Influence of Power and Interest on (Pre)-ERP
implementation within Manufacturing Companies
LAURENS LUUTZEN JAN STELLINGWERFF University of Groningen
Faculty of Economics and Business
MSc Technology and Operations Management June 2020
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Inhoudsopgave
1. Introduction... 5
2. Theoretical background ... 8
2.1 Enterprise Resource Planning system implementation ... 8
2.1.1. Phases of ERP implementation... 10
2.2 Power and interest of internal stakeholders ... 11
2.2.1 Production/sales interface ... 14
2.3 Decision-making process ... 15
2.4 Conclusion and Research model ... 16
3. Research methodology ... 19 3.1 Research design ... 19 3.2 Research setting ... 21 3.3 Data collection ... 22 3.4 Data analysis ... 24 4. Findings ... 26
4.1 Overview of Implementation Process ... 26
4.1.1 ERP Implementation background ... 26
4.1.2 Overview of internal stakeholders ... 27
4.1.3 Decision-making process – production/sales interface ... 28
4.2 Influence of power and interest ... 30
4.2.1 Descriptive: Interest of internal stakeholders at FoodCo ... 30
4.2.2 Descriptive: Power of internal stakeholders at FoodCo ... 32
4.2.3 Analyze – Power, interest and influence on the decision-making process ... 34
5. Discussion ... 37 5.1 Overview ... 37 5.2 Implications ... 39 6. Conclusion ... 40 7. References ... 42 8. Appendix ... 51
8.1 Appendix 1: Case study protocol... 51
8.2 Appendix 2: Coding schemes ... 55
8.2.1 Interest - coding scheme ... 55
8.2.2 Power - coding scheme ... 59
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Abstract
Manufacturers are increasingly focused on optimizing their business processes and resources; ERP systems can contribute to this. However, in about 70% of cases, the implementation of ERP systems does not meet the pre-determined goals. This study is an initial attempt to analyze how decision-making processes in the early stages of ERP implementation are affected by the power and interest of internal stakeholders within the production/sales interface. Since EPR implementations proved to be complicated, insights towards this topic might be helpful, and empirical evidence on this topic lacks within current research. Data for this study were gathered by performing an in-depth single case study at a company within the manufacturing industry. Within this company, an ERP implementation has been investigated concerning both sales and production locations. By this, the power, interest, and the influence on the decision-making process of these individual locations showed up well. These results suggest that the ERP system's interest was mainly present when support was experienced for achieving personal goals. When this support was experienced, more influence on the decision-process was exerted duo to increased involvement. However, power on the locational level was limited within the production/sales interface, as the autonomous core project team took charge of all sites. They did this to promote standardization, making location influence undesirable, and herewith putting pressure on support at an organization-wide level. All in all, the centralized approach within a large company has meant that the power and interest of internal stakeholders in the production/sales interface did not have a significant impact on the decision-making process. More research should show how this turns out within other companies.
Keywords: ERP Implementation, Power and Interest, Decision-makings processes,
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Preface
Before the start of this paper, I would like to thank my thesis supervisor Prof. Dr. J. de Vries of the Rijksuniversiteit Groningen. Mister de Vries guided me through the process pleasantly and professionally. From the beginning to the end, he actively contributed to the structure and content of my research, showing much enthusiasm. His (digital) office was always open to me. Further, I would like to acknowledge Dr. M.J. Land and Dr. Ir. S. Boscari, for their valuable feedback as the second supervisor of my thesis.
I would also like to thank the employees of FoodCo who were involved in the data gathering process for this research project. Without their passionate participation and input, the in-depth case study would not have been possible. I would especially like to thank Ilse, she introduced me to many suitable internal stakeholders at FoodCo, and has shown great interest in the background of my research.
Further, I would like to thank all my fellow students for working together professionally over the years. In particular, I would like to thank Lars Kuperus and Sietse Sinnema, with whom I spent my entire study period at the University of Groningen. Together we have made it a fun and educational period. Also, I acknowledge the support and constructive feedback of Tim Pronk during the master thesis process.
Last but not least, I must express my gratitude to my parents, family, and friends. They always have supported me throughout my years of study and through the process of writing this master thesis for the Master program in Technology and Operations Management.
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1. Introduction
Manufacturers are increasingly pressurized by tighter delivery schedules, efficient utilization of resources, and improving overall responsiveness (Jutras, 2010). Moreover, business functions in which different departments are involved are the core of every company (Ali & Miller, 2017). The result of these developments is the increased complexity of the operational processes. Considering these changed circumstances, the influence of Enterprise Resource Planning (ERP) systems has raised significant attention within many companies in order to make operational, tactical and strategical decisions (Daniel & White, 2005; Dezdar & Sulaiman, 2009; Markus, 2004). Within this context, ERP systems can be defined as ‘highly integrated enterprise-wide software packages that automate core corporate business processes such as finance, human resources, manufacturing, and supply and distribution’ (Holland & Light, 1999, p289).
The benefits of these systems are clear and generally supported by many researchers. Due to increased information exchange and reduced communication costs, firms turn into more integrated and coherent organizations. (Dowlatshahi, 2005; Fowler & Gilfillan, 2003; Paré & Sicotte, 2001). In the optimal situation, the systems provide benefits for companies by reducing, e.g., development costs and providing real-time access concerning business data. In general, these benefits contribute to the overall performance of manufacturing companies (Murcia & Whitley, 2007; Seethamraju, 2008; Setia & Patel, 2013; Tenhiälä & Helkiö, 2015). Manufacturing companies more and more rely on ERP systems for many new tasks and organizations throughout the enterprise. The internet's introduction made it possible to implement this broader range of operations and functions (Dowlatshahi, 2005). In 2010, around 74% of manufacturers had implemented ERP. Thereby, this industry is leading with respect to ERP implementations. Comparatively, in the Wholesale- and Service industry, respectively 49% and 30% of the companies have adopted ERP within their business (Jutras, 2010).
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(2010), Jinno et al. (2017) proved that it is difficult for companies to improve their effectiveness and efficiency through ERP implementation. The low success rate, combined with high investment costs, validates the investigation of ERP implementation factors. Therefore, this topic has already developed a lot of interest in the existing literature (Brown & Vessey, 2003; Jinno et al., 2017; Liu & Seddon, 2009).
