1. THE COFELY ORGANIZATION

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Groningen, February 2011

University of Groningen

Faculty of Economics and Business Master of Science Business Administration

Specialization Organizational & Management Control

Name: Jaap Meursing

Address: Nieuwstraat 114a,9724 KS, Groningen Student number: 1590103

E-mail: j.meursing@student.rug.nl Phone: 0641237364

Thesis Supervisor Cofely: Drs. N. Spuy Thesis Supervisor RuG: Drs. M. Bergervoet

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PREFACE

This thesis is the final part of my master Organizational and Management Control and thereby my study Business Administration at the Rijksuniversiteit of Groningen. In this thesis I had the opportunity to be involved in the implementation-process of SAP at Cofely Noord. During this period I learned a lot in regard to the effort which is needed to successfully implement an ERP system. These experiences will last a lifetime and I am grateful that I had the opportunity to be part of this.

Therefore, I would like to thank Drs. Niels Spuy, who was my thesis supervisor at Cofely. I would like to thank him for giving me the opportunity to be part of the implementation process and for his guidance during this period. Working with him was a pleasure and I hope that this will continue in the future. I would also like to thank the other employees of Cofely who made it possible to complete this thesis. They provided me the facilities and resources which were needed in order to complete this thesis. I would also like to thank Drs.

Marcel Bergervoet, who was my thesis supervisor at the Rijksuniversiteit of Groningen. I would like to thank him for his comments and guidance during the course of this research. His comments were very helpful and contributed a lot to this thesis. In conclusion, I can say that I am proud on the final product and hope that you will enjoy reading this.

Yours sincerely,

Jaap Meursing

Groningen, February 2011

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MANAGEMENT SUMMARY

Cofely Noord implemented SAP on the 25^th of May 2010. However, in spite of all the preparations, Cofely is not convinced that all employees will adopt the new routines without a struggle. Especially the employees of the TOS departments could show resistance against adopting new routines. This is due to the fact that SAP is less accustomed to the work processes of the TOS departments in comparison to their old system. Cofely therefore predicts a problem between the input SAP needs in order to work properly and the willingness and/or ability of the employees of the TOS departments to alter their routines.

The purpose of this thesis is to research and explain the factors which influence the routines of the employees of the TOS departments in Groningen and Leeuwarden concerning their administrative duties.

After identifying these factors, the purpose of this thesis is to research the possibility of institutionalising new routines which will result in reliable data entries. In order to achieve this, this thesis primarily focuses on two theories, the institutional perspective theory (Burns and Scapens, 2000) and the implementation climate theory (Kemp and Low, 2008).

The results of the research show that there are a lot of difficulties concerning the institutionalisation of new routines. Employees constantly have to deviate from the predetermined actions in order to enter the correct data entries. Besides this, the implementation climate also does not stimulate the institutionalisation of new routines. Reactions concerning the implementation climate were very negative and this needs to be improved in order to stimulate the institutionalisation-process.

Cofely needs to react quickly in order redirect the institutionalisation-process. It is important that Cofely takes measures to improve the institutionalisation-process and the implementation climate. This thesis provides five recommendations in order to achieve this;

1. Cofely needs to appoint a person or group to alter the incorrect contract entries.

2. Cofely needs to arrange meetings between employees which occupy different jobs within the TOS departments.

3. Cofely should arrange meetings between different employees which occupy the same jobs across the TOS departments.

4. Cofely needs to appoint a person in the finance department who will check periodically if the service orders are processed correctly.

5. Cofely should not make any further changes in regard to the configuration of employees and/or tasks at the TOS departments.

Clear improvements have to be made to stimulate interaction between employees among each other in regard to SAP. By doing this, Cofely will be able to eventually institutionalise new routines which will lead to correct data entries.

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INTRODUCTION

In the last two decades, organisations worldwide have implemented enterprise resource planning systems (ERP). Especially during the turn of the century did the amount of organisations which implemented an ERP system reached a high point due to the Year 2000 bug, which was a trigger for a lot of organisations to switch to an ERP system (Delgado and Nah, 2006). By implementing an ERP system, organisations are able to interconnect different divisions and functions together though software packages. They are therefore able to manage their resources more efficiently and effectively (Davenport, 1998. Fahy, 2001).

However, implementing an ERP system successfully means that data entries, and especially the correctness of these entries, have major consequences throughout the system (Escalle, Cotteleer and Austin, 1999). It is therefore essential that organisations make sure that all data entries are done properly in order to produce correct real time information. Without these entries, the ERP system will not work properly. However, successful implementing an ERP system can be quite problematic. First of all, the new technology needs to be accepted by their users, the organisational culture, leadership and other organisational aspects can therefore have a major impact on successful implementing an ERP system (Ross and Boudreau, 2002). Besides that, even if the users are willing to use the new system, it can still be complex and therefore difficult for users to properly use the new system. The new technology focuses on changing the organisational processes, which means that users need to re-learn their day to day tasks and simultaneously cope with non-intuitive new software (Markus, Axline, Petrie and Tanis, 2000).

