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THESIS MSC.SUPPLY CHAIN MANAGEMENT
FACULTY OF ECONOMICS AND BUSINESS:DEPT. OF OPERATIONS MANAGEMENT
UNIVERSITY OF GRONINGEN
ERP
S
YSTEM
I
MPLEMENTATIONS
:
T
HE
I
MPACT
O
F
E
XTERNAL
C
ONSULTANTS
AUTHOR: Niels Arends SUPERVISORS: Prof. Dr. J. de Vries
Abstract
This research examines the role of external consultants in ERP system implementations. More specific, the research assesses how professional skills of ERP consultants contribute to the success of an ERP system implementation within large and private sector organizations. By means of extensive literature analysis and several expert interviews the research found a set of dominant consultancy competencies contributing to successful ERP implementations. Those competencies include communication skills, time management skills, ability to work under pressure, assertiveness, business knowledge and savvy and technical competency. These characteristics are found to specially benefit ERP implementations in large private sector organizations. On the contrary, no indications were found that SME’s and/or public organizations will benefit these characteristics differently. At last, the study proposes several suggestions for future research.
Table of content
Abstract
1. Introduction 1
2. Literature Review 3
2.1 ERP systems 3
2.2 External ERP consultancy 6
2.3 Client firm 8
2.4 Research framework 11
2.5 Schematic literature review 16
3. Methodology 18
3.1 Research process, philosophy, approach and design 18
3.2 Data collection methods 21
3.3 Data analysis 23
4. Research Findings 24
4.1 Literature analysis finding 24
4.2 Primary data findings 29
5. Discussion and Analysis 32
5.1 Important skills and roles for external ERP consultants 32 5.2 Differences between private and public sector organizations: impact on ERP
implementation 33
5.3 Effects of enterprise size on ERP implementation 34
5.4 The enhancement of professional skills in ERP implementations 35
5.5 Conclusions 36
6. Conclusion 38
6.1 Sub conclusions 38
6.2 Managerial implications 39
6.3 Limitations of the study 40
6.4 Scope for the future research 40
7. References 42
Table and figure index
Table 1: Role distinctions 6
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Table 2: Consultation role 13
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Table 3: Consultant characteristics 14
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Table 4: Client firms’ characteristics 14
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Table 5: ERP system literature 16
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Table 6: Project management literature 17
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Table 7: External consultancy literature 17
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Table 8: External ERP consultancy literature 17
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Table 9: Keywords 21
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Table 10: Major themes within ERP literature 24
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Table 11: ERP implementation CSF's 26
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Table 12: Key players in ERP implementations 27
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Table 13: Skills important for external consultants 27
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Table 14: Main differences between public and private sector organizations 28
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Table 15: Interviewee details 61
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Figure 1: Research framework (adopted from Jang and Lee (1998)) 12
1. Introduction
implementation models can be developed, with as ultimate goal, to decrease ERP system implementation failure rates.
In accordance to above discussed relevance, the following research question, and accompanying sub-research questions were constructed:
“How do professional characteristics of external ERP consultants affect ERP system implementations in large, private sector business organizations?”
The research question specifically focuses on large and private sector businesses. The literature review will further elaborate on these variables and the motivations for adopting those. The accompanying sub-research questions are:
• What are the most important skills to be possessed, and roles to be taken on by external ERP consultants for an effective ERP system implementation?
• What are the main differences between private and public sector organizations and what are the implications of these differences on ERP system implementation? • What are the main differences between SME’s and large enterprises and what are the
implications of these differences on ERP system implementation?
• What are the ways of enhancing personality skills of external ERP consultants to increase the effectiveness of ERP system implementation in private sector?
2. Literature Review
This chapter will review most important literature following logically from the research questions. First literature about ERP systems, their effectiveness, its implementation, its key players and its implications will be reviewed. Subsequently the roles and competencies of the consultant are considered. Thereafter, firm size and sector and their capacity to obtain knowledge will be discussed. At last, the research framework, and a schematic overview of all regarded articles will be presented.
2.1 ERP systems
ERP systems originate from the in the 1950’s developed: Material Requirement Planning (MRP) software. This software was created to more efficiently order required materials for a production process (Klaus et al., 2000). Through further development of the MRP software, first MRP II and later the ERP systems were introduced. The new software entailed new functionalities like sales planning, human resource management, finance and distribution. Nowadays total integrated business software programs have been introduced (Klaus et al., 2000). Basically, all company data is saved the moment it is generated, centrally stored and updated real time. Taken together, the company-wide application facilitates governance of the firm; comprehensive information where to managers can base their business decisions upon (Hendricks, Singhal and Stratmann, 2007). Markus and Tanis (2000) state that the integration of Supply Chain Management data, Human Resource Management data, Customer Relation Management data and Financial Management data into a single storage, that can be assessed in order to “enhance business performance, financial predictability, productivity and decision making” (Kähkönen, Maglyas and Smolander, 2014: p.1) can be considered an ERP system.