The purpose of this study is to gain more insights into problems that companies are facing before and during the first stage of implementation. More specifically, the influence of power and interest of stakeholders within organizations has been identified as one of the major reasons for ERP failures (Boonstra, 2010; de Vries & Boonstra, 2012). This paper will outline the effect of power and interest in the earlier stages of the decision-making process. Internal stakeholders seem to influence this decision process, but there is little empirical material on this topic (Ali & Miller, 2017; Jääskelainen & Pau, 2011). The research question that follows and will be addressed is: ‘To which extent are decision making processes in the (pre-)implementation stage of ERP systems affected by power and interest of internal stakeholders?’
Until now, multiple researchers have investigated diverse aspects with respect to the complex implementation of ERP systems (Brown & Vessey, 2003; Esteves, 2009). One of them are changes within the organizational activities due to ERP implementation (Markus, 2004). During organizational change, internal stakeholders continually influence each other, partly driven by their own interests (Jääskelainen & Pau, 2011). Herewith, it is generally accepted that the power and interest of internal stakeholders influence the decision-making process within ERP (pre)-implementation (de Vries & Boonstra, 2012; Holland & Light, 1999; Willcocks & Sykes, 2000). Therefore, it is important that more knowledge is generated about the influence of these constructs within the earlier stages of the decision-making processes (Allen et al., 2002; Markus et al., 2000; Hauck, 2009).
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implementation both consist of activities before the implementation (e.g., planning, training) and the commissioning of the system (Abdinnour-Helm et al., 2003; Akkermans & Van Helden, 2002). The post-implementation is often a continuous process; the target in this stage is that the system will contribute to the organizational performance. According to researchers, little is known about how the power and interest of internal stakeholders are related to the (pre)-implementation of ERP systems within manufacturing companies. There are strong indications that the decision-making process in this phase is influenced by the power and interest of these stakeholders. However, empirical evidence on how this power and interest of internal stakeholders within manufacturing companies may affect the early stages of ERP implementation is lacking (Ali & Miller, 2017; Jääskelainen & Pau, 2011).
This study's analysis contributes to existing literature, that already examined problems that companies face during the ERP implementation. Contributions to this topic can help managers and other researchers to gain more insight into the influence of power and interest before and during the first phases of implementation. There seems to be a need for this since the high failure rate proved problematic (Liu & Seddon, 2009). Moreover, the research outcomes can be used and tested within other industries, where ERP is gaining more and more relevance (Jutras, 2010; Paré & Sicotte, 2001).
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2. Theoretical background
This section elaborates on the different theoretical constructs of this research. First, the focus will be on ERP systems and implementation in general. After this, the scope of implementation will be discussed. Last, the existing body of knowledge concerning the influence of power and interest on the first stages of ERP implementation will be highlighted, and the resulting research model will be explained.
2.1 Enterprise Resource Planning system implementation
Many manufacturing companies have implemented ERP to fulfill their increased information needs (Ali & Miller, 2017). ERP has its roots in this industry since it originates from Material Requirements Planning (MRP) (Jutras, 2010). In the mid-1960s, this became popular to provide a logical and easily understandable method for estimating parts, components, and materials needed for production. The advantages of computerization and networking have increased the functionality of this system (Jutras, 2010). More applications were added to the system, and other resources besides materials were incorporated (Glasgow, 2002; Singh et al., 2013). Due to these developments, ERP was introduced in the 1990s when the Garners Group employed ERP as an extension of MRP (Singh et al., 2013).
Within the last decades, a considerable number of manufacturing firms in developed countries have adapted ERP within their business (Jutras, 2010). However, the implementation of ERP is not self-evident, since it is proven to be quite complicated in practice (Liu & Seddon, 2009; Maguire et al., 2010; Nafeeseh & Al-Mudimigh, 2011; Plaza, 2016). Within this paper, ERP implementation is defined as ‘an organizational effort directed towards the installation and diffusion of an ERP system within a user community’ (Cooper & Zmud, 1990, p.124). This definition is applicable since the direct effort towards ERP implementation within a company will be investigated (Cooper & Zmud, 1990; Ram et al., 2013).
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Recent studies have proved this improved information exchange and inter-functional coordination (Dezdar & Sulaiman, 2009; Klaus et al., 2000). Since ERP reduces data duplication and provides data integrity, all information is incorporated within only one source of accurate information. All this information can be derived from a unified database (Ruivo et al., 2017; Su & Yang, 2010; Yeh & Xu, 2013). As a result of this integration, a manufacturing company can handle data from multiple sources more efficiently. Examples of these data are; the flow of financial resources, materials, and information within the organization (Dowlatshahi, 2005; Su & Yang, 2010).
Although some research has been done to inter-functional coordination, the majority of articles are lacking the level of integration needed by designing and implementing an ERP system (Ali & Miller, 2017). More specifically, recent studies show that multiple departments should be involved during implementation. Since every department has its ‘own’ power and interest position towards this uniform ERP system, it is essential to incorporate this in the decision-making process (Dowlatshahi, 2005; Willcocks & Sykes, 2000).
Despite all the positive signals of ERP systems, there are also some critics. Most of the research on manufacturing companies is related to increased production performance. However, researchers also found that manufacturers might be negatively affected by rigidly designed ERP systems (Moon & Phatak, 2005). Such rigidly designed systems might be inflexible in changing situations, resulting in material deficit or overproduction (Chen, 2001; Moon & Phatak, 2005).
However, at large, there is a positive attitude towards ERP systems. Nowadays, many manufacturing companies are using ERP systems, and the implementation of these systems, in general, leads to increased firm performance. When an implementation is successful, it soon becomes of strategic importance within a company (Tenhiälä & Helkiö, 2015; Velcu, 2010). Various challenges need to be incorporated to make the implementation a success. Compared to other IT-related innovations, the implementation of ERP is far more complex. Because many different stakeholders and social structures will change within an organization, the socio-technical challenges during and before implementation are enormous (Boonstra & De Vries, 2005). Moreover, many end-users generally influence the decision-making processes during and before implementation (Sudhaman & Thangavel, 2015).
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system often influences both the structure of the company and the organizational culture. There are strong indications that departments' power and interest will influence the decision-making process, since ERP systems play an inter-functional role within the company (Ali & Miller, 2017; de Vries & Boonstra, 2012; Sudhaman & Thangavel, 2015).