This thesis will focus on implementing an ERP system and the problems that arise concerning entering reliable data entries. More specifically, we will focus on an international organisation, Cofely, which already implemented SAP at some of their sites and are planning to implement it organisation wide. The focus will lie on making sure that employees at two departments of this organisation will properly input data in such a way that this new ERP system will produce correct real time information.

In order to deal with this statement systematically, this thesis is divided into different chapters. The next chapter will introduce the Cofely organisation, which will be the subject of this thesis. This chapter will start elaborating on the complete Cofely organisation and will gradually focus on the two Cofely departments, which are subject of this thesis. The second chapter will focus on the problem statement and the methods which will be used to obtain the necessary information. The following chapter will be devoted to the theoretical framework, which will be the theoretical foundation. The fourth chapter will focus on the different processes at the departments which are subject of this thesis. This fourth section will also make a comparison between the tasks and responsibilities before SAP is implemented and the tasks and responsibilities after SAP is implemented. The fifth chapter will elaborate on the results of the research. This chapter will present the results of the research. The final chapter will be devoted to the conclusions and recommendations which will be based on the previous chapters. However, like stated earlier, this thesis will start of by outlining the Cofely organisation.

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1. THE COFELY ORGANIZATION

This chapter will first describe the elements of the Cofely organisation which are relevant for this thesis.

Therefore the first paragraph will introduce Cofely and describe their main activities. The next paragraph will discuss the strategy of Cofely, which will make clear which goal(s) they want to achieve. The third paragraph will elaborate on the organisational structure, were the focus will lie on the specific organisational departments. The last paragraph will describe two departments in more detail, because they are the subject of this thesis.

1.1 Introduction

Cofely, formerly known as GTI, was established in the beginning of the 1970’s due to mergers of several organisations. After the acquisition of several smaller organisations, it grew to be the largest technical service provider in Belgium and the Netherlands. Cofely is a subsidiary of SUEZ Energy Services, which is one of the leading energy providers in the world. Within the Energy Services business line of Suez, Cofely represents revenues of almost eight billion Euros and employs nearly 35,000 employee, spread over more than fifteen countries. Under the name of Cofely, SUEZ Energy Services offers their clients in Europe expertise in energy efficiency and other sustainable solutions. Cofely is focused on the design, realization and operation of long- term solutions that meet the energy needs of businesses and public authorities. More specifically, Cofely can offer different products and services to its customers. First off all, Cofely is able to offer consultants which can contribute to durable technical solutions. They have expertise in the conceptual-, realisation- and technical maintenance phase. Secondly, Cofely is also able to fabricate quality parts, which can be tailored specifically to the needs of the customer. Besides this, Cofely is also able to perform technical maintenance services on all technical installations. In this way, Cofely aims to offer their customers a complete solution. Their aim will be discussed in more detail in the next paragraph, which will focus on the strategy of Cofely.

1.2 Strategy

The mission of Cofely is to offer their customers durable technical solutions in three ways. First off all, Cofely aims to offer their customers a high level of energy efficiency, which means an optimal use of available energy sources. Secondly, they strive to offer their customers a high level of asset efficiency. This means optimizing technical installations and production processes. Lastly, their mission is to offer their customers comfortable and energy efficient work- and living environments.

To achieve this mission, Cofely has formulated a strategy, which is divided into five strategic themes.

The combination of these five strategic themes is called the high five strategy of Cofely, which is divided into two internal and three external themes. This high five strategy, and its different strategic themes can be seen in figure 1.

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The first internal strategic theme, which is called the Cofely foundation principle, focuses on three aspects. The first aspect focuses on health, safety and the environment. This aspect strives to achieve a working method in which health, safety and the environment are always undisputed. Secondly this theme focuses on finding, binding and captivating the right people and to develop their expertise in order maintain a high quality workforce. The last aspect of this theme focuses on customer intimacy. This aspects states that the customer always needs to be the central figure at Cofely. Employees of Cofely should never forget that Cofely exists due to the needs and wishes of their customers. The second strategic internal theme, which is called the Cofely tidy up principle, focuses on consciously analysing the profit model of Cofely. This means consciously analysing how Cofely makes money, how much money and if this will change in the future.

The first external strategic theme, which is called asset effiency, focuses on offering the customers of Cofely a complete solution. This was also discussed briefly in the previous paragraph. This complete solution means that efficiency, performance and functionality are optimised for all technical installations at the lowest possible costs. The second external strategic theme, which is called energy efficiency, focuses on offering the customers of Cofely complete solutions concerning energy management. These solutions will be efficient, cost effective, and environmental friendly. The last external strategic theme, human comfort, focuses on offering the customers of Cofely complete solutions to create a comfortable working- and living climate and to create an ergonomic environment at offices, plants and homes.