Benefits
innovative operational practices (Al-Mashari, Al-Maimigh and Zairi, 2003; Chen, Law and Yang, 2009). Many authors, in accordance researched whether (and to what extent) ERP implementations actually contribute to the organizations’ performance. Hitt, Wu and Zhou (2002) for example conducted a research assessing multi-year implementation and financial data (consisting of 24’000 firm-years). This research clearly confirmed that “ERP adopters are consistently higher in performance across a wide variety of measures than non-adopters” (p. 93). With Hitt et al., (2002) many more research shows evidence for the increase in operational performance (Cottelleer, 2006; Mabert et al., 2000; McAfee, 2002; Poston and Grabski, 2001). Hendricks et al. (2007) likewise assess the impact of an ERP implementation on the organizations performance. They however are less positive regarding ERP’s after-implementation performance gains, as they could not find statistical evidence to attribute performance improvement to ERP implementations. Scientific literature delved deeper into this imparity and Madapusi and D’Souza (2012) suggest that this imparity is caused by the variable statuses of an ERP implementation. As mentioned in the introduction, because of a wide variety of reasons (e.g.: Pan, Newel, Huang and Cheung, 2001), many organizations today still fail to successfully implement an ERP system (Chen, Law and Yang, 2009; Panorama, 2015), and this research considers an ERP implementation failed when the system does not provide a proportional potential of its promised improvement (Davenport, 1998; Umble, Haft and Umble, 2003).
Key players
2.2 External ERP consultancy
IT consulting now yields the largest revenue stream of all management consultancies areas (O’Mahoney and Markham, 2013). Other than the name ‘IT consultancy’ implies, advisory is focused on the business because the main reason for ERP implementations to fail is because of business related issues. “They fail to specify and control what they (: client firm) want” (O’Mahoney and Markham, 2013, p. 62).
Roles
Within consultancy projects, consultants take on different roles. Both professional as scientific literature about the role of an ERP consultant will be examined. O’Mahoney and Markham (2013) describe seven different IT consultancy roles. They hereby mention that it is likely and desirable to simultaneously adopt various roles. Nees and Greiner (1986) similarly discussed different consultancy roles. The segmentation they present however emphasizes on general consultants within project management. Since our research clearly considers the interaction between consultancy and ERP implementations from a consultants’ perspective, rather than from an ERP implementing firm, and since consultants will thus lead the implementation project, this framework seems appropriate to discuss and adopt. In addition, professional literature likewise distinguished several consultancy roles. Microsoft Dynamics, an ERP system developer distinguishes five different consultancy roles, within their “sure step methodology” and can be used as a guideline towards a successful ‘Dynamics’ implementation (Mircosoft Dynamics, 2006). Because the three segmentations presented above originate from three different but all relevant areas of research (academic consultancy, academic ERP implementation and professional literature) they complement each other. The three role distributions have been analyzed and as adequate, and appropriate as possible been merged. The merge of these roles lead to a widely applicable distinction. Each specific interpretation can be found within appendix 1.
O’Mahoney & Markham (2013) Nees & Greiner (1986) MS Dynamics (2006)
Business owner/product man. Mental Adventurer Project Manager
Project Manager Strategic Navigator Engagement Manager
Business Analyst Management Physician Application Consultant
System Analyst System Architect Development Consultant
Technical Architect Friendly Co-Pilot Technology Consultant
System Architect Coder
Competencies
needs – their whole system – IT professionals can act as “problem solvers” by using both their business skills as their IT-capabilities (Basselier & Benbasat, 2004). Last mentioned skill is not necessarily an initial requirement to successfully implement. However this skill emphasizes on the consultants’ ability to ‘along the way’, make adjustments and redirect the implementations.
2.3 Client firm
The research question entails a specific orientation to the type of organization in which this study will look for answers. Large and private sector businesses are a focus of our research. Furthermore, as client firms and ERP implementations are inextricable, this paragraph presents an overview of client characteristics affecting ERP implementations.
Firm size
ERP systems have widely proven their importance as a strategic tool (Davies and Garcia-Sierra, 1999; Soliman and Janz, 2004). For example, CRM tools embedded in ERP software facilitate excellent tracking information over customers (Zheng et al., 2002), which in turn enhances the firms’ capability to serve its customers more effectively. However, the implementation of ERP systems is expensive because of adjustments of protocols, standards and hardware, and costs regarding external advisory and switching costs (Soliman and Janz, 2004). Small organizations typically have “negligible buying power, limited access to resources and information, compromised in-house IT experience, and a short-range perspectives” (Burpitt and Rondinelli, 2000; Davies and Garcia-Sierra, 1999 in: Levenburg, 2005, p.95). Besides, it is argued that because of limited access to formal sources of external finance, SME’s are constrained to growth (Beck and Demirguc-Kunt, 2006). Much research has been done in order to identify specific differences between SME’s and large organizations regarding IT adoption, integration and ERP benefits (Daniel and Grimshaw, 2002; Esteves, 2009; Turner, Ledwith and Kelly, 2009). Furthermore Hsin and Ching-Fang (2005) conclude that generously available IS integration literature regarding large enterprises cannot be generalized for SME’s due their different nature and characteristics. Therefore our research distinguishes large organizations and SME’s.
to this research. The definition considers small enterprises to have fifty or less employees whereas their turnover will not exceed EUR 10 million (OECD, 2005). On the contrary, this research considers all businesses larger, in terms of turnover or employees as ‘large’.
Sector: Private and public
Furthermore this research focuses on private company organizations. Namely, the fact that culture of public and private organizations greatly differs from each other has certain implications for its ERP implementation process (Wagner and Antonucci, 2004). Among others, political structures, the values that are internally identified as rewarding and organizational commitment, is very different for the two types of organization (Lyons, Duxbury and Higgins, 2006; Van der Wal, De Graaf and Lasthuizen, 2008; Blick et al., 2000; Houston, 2000; Perry and Rainey, 1988; Rainey and Bozeman, 2000). “The public sector project team composition, tends to be quite different in order to accommodate representation from the many departments and divisions” (Wagner and Antonucci, 2004, p.4). Therefore it is appropriate distinguish those two types of organization. This research chooses to focus on private organizations because of their more dominant market positioning, thereby contributing to the practical relevance of this research.