This study will investigate the influence of power and interest on the first stages of ERP implementation. However, to do this, the scope of implementation will be determined first. In the next section, the three phases of ERP will be described in line with the research of Ali and Miller (2007). After this section, the influence of power and interest will be discussed in more detail.
2.1.1. Phases of ERP implementation
In general, the implementation of ERP systems consists of three stages: pre-implementation, implementation, and post-implementation. The first two phases are more clearly defined than the post-implementation phase. Within this research, the scope will be on the first two stages (Ali & Miller, 2017). For the post-implementation, the endpoint is unclear since this process is continuous; the software has to be incorporated within the requirements of the company until it thoroughly contributes to the benefits of ERP (Ahmad & Cuenca, 2013; Fui-Hoon Nah et al., 2001; Nwankpa, 2015).
The pre-implementation consists of activities as planning the introduction, deciding which vendors play a role, and the arranging of preliminary training (Abdinnour-Helm et al., 2003). Research suggests that in this phase, the attitudes of internal stakeholders will influence the future implementation process. For this reason, it is essential to understand the nature and origin of these attitudes in this phase (Herold et al., 1995). The implementation phase consists of activities that contribute to the commissioning of the system. This process can take a significant amount of time, in general, between 12 and 30 months; this duration depends on the process and size of the specific company which is involved (Abdinnour-Helm et al., 2003; Akkermans & Van Helden, 2002).
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process, hopefully contributes to the existing literature about ERP implementations (Ali & Miller, 2017; Jääskelainen & Pau, 2011).
2.2 Power and interest of internal stakeholders
Within this section, the influence of power and interest in the (pre)-implementation phase will be discussed in more detail. As mentioned, ERP is not just a technology that only has to be implemented at a certain point in time and will run immediately. On the contrary, the organizational changes are a significant part of implementation complexity. Research showed that the process of implementation and related organizational change is profoundly affected by a diverse group of ‘internal stakeholders’ (de Vries & Boonstra, 2012; Jääskelainen & Pau, 2011). Within this context, an internal stakeholder is defined as: ‘individuals or groups of people within an organization who have a vested interest in an ERP implementation project’s outcome and/or whose support is required to launch such a project, drive it forward to a successful conclusion and ensure that the product is utilized to its fullest extent’ (Sudevan et al., 2014, p.3012).
Each firm can be described as “a vehicle by which stakeholders are engaged in a joint and cooperative enterprise of creating value for each other” (Freeman et al., 2007, p.6). The internal stakeholders within a company act as a network of relations that continually influence each other. The decisions made in the (pre)-implementation are partly influenced by each stakeholder's personal drivers (Jääskelainen & Pau, 2011). In line with this research, Mitchell et al. (1997, p871) concludes that ‘an organization is an environmentally dependent coalition of divergent interests’. The behavior of these internal stakeholder in the (pre)-implementation might be affected by possible changes in power and interest due to the introduction of ERP. Since the power and interest of internal stakeholders potentially influence the ERP implementation, there is expected that the creation of knowledge about the influence of these constructs within the earlier stages of the decision making processes will add value to existing literature (de Vries & Boonstra, 2012; Mitchell et al., 1997).
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First, the existing body of knowledge regarding an internal stakeholder's interest related to possible ERP implementation will be outlined. Some actors might have more interest in the introduction of ERP systems than others. The interest of a stakeholder can be defined as ‘the degree in which someone beliefs that they can gain from ERP systems’ (de Vries & Boonstra, 2012, p.1182). The level of interest can be high and low. Herewith, the stakeholder's perception is more important than what the company wants to achieve with the system. The perception of the stakeholder drives the interpretation and resulted actions (Hauck, 2009).
According to Foreman (1999), stakeholders have different perceptions and attitudes regarding, for example, implementation. With this, these stakeholders can have both individual and group interests during their influence on the decision-making process (Willmott, 1987). Low or high individual interest can be caused by multiple reasons. Possible reasons are the result of individual interests and/or the stakeholders' perceptions and attitudes (Frooman, 1999; Willmott, 1987). In general, this depends on the extent to which the implementation supports or conflicts with personal goals. Examples of this are a possible increase in efficiency or less manual work (Bendoly et al., 2004; Frooman, 1999; Willmott, 1987).
To further operationalize interest, we make use of the distinction as introduced by Bridoux et al. (2020). When a stakeholder steers his behavior to meet self-interest, it is a powerful stakeholder strategy. However, it may also be that the interest lies in achieving similar goals. In this case, the balance in interest is divided, and common goals are the target: an all-stakeholder strategy. The all all-stakeholders strategy as described by Bridoux et al. (2020), also fits with the definition of group interest of Wilmott (1987). The operationalization of interest, as described and summarized in the figure below, will be used to analyze the empirical part of the research.
The behavior of internal stakeholders within the early stages of the decision-making process depends not only on the interest of a specific actor toward the system, but also the power of an actor (Buchanan & Badham, 2014). The presence and use of power have been identified as one of the primary reasons why implementations are not always successful (Allen et al., 2002;
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Markus et al., 2000). Within this scope, power is defined as ‘the capacity to exert one’s will over others to realize desired benefits’ (Boonstra & De Vries, 2005, p.489). There are various situations where power plays a role. Internal stakeholders' power can be high or low depending on their involvement in the project and the expected contributions of the system (Newcombe, 2003). Internal stakeholders with high bargaining power may force managers to adopt strategies that prioritize the interest of themselves over the interest of all stakeholders (Bridoux & Vishwanathan, 2020).
To further operationalize power, the dimensions of power, as described by Hardy (1996), are used. This operationalization is used since it is very applicable to internal stakeholders. Hardy (1996) distinguishes three dimensions of power: resource, process, and meaning power. Resource power indicates that a group of stakeholders have access to scare resources within the organization. As a result of this, the deployment of these resources can bring desired behavior. Process power can be defined as the ability of stakeholders to execute some kind of control on formal decision-making areas and agendas within organizational boundaries. At last, meaning power is related to the legitimization of particular activities through the semantic and symbolic examples of organizational life: the management of cultural norms and expectations. These operationalizations are in line with the findings by Savage et al. (1991). According to their research, stakeholders can use their power in three ways to influence decisions. First, stakeholders can use force, violence or restraint (coercive view) to influence the process. Second, stakeholders can have control over financial or material resources (utilitarian view). At last, normative power can be used to influence the process; this symbolic view is in line with meaning power as described by Hardy (1996) (Savage et al., 1991). The operationalization of power, as described and summarized in the figure below, will be used to analyze the empirical part of this study.