Figure 1: The high five strategy of Cofely

The underlying principle of the high five strategy of Cofely is that they continuously strive to develop their abilities. In order to do this efficiently and effectively, Cofely is focusing on operational excellence, which means that they try to optimize their logistic and administrative processes. However, currently Cofely uses thirteen different computer programmes. Not only do these programs facilitate different processes independently of each other at different site, but these programs also need to communicate with each other through constantly converting data from one program to the other. Besides this point, different sites also use different programmes for the same processes, which results in different working methods. Therefore, due to the wide variety of programs and working methods, Cofely is convinced that improvements can be made by substituting all these programs for one organizational system. They are therefore convinced that their next step should be to implement SAP, which will substitute most of these programs and will achieve a uniform working method. This will eventually contribute to a higher level of operational excellence. As of March 2010, Cofely implemented SAP at most of their sites in the Netherlands. Cofely’s southern sites went online in 2009

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and their western sites went online in the beginning of 2010. The last sites of Cofely who go online are the ones in the Northern region of the Netherlands, which will go online on the 25^th of May.

1.3 Organizational structure

In order to achieve the previously stated high five strategy in the Netherlands, Cofely is divided into three regional divisions; sites in the southern-, western-, and northern part of the Netherlands. This regional structure, and their subsidiaries, can be seen in figure 2. This thesis will focus on Cofely Noord, which is part of the northern region of Cofely. The organizational structure of Cofely Noord, which can be seen in figure 3, divides departments into two categories. Departments which focus on customers in the industry sector and departments which focus on customers in the utility sector, like schools and hospitals.

Figure 2: Organizational structure of Cofely Netherlands

At Cofely Noord, departments which focus on customers in the utility sector are divided into four more specialized departments. The first department is the knowledge department. This department focuses on activities concerning calculation and engineering. The second department is called the project department.

This department focuses on big stand-alone project. The third one is called the strategic maintenance and services department. This department focuses on activities which deals with malfunctions and reparations based on contracts with customers. The last department is called the customer specific work department. This department is concerned with activities which focuses on custom made products and/or services, which meet the specific needs of customers.

Figure 3: Organizational structure of Cofely Noord

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This thesis will focus on the customer specific work department. More specifically, the technical maintenance and service departments (TOS) in Groningen and Leeuwarden. However, before elaborating on these departments, an overview will be given of the other departments which are part of the customer specific work branch. Customer specific work is split up into three sections, building automation, customer specific work Groningen and customer specific work Leeuwarden.

The building automation department focuses on activities concerning automation within buildings.

KSW Groningen and KSW Leeuwarden deal with customer specific work in other disciplines, like electro- technical (ET) and mechanical engineering (WT). The KSW department at Leeuwarden and Groningen are similar and co-exist to supply their regional customers. These sites each consist of three departments; the previously mentioned electro-technical department (ET), the previously mentioned mechanical engineering department (WT) and the technical maintenance and service department (TOS). These TOS department will be the focus of this thesis and will therefore be described more in depth in the next paragraph.

1.4 The TOS departments

The TOS departments offer technical maintenance and repair services. They strive to do this in line with the general Cofely high five strategy, which was described earlier. The services they provide can be divided into two categories. First off all, the TOS departments have maintenance contracts with certain customer, which means that they take care of technical installations by conducting periodical maintenance. Besides that, The TOS also reacts to technical service requests. This could, for example, mean that a technical malfunction needs to be repaired. To offer these services they use different processes which are interlinked to each other.

There processes will be described in chapter 4 to illustrate the current and the envisioned situation. For now, this paragraph focuses on all the aspects of the TOS departments, besides their processes. The first paragraph will elaborate on the different computer programs, which are used to facilitate their processes and which will be substituted by SAP. The second paragraph will elaborate on the different employees at the TOS departments, which all have different functions in order to offer their services in an effective and efficient way.

The last two paragraphs will describe the differences between the two departments in more detail.

1.4.1 Computer programs

To facilitate their processes, the TOS departments started out with a wide range of different computer programs. The most important ones were TIAS and TIBIAS. TIAS was used to facilitate the commerce and finance processes. TIBAS, on the other hand, was used to manage calculations, projects and sourcing processes. However, in 1997 GTI Oisterwijk and Pluriform Software developed a monitor program, Pluriform, which could integrate all these different programs into one. As of 1999, Pluriform is used at every TOS department in the Netherlands. The employees of the TOS department use Pluriform for every process imaginable, from registration the service request and managing contracts to eventually sending the invoice.

However, Pluriform is still only a monitor program, which means that programs like TIAS and TIBIAS are still in use and therefore still needs information of Pluriform. Exchanging data between Pluriform and other

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programs is done at night, which is far from ideal. As of May 2010 Pluriform and all other programs will be substituted by SAP. In theory, this means that the TOS departments will substitute multiple programs, but in practice the employees of the TOS departments will only see the substitution of Pluriform.

