionalities and building interfaces with more global electronic commerce technologies.
Today, several large companies have standardized their businesses on ERP systems. For instance, Price Waterhouse, Dow Chemical, Du Pont, Eastman, Monsanto, and Hoechst are all SAP companies (Rick, 1997). The SAP R/3 standard, the leading ERP system, facilitates information integration between the individual information systems, reduces information cost, and enhances its value (Österle et al., 2000). It helps focus on core competencies and works as a vehicle for transferring best practices and developments in both business processes and IT (Keller and Teufel, 1998).
While several studies show that organisations consider implementing ERP systems to be an approach used to achieve a strategic competitive position (Shankarnarayanan, 1999; Sweat, 1998), the failure by many organisations to attain this advantage has put this issue in question. In one example, FoxMeyer perceives its R/3 initiative to be the main reason for its bankruptcy (Davenport, 1998). A recent survey of SAP implementation shows that competitive positioning was ranked least amongst the benefits expected, with only 28 per cent of achievement level (Cooke and Peterson, 1998). Despite the scepticism regarding the ability of "off-the-shelf" ERP systems to maintain an organization's process infrastructure that is different to those of its competitors (Sor, 1999), Ezingeard and Chandler-Wilde (1999) believe that considering this risk at the customisation stage can provide a certain level of competitiveness protection. They also identify four dimensions of leadership necessary for achieving competitiveness through ERP systems, namely cost, quality of products and services, performance, and information and knowledge. Sor (1999), however, states that:
… competitive advantage will in the end come from a consideration of the environment in which the business operates (see Michael Porter, 1980, 1985). This means one should consider such non-computer-based matters as the market niche in which management chooses to operate, what your competitors are doing, what substitutes there are for your product or service and what environmental forces impinge on your organisation.
As the widespread application of ERP systems continues, the need for a new research agenda to address the various issues in this context has never been more urgent. Having ERP repeatedly topped the list of themes in major academic information systems (IS) conferences and this reflects the dire need for research in this rapidly emerging field. The following list highlights the major streams of ERP research:
Overall approaches and strategies of ERP systems' deployment.
Change management strategies for ERP implementation.
Business process management in an ERP context.
Standardisation, innovation, flexibility and adaptability.
ERP and competitiveness.
Effectiveness and performance measurement.
ERP systems for various business sizes and industries.
Technology and knowledge transfer using ERP.
Benchmarking for best practice in an ERP context.
Methods, techniques and tools for process-based system analysis and design.
ERP project management infrastructure.
Critical success/failure factors.
Managing strategic alliances and outsourcing in ERP projects.
Integrating ERP with e-commerce applications; i.e. enterprise application integration (EAI).
Supply chain reengineering through ERP.
Role of IS function in ERP implementation.
Risk management in ERP projects.
Managing various scales of change in ERP implementation.
Success and failure in ERP implementation.
Technical aspects of ERP implementation (customisation, connectivity, etc.).
Training and teaching aspects of ERP systems.
ERP in IS curriculum.
Current and future development in ERP market and application.
Methodological aspects of ERP research.
The aim of this special issue is to offer researchers and practitioners a good understanding of the aforementioned issues involved in the implementation of ERP systems for improving business performance. The articles appearing in this issue provide conceptual and analytical models, strategic frameworks, surveys, and case studies focusing on the tools/techniques, justification, design and implementation of ERP systems.
The special issue starts with interesting and insightful viewpoints by Professor M. Lynne Markus, who presents important reflections on the systems integration enterprise based on extensive research on ERP systems and related technologies. The viewpoints centre on the following three arguments:
integrated systems require more integration;
integrated systems may be unintegrated with the business; and
integrated systems may not support inter-enterprise integration.
In their article, Stijn and Wensley argue that ERP systems not only have a broad functional scope promising to support many different business processes, but they also embed many different aspects of the company's organizational memory. Disparities can exist between those memory contents in the ERP system and related contents in other memory media, such as individuals' memories, and the organizational structure and culture. The authors believe that, in general, these memory mismatches lead to under-performance of ERP systems. The paper, therefore, focuses on potential memory mismatches that may arise with respect to the embedding of process knowledge within ERP packages. Packages such as SAP provide a varied and rich environment for process modelling. However, the authors argue that there are still many instances where process knowledge is either lost or represented in different ways in different parts of the organisation. However, the results of such memory mismatches will often not become evident until the system is in use. The paper presented by the authors identifies a variety of concerns, intriguing questions and avenues for future research in this context.
Themistocleous, Irani and O'Keefe show that while, during the 1990s, companies focused on the adoption of ERP systems to solve integration problems, these systems can only automate core business activities without solving underlying business structures and processes. This results in a number of disparate applications often coexisting with ERP systems. The authors provide a better understanding of ERP and application integration (AI) problems through identifying, analysing and presenting the problems of ERP systems, as well as examining new approaches for AI. They use a multi-choice questionnaire that was distributed to ERP specialists over the Internet. The results of their survey show that ERP systems amplified the need for integration, as existing systems have to be incorporated with ERP applications. They also point to the fact that AI securely incorporates functionality from disparate applications, and has shown to lead to the development of new strategic business solutions for enterprises. The results of the research also confirm AI as a new means of system integration that adds value by placing business logic in the applications network, thus creating a more dynamic information systems infrastructure.
