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Enterprise Systems Implementation Framework: An Organisational Perspective Article  in  Procedia - Social and Behavioral Sciences · December 2012 DOI: 10.1016/j.sbspro.2012.11.151

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Procedia - Social and Behavioral Sciences 65 (2012) 473 – 478

International Congress on Interdisciplinary Business and Social Sciences 2012 (ICIBSoS 2012)

Enterprise Systems Implementation Framework: an organisational perspective Rajesri Govindaraju* Faculty of Industrial Technology, Bandung Institute of Technology, Bandung, Indonesia

Abstract Although many companies have spent large investments on ES implementation, there is extensive evidence that only a limited number of them have been successful with the implementation. Realising the potential benefits offered by ES implementation and the high failure rate found in practice, the study reported here aims at developing a framework that can help to provide a better understanding of how the process can be managed to bring the benefits for the implementing organisations. Implementation is defined as a process started with decision to adopt ES systems and finished when organisation already used the systems as an integral part of the organisation. To develop the conceptual framework, results of previous research had been studied. Based on the results of previous studies, utilising relevant theories in the field of information system implementation and organisational change, a conceptual framework was developed. The framework addresses the project as well as the post-project stage of ES implementation, and a number of essential issues within the stages. System alignment, knowledge development, change mobilisation are the essential issues highlighted in the project stage while institutionalisation and system optimisation are essential isuues in the post-project stage.

© 2012 2012The Published ElsevierbyLtd. Selection © Authors.by Published Elsevier Ltd. and/or peer review under responsibility of JIBES University, Selection Jakarta and peer-review under responsibility of JIBES University, Jakarta Keywords: enterprise systems, ES, ERP, project, post-project, implementation, institutionalisation, post-implementation

1. Introduction Being aware of the strategic impacts of information and processes, many organisations have focused on improving their business processes by implementing standard integrated information systems

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Corresponding author (*). Tel.: +6-222-2504189; Fax: +6-222-2509164 E-mail address: [email protected]

1877-0428 © 2012 The Authors. Published by Elsevier Ltd.

Selection and peer-review under responsibility of JIBES University, Jakarta doi:10.1016/j.sbspro.2012.11.151

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(IS) applications that are more commonly referred to as “enterprise systems” (ES) or enterprise resource planning (ERP). ES are software applications that support the organisations to manage their resources across the enterprise and enable integration of many different business functions (Davenport, 1998). Enterprise system is defined as “an information system application which can be configured or customized and consists of several modules; ES integrates data, information, and business process in a organization and between organizations”(Chandra & Govindaraju, 2012). Implementing an enterprise system is a complex task. Many choices and changes have to be made, not only regarding the information technology, but also concerning the way people and processes are to be arranged and aligned to the systems (Bancroft et al., 1998; Davenport, 1998). In practice, despite the large investments on ES implementation, there is extensive evidence (Govindaraju and Indriany, 2007; Chandra & Govindaraju, 2012) that only some of them have been successful with the implementation. Earlier studies confirmed that most failures were caused by organisational issues especially people related issues, rather than technical problems (Bancroft et al., 1998; Govindaraju, 2002). Though a lot of studies had been done on ES implementation, previous studies inclined to neglect the post-project stage in which the new system is operational and running (BottaGenoulaz et al., 2005). Ignoring this stage of the IT-enabled change process is the main reason why organisations are not able to gain the full benefits of IT projects (Levinson, 1988; Govindaraju, 2002). Among others, researchers studying the post-project stage suggest the need for post-implementation alignment of ERP systems with the organisation’s competitive strategy (Beard and Sumner, 2004), explain the use of ERP as a foundation for social and intellectual capital formation (Lengnick-Hall et al., 2004), define the taxonomy of ERP maintenance and enhancement activities (Ng et al., 2002), discuss post-implementation review for ERP systems (Nicolaou, 2004), and propose a classification for better use of ERP systems (Botta-Genoulaz and Millet, 2005). Considering the importance of the project and the post-project management in implementing ES, the study reported here aims at developing a framework incorporating the project and the post-project phases of ES implementation, to provide a better understanding of how ES implementation can be managed to bring the benefits for the implementing organisations. 2. Framework Development Although project success, which means bringing the project in on time and on budget (short-term performance) is important, companies are interested in the improvement to organisational effectiveness and business performance (Davenport, 2000). Success is not defined as the project success, but extended beyond the project into refinement and organisational transformation (Shanks, 2000), which sees the project as only a part of the process. The model is aimed towards a concept of success, which considers the contribution of ES use to the improvement of organisational effectiveness. Improved short-term performance (project success) may or may not lead to improved long-term performance (improved organisational effectiveness).
 