1.4.2 Employees

The employees of the TOS departments can be divided into direct and indirect employees. The first category concerns employees who directly participate in the primary process and can therefore be directly linked to a service order. The direct employees at the TOS departments are the engineers. They are the ones who make repairs and perform maintenance and can therefore be directly linked to the customers. Indirect employees are the employees who support the direct employees and cannot be linked to a specific customer or service order. However, indirect employees can also be divided into two categories. Complete indirect employees and project connected indirect employees, also called PGI’s. Complete indirect employees cannot be traced to a particular customer. The complete indirect employees at the TOS are the technical administrative employees. The main function of these employees is to fully support the engineers, concerning processing working hours and work receipts. Project connected employees are indirect employees, but can, to a level, be connected to certain customers. The project connected employees category consists of three different jobs. First off all, there are the service managers. Service managers carry the commercial and financial responsibility of multiple service orders. One of these project managers is a senior project manager and therefore also manages the TOS department. Next, there are the contract coordinators. Contact coordinators are responsible for the technical, administrative and organisational coordination of service orders and they report to the project managers. Lastly, there are the planners. The planners concentrate on planning the different engineers in an efficient and effective way. The service managers, contract coordinators and the planners all coordinate multiple service orders, and can therefore be connected to several service orders. The workforces of both TOS departments consist of these employees and their tasks and responsibilities are, in essence, similar to each other. The next paragraphs will focus on the main differences between these two TOS departments.

1.4.3 TOS Groningen

The TOS department in Groningen will at least have a turnover of 2,3 million Euros this year, which is based on this year’s maintenance contracts. This is without any extra service requests. The TOS department in Groningen consists of 28 employees. 20 of them are engineers, which are send out to work on the different service orders. This means that this department has 7 indirect employees who support these engineers. The TOS department in Groningen has 2 service managers. One of these service managers is a senior service manager and manages this TOS department. Besides these project managers, there are also 2 contract coordinators and 2 technical administrative employees. However, both technical administrative employees work part time, which means that there is 1 full-time technical administrative employee working at this

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department. There is also 1 planner working at the TOS in Groningen. All these employees report to the senior service manager. Figure 4 gives an overview of the employees working at the TOS department in Groningen

1.4.4 TOS Leeuwarden

The TOS department in Leeuwarden will at least have a turnover of 1.1 million Euros this year, which is based on this year’s maintenance contracts. This is also without any extra service requests. When compared to the TOS department in Groningen, their turnover is smaller. The workforce of the TOS department in Leeuwarden is also smaller, but not as much as one would suspect. The TOS department in Leeuwarden consists of 23 employees. 16 of them are engineers, which are send out to work on the different service orders.

This means that this department also has 7 indirect employees who support these engineers. Just like the TOS department in Groningen, this department also has 2 project managers. However, one project manager works at another department and only supports the senior project manager part time. There are also 2 contract coordinators, who do the same duties as in Groningen. There are also 2 technical administrative employees, who both work part time. There is also one planner at this department. As with Groningen, all these employees report to the senior service manager. Figure 4 also gives an overview of the employees working at the TOS department in Leeuwarden.

Figure 4: Employees of the TOS departments

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2. PROBLEM STATEMENT AND RESEARCH METHOD

This chapter will focus on the problem statement and the research methods which will be used to conduct the research in this thesis. The first paragraph will elaborate on the motive of the research. The second and third paragraph will focus on the problem statement, which consists of the purpose of this research and the central question (De leeuw, 2003). The following paragraph will focus on the conceptual model and will be followed by the sub questions, which will be based on the previous paragraphs. The fifth paragraph will elaborate on the theories that will be used in order to answer the central- and sub questions.

This chapter will conclude with a final paragraph, which focuses on the research methods.

2.1 Research motive

As mentioned earlier, Cofely Noord is going to implement SAP on the 25^th of May. This ERP system was already implemented at southern en western sites of Cofely and now it is their turn. This new system was designed in, and imposed from, the corporate headquarters in France. Niels Spuy, the manager finance and control at Cofely Noord, has the advantage of looking at the implementation processes at the other sites and noticed a potential problem. As was mentioned by the controller, SAP has the advantage of generating real- time information on all business processes. However, all the business processes are connected throughout the system, which means that wrong entries in one part of the system can have major consequences throughout the whole system. It is therefore essential that all employees execute their administrative duties in the right manner, because if some employees neglect their administrative duties, SAP will not work properly. Looking at his own organisation, he is not convinced that all the employees will adopt the new SAP system, and the new administrative duties, without a struggle.

Especially the employees of the TOS departments could pose a lot of resistance, which has multiple reasons. First off all, Pluriform is custom made for the TOS departments and SAP is designed to fit the whole Cofely organisation, which means that SAP will be less accustomed to the work processes of the TOS departments in comparison to Pluriform. Employees of the TOS department can therefore be less willing to adopt SAP in comparison to employees of other departments. Secondly, most employees of the TOS departments are primarily focused on fixing technical problems at their customers and they are experience their administrative duties as a burden. Therefore, they will probably not like the coercive nature of SAP.

The controller therefore predicts a problem between the input SAP needs in order to work properly and the willingness and/or ability of the employees of the TOS departments to meet their administrative duties.

He therefore states that it is important to give insight into the current routines of these employees and to identify what is needed to make sure that these employees will adapt new routines which will fit the new SAP environment.