Knowledge transfer
Following from client firm characteristics that influence a consultancy project, Wang and Chen (2006) argue that information and knowledge sharing between sender (consultant) and recipient (client) is paramount for ERP implementations. Through sharing of information and knowledge a more solid and therefore more valuable relationship between a consultant and its client can be build. Hereupon, the implementation project in a later phase can fall back (Ford, 1985). Basically, initially a knowledge-gap between two the parties exists (Ko, 2014), whereas the transfer of knowledge is the main objective. Ko et al. (2005) extensively researched competencies enabling effective knowledge transfer. Since this research was published it is considered leading within the Knowledge Transfer literature. In his research, knowledge transfer is defined as: “the communication of knowledge from a source so that it is learned and applied by a recipient” (Ko et al., 2005, p.62).
recipient to recognize the importance and value of externally sources knowledge, assimilate it, and apply it” (Ko et al., 2005, p.64; Cohen and Levinthal, 1990). This is considered a function of the knowledge of the recipient prior to the consultancy process. Third factor is ‘motivational’ and is considered the amount of ‘shared understanding’ between consultant and client. It is defined as “the extent to which the work values, norms, philosophy, problem solving approaches, and prior work experience of a dyad are similar” (Ko et al., 2005, p.64; Gerwin and Moffat, 1997; Nelson and Cooprider, 1996). Because such shared understand diminishes barriers to understanding and acceptance between a consultant and client (Krauss and Fussell, 1990) it contributes to an effective transfer of knowledge. Within the third main group of influencing factors; ‘motivational factors’, both the recipient and source intrinsic motivation to respectively receive and transfer knowledge positively influences the transferring of knowledge. In this context, intrinsic motivation is a form of motivation triggered by a person that will be directly satisfied by that action. Intrinsic motivations appears when “an activity is valued for its own sake and appears to be self-sustained” (Calder and Staw, 1975, p.599). In conclusion, the factors discussed here above positively influence the flow of knowledge transfer between a source and a recipient (Ko et al., 2005). This relationship entails a consultant-client relationship (Ko et al, 2005) and therefore will be used to complement the constructs in a later presented conceptual model.
Success-implementations
are still considered a success (and vice versa), other criteria of success were introduced in project management theory (Shenhar, Dvir, Guth, Lechler, Panatakul and Poli, 2005). Those criteria are: ‘client satisfaction’, ‘realization of client’s strategic objectives’, ‘satisfaction of end-users’ and ‘satisfaction of other stakeholders’ (Ika, 2009).
2.4 Research framework
In order to capture all variables and later examine how they will have an influence on ERP implementation success, a model is adopted. This model will serve as research framework in which all operationalized variables will be presented.
In research of Jang and Lee (1998), misalignment and misunderstanding between external management consultants and their clients within project management was identified. Clients asserted that consultants lack specific knowledge, objectivity and fail to meet the client’s expectations. Consultants in turn claimed that they do not receive support of top management while they are engaging the company (Zeira and Avedisian, 1989). The misunderstanding between both parties led Jang and Lee (1998) to conclude that “this situation points out the lack of knowledge by both the client and the consultant about what it takes to implement successfully their work in a complex environment” (p. 67). Their study therefore aims to identify how consultancy services contribute to project management success.
Original model
The model applied to the ‘ERP implementation’ practice is here presented. The two patterns behind the ‘ERP implementation success’ variable stand for large and private sector organizations. The research continues by shortly explaining all four variables.
Figure 1: Research framework (adopted from Jang and Lee (1998))
ERP!implementation! success! Consultants’!competencies!
Consultation role
The mode in which a consultant executes a project depends on the project specifics. Certain projects require other ‘consultants’ than other projects. However, other implementation projects require all roles at the same time. A consultant is therefore able to take on different roles, depending on what is needed. However, not all consultancy firms, and therefore consultants can bring all different types of required consultancy roles. At one point a decision must be made whereupon the emphasize will be placed (Nees and Greiner, 1986). The merged role distribution is here presented. The different roles will be examined in order to see how, to what extent they contribute to a successful ERP implementation. The appendix may be consulted to see how the roles were merged in order to come to the following segmentation.
Consultants’ competencies
The earlier presented consultancy skills and competencies will now be summarized in order to complement the study’s research framework.
At first, technical skills with ERP consultants have broadly been identified as a great contributor to successful ERP implementations. Technical consultancy skills will be defined as follows: “knowledge of a variety of technologies, including ERP systems” (Metrejean and Stocks, 2011, p.8). Subsequently experience with ERP implementations was identified as an enabler of ERP implementation-project success, whereas experience will be defined as: “whether the consultants has been involved in ERP implementations and similarity of previous implementations” (Metrejean and Stocks, 2011, p.8). Consequently, for several reasons a consultants’ communicative skill is put forward as positively contributing to an ERP implementation project’s success. Communicative skill in this context is defined as: “being able to anticipate concerns and respond sensitively to needs and expectations” of the client (Djavanshir and Agresti, 2007, p.46). At last, a consultants’ skill to identify complications and along the way modify and adjust the implementation activities is called ‘understanding, sense and adjustability’ and will be defined as: “the language needed to
Consultation role Description
Business analyst Planning the project; keeping overview over the different sub-processes; consultations with client to identify goals and objectives and directs the implementation process. Project manager Communicate supportive and administrative activities to clients; be the link between
consultant and client throughout the process.
System architect Design and write the technology solution, furthermore they adjust configurations and integration of business processes.