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After that, the influence of power and interest on the decision-making process will be discussed in more detail.
2.2.1 Production/sales interface
As introduced, research will be done towards two specific coalitions of internal stakeholders within a manufacturing company. The power and interest of these departments concerning the introduction of an ERP system, will be tried to reveal within this paper. In this way, it can be identified how communication between internal stakeholders has affected the decisions during the pre-implementation process (Olander & Landin, 2005).
The alignment between production and sales targets is considered to be one of the critical factors in determining a manufacturer's performance. In general, alignment between the objectives of both groups contributes to a competitive company. For this reason, multiple researchers studied this topic (O’Leary-Kelly & Flores, 2002; Raman & Chhajed, 1995). In line with this, researchers stated that it is crucial to integrate the production and sales departments since, in general, joint decision-making yields higher profits than the case where the functions optimize their own objectives (Abad & Sweeney, 1982; Freeland, 1980).
15 2.3 Decision-making process
Communication between internal stakeholders in the early stages of the decision-making process concerning ERP-implementation seems essential in exploring the different possibilities of the system. Herewith, the internal stakeholders in the production and sales departments are primary stakeholders, which means they are able to affect the possible outcomes of decisions directly (Harrison et al., 2010). So, these internal stakeholders can influence the decision-making process, and for this reason, more factors play a role than only an objective judgment of available information (Pepi, 2016).
During the decision-making process, there are many choices to be made. The decisions made here might influence the final implementation to a great extent (Mellahi & Wood, 2003). Since internal stakeholders have different interests and power, they may have different viewpoints for these choices. There are several ways in which an internal stakeholder can influence the decision-making process within a company. To analyze this, the decision-making process will be investigated based on the political behavior within the (pre)-implementation stage. Here, political behavior is defined as: ‘decisions emerge from a process in which decision-makers have different goals, forming agreements to achieve their goals in which the preferences of the most powerful prevail’ (Elbanna & Child, 2007, p.434)
Within this case, the sales and production departments are coalitions of internal stakeholders with competing interest. These stakeholders often have some conflicting and shared goals (Elbanna, 2006). Political behavior is often shown since every party wants to represent their interests (Mori, 2010). There are four types of political behavior with which a stakeholder can influence the decision process, in the table below they are described according to the classification of Mori (2010). Further, the constructs are defined based on several researchers. Within this research, the operationalization will be used to reveal the influence of power and influence on the decision making process using political behavior. Herewith, the operationalization of power, interest, and political behavior is the guide for empirical research.
Use of power ‘The use of power in pursuit of sectional interest, even to the point
where it contravenes organization or social rules’ (Child et al., 2010, p.4)
Coalition formation ‘The perception of shared affinity of interest and the feeling that an
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Individual interest ‘The heart of the political approach is the process by which conflict
is resolved among individuals with competing preferences’ (Eisenhardt and Zbaracki, 1992, p.23). Stakeholders have conflicting goals/own interests (Elbanna, 2006).
Negotiating ‘Negotiators begin by groping for a jointly agreeable formula that
will serve as a referent, provide a notion of justice, and define a common perception on which implementing details can be based’ (Zartman, 1977, p.619)
Table 1: Political behavior (Mori, 2010)
2.4 Conclusion and Research model
Within this chapter, the theoretical background of this research has been revealed. Due to increased technologies, companies nowadays can use inter-functional systems like ERP. These ERP systems can contribute to the overall performance of firms. However, the actual implementation has proven to be quite complicated. One primary reason for this lies in the socio-technical aspect, which is inherent to implementation. Since the system has to be incorporated throughout the firm, it influences firms’ structure and culture. Further, the first stages of this implementation within manufacturing companies require more analysis. Herewith, the socio-technical challenges make the influence of power and interest among internal stakeholders a valid topic.
The production and sales departments are coalitions of internal stakeholders who continually have to make trade-offs. Their targets are often opposing, and ERP systems can contribute to the integration of these departments. This research will identify who these players are at a specific company (1). Based on interviews with those involved, there will be further examined how these departments interact and behave during the implementation process (2). It is assumed that both parties will use their power and interest (3) to shape decisions in the pre-implementation process (4). These topics have resulted in the following research question, which also has been shortly introduced in the introduction:
‘To which extent are decision making processes in the (pre-)implementation stage of ERP systems affected by power and interest of internal stakeholders?’
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utilize their power and interest to influence the decision-making process. Also, internal stakeholders do not consider the interests of the entire company. However, they will determine whether the possible implementation will contribute to their personal interests during the implementation process. Further, there is assumed that communication between departments occurred during the decision making process. If both departments do not have a direct influence on each other during ERP (pre)-implementation, the assumption is made that constructs of power and interest can be measured within specific departments. These assumptions are graphically shown in figure 4.
The research question, combined with the proposed model, can be used to reveal the influence of underlying power and interest mechanisms on the pre-implementation of ERP systems at the production sales-interface. The following sub-questions will be structured around this model to validate this proposed influence:
1) Who were the active internal stakeholders at the production-sales interface?
2) How were the production and sales departments interacting before and during the first stage of implementation?
3) What were the power and interest positions of these departments before the ERP implementation took place?
4) How did the power and interest of departments influence the decision process regarding ERP implementation?
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that a positive effective decision-making process will result in a more effective ERP (pre)-implementation within manufacturing companies.
It is assumed that internal stakeholders within the production-sales interface have different roles, tasks, and responsibilities. As a result, the viewpoint regarding their interest in the ERP system might be different, and power might be used to promote their personal interest. Within this research, there will be observed how stakeholders negotiate and influence each other in the decision-making process regarding the implementation of ERP systems. There is expected that balancing power and interest in the production-sales interface will have a positive impact on the pre-implementation of ERP systems. Within this research, an in-depth case study is performed to confirm these assumptions. In the next chapter, the methodology of the study will be further elaborated.
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3. Research methodology
In order to answer the research question of this paper, a clear elaboration concerning the formulated sub-questions has to be provided. To do this in a structured manner, a research method has been developed. Within this chapter, the choices regarding the design, setting, and the instruments of the research method will be discussed, as well as the actual procedure and analysis of the data.