  

 
 
To move from an “old state” using “non-ES based” organisational practices, to a new, “desired state” the transition process needs to include not only implementation project activities, but also essential postproject activities. Analysing the IT implementation model by Zmud and Apple (1989), linking it to Lewin’s change model, and the stages of transition model by Levinson (1988) the Table 1 shows the association between the two stages used in this framework and the stages used in previously mentioned three models. Table 1 Comparison of stages used in Lewin’s change model, Zmud and Apple’s (1989) model, Levinson’s (1988) transition model, and stages studied in this research

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Change model Stages (Lewin, 1980) Unfreezing and Change

Transition model stages (Levinson, 1988) Planning and implementation

Re-freezing

Institutionalisation

IT Implementation model stages (Zmud and Apple, 1989) Initiation Adoption Adaptation Acceptance Routinisation Infusion

ES Implementation stages in this study Project

Post-project

In order to gain a better understanding of the transformation process, the two stages, and important issues within the stages, will be addressed below.  
 
The objective of the ES project is mainly to develop a new, improved IS environment. To create a better IS environment, a new IS application is prepared while at the same time, users are prepared to adopt and use the system. The ES project aims at integrating the ES within the organisational structure and processes. Walton (1989) argues that effective implementation rests on the integration, and business, organisational and technical strategies. He suggested the following three components are essential for integrating information technology and the organisation: a. Alignment of the three elements of the strategic triangle: business, organisation and the technology b. Commitment of employees and support of stakeholders c. Competence/mastery by employees In line with Walton’s (1989) model, a more comprehensive analysis of important issues in the project stage will be presented. System adaptation (alignment). The mutual adaptation (alignment) of the organisation, technology and business processes is the central issue in IT-enabled projects (Benjamin and Levinson, 1993). More specifically for ES projects, when business process change takes place, formal structures comprising of work tasks, work contents, work environment, and performance measures need to be rearranged (Davenport, 1998). Pries-Heje and Dittrich (2009) looked at ERP implementation project as a “design” process in which knowledge integration in the company is a key element for an improved IS environment. Further, people capability and attitudes, and the social and psychological work environment of systems users need to be adapted. Change mobilisation. Change mobilisation is used to refer to efforts mainly aimed at gaining employees commitment (ownership) and support of the involved stakeholders. Support and ownership of the involved employees and other stakeholders are essential in integrating technology and the organisation (Walton, 1989). User participation and involvement are essential because users have the detailed knowledge and first hand experience of the strengths and weaknesses of the current processes. A decision to implement enterprise systems is usually made by top managers of companies. However, the project teams and individuals in the organisations have considerable influence on the decision whether and how to carry out the implementation and the changes needed by the implementation. They may adopt the decision enthusiastically, or they may comply with the suggestions reluctantly and without committing themselves to the proposed implementation projects. Good communication and top management support are often very important for mobilising a change during the project (Govindaraju, 2002).

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Knowledge development (acquisition). ES implementation can be considered as knowledge transfer from source organisations such as ES suppliers and consultants, to destination (user) organisations. It implies that the implementing (user) organisations need to develop in-house knowledge necessary for systems usage, maintenance and even improvement. Training that is available through the consultants, the vendor, or through third parties, provides a valuable resource to develop skills that are lacking in-house (Davenport, 1998; Grabski, Leech, and Lu, 2000). Moreover, a close working relationship between consultants and an organisation’s project team can lead to a valuable skill transfer in both directions (Grabski, Leech, and Lu, 2000).
 
 
This phase can be associated with initiation, adoption and adaptation stages of Zmud and Apple (1989)’s model. In this stage, organisational members are expected to commit themselves to ES application usage. Usage of the ES application is encouraged as a normal activity. Increased organisational effectiveness is obtained by using the ES application in a comprehensive and integrated manner that supports higher-level aspects of organisational work. Management should encourage the appropriate use of the new application through institutionalisation efforts. Besides having the system use as a normal activity, for a better organisational effectiveness, in this stage organisations are supposed to evaluate and optimise the implemented systems as well as the organisational processes. Institutionalisation. In any organisation, tensions will arise as a consequence of the 'lack of fit' between the institutional order and its material condition (Silva and Backhouse, 1997). The material condition is constituted by technology, techniques, and methods of production, whereas the core institutional order will be integrated by the values, beliefs, and norms already institutionalised in the organisation. One of the reasons why ES implementations do not achieve their goals is the lack of fit between the expected new way of working and the prevailing organisational rules and norms. Institutionalisation is the process through which a social order of pattern becomes accepted as a social “fact” (Avgerou, 2000). Information system institutionalisation can be seen as a process to stabilise an IS (Silva and backhouse, 1997). Implemented ES becomes institutionalised when it is no longer considered as an innovation, but as unnoticed tools that people feel comfortable to work with. To be fully institutionalised, all procedures and activities related to ES should become habits. Institutionalisation is related to providing support for the new culture (Levinson, 1988). Facilitating mechanisms such as formalization of work procedure (Berchet & Habchi, 2005), changes in performance measurement systems (Davenport, 2000) and IS-business ownership (Govindaraju, 2002) may facilitate the institutionalisation of the new way of working. System optimisation. To realise the benefits offered by IT projects, organisations should put effort to continuously improve the implemented systems after the systems have become operational in the organisation (Levinson, 1988; Botta-Genoulaz et al., 2005). The role of users and management in evaluating the use of the current systems in relation to the changes in business determines the optimisation efforts. Botta-Genoulaz and Millet (2005) addressed some aspects of ERP systems optimisation that is classified into three different optimisation types: software mastery, improvement and evolution. Post implementation review (Grabski, Leech, and Lu, 2000), regular audit and workshops (Govindaraju, 2000), the existence of executives in charge for problems and improvement ideas (Davenport, 2000), are among others ways to facilitate system optimisation in the post-project stage. 3. Conclusion The ultimate goal to be achieved with ES implementation is an improvement in organisational effectiveness. ES implementation framework developed in this study is illustrated in Figure 1. ES implementation process is comprehensively defined as a process that consists of two stages: project stage