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2.2 Research purpose

First off all, the purpose of this thesis is to research and explain the factors which influences the routines of the employees of the TOS departments in Groningen and Leeuwarden concerning their administrative duties. By doing this, Cofely is better able to focus their energy on factors which truly matter in changing these routines. Secondly, after identifying these factors, the purpose of this thesis will be to research the possibility of changing these routines, into new routines which will result in reliable data entries in the new SAP environment. By doing so, Cofely will be able to manage their TOS departments in Groningen and Leeuwarden in an effective and efficient way, which will fit the strategy of Cofely.

2.3 Central question

Now that the research motive and the purpose of this thesis has been discussed, a central question can be formulated. Figure 5 shows the central question of this thesis and is based on the research motive and purpose which were discussed in the previous paragraphs. In order to answer the central question, sub- questions need to be formulated. These sub-questions will be based on a conceptual model, which will show the different element which are of relevance in answering the central question. Therefore, the following paragraph will first elaborate on the conceptual model, which will be followed by a paragraph which focuses on the sub-questions.

Figure 5: Central question

2.4 Conceptual model

The function of the conceptual model is to distinguish different variables which are of relevance in answering the central question. Besides these variables, the conceptual mode will also focus on the relationship between these variables. Based on this conceptual mode and the central question, which was discussed in the previous paragraph, sub-questions can be formulated. These sub-questions will be discussed in the next paragraph. Looking at the central question in the previous paragraph, four different variables can be distinguished. These variables will be labelled with a letter, which will be used in the next paragraph to create sub-questions. This paragraph will continue by describing the different variables in more detail.

The first variable which needs to be researched refers to the different factors which influences the routines of the employees. Not only is it important to research the factors which influence the current routines, but it is also important to research the factors which influence the routines in the new SAP environment. In the conceptual model this variable will be depicted by the letter A

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The second variable consists of the routines themselves. In this thesis, routines are the procedures which are actually in use. It is necessary to research the current routines and the routines which are required in the new SAP environment. This change will be done in a drastic manner due to implementation of SAP, which means that employees need to convert their old routines into new ones, based on past knowledge and training. By identifying these routines, Cofely will be able to only focus on those routines which need to be changed. After researching this variable and also the first one, Cofely will be able to formulate a strategy which will focus on the relevant factors to change the relevant routines. In the conceptual model the current routines will be depicted by the letter B and the routines in the new SAP environment will be depicted by the letter C.

Besides these variables, it is also important to research the current implementation climate. Cofely carried out change management activities in an attempt to create an implementation climate which will best facilitate the change from the current routines to the required routines in the new SAP environment. The purpose of the implementation climate is to reduce employee resistance towards SAP and to positively influence employee attitude towards this new system. In the conceptual model this variable will be depicted by the letter D. Now that all the relevant variables have been discussed, a conceptual model can be created.

This conceptual model can be seen in figure 6.

Figure 6: Conceptual model

2.5 Sub-questions

After formulating the problem statement, the central question and the conceptual model, sub- questions can be formulated. Like stated in the previous paragraph, the letters of the sub-questions will directly relate to the letters in the conceptual model. Based on the preciously discussed conceptual model, six sub-questions can be formulated. These sub-questions can be seen in figure 7. The formulated sub-questions will be the framework of this thesis.

Sub-question A focuses on the factors which influences routines. Answering sub-question A will be the focus of the third chapter. This third chapter will elaborate on the theoretical framework and will therefore focus on the theoretical aspects. The next paragraph will elaborate on the theories which will be used to answer this sub-question. Sub-questions B and C, which focus on the current- and required routines, will be discussed in the fourth chapter. This fourth chapter will make a comparison between the current routines and the routines which are required in the new SAP environment on order to produce correct data entries. After

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doing field research at the different TOS departments, the final chapter will focus on answering sub-question D and the central question.

Figure 7: Sub-questions

2.6 Theory

This paragraph will focus on the theories which will be used in the theoretical framework chapter. Like stated in the previous paragraph, the theoretical framework chapter will focus on explaining the factors which influences the work routines. In order to distinguish factors which influences work routines, the institutional perspective theory will be used. This theory is written by Burns and Scapens in 2000 and will be used, because it focuses on changing routines in relation to rules. Implementing an ERP system, like SAP, brings forth new rules, which needs to translate into new routines. By describing this process, the institutional perspective theory by Burns and Scapens will perfectly fit the SAP implementation process at Cofely. Besides the institutional perspective theory, the theoretical framework chapter will also focus on the implementation climate. Concerning the implementation climate, this thesis will focus on the implementation climate theory by Kemp and Low, which they wrote in 2008. Their theory is used, because they distinguish three different elements of the implementation climate during the implementation phase of a new system. Besides that, they also researched the impact of the implementation climate on the effectiveness of implementing a new system, which also fits the SAP implementation process at Cofely

2.7 Research methodology

Research will be done in two ways, through desk research and through field research. Desk research will be done to gather and analyse information which was already available in print or published on the internet.