3.1 Research design
This study aims to gain more insight into the influence of power and interest of internal stakeholders on the decision-making process in the (pre)-implementation of ERP systems at manufacturing companies. When analyzing the research model and formulated questions, qualitative research has been identified as the most appropriate. Qualitative research can be broadly defined as ‘any type of research that yields findings that have not been obtained by statistical procedures or other quantification tools’ (Strauss & Corbin, 1990, p.17). Within this research, qualitative research can provide a certain explanation by understanding a specific situation and extrapolating it to other (comparable) situations (McCutcheon & Meredith, 1993).
More specifically, an in-depth case study is chosen as the most appropriate research design within this qualitative research. The research question is explorative in nature. In order to investigate the influence of power and interest in their natural setting, this design proved to be very applicable (Yin, 1994). Moreover, the relationship between the constructs are not completely clear within current literature, since there has barely been performed empirical research towards this topic (Ali & Miller, 2017; Benbasat et al., 1987; Jääskelainen & Pau, 2011; Karlsson, 2016).
Based on the phenomena under investigation, more researchers proved the effectiveness of an in-depth case study. The boundaries between power and interest are quite unclear in practice, and the influence of these constructs is often the result of underlying mechanisms. An in-depth case study can be used to improve the understanding of why certain stakeholders act like they do during and before the first steps of ERP (pre)-implementation (McCutcheon & Meredith, 1993; R. Yin, 1981). The research model, depicted in figure 4, was the starting point to understand the underlying mechanisms of power and interest and their influence on the decision making process.
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design, external validity will be better guaranteed. However, given the available resources, a single case study was assumed to be more appropriate. Since the duration of the study, and the number of companies open to cooperation was limited within this research, multiple case studies would lead to less depth to reveal the underlying mechanisms concerning power and interest (Voss et al., 2002). A trade-off between external validity and reliability had to be made here. Within the application of a single case study, the main challenge was a well-conducted research, to get both rigorous and relevant outcomes (Karlsson, 2016).
In order to get these rigorous and relevant outcomes, there will be elaborated on multiple aspects of the research method before the actual empirical part of the research. First, the main topics which should be covered by this study have been explained in the theoretical background. Second, the unit of analysis at the case level should be specified. Third, the internal stakeholders from whom information should be obtained is essential. Next, it is crucial to properly collect and analyze the statements of those individuals (Yin, 1981). When considering these aspects, an attempt was made to increase the validity and reliability of this case-study based. According to Yin (1994), four types, as described in the figure below, should be considered. Throughout the next sections, there will be elaborated on these aspects.
21 3.2 Research setting
In line with the research design, the empirical data gathering was crucial to answer the research questions. With this, the unit of analysis with respect to the empirical material can be described as the “who” or the “what” that is analyzed for this study’ (Trochim, 2006). As introduced in the previous section, an in-depth case study has been performed to shed a light on the influence of power and interest and its effects on the (pre)-implementation process within manufacturing companies. An empirical field with several requirements has been searched, to collect suitable data that fits both the research and the manufacturing industry.
First, the company must operate in a production environment. Second, it is a requirement that an ERP system has been implemented in the past five years or is now being implemented. Third, the company should focus on both production and commercialization. So, it should not be purely focused on production, but also sell and commercialize the produced goods. Finally, it should be possible to conduct online interviews. Due to the Corona-virus (COVID-19), company visits were not desirable, and therefore it was not possible to gather information at the location of the company under investigation.
The setting took place at the FoodCo1. Founded after a merger of many food-related cooperatives, this company is one of the world’s largest food-producing companies nowadays. Within FoodCo, a uniform ERP system will be implemented at all locations across the company. Since the company was created from various mergers, multiple locations worked with their individual systems for controlling inventory and production.
With the ‘United Project2’ of FoodCo, all locations are set up in the same way: through a
uniform SAP-ERP system. With the implementation of this system, coordination within a location, as well as between locations, is expected to be organized more efficiently. Where previously everyone used their individual programs and systems, it is expected that this uniform system makes the flow of information more feasible. The entire process might be managed more efficiently by implementing this uniform system.
Within FoodCo, the ERP Project Team was founded in September 2016. In a process that will take approximately four years, all the locations of FoodCo will be connected to the same ERP system. During the kick-off with someone of the project team, there was revealed that the implementation of the ERP started at commercial locations and then followed at production
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locations (see figure 6). Herewith, it became clear that during the implementations, production and commerce have a marginal influence on each other. Figure 6 shows an overview of this implementation sequence. Right now, all locations of FoodCo except ‘location x, are already using this uniform system. During the research, previous implementations and the pre-implementation of ‘location x,’ which is scheduled for January 2021, were analyzed.
Multiple employees of FoodCo were interviewed, each of whom have or had affected the implementation of ERP systems. During the implementation, these internal stakeholders had different roles and functions during different implementations-projects at FoodCo. Within the next section, there will be elaborated on the process of data gathering.
3.3 Data collection
Within qualitative research, two instruments are commonly used for data gathering: observations and interviews. Given the research questions and operationalization of the constructs, interviewing has been chosen as the best suiting instrument.
In order to conduct interviews, multiple interview partners have been selected who seemed suitable, given their role in the implementation process. In a kick-off meeting with a core project team members regarding the implementation of ERP systems across FoodCo, multiple internal stakeholders were identified that are affected by the (pre)-implementation of the ERP system. Further, the different roles of internal stakeholders in the implementation process, as well as the time planning of ERP implementation at FoodCo, were mapped. Hereafter, there has been identified which stakeholders are relevant and can be approached in the light of the research. These persons were contacted after approval from the management of FoodCo and are described in table 3.