Technology consultant Controls high-level system-design and project mapping, ensuring the implementation is indeed light, logical and efficient. Furthermore he assesses whether the project has met the objectives/requirements and if the software was rightly installed.
communicate with and understand their clients” (Basselier & Benbasat, 2004, p.674). Thereby IT consultants enable participation in important organizations decision-making processes (Basselier & Benbasat, 2004). In conclusion, the variable ‘competence of consultants’ consists of the following constructs.
Client firms’ characteristics
By means of the earlier identified factors enhancing knowledge transfer, the variables will here be constructed and presented. Regarding communicational factors Ko et al. (2005) found that the more a recipient finds its source reliable, the more transfer of knowledge will occur. Translating this to a client-perspective characteristic enhancing transfer of knowledge, the ‘clients trustfulness’ positively affects knowledge transfer. Regarding knowledge factors, the absorptive capacity of a client positively contributes to extent knowledge is effectively transferred and therefore, a ‘clients’ absorptive capacity’ enhances this process. Likewise ‘shared understanding’ of work principles enhances knowledge transfer. Converting this to a clients’ perspective, we derive ‘understanding of a consultants’ work values, norms, philosophy, problem solving approaches, and prior work experience’ as positively influencing knowledge transfer. At last, among the motivational factors, Ko et al. (2005) identified ‘intrinsic motivation of the recipient’ positively contributes knowledge transfer. We therefore adopt this as the final construct. In conclusion, the variable ‘Client firms’ Characteristics’ consists of the following constructs.
Skills Description
Technical skills The extent to which the consultant has extensive knowledge and deep understanding of the workings of a variety of technologies of the potential ERP system.
Level of experience The extent to which the consultant has been involved in ERP implementations before and the similarity of these previous implementations.
Communication skills The extent to which the consultant is able to anticipate concerns, proactively discusses those, and to which he responds sensitively to needs and expectations of the client. Understanding, sense
and adjustability
The extent to which the consultant speaks the language needed to communicate, is congenial, and understands its clients.
Table 3: Consultant competencies
Client firms’ characteristics
Description
Clients trustfulness The extent to which a recipient perceives a source to be trustworthy and an expert Client’s absorptive
capacity
The ability of a recipient to recognize the importance and value of externally sources knowledge, assimilate it, and apply it.
Understanding of a consultants
The extent to which the work values, norms, philosophy, problem solving approaches, and prior work experience of the dyad are similar.
Intrinsic motivation of the recipient
A side note to the abovementioned variable ‘Client firms’ characteristics’ and accompanying constructs, this research assumes that the transferal of knowledge from consultants to the client always positively contributes to the implementations’ success.
ERP implementation success
The authors adopt the measures that were identified as being an appropriate measures for success. Therefore this research defines management consultancy success at five dimensions: 1) the extent to which objective concerning time and 2) costs have been exceeded or achieved, 3) end-user and 4) stakeholder satisfaction has been realized and the extent to which 5) strategic objectives have been realized (figure 2).
Realization!of! strategic!objectives! Ti m e! Cost s! Satisfa ction!o f! end>us er! Satis factio n!of! othe r!stakeh olders!
2.5 Schematic literature review
The following table is presented in order to create a reference point. The table schematically presents all considered literature. The literature consists of 100 articles total, of which 52 ERP systems related articles, 17 client-firm related articles, 26 consultancy articles and at last, 5 project management related articles. Moreover, analysis of this literature, in combination with the expert interviews is used to establish the research findings.
Table 5: ERP system literature
Topic Sub-topic Author Journal
ERP systems
CSF's Akkermans & Van Helden (2002) European Jrnl of Information System Al-Mashari, Al-Mudimigh, & Zairi (2003) European Jrnl of operational research Bingi, Sharma, & Godla (1999) IS Management
Ehie & Madsen (2005) Computers in Industry
Finney & Corbett (2007) Business Process Management Jrnl Fui-Hoon Nah, Lee-Shang Lau & Kuang, (2001) Business process management Jrnl
Holland & Light (1999) IEEE software
Jarrar, Al-Mudimigh & Zairi (2000) European Centre for Total Quality Management Nah, Zuckweiler & Lee-Shang Lau (2003) Int Jrnl of Human-Computer Interaction Ram, Corkindale, & Wu (2013) Int Jrnl of Production Economics
Somers & Nelson (2001) Proceedings of the 34th Annual Hawaii Int Conf*** Umble, Haft & Umble (2003) European Jrnl of operational research
Implemen-tation
Aladwani (2001) Business Process management Jrnl
Amid, Moalagh & Ravasan (2012) Information Systems Amoako-Gyampah & Salam (2004) Information and Management Benjamin & Levinson (1993) Sloan Management Review
Boonstra (2006) Int Jrnl of Project Management
Chen, Law & Yang (2009) IEEE Transactions Hossain & Shakir (2001) Jrnl of Decision Systems
Kansal (2007) Contemporary management research
Law & Ngai (2007) Information & Management Mabert, Soni & Venkataramanan (2003) European Jrnl of operational research
Markus & Tanis (2000) Framing the domains of IT research: Glimpsing the future through the past*
Motwani, Mirchandani, Madan & Gunasekaran (2003) Int Jrnl of Production Economics Reich & Benbasat (2000) MIS quarterly
Sumner (2000) Jrnl of Information technology
Thong, Yap & Raman (1996) Information Systems Research
Characteris tics, effect and implica-tions
Aladwani (1998) Proceedings of the 9th IRMA Conf***