Rajesri Govindaraju / Procedia - Social and Behavioral Sciences 65 (2012) 473 – 478

and post-project. The project stage begins when an ES adoption decision is made and ends when an implemented system is ready for usage. In this phase, alignment (adaptation) process, change mobilisation, and knowledge development, are three important issues. The post-project stage begins when system use takes place as a normal activity, and the implemented IS becomes an integral part of the organisation’s operation. Institutionalisation and system optimisation are two essential issues in this stage. ES Implementation Process

ES Adoption Decision

Project stage: ∞ Alignment ∞ Change mobilisation ∞ Knowledge development

Improved IS Environment

Post-project stage: ∞ Institutionalisation ∞ System optimalisation

Improved Organisational Effectiveness

Figure 1 ES Implementation Implementatio Framework The framework shows that the outcome of processes in the project stage is “improved IS environment”. This intermediate outcome may determine the ability of the organisations to benefit from the use of the system in the next stage, and therefore influence the improvement of the organisational effectiveness. Thus ES implementation effectiveness needs to be analysed at two levels: 1) short term implementation effectiveness, which is related to the outcome of the project stage (“improved IS environment”), and 2) the long-term implementation effectiveness (“improved organisational effectiveness”), which is related to the outcome of the post-project stage and can be evaluated after quite a period of time during which the systems have been operational. Acknowledgements This work is partly supported by the Research Grant from Institut Teknologi Bandung and the Competitive Research Grant from Indonesian Minister for Higher Education. References Avgerou, C. (2000). IT and organisational change: an institutionalist perspective, Information Technology and People, 13 (4), 234-262. Bancroft, N. H., Seip, H., & Sprengel, A. (1998). Implementing SAP R/3: How to introduce a large system into a large organisation. (2nd ed.). Greenich, CT: Manning. Benjamin, R. I. & Levinson, E. (1993). A framework for managing IT-enabled change, Sloan Management Review (summer), 23-33. Boudreau, M.C. (2002). Learning to Use ERP Technology: a Causal Model. The 36th Hawaii International Conference on System Sciences (HICSS). IEEE. Botta-Genoulaz, V., Millet, P. A., & Grabot, B. (2005). A survey on the recent research literature on ERP systems. Computers in Industry, 56(6), 510-522.

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Berchet, C., & Habchi, G. (2005). The implementation and deployment of an ERP system: An industrial case study. Computers in Industry , 56(6), 588-605. Chandra, D. R. & Govindaraju, R. (2012). Recommendation of ERP Post-Project Management. Paper presented at the IEEE International Conference on Management of Innovation & Technology. Davenport, T. H (2000) Mission Critical: Realizing the Promise of Enterprise Systems, Harvard Business School Press, Boston, Massachusetts. Govindaraju, R. (2002). Effective Enterprise Systems Implementations. Dissertation, University of Twente, Enschede, The Netherland. Govindaraju, R. & Indriany, R. (2007). ERP Systems Acceptance, 2nd International Conference on Operations and Supply Chain Management, Bangkok, Thailand, 18-20 May 2007. Grabski, S. V., Leech, S. A., & Lu, B. (2000). Complementary relationship among critical factors and procedures for the successful implementation of ERP systems, The Third European Conference on Accounting Information Systems. Jones, M. C., Cline, M., & Ryan, S. (2004). Exploring knowledge sharing in ERP implementation: an organizational culture framework. Decision Support Systems , 41 (2), 411-434. Levinson, E. (1988). The line manager and system-induced organizational change, in Success factors for Change from Manufacturing Viewpoint, ed. K. Bloche, Dearborn, Michigan. Parr, A. & Shanks, G. (2000). A model of ERP project implementation, Journal of Information Technology, 15(4), 289-303. Pries-Heje, L. & Dittrich, Y. (2009). ERP implementation as design: Looking at participatory design for means to facilitate knowledge integration, Scandinavian Journal of Information Systems, 21(2), 27-58. Silva, L. & Backhouse, J. (1997) Becoming part of the furniture: the institutionalisation of information systems, in Information Systems and Qualitative Research eds. Lee, Allen S., Liebenau, J. and DeGross, J., Chapman and Hall, London 1997. Soh, C., Sia, S. K. & Tay-Yap, J. (2000). Cultural fits and misfits: is ERP a Universal solution?, Communications of the ACM, 43(4), 47-51. Zmud, W. R. & Apple, L. E (1989). Measuring information technology infusion, Unpublished manuscript.

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