# number Department (FC) Position Duration (min)
1 ERP core Project team Business Lead Finance 44:12
2 Former Employee - Supply
Chain Manager
Of the Initiators - ‘United Template’
22:32
Table 2: Kick-off meeting(s)
ERP Project Team FoodCo founded
Start project team and wave 1:
commerce Start of wave 2: production Start wave 3: production (2) Last ERP implementation: location x
September 2016 September 2017 September 2018 September 2019 January 2021
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# number Department (FC) Position Duration (min)
1 ERP core Project team Business Manager 32:50
2 ERP core Project team Business Lead Finance 32:12
3 ERP core Project team Change Manager 55:12
4 Production – location x Site planning and Logistics
Manager
40:52
5 Production – location y Project manager and ‘United’
teamlead
38:53
6 Production – Location z Manager Packing and
Warehousing
26:14
7 Commercial – Location a Project teamlead and
commercial controller
28:53
8 Commercial - Location b Project teamlead and
commercial controller
42:35
Table 3: List of interviewed internal stakeholders
After the involved stakeholders were identified, semi-structured interviews were conducted with each individual to gather relevant data. The interviews conducted are semi-structured. There are a number of fixed questions aligned with the research's operationalization, but there was room to delve deeper into certain topics. Per construct, questions have been included that can map out the effects of power and interest as assumed within the research model. Using these common sets of questions for each individual interview will improve the reliability of the research (Voss et al., 2002). Questions about the drafted concepts and relationships, were obtained from theory in literature and are shown in appendix 8.1.
There was chosen for interviews as the means of data collection for more reasons. This instrument has proven to be an effective tool for the operationalization of power and interest, as described in the theoretical background. Moreover, the perceptions and opinions of the internal stakeholders towards this complex phenomenon can be explored (Karlsson, 2016).
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taking notes, this had a valuable effect on the data analysis. The recording of the interviews was included in the case study protocol to inform participants (Voss et al., 2002; Yin, 1994).
Next to interviews, observations are often used for data gathering within qualitative research. However, within this case, it was expected that the operationalizations of the constructs would become difficult to measure through observations, because it does not provide the correct data for measuring these constructs (Strauss & Corbin, 1990). Further, observation as an additional triangulation option and support for statements made in interviews was not possible due to the Corona-virus. Table 3 shows the internal stakeholders who are or have been involved in the implementation of the SAP-ERP system at FoodCo. It was explicitly chosen to interview several people from the project team because they are involved in many implementations. Therefore there was expected that differences in the field of production and commercial could be well exposed.
Each interview followed the same structure. First, the position of the internal stakeholder within FoodCo was adequately mapped out. Subsequently, changes within the company due to ERP implementation were requested. After this, the interest and position of power of the stakeholder were explored. Finally, the decision-making process and the influence of the stakeholder on this decision-making process is elaborated. The interviews were conducted in Dutch, as this is the interviewee's native language. Research done by uniformly conducting interviews has a positive contribution to the reliability of the study (Yin, 1994). In the next section, there will be elaborated on the analyses of the data which is gathered.
3.4 Data analysis
The data gathered during semi-structured interviews had to be analyzed systemically to identify patterns and answer the formulated sub-questions. Three steps were followed during this analysis: the reduction of data, the display of data, and the conclusions on outcomes (Miles, M.B & Huberman, 1994; Strauss & Corbin, 1990).
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the article from Straus and Corbin (1990). The coding process is performed by using the computer software Excel.
During the process of open coding, parts of the transcripts were highlighted to gather relevant statements. During this process, the collected data of the interviews is broken down analytically. The purpose of this is to generate new insights by splitting up the texts in an initial division of categories. With this, relevant statements concerning the operationalization of power and interest have been searched for. After open codes have been applied to fragments of the transcripts, these codes are assigned to so-called axial codes. These axial codes are subcategories to which the previously rendered, open codes, are linked. This process ensures that previously made statements are bundled under core themes, to give guidance to individual statements. The last step in the data reduction process is the identification of selective codes. In this process, the collected categories (axial codes) are linked around a core of categories.
Within the transcripts of the interviews, there was searched for quotes that map and illustrated the power and interest of internal stakeholders within the production/sales interface. During this data reduction process, the aim was to generate selective codes that can be linked to the operationalization of the constructs. These selective codes tried to increase the generalizability of the statements from practice.
In figure 7, a (short) example of this coding process can be viewed. The further elaboration of the coding process can be found in Appendix 8.2.
After the reduction of data, these analyses were used to display the results in chapter four. Subsequently, conclusions have been drawn concerning the research questions in section five of this paper.
Interface Construct Operationalization Selective Code Axial Coding
Sales Interest Perception and
attitude
Ease of work Binding
agreements Production
/Sales
Interest Individual interest Ease of work Standardization
Production Interest Individual interest Ease of work Optimize
planning
Production Interest Perception and
attitude
Perceived support
Lack of awareness
Production Interest Individual interest Perceived
support
Legal capacity
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4. Findings
Within this chapter, the findings will be elaborated, and structured around the research model. These results have been formed using the interviews and the interpretations of this empirical data. First, there will be described how the implementation process is initiated, which stakeholders are involved, and how the decision-making process in the production/sales interface is designed (RQ1+RQ2). Subsequently, the other part of the research model will be analyzed based on the case study findings.
4.1 Overview of Implementation Process
4.1.1 ERP Implementation background
The board of the company FoodCo initiated the implementation processes of the ERP system. The company has grown significantly over the past eighty years through mergers of multiple companies. Different ERP systems were used in these companies, from which FoodCo originated and within various FoodCo locations. Directors and managers of FoodCo wanted more insights and control over the locations spread globally, but primarily represented in the Netherlands. Given the large number of locations and employees, a uniform system was considered crucial to accomplish this insight and control. According to one of the project managers on a production site: ‘it was the top priority at any location, the year implementation was planned’ (project manager location y). Herewith, the system’s importance was managed. The next section will briefly discuss the potential benefits of this uniform system, as introduced by the interviewees.
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company to organize both the supply chain and the operation on location more efficiently. These potential benefits show that a uniform ERP system was seen as a useful and crucial asset to integrate information flows.
4.1.2 Overview of internal stakeholders
Based on the research model- and questions, it was essential to identify individual stakeholders in the production/sales interface who influenced the pre-implementation of ERP systems in manufacturing companies. Literature showed that production and sales departments might have a different viewpoint concerning the implementation of ERP-systems (Boonstra, 2010; de Vries & Boonstra, 2012).
The kick-off meeting with a project member of the ERP ‘core-project’ team, focused on how the implementation was guided and who have been involved concerning implementation. During this kick-off, it emerged that an ERP Project team was set up in 2016 to guide the ‘United Project’ of FoodCo. The team members left their previous position and started working full time on the project to guide the implementation of ERP systems at all FoodCo locations. These implementations have been supported by a project location on each specific location. Besides, these team members regularly travel to particular locations to support implementations and to consult with project teams on site.