Aladwani (1999) Industrial Management & Data Systems Cotteleer (2002) Harvard Business School Working Knowledge
Davenport (1998) Harvard business review
Gable, Scott & Davenport (1998) 9th Australasian Conf on Information Systems*** Gable, Sedera & Chan (2003) ICIS 2003 Proceedings***
Helo, Anussornnitisarn & Phusavat (2008) Industrial Management and Data Systems Hendricks, Singhal & Stratman (2007) Jrnl of Operations Management Hitt, Wu & Zhou (2002) Jrnl of Management Information Systems Kähkönen, Maglyas & Smolander (2014) Enterprise Information Systems Klaus, Rosemann & Gable (2000) Information systems frontiers Madapusi & D'Souza (2012) Int Jrnl of Information Management
McAfee (1999) Presentation at Wharton Supply Chain Conf***
McAfee (2002) Production and operations management
Pan, Newel, Huang & Cheung (2001) Twenty Second Int Conf on Information Systems Poston & Grabski (2001) Int Jrnl of Accounting Information Systems Wang & Chen (2006) Decision Support Systems
Others Bajwa, Rai & Brennan (1998) Decision Support Systems Dezdar & Ainin (2011) Management Decision
Ke & Wei (2008) Decision Support Systems
Mabert, Soni & Venkataramanan (2000) Production and Inventory Management Jrnl Nelson & Cooprider (1996) MIS quarterly
Table 6: Project management literature Project manage-ment Success criteria
Atkinson (1999) Int Jrnl of project management
Ika (2009) Project Management Jrnl
Jang & Lee (1998) Int Jrnl of Project Management
Oisen (1971) Project Management Quarterly
Westerveld (2003) Int Jrnl of Project Management
Table 7: External consultancy literature Table 8: External ERP consultancy
literature
Table 8: Client firm literature
External ERP con-sultancy
Roles Chang, Wang, Jiang & Klein (2013) Jrnl of Systems and Software
Metrejean & Stocks (2011) Academy of Information and Management Sciences Jrnl Microsoft Dynamics (2009) Official Microsoft Website **
Nees & Greiner (1986) Organizational Dynamics O'Mahoney & Markham (2013) Management consultancy* Zeira & Avedisian (1989) Organizational Dynamics
Compe-tences
Bassellier & Benbasat (2004) MIS quarterly
Appelbaum & Steed (2005) Jrnl of management development Basselier & Benbasat (2004) MIS quarterly
Djavanshir & Agresti (2007) IT professional Monge, Bachman, Dillard & Eisenberg (1982) Communication yearbook
Schwartz (1998) Beyond computing
Shenhar, Dvir, Guth, Lechler, Panatakul, Poli (2005) Project strategy: The missing link
Client-Consultant relationship
Ford (1985) Clients and Consultants: Meeting and Exceeding
Expectations *
Liebowitz, Agresti & Djavanshir (2005) Communicating as IT professionals*
Ko (2014) Information & Management
Knowledge transfer
Baum & Ingram (1998) Management Science
Gerwin & Moffat (1997) Management Science Ko, Kirsch & King (2005) MIS quarterly
Krauss & Fussell (1990) Intellectual teamwork: Social and technological foundations of cooperative work*
Mizerski, Golden & Kernan (1979) Jrnl of Consumer Research
Others Calder & Staw (1975) Jrnl of personality and social psychology Cohen & Levinthal (1990) Administrative science quarterly
Drucker (1964) Managing for Results *
Mitchell, Agle & Wood (1997) Academy of management review
Schein (1990) Organizational culture *
Client firm character istics
Size Beck & Demirguc-Kunt (2006) Jrnl of Banking & Finance Burpitt & Rondinelli (2000) Jrnl of Small Business Management Daniel & Grimshaw (2002) Jrnl of Information Technology Davies & Garcia-Sierra (1999) BT Technology Jrnl Dean, Brown & Bamford (1998) Strategic Management Jrnl
Esteves (2009) Jrnl of Enterprise Information Management
Hsin & Ching-Fang (2005) Proceedings of the 5th Int Conf on Electronic Business, Hong-Kong ***
Levenburg (2005) Electronic markets
OECD (2005) OECD SME And Entrepreneurship Outlook**
Turner, Ledwith & Kelly (2010) Int Jrnl of Project Management
Sector Blick, Gulledge & Sommer (2000) European Conf of Information Systems 2000*** Houston (2000) Jrnl of public administration research and theory Lyons, Duxbury & Higgins (2006) Public administration review
Perry & Rainey (1988) Academy of management review
Rainey & Bozeman (2000) Jrnl of public administration research and theory Van der Wal, De Graaf & Lasthuizen (2008) Public administration
3. Methodology
The main aim of this chapter is to explain how and why the adopted research method ideally suits to answer the research question. In accordance with Saunders, Lewis and Thornhill (2009), this chapter is structured as follows. First the research process, philosophy, approach and design will be elaborated. Thereafter the actual data collection will be considered. Eventually the data analysis process will be discussed.
3.1 Research process, philosophy, approach and design
In order to find a suitable and interesting research topic, a preliminary study was executed in which most important literature was examined. Later an orientating interview with an expert in the field of EPR system implementations was arranged. Thereafter the research questions were constructed.
Saunders et al. (2009) emphasizes that first the research philosophy and research approach should be identified before actual practical research decisions are to be made. The research philosophy contains assumptions that underpin the research strategy and chosen research methods as a part of this research strategy (Saunders et al., 2009, p.108). The philosophy of this research can best be described as a pragmatic. The time span of the research is set, and therefore the research adopted a research philosophy that is dynamic and entails a variable time span. The research question aims to answer the ‘how’ question regarding the interplay of certain variables. These questions will be answered using mainly theoretical research techniques (literature analysis), and partially using practical research (expert interview research). The pragmatic philosophy furthermore offers the opportunity to use multiple data collection methods. In addition, values will play a large role in interpreting results because the research will adopt both objective- as subjective points of view (Saunders et al., 2009, p.119). These subjective views comprise the opinion of experts and will be discussed in the result chapter. Objective views will be derived from the literature analysis.