Clemmons and Simon review the concepts of control, co-ordination, and their trade-offs plus Bartlett and Ghoshal's topology of firm strategy. Human resource issues are introduced as examples of organization elements that may or may not conform to the enterprise design structure within co-ordination and control. The authors combine the concepts of control and co-ordination and the Bartlett and Ghoshal topology and show how this combination can create a firm strategic orientation that is matched to an ideal ERP configuration or enterprise information architecture.
Light, Holland and Wills highlight the criticism of ERP systems as being inflexible and not meeting specific organisation and industry requirements. They discuss the best of breed (BoB) strategy, which integrates components of standard package and/or custom software. BoB aims to develop enterprise systems that are more closely aligned with the business processes of an organisation. The authors present a case study of a BoB implementation and a comparative analysis of the issues associated with this strategy and the single vendor ERP alternative. The authors also illustrate the differences in complexity of implementation, levels of functionality, business process alignment potential and associated maintenance.
Hawking, Ramp and Shackleton outline how ERP systems can be incorporated into a broad IS curriculum model such as IS'97 thus providing a guide to institutions that may be contemplating the use of ERP in their curriculum. They argue that alliances with some of the ERP vendors have enabled some universities to develop innovative courses and subjects. Nevertheless, the limited research in this area has only outlined case studies or examples of ERP use in IS.
Stewart and Rosemann discuss the design of a problem-based learning approach that seeks to embed industrial knowledge in the ERP-related curriculum of universities. They describe a project that is developing a business reference model for public administration. This reference model is to be implemented in the leading ERP system SAP R/3. Teaching cases are developed through collaboration between universities and industry, and the authors argue that this approach is in alignment with the recommendations of key curriculum documents and educational approaches.
Dong proposes a conceptual model exploring impacts of top management on enterprise systems (ES) implementation effectiveness. Taking a perspective of innovation implementation, Dong addresses two research questions: what influences does top management exercise on the ES implementation; and what does top management contribute to a successful ES implementation under different implementation modes? Based on Klein and Sorra's (1996) model, Dong develops a research model and identifies three top management influences. She concludes with potential contributions to IS researchers and business practitioners.
Bernroider and Koch detail the results from an empirical study concerning differences in characteristics of the ERP system selection process between small or medium and large sized organisations. The authors address particularly the fields of software packages considered and chosen, the weights assigned to different selection criteria, the size and structure of the team responsible for the decision, the methods employed and the effort expended.
Koch analyses ERP as a tool for realising business process reengineering (BPR) in manufacturing. He combines theories from organisational sociology and management with technology-analysis. He views change as involving choice and coalition building. Koch follows a case study approach, covering 30 implementations of ERP with different types of change. Two cases of the variant labelled "BPR followed by ERP" are focused upon. In both cases, Koch illustrates that the change proceeds as a co-operation between enterprises, consultants and IT-suppliers. In the first case, a superficial management change programme of BPR and ERP emerges into a more elaborate change program, which was then relatively successfully realised. The other case is a multi-front exercise for the management coalition. The BPR strategy was poorly supported, and restated the long term split between manufacturing and sales. Koch shows that the two cases exhibit different experiences, but they underpin that process integration cannot be taken for granted when implementing BPR and ERP.
When implementing an enterprise resource planning (ERP) system, top management commonly faces an unwanted attitude from potential users – for one reason or another, they resist the implementation process. Top management should, therefore, pro-actively deal with this problem instead of reactively confronting it. In his article, Aladwani describes an integrated, process-oriented approach for facing the complex social problem of workers' resistance to ERP.
Huang and Palvia highlight some global aspects of ERP implementation. They notice that as ERP software is designed to support total business solutions, it has been widely adopted by organizations in developed countries. Huang and Palvia argue that ERP is beginning to appear in many organizations of developing countries. They note little research has been conducted to compare the implementation practices of ERP in developed vs developing countries. Their article shows that ERP technology faces additional challenges in developing countries related to economic, cultural, and basic infrastructure issues. The authors identify a range of issues concerning ERP implementation by making a detailed comparison of advanced and developing countries.
Finally, based on a comprehensive literature review, Nah, Lau and Kuang identify a list of critical success factors in ERP implementations. They analyse their degree of criticality using a content analysis approach and classify them into the respective phases (chartering, project, shakedown, onward and upward) in Markus and Tanis' process-oriented ERP life cycle model. Based on this analysis, the authors identify and discuss the 11 most critical ERP success factors.
The editor has been overwhelmed by the response for the call for papers on "Enabling process-orientation through ERP systems". All papers have been reviewed by at least two experts. The editor is very grateful for the assistance of Richard Whitfield of MCB University Press and the anonymous referees who review the manuscripts.
Majed Al-MashariKing Saud University
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