Field research will be done to collect original data, which could not be obtained through desk research. The last part of this chapter will elaborate on these two methods.

Desk research is conducted through examining organisational documents. Reports, surveys and other documents which were created as part of implementing SAP were reviewed. In this regard, a lot of

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information is abstracted from the operational blueprint document, which was used as the foundation of implementing SAP at Cofely. Besides these documents, documents which focused specifically on the two TOS departments were also reviewed extensively.

Field research is conducted in two ways, through interviews and through questionnaires. The purpose of the interviews is to research if the employees are able to change their current routines. These interviews will therefore focus on researching the weak points of the implementation process. The interviews will be unstructured in order to ask open questions which could discover new problems which are not covered in all the previously discussed documents. Interviews will be held with one person per job per department. This means that at every department, interviews will be held with: one senior service manager, one service manager, one contract coordinator, one technical administrative employee, one planner and one engineer.

The purpose of the questionnaires is to research the current implementation climate, which will explain the readiness of the employees to adopt the new SAP system. These questionnaires will measure the strength of the employees’ agreement with a range of statements, which can be seen in appendix one. These statements will be measured on a five-point Likert scale, ranging from 1: strongly agree, to 5: strongly disagree. The statements will relate to the three different elements of the implementations climate. Data will be collected from all the employees of the TOS departments.

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3. THEORETICAL FRAMEWORK

This chapter will elaborate on the theoretical framework, which was mentioned in the previous chapter.

As was pointed out in the previous chapter, this chapter will focus on two different theories. The first theory will be institutional perspective theory, which was redefined by Scapens (1994) and later expanded on by Burns and Scapens (2000). The second theory will be the implementation climate theory by Kemp and Low (2008). This chapter is divided into four paragraphs. The first paragraph will give a short introduction of the used theories and will elaborate on the function of both theories in this thesis. The second paragraph will focus on the development of management accounting change in relation to implementing an ERP system. The third paragraph will elaborate on the principles of the institutional perspective theory. The concluding paragraph of this chapter will elaborate on the implementation climate theory by Kemp and Low (2008).

3.1 Introduction

ERP systems are focused on business processes instead of functions (O’Connell,1995). This suggest a tendency towards horizontal integration, which also implies a need for information sharing and teamwork (Henson,1997). The institutional perspective theory deals with horizontal integration of management accounting practices and it also focuses on processes instead of functions (Burns and Scapens,2000). It is therefore ideal to use this theory considering the current situation at Cofely. However, institutionalising new routines and therefore successful implementing a new ERP system, considering the institutional perspective theory, is not always done successfully. This can be contributed to the fact that the institutional perspective theory only focuses on the ability of employees to change their routines and takes for granted the attitude and willingness of employees to adopt these new routines. That is the reason why, beside the institutional perspective theory, this thesis will also focus on the implementation climate theory by Kemp and Low (2008).

Before and during an implementation process, organisations deploy different change management activities which will result in a positive or negative implementation climate (Holland and Light, 1999), which has a direct effect on the attitude of employees to adopt new routines. Kemp and Low (2008) state that creating a positive implementation climate among employees will have a positive impact on the attitude and willingness of employees to institutionalising new routines. It therefore directly effects the effectiveness of the implementation process. This thesis will focus on both theories in order to deal with both aspects of implementing an ERP system.

3.2 Development of management accounting change

The classic economics-based approach sees management accounting as providing information to rational decision makers to make optimal decisions (Scapens, 1994). Management accounting research adopts different well-known theories, like transaction cost economics and agency theory, which deal with optimal solutions and focuses on equilibrium (Burns, 2000). These approaches resulted in new accounting techniques, but it neglected the fact how these techniques can be successfully implemented in organisations. As a

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consequence, these well known theories did not focus on the possible resistance of employees against implementing such a technique. Activity-based costing (ABC) can for example be more rational than cost allocation based on labour hours, but such a rational conclusion will not say anything about the ease of implementation. Therefore management accounting change is becoming a much debated topic nowadays.

Looking at implementing ERP systems, like SAP, it can be said that a lot about the subject has been written in computing literature, but that not much attention has been given to this phenomenon in regard to accounting change. This is surprising considering the impact such a system has on accounting practices (Henson, 1997).

However In recent years there has been a growing interest in the institutional perspective theory across economics (Scapens,1994.) and sociologists (Henson, 1997). This theory will be described in the next paragraph and will play an important part in this thesis.

3.3 The institutional perspective theory

The institutional perspective theory focuses on changes in routines in relation to rules. In order to understand this relation it is important to first define the differences between rules and routines. This paragraph will therefore first focus on these two concepts and their relation with each other.

Looking at the nature of habits of thought and action, it can be stated that habits are self-actualizing tendencies or dispositions to engage in previously adopted forms of actions (Burn and Scapens, 2000). Habits are personal, whereas routines can encompass groups. Routines are the procedures which are actually in use.