Research approach
The researches’ literature analysis clearly takes on a deductive research approach because this phase entails a theoretical examination of a predefined conceptual model. Robson (2002) argues that testing relationships between two (or more) variables is a stage that a deductive study goes through. The combination of two (inductive and deductive) approaches can be justified by emphasizing on the lack of theory available about the research’ specific research topic. Therefore an inductive perspective has been build into this research aswel.
Research design
The research design consists of the research strategy, research choices and quality issues. Addressing these topics will transfer a research question into a research project (Robson, 2002). As this research adopts two research approaches it thereby uses two research collection methods. This is ideally appropriate to answer the research objective: gain understanding of a topic within a well-considered field of research, but with less discovered sub areas that are believed to have an influence on that field of research. In other words, much literature on the research topic of ‘ERP implementation success’ is available, and the research strived to find answers by extensively examining this literature. However, much less theory is available on the proposed variables that are believed to influence the outcome variable. Therefore, because extant literature only very limited considers the research’ input variables, a theory building perspective had likewise to be built into this research. Thus as existing theory only partially considers the research focus, examining the extensive amount of existing theory on the research’ variables on the one hand and complementing literature with some newly build theory on the other hand, is considered as a rigorous and comprehensive research method and therefore as ideally suitable. The type of data analysis, wherein both primary and secondary data is considered, becomes increasingly supported in business-research, whereas combining quantitative and qualitative data collection techniques is defined as mixed-method research (Curran and Blackburn, 2001 in: Saunders et al., 2009, p.151).
The literature analysis-phase aims to provide the author with enough relevant knowledge regarding the four subtopics derived from the sub-research questions. In this respect, chapter four has been organized according to the different sub-research questions. Subsequently, the combination of implications from literature and the results derived from the expert-interviews lead to the discussion of the main research question.
is gathered which allows the researchers to better understand and study the variables and their relation in more detail (Oates, 2005).
Maintaining meticulous records of interviews and documentation is the way to reach reliability. In addition, reliability is enhanced by a second, independent assessment of the derived results, executed by another academic researcher. Organizing such a secondary assessment will minimize the interpretability of the gathered results. This ultimately will lead to better-substantiated conclusions (Mays and Pope, 1995).
3.2 Data collection methods Article selection
The considered literature was selected by using Google Scholars search engine. The following keywords (table 9; the keywords from the first row were combined with the keywords of the second row,) were used to find literature. A short evaluation of the articles’ abstracts determined whether the articles were relevant and appropriate to use.
Keywords
‘Enterprise Resource Planning Implementation’
‘ERP System Implementation’ ‘Implementation’
Combined with:
‘Management consultancy’
‘Consultants’ ‘External consultants’
‘Success criteria’ ‘Characteristics’ ‘Roles’
Table 9: Keywords
Expert interviews
Interviewee selection
In order to determine an appropriate sample technique Patton (2002) argues that this should depend on the research question, research objectives, what techniques have credibility and at last, what can be done within the researchers’ capability. Especially regarding data collection from interviews, emphasize of the sample size is on the point of data saturation (Guest, Bunce and Johnson, 2006). In addition, a non-probability snowball sampling technique was adopted. Because experts within this field were difficult to find, a snowball sampling was considered most suitable (Saunders et al., 2009).
A definition to ‘elite’ or ‘expert’ within the considered industry has to be provided in order to identify and approach potential interviewee’s. Experts are people who are particularly competent as authorities on a certain matter of facts (Beeke, 1995, pp. 7-8; in Flick, 2009). Experts therefore can be considered as staff members with a specific function or knowledge (Flick, 2009). Borger and Menz (2002), frequently cited specialists in this field, define experts as: “Persons having technical process oriented and interpretive knowledge referring to their specific professional sphere of activity. Thus, expert knowledge does not only consist of systematized and reflexively accessible specialist knowledge, but it has the character of practical knowledge in big parts. Because of the practical knowledge the authors incorporate in their definition, which is valuable for this research, this research defines experts alike. To ensure that indeed all interviewees match a minimum level of expertise, criteria were set.
The criteria were set regarding experience, responsibility and diversity.
• A minimum period of time that the interviewee has been active in the field ERP consulting is required. Since the fact that an average ERP implementation project takes 14.3 month (Panorama consulting, 2015) and as we assume that after three implementations a consultant has adequate experience, we set this period at (3 x 14.3, rounded up), 5 years.
• We assume that more responsibilities come with good performance. Therefore, as this research requires experts that have performed well in their previous projects, we look for consultants with responsibilities. As a level of responsibility is hard measure, we set the criteria to at least have the responsibility over two other consultants.
Ultimately the respondents cooperated by assigning an interview, are presented in table 15, in appendix 6. Their names have been ammonized.
After having constructed the interview protocol (appendix 7) first a pilot interview was executed. This pilot interview was held with a former IT consultant that is no longer working within that specific sector, however still has a lot of experience and industry knowledge. The pilot interview pointed out the unclear questions and wrong emphasizes within some questions. These questions were adjusted so that in every occasion of the interview it is clear what was meant. Another aspect that was taken into consideration before executing the expert interviews is the level of expertise that an expert expects its interviewer to have (Flick, 2009). Because the expert is about to explain the workings and defects of complex mechanisms, an interviewer must be very knowledgeable within its topic. If the expert does not notice the interviewee’s knowledge, he/she might depreciate the interview that in turn could lead too less reliable and valuable data. This research refers to that aspect since the researcher has extensively studied literature about ERP implementations and the role of consultancy, and therefore may be considered knowledgeable in this field.
