SESSION 6 - A framework for evaluating ERP implementation choices

Question 1

Whats the paper about?

Answer 1

• ERP software is fast growing
  –> promises integrating computing solution while improving firm’s ability to compete in marketplace
• benefits of ERP systems: integration of data & apps; replacement of old and fragmented systems; cost advantages; quicker development of packaged systems; best practices in organisational process
• drawback of ERP systems: implementation in individual companies – extremely expensive; oftentimes not compatible with strategic partner; conflicting with management style; overwhelming required organisational changes to system
• ERP implementation is often accompanied by large-scale organisational changes
  –> packaged software solution does not match with orgas existing processes
• aim of paper: introduce framework for supporting management decision-making about customisation choices and capabilities required to accomplish them

Question 2

Whats the resource-based view on ERP implementation?

Answer 2

Resource-based view regarding ERP implementation: success of ERP implementation depends on IT-resources possessed by an organisation and how they are assembled, coordinated, deployed (IT-capability)
* classification of IT-based resources: tangible (IT infrastructure); intangible (knowledge bases); human (technical & managerial IT skills)
IT capabilities: IT leadership, business system thinking, architecture planning, informed buying etc
* organisations have different IT resources + thus different IT capabilities
–> divergence in how orgas use IT = explanation for why orgas choose different ERP customisation options

Question 3

What are the three types of technical customization options?

Answer 3

Module selection: companies choose to implement one or more modules with the set configurations; customisation only achieved through firm decision as to which module to implement
–> minimum alterations to system; + low risk, low cost; - rarely sufficient in implementation

Table configuration: configuration options are selected in tables so that system fits organisational needs (for that meaning of options must be understood); + ability to tailor system without coding, full support of vendor & ease of future updates; - very complex & time-consuming

Code customisation: source code of ERP system is changed, functionality is augmented or new interface is developed; + greatest flexibility in adapting system to needs and existing production systems; - expensive, risks of failure & overrunning budget, integration benefits of ERP system may be lost

Question 4

What are the different degrees of process customization?

Answer 4

Business process: set of logically related tasks that use the resources of an organisation to achieve a defined business outcome
* three types of process customisation: no change, incremental change, radical change

No change: process customisation only involves change in tasks and resources but no changes in relationships among tasks and configurations of resources

Incremental change: improvements are made in tasks and resources & relationships among these; focus lies on solving problems found in process; eg total quality management

Radical change: fundamental rethinking and radical redesign of elements in process (including measures of performance

Question 5

What is technical change capability?

Answer 5

Technical change capability: organisation’s overall ability to customise ERP systems; consists of 1) scope & depth of its ability to understand ERP system 2) ability to make changes to software 3) ability to manage large-scale ERP implementation projects

High technical change capability: broad scope and depth in all 3 abilities
Low technical change capability: narrow scope & limited depth in all 3 abilities

Question 6

What is process change capability?

Answer 6

Process change capability: overall ability to customise business processes; consists of 1) ability to understand existing business processes 2) ability to design and implement business process changes 3) ability to manage large scale organisational changes

High process change capability: broad scope and depth in all 3 abilities
Low process change capability: narrow scope & limited depth in all 3 abilities

Question 7

What are the conclusions?

Answer 7

• framework allows ERP implementers to examine many implementation possibilities rather than simply following ‘conventional wisdom’ of fitting the processes to the system
  ERP IMPLEMENTATION AS SERIES OF IMPLEMENTATION PROJECTS
• firms have capabilities with regard to individual projects
• capabilities can change over time as firms learn from previous projects
• important to plan path of implementation projects so that more difficult projects become feasible through learning
  –> result: view ERP implementation as portfolio of projects