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4.1.3 Decision-making process – production/sales interface
This section discusses how the decision-making process in the (pre)-implementation has been structured within FoodCo. In section 4.2.3, there will be analyzed how power and interest affected this decision-making process within FoodCo. As mentioned, the core project team has been responsible for implementing SAP-ERP systems across all locations of FoodCo. Many of the decisions were made by the core project team. These choices were made based on the business case that applies to all of FoodCo locations. Within certain phases, some room for decentralized input at the locational level has been possible.
The core project team started, in general, a year and a half in advance for a specific location. The project team on location has been involved in the process a year before implementation. The core project team was leading in the steps that are taken and the decisions that were made. For each implementation, the project was mapped out in several phases. Within these phases, activities were described that must take place before entering the next phase. As the implementation approaches and there has already been partial testing of the system on location, this meeting occurred more frequently. The ‘change business leads’3, members of the project team on location, ensure that people within their team were informed about the core project team's actions and impact. Within each discipline on-site, there was daily contact about the precise execution of the implementation.
In addition to these centralized choices, decentralized input was possible. Within each phase, two types of internal stakeholder groups were able to influence the core project team: the technical consultants and the project team on location. In practice, for example, within a specific
3 See previous page, for the explanation of this term
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discipline, a discrepancy may arise between the uniform template and reality: these discrepancies are defined as ‘GAPS’ within FoodCo. An example of such a difference between reality and the uniform template emerged within sales. Inside sales (from FoodCo location x to FoodCo location y) were not taken into account in the uniform template. These inside sales had to be included according to the sales location. This GAP was then discussed in meetings with the Core project team. These meetings took place between the core project team and the’ change business leads of a specific location’. In this process, discussions have arisen about the perceived proposed changes: ‘Perceived advantages and disadvantages are central here: does it yield a cost advantage? Does it provide a quality advantage? Does it reduce the chance of errors’?
Further, the relationship and interaction between production and sales within the decision-making process became apparent during the interviews with the core project team: ‘Our implementations are separated. The commercial side went live two years ago, and the production locations went later. The production and commercial departments are not much related. The commercial departments are responsible for the sales of products. Hereafter, these orders are places in the planning of the production sites, which produces them. However, the interaction between the two parties is minimal’.
This separation was also indicated by both production- and sales locations. The finance ‘change business lead’ of the project team at a sales location recognized: ‘In the case study protocol, you talk about contradictions between production and commerce. These contradictions are difficult for us to indicate, but I do not immediately see this phenomenon in practice. Perhaps this is also difficult to indicate because production is still in the (pre)-implementation phase’. Moreover, these findings were confirmed by employees at production locations: ‘What you see is that we have few direct links with commerce. However, it is better to put a customer's question in a system. This gives us better insight into what we have to produce. If we have to produce more or less, we see demand decreasing somewhere. The ERP system has improved these insights. However, the relationship will not necessarily change with the system’.
30 4.2 Influence of power and interest
Chapter 4.1 has described the potential benefits that the ERP system can have for FoodCo, which stakeholders were involved in the making process, and how this decision-making process was organized within the production/sales interface. These outcomes are in line with the first two sub-questions of the research model (figure 4). This chapter (chapter 4.2) will elaborate on more details of the research model. Within this section, subquestions three and four will be covered. The power and interest positions of the internal stakeholders will be elaborated on first. These findings will have a descriptive character (RQ3). After this, the constructs of power and interest will be analyzed. Further, a casual map has been used to analyze how these constructs affected the early stages of the decision-making process within FoodCo (RQ4).
4.2.1 Descriptive: Interest of internal stakeholders at FoodCo
During this section, the interest of internal stakeholders within sales locations will be discussed first. Hereafter, a light will be shed on the production locations. The individual interest of employees who are responsible for the customer relationship is, in general, perceived as low: ‘Sales managers within the company have one goal: making profitable deals with customers and ensuring a good relationship with these customers.’ This little perceived interest is further elaborated by the change manager of the ERP project: ‘Sales managers do think in bonuses, turnover, and margins. The awareness of such an implementation is not always present’. The lack of awareness also has to do with the fact that sales managers were leaving the administration to assistants. At this moment, they are not experiencing the potential benefits of the system. For this reason, the initial participation of sales managers in the process is minimal.
The perception and attitude of internal stakeholders are in line with these individual tasks. When personal goals do not match the system's intention, the attitude and affinity toward implementation are often more passive since the direct experienced support is minimal: ‘80% of these salespeople have no affinity with ERP and do not want to look into it either.’ However, the perceived interest of assistants and other administrative jobs within sales departments seems predominantly high: ‘the system will improve efficiency as everyone works with the same systems and requires much less manual work to exchange information’.
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Everything is mapped and signed off within the system. If there are changes in volume and prices, this is immediately visible. In the past, a manager could get away with this or make up an excuse, but now that is no longer possible if it turns out to be disappointing’.
According to the ERP core project team manager, thestandardization might also bring benefits for the sales departments. The most significant potential advantage for sales is that tasks are better separated. It becomes clearer who should do what concerning customers: 'For commerce, it is enforced who takes on which tasks. What does the sales manager do, what does the sales supporter do, what does the order fulfillment officer do? Tasks and responsibilities are better separated.’
Contrary to commercial managers, who think: 'Bother me as little as possible', the production managers are very uniform in their assessment of the introduced ERP system. ‘I really only see the benefits of this uniform system’. Another production manager further elaborates this statement; they really needed this system because: ‘It has helped me personally to make my location a bit more professional. We were really ready to use this system’.
Concerning production locations, the influence of ERP on the ease of work also emerges during the interviews. Within the production department, the impact of the ERP implementation on ease of work was felt. The managers within the sites are very pleased with the standardization that the system provides: ‘All ERP systems within FoodCo will be linked together, so that information between different locations and within the location is immediately visible. In the past, Excel sheets were used between these locations’. A direct (potential) benefit of this is the optimization of planning, within and between locations: ‘Much production is currently being done with the availability of safety stocks. We will soon be working in a system-driven manner, and that will be less necessary’.