Routines are normally changed in a cumulative manner as they continue to be reproduced. However, people also need reasons to do things. There are certain behaviours that result from purely rational choices, but people can normally give reasons for their actions. Often these reasons are based on established rules. Rules are the formalized statements of procedures. These rules concern the formal management systems and are set out in the procedure manuals. As stated by Scapens (1994), these rules are necessary to coordinate groups.

Normally rules are established and through implementing these rules, routines will emerge. One can argue that routines follow rules, because individuals interpret rules in order to create certain routines. However, it can also work the other way around, because previously stated rules can be modified by people, as the group locates mutually acceptable ways of implementing them. In some organizational activities, routines may emerge which were never formally stated as rules or which are deviations on the rules. Eventually, these routines will result in concrete actions. Therefore, there is an ongoing interaction between rules and routines.

This interaction, which is the main principle of the institutional perspective theory.

Burns and Scapens (2000) expanded this perspective by adding the role of institutions and actions.

Their purpose was to build a framework for managing management accounting change. The remaining part of this paragraph will be devoted to these new elements in relation to, the previously discussed, rules and routines.

Institutions can be defined as the shared taken-for-granted assumptions which inform and shape the actions of individual actors’. Institutions only exist in the understanding and stocks of knowledge of the employee and describe for them “the way things are”. An important aspect of institutions is that they define

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the behavioural patterns which are expected from employees in their social environment. Actions are the behavioural outcome of the interaction between rules and routines. Actions and thoughts are institutionalised if employees think “that’s how thinks are”. However, not all behavioural patterns are institutionalized. There may, for example, be differences in the amount of time certain institutions have been in place, which can influence the acceptance of these institutions. Therefore institutions which are not accepted widespread, are less likely to influence action (Burns and Scapens, 2000). The institutional perspective theory, as described above, can be seen in figure 8.

Figure 8: the process of institutionalization

Figure 8 shows a framework which contains synchronic and diachronic elements. The synchronic elements refer to the institutions, which shape the action synchronically, which mean at a specific point in time. Actions produce and reproduce institutions in a diachronic way, which means that they cumulative influence over time.

The first process, which is depicted by arrow A, focuses on the encoding of institutional principles into rules and routines. The routines will embody the prevailing institutional principles and will affect the ongoing routines. This process starts by looking at the institutional principle, which are comprised of existing meanings, values and power. The second process, which is depicted by arrow B, involves the employees enacting the rules and routines, which are drawn from their institutional principles, into action. This process may be a result of reflective monitoring and the application of knowledge about how things should be done, but it can also involve conscious choice. Problems can occur when employees show resistance against rules and routines, due to the fact that these rules and routines challenge existing meanings and values, and employees have enough power to intervene. The third process, which is depicted by arrow C, focuses on the repetition of behaviour, which will lead to a reproduction of routines. This reproduction can be done in a conscious or a unconscious way. If this happens in an unconscious way, it means that the employees may not sufficiently understand or accept the routines and rules and are not monitored to correct them. If this happens in a conscious way, it means that the employees are questioning the existing routines and rules, based on their resources and rationales. The last process, which is depicted by arrow D, involves the institutionalisation of routines and rules. Rules and routines will eventually be institutionalized because they are reproduced through

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the behaviour of the individual employee. Eventually the rules and routines become institutionalised, which means that employees sees them as “just the way things are”.

Like mentioned earlier, institutions are comprised of the taken-for-granted assumptions about how things should be done. This determines the meanings, values and actions of the individual employee en will directly influence the ongoing rules and routines. This process only exists in the minds of the individual employee and it is therefore more abstract than routines and rules. Therefore the A and D arrows are dotted.

Besides that, arrows B and C are repeated more frequently than arrows A and D. Burns and Scapens do this due to the fact that actions get shaped in short periods of time and institutionalising actions will take much longer. So by repeating the rules and routines in the short run, they become institutionalised in the long run.

Looking at how this theory can be used in practice at Cofely. Implementing an ERP system like SAP can be regarded as a formal change. This means that the new system is a conscious design, which instantly introduces new rules (Rutherford,1994). New rules need to be introduced to make SAP work properly. When the new rules are implemented, new routines need to emerge, which means that new procedures need to be developed and reproduced by the employees of the TOS departments.

3.4 The implementation climate theory

Organisations who implement an ERP system have made investments concerning both capital and time to guide the process of institutionalization. However, in spite of all these investments, institutionalising new routines and therefore successful implementing a new ERP system is not always done successfully (Escalle et al, 1999). This is primarily due to the fact that an ERP system needs to be implemented organisation wide, which involve multiple stakeholders and also multiple routines (Holland and Light, 1999). It is therefore important that organisations focus on ways to improve the implementation process. Like stated earlier, organisations deploy different change management activities to create a positive or negative implementation climate (Holland and Light, 1999). Kemp and Low (2008) state that creating a positive implementation climate will have a positive impact on the effectiveness of the implementation process, which will therefore stimulate institutionalising new routines. The implementation climate for an innovation, in this case implementing SAP, can be described as the sum of experiences and observations by employees regarding the new ERP system (Kemp and Low,2008).