3.3 Data analysis
4. Research Findings
This chapter presents the research findings, which later will be subjected to critical analysis. The findings chapter can be devided into two parts. The first paragraph presents the findings of the literature analysis. These findings mainly focus on sub-research questions two and three and appoint the difference in organizational characteristics (i.e.; size and sector). Furthermore, the literature analysis could support findings of the interview results. Moreover, the analysis serves to summarize most important literature within the field of “ERP implementations”. The second paragraph of this chapter is devoted to the presentation of the interview findings. This section focuses on the presentation of the interviews findings. The interviews were designed to answer the sub-research question one and four, which appoint the topics of roles, skills and their enhancement. The most noteworthy patterns among responses of sample groups are presented here in a logical manner.
4.1 Literature analysis finding
The literature analysis has found evident answers to the sub-research questions on the topic of the organizations’ sector and size. Literature analysis findings further indicate that major themes in the research area include discussions about the essence of ERP and need for ERP in organizations, CSF’s associated with ERP implementation, outcome of ERP implementation initiatives and others. Table 10 below illustrates authors covering some of these themes and their findings in a chronological order. More detailed discussions of the most noteworthy aspects of findings are provided further below.
Theme in research area Author(s) Findings
Essence of ERP Davenport (1998) • Platform for seamless integration for information flow
Klaus et al. (2000) • Comprehensive business software package that integrates all business functions and processes Jarrar et al. (2000) • Integrated multi-dimensional system
Need for ERP Parr and Shanks (2000) • Business restructuring • Decision making improvement
Al-Mashari et al. (2003) • Platform to enable innovative operational practices Law and Ngai (2007) • Operational efficiency gains
Dezdar and Ainin (2011) • Source of competitive advantage Outcome of ERP
implementation
Hitt et al. (2002) • ERP adopters perform better than non-adopters Amid et al. (2012) • Many case studies for failed ERP implementation
Essence of ERP systems and their importance for large organizations
Although there are many definitions of ERP, there are no vast differences between the definitions and there is a consensus among authors that ERP deals with streamlining information needs of enterprises. Accordingly, ERP system has been accepted as a comprehensive business software package, functioning to integrate all of the businesses its functions and processes, seeking to provide a holistic overview of the business from a single IT architecture (Klaus et al., 2000, Mabert et al., 2003). There is a consensus among business scholars and practitioners about increasing importance of ERP systems in terms of increasing operational effectiveness through an efficient use of timely information. Specific factors increasing the importance of ERP systems include but not limited to intensifying level of competition in all industries, increasing complexity associated with running a business and emerging role of information and utilization of information technology as a competitive advantage for the business and others. It has to be clarified that literature review has found confirmation for both, positive, as well as, negative outcomes for ERP implementation initiatives. Specific nature of the outcome in each specific case is found to depend on the impact of CSF’s discussed below.
Factors impacting the outcome of ERP implementation
Critical Success Factor Author(s)
Management support Holland and Light (1999); Jarrar et al. (2000); Akkermans and Helden (2002); Mabert et al. (2003); Ehie and Madsen (2005); Finney and Corbett (2007); Halo et al. (2008)
Effective change management Atkinson (1999); Jarrar et al. (2000); Akkermans and Helden (2002); Motwani et al. (2002); Mabert et al. (2003)
Finney and Corbett (2007); Halo et al. (2008) Communication with
stakeholders
Holland and Light (1999); Mabert et al. (2003); Finney and Corbett (2007) Staying within deadline Oisen (1971); Holland and Light (1999); Finney and Corbett (2007) Knowledge transfer and sharing Pan et al. (2001); Motwani et al. (2002); Wang and Chen (2006) Staying within budget Oisen (1971); Ehie and Madsen (2005)
Training on ERP system Amoako-Gyampah and Salam (2004); Ehie and Madsen (2005) Visioning and planning Holland and Light (1999); Finney and Corbett (2007)
IT infrastructure Jarrar et al. (2000); Mabert et al. (2003) Shared belief in the benefit Amoako-Gyampah and Salam (2004) Alignment between consultant
and client Jang and Lee (1998)
Feasibility evaluation Ehie and Madsen (2005) Competence of project team Akkermans and Helden (2002) Clarity of aims and objectives Akkermans and Helden (2002) Vendor support Akkermans and Helden (2002) Employee motivation Finney and Corbett (2007) Consultant selection and
relationship Finney and Corbett (2007) ERP strategy Holland and Light (1999)
Table 11: ERP implementation CSF's
Researchers such as Ke and Wei (2008) warn that although countless scientific papers have been devoted to the analysis of CSF’s related to ERP implementation, there is a lack of studies about the nature of impact of these CSF’s on the outcome of the project. In other words, knowledge of CSF’s may not suffice to ensure successful outcome of the project due to the presence of a wide range of company-specific and other factors that need to be taken into account in each individual case.