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Despite these contradictions, significant benefits are expected to implementation, for the organization as a whole. All locations have the same goal, and that goal is leading in the implementation. Due to standardization, the amount of risks is expected to be reduced. For example, the inventory value will decrease, partly due to the reduction of safety stocks. Besides, it appears that the risk of errors is many times lower because there is much less manual work.
The efficiency is expected to increase significantly if all locations are connected to the same uniform system: ‘There already have been worked with versions of SAP-systems within the locations, so most employees were already used to it. However, the new system will allow everyone to work with the same system, which will allow communication to run more efficiently’. According to the core project manager, both commercial and production departments will benefit from this system: ‘Through this system, we link sales and production very well. We do not want salespeople to go to the factory and ask for an extra snare, or can we run an extra batch. This system well separates it’.
In order to make all the internal stakeholders aware of the expected usefulness of the implementation, it has been contractually defined within each location as the biggest priority of the year: ‘Within the personal targets for the specific year that ERP will be implemented, the moment SAP goes live is the most important. This is clearly managed within FoodCo’.
The next section will describe how power is distributed within FoodCo. After this, the interest and power constructs will be analyzed in more depth in section 4.2.3.
4.2.2 Descriptive: Power of internal stakeholders at FoodCo
Within this section power, the separation between production locations and sales locations will not be that evident as it was in the previous section. However, the comparison is made between project teams on site and the core project team because differences in power are expected to be reflected more clearly by doing this.
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manager of the project manager of the core project team, but I think I can make a good trade-off between the interests of FoodCo and the interest of an individual location (production or sales).’
Each respondent was asked about the perceived influence that he/she could express on the decision-making process. The question was asked for a number, on a scale from 1 to 5. The employee who was highest in the hierarchy of the project gave himself 'only' a 3.5. The manager of the entire ERP project within FoodCo gave himself 'only' a 3.5, which has to do with the standardization (the ‘potential’ big benefit) that the uniform ERP system potentially brings. FoodCo tries to achieve this standardization by rolling out a uniform template across all its locations. The core project team manager elaborated on the importance of uniformity and the limited influence of internal stakeholders: ‘The ERP system runs worldwide. So if we are going to change something somewhere, it has to be adjusted and rolled out worldwide’.
The parts of the system that can be partly changed is mostly influenced by internal stakeholders who have functional input related to this change. The previously mentioned GAPS are the basis for this functional-specific influence. An example was given within a commercial location: ‘For commerce, there were certain things that had not been thought about -- For example, selling FoodCo products to other FoodCo locations. You can participate in this area from the business side, and you can influence the decisions in this case.’ According to the core project team manager, ‘your arguments must be very strong in this case’ .
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4.2.3 Analyze – Power, interest and influence on the decision-making process
The first three sub-questions of the research model have been discussed within the first sections of the findings. There has been described who the active internal stakeholders in the production /sales interface are, how the decision-making process was shaped, and which factors have affected the power and interest of internal stakeholders within FoodCo.
The last part of the findings will analyze how the power and interest of internal stakeholders from the production-sales interface have influenced the decision-making process. At this point, the power and interest constructs are analyzed and related to the decision process at FoodCo. The research model, shown in figure 4, has been the starting point for this analysis. Further, a casual map has been used to tie all the findings together. This casual map is illustrated below (figure 9).As a result, a well-founded analysis has been conducted within this section.
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decentralized level (both a negative and positive effect, depending on interest). Despite these contradictions, the importance and expected benefits of implementation are supported throughout the organization. All internal stakeholders know that the system will be implemented, and they have to work with it.
Empirical material has shown that internal stakeholders, in both the production and commercial locations, have the same role within the decision-making process. From a formal point of view, stakeholders from both production and commercial locations are equally empowered to influence the decision-making process. The decision-making process is structured in the same way in both cases. The choices regarding implementation are mainly taken at the overarching level by the ‘core project team’. The steps to be considered are distributed uniformly across all locations to ensure standardization. According to one of the project team members on a commercial site: ‘It was obvious. We knew this is coming and we have to do it. It is not that you can say either; no, we do not want this. It is on the agenda, and everyone has to contribute. Within sales, but also in marketing and project teams: everyone gets the same goals’.
Overall, it became clear during this analysis that the hierarchical structure within the implementation process is evident. It is critical for the amount of power the internal stakeholders within the production-sales interface can exert in the decision-making process. The reason for this strict hierarchy is the uniform template which FoodCo would like to implement across all locations. Consequently, the influence of individual stakeholders' power on the decision-making process is minimal, as expressed by a commercial project member: ‘For eighty percent you have to go along with the implementation plan and the layout. That is what the rest of FoodCo is on, and that is non-negotiable, not to be discussed, that has been laid down, and you have to get involved.’
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For decentralized input, the previously introduced GAPS are brought up in meetings to reach decisions. These GAPS are retrieved from the first validation session (The decision-making on location starts with a validation session on this site: ‘Here it is validated whether current production or sales processes can work with it. If this is not the case, arguments from a production or sales factory are considered as part of what goes wrong if they cannot work with it.’). Also, these GAPS can come op during the process of (pre)-implementation. As can be retrieved from the casual map, making these GAPS known contributes to the decentralized input from the locational level into the decision-making process. The input concerning these GAPS is communicated by the team leads of a project team on location to the core project team. Then, possible improvements are translated to ‘the United Template’, if accepted.
However, these gaps must be well-argued if plans are to change. According to one of the project members at a commercial location: 'They (core project team) are settled on one thing, finishing the project. They want as little personal wish list as possible from the business’. Furthermore, it is also decided from the top of the hierarchy whether a submitted 'change' takes place: 'You may bring in certain changes, and that is brought all the way up and then approved or rejected. You indicate where priority is given from the business; the core project team then assesses this’. Every other week there is a meeting between the core project team, the on-site project team representatives and the external consultants. The progress is discussed here. However, standardization means, in general, that there is little input from project teams at location: ‘A change at the location level means that an adjustment to the system has to be made all over the world,’ as mentioned by the core project team's manager. The dominant mechanism, which leads to the central core team guiding decisions and minimizing decentralized input, is in line with this.
Due to this minimal input on the locational level, the informal power of these internal stakeholders should be taken seriously; if internal stakeholders do not feel interested, they may be able to use their informal power if possible. This negative formal power can increase or decrease the chance of successful ERP-implementation at FoodCo, as depicted in figure 9.