According to Kemp and Low (2008) the implementation climate can be divided into three elements.

First off all, there is employees’ system awareness response, which refers to the ability of employees to explain the features of the ERP system. If employees can mention a large number of benefits using the new ERP system, the implementation process will have a bigger chance of being successful (Kemp and Low,2008). The second element is employees’ adoption intention. This element refers to the employees’ intention to adopt the new system. If employees see the necessity of the new ERP system, they will adopt this new system more easily then when they do not see the necessity of it. Therefore, employees’ adoption intention will also have a direct impact on the implementation process (Kemp and Low,2008). The last element is employees’ feelings response. This element refers to the employees involvement in implementing the ERP system and attending trainings. If employees do not have a particular role in the development of the system and they are not

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regularly informed about the development of the system, they will create negative feelings response towards the system. Negative feelings response towards the ERP system will have a negative impact on the implementation process (Kemp and Low,2008).

According to Kemp and Low (2008), employees awareness, intentions and feelings are equivalent to the sum of experiences and observations during the ERP implementation process and can therefore be used to determine the implementation climate,. This implementation climate directly affects the willingness of employees to adopt new routines. In this view, institutionalising new routines during an implementation process will take place in the context of the implementation climate, which can be seen in figure 9.

Figure 9: the implementation climate

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4. PROCESSES AND ROUTINES AT COFELY

After elaborating on the theoretical framework of this thesis, it is time to look at the different processes at Cofely and the TOS departments. These processes will be the foundation of distinguishing the routines at the different TOS departments. This chapter is divided into four paragraphs. The first paragraph will focus on the eight main processes of Cofely. After elaborating on these processes, the focus will shift to the different processes of the service process, primarily the processes of the TOS departments. In this paragraph the focus will lie on the different functions of these processes and how they interact with each other. The concluding paragraph will focus on the current routines and the predetermined actions which need to be institutionalized after the implementation of SAP. By doing this, a comparison can be made between these two.

4.1 The eight main processes at Cofely

Cofely has distinguished different processes. This is not only done due to the upcoming implementation of SAP, which also focuses on different processes, but also due to the need of recognising improvements areas within the organisation. These improvements do not only focus on the quality of their products and services, but they also focus on safety, health and the environment, which suits the earlier discussed strategy of Cofely.

Looking at Cofely as a whole, all the processes can be grouped into eight main processes. These categories are based on the different departments which they support.

The first main process which can be distinguished is control. This main process consists of all the processes which facilitate measuring, analysing and improving the organisation. Besides these aspects, the control process also consists of all the processes which refer to policy making, planning and setting targets.

The second main process is commerce. Commerce focuses on the contacts with the customers.

Customers offer projects or request services and these are realised through bids and contracts. For making those bids, calculation is used, which entails another main process.

Calculation refers to all the activities concerning calculating the budget. This budget will be the starting point of the eventual invoice to the customer. These bids and contracts will lead to orders for projects or services, with are the fourth and fifth main processes.

For the execution of processes concerning project and services, resources like materials and employees, internally and externally, are needed. External resources are delivered through processes which can be combined in the sixth main process, sourcing.

Human resources, another main process, entails all the processes which focuses on making the right employees available and paying those employees.

The last main process is finance. This main process focuses on processes concerning the payment of customers and suppliers. These main categories and their correlations can be seen in figure 10.

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Figure 10: Eight main processes at Cofely

4.2 The processes at the TOS departments

This paragraph will focus on the processes which are part of the day-to-day activities at the TOS departments. These processes and relations can be seen in figure 11.

There are two ways to initiate a service order. Fist off all through a service request. A customer reports a malfunction and requests a repair. A local service desk processes the request and creates a service order.

Another way to initiate a service order is through periodical maintenance which is stated in the service contract with the customer. This is indicated by the dotted line in figure 11. When a malfunction is reported by a customer who does not have a service contract, a service contract is created. A service contract is therefore always the foundation of a service order. The service contract includes all the agreements with the customer.

These agreements range from; maintenance activities, duty-rosters, response time, price conditions etc.

After creating the service order, the service order will go to planning. Planning the actual service order is an activity which focuses on assigning execution date, engineers, and materials/services to the service order.

During the next step, executing and reporting the service order, the focus will lie on processing data concerning the execution of the service in the proper documents. Reporting the service order will consist of a report concerning; used hours, used materials, and other expenses. Besides this, the engineer also needs to report the hours when he or she was not working on a service order.

Eventually, invoices will be made based on the terms of the contract and the report. Like stated earlier, the relation between these processes can be seen in figure 11.

Figure 11: Process sequence at the TOS

1. THE COFELY ORGANIZATION

PREFACE

MANAGEMENT SUMMARY

TABLE OF CONTENTS

INTRODUCTION

1. THE COFELY ORGANIZATION

2. PROBLEM STATEMENT AND RESEARCH METHOD

3. THEORETICAL FRAMEWORK

4. PROCESSES AND ROUTINES AT COFELY