Stakeholders and their role in ERP implementation
Key
player Role Critical success factors Challenges
Client firm • Specifies needs and preferences unambiguously • Provides necessary information to external consultant
• Closely cooperates with vendor and external consultant
• Technical knowledge and competence of senior level management • Knowledge management practices • Employee commitment to cooperate • Lack of cooperation from middle and operational level employees
• Financial issues
Vendor • Adjusts its ERP system to meet client’s unique needs • Closely cooperates with
external consultant • Business strategy • Years of operations • Commitment to quality • Conflicts with external consultant • Quality issues External
consultant • Assesses needs of client firm and determines ERP system requirements • Assumes intermediary role
between vendor and client firm
• Addresses expectation and concerns of client firm
• Experience and expertise • Communication and interpersonal skills • Level of technical knowledge • Lack of work experience • Lack of comprehension of client’s ERP system requirements
Table 12: Key players in ERP implementations
The competencies of external consultants on implementation success of ERP systems
Findings of the literature review shed a light into important skills that can help external consultants to perform their job duties with an increased level of effectiveness. Table 13 below illustrates these findings by specifying relevant characteristic to author(s).
External consultant characteristics Author(s)
Communication skills Monge et al. (1982)
Djavanshir and Agresti (2007) Halo et al. (2008)
Metrejean and Stocks (2011) Technical and operational knowledge Chang et al. (2013)
Comprehension skills Reich and Besabas (2000)
Business savvy Basselier and Benbasat (2004)
Conflict resolution Halo et al. (2008)
Table 13: Competencies important for external consultants
ERP in private and public sector organizations and the impact of size on ERP implementations
and employee motivation (Houston, 2000) have been found as the main distinctive points between private and public sector organizations. Table 14 below summarizes research findings about the main differences between public and private sector organizations.
Point of difference Private Sector Organization Public Sector Organization
Primary objective Profit maximization Social objectives Ownership Owned by individuals or groups of
individuals. Ownership can be transferred
Owned by government. Ownership cannot be transferred
Level of bureaucracy Less bureaucracy More bureaucracy Employee motivation Focus on extrinsic motivational
tools such as income and tangible benefits
Focus on intrinsic motivational tools such as sense of contribution and accomplishment Values 1. Profitability 2. Accountability 3. Expertise 1. Accountability 2. Effectiveness 3. Incorruptibility Employee commitment Greater level of employee
commitment to organization Lesser level of employee commitment to organization
Table 14: Main differences between public and private sector organizations
Enterprise size has been found as a factor that determines the patterns and outcome of implementing new IT systems such as ERP. For example, e-commerce emerges as an internet-related IT system that attracts small and large-sized businesses for different reasons. Specifically, large companies use e-commerce as an opportunity for simplifying the complexity of internal processes, whereas smaller sized enterprises adapt similar systems mainly to increase the volume of sales (Daniel and Grimshaw, 2002).
Lack of access to the formal sources of external finance has been found to be a significant barrier in terms of achieving growth for small enterprises (Beck and Demirguc-Kunt, 2006). Therefore, the probability for SMEs to face financial issues in their attempt to develop and implement ERP systems can be assessed as significant. On the other hand, research findings indicate to factors that can increase the probability of positive outcome for SMEs in managing projects such as ERP implementation. The list of such factors has been found to contain efficient client consultation, resource allocation, risk management and support from senior management (Turner et al., 2009). Moreover, research findings indicate that strategies used by SMEs to derive increased benefits from ERP usage include adoption of a long-term vision towards the initiative and appreciating interconnected nature of ERP benefits realization (Esteves, 2009).
such as ERP systems (Hsin and Ching-Fang, 2005). It has been found that while technical issues due to the lack of experience, financial problems and managerial issues represent major technology integration challenges for SMEs, large organizations have to deal with strategic issues, change management and managerial problems.
4.2 Primary data findings
Semi-structured in-depth expert interviews have shed a light into the important variables of the research framework. Interview questions addressed skills and roles that played an important role in successful consultancy practices in the area of ERP implementation.
Communication
All experts mentioned the role of communication skills as a critical success factor impacting the process and outcome of ERP system implementation. It has been found that both means of communication, verbal and written is important for external consultants to transmit their ideas to their client in a clear and unambiguous manner. Moreover, non-verbal communication channels such as body language and gestures were mentioned during interviews and interviewees recommend ERP consultants to master the skills of non-verbal communication. According to interviewees, advanced communication skills are likewise important for external consultants in terms of being able to capture unique aspects of the organization and address them within the scope of the ERP implementation. The following comment made during primary data collection method captures the essence of this idea.
“Are you capable of both communicating your own ideas, as well as extracting the exact, specific and accurate business specific information? You should be able to obtain all information that concerns and contributes the implementation.”
Functional business knowledge
Experience
Experience emerges to be an important factor that directly affects the process of ERP implementation, as well as, its outcome. It has been noted that experience allows consultants to become more adept in dealing with a wide range of technical and other issues during various stages of ERP implementations. The following comment of an interviewee can be referred to in order to justify this point:
“It all starts with the consultant bringing experience to a project. This experience reduces the change of making the same mistakes again.”
Additionally, timeframe available to complete the project and the budget of the project are specified by interviewees as important factors and potential problem areas when developing and implementing ERP systems. This can be interpreted as an indication to the immense role of time management, multitasking and working under pressure as skills to be possessed by external consultants.
Clients’ value judgement of the project
According to interview findings an important factor that affects effectiveness of ERP system implementation and the outcome relates to the attitude of client firm’s workforce in general and senior level management in particular. An interviewee, an experienced ERP consultant stated that:
“For us it is absolutely essential that the client firms identify this project as strategic. Therewith, a board member should take place in the ERP implementing control-group.” In other words, it has to be ensured that employees of a client firm approach ERP with a due level of importance appreciating its potential contribution to profit maximization and ERP is not dealt with simply as a compulsory chore. External consultants can achieve this by communicating the potential contribution of ERP systems to the achievement of organizational objectives, thus potential benefits of ERP systems for each member of the workforce.
Roles within the consultation process
that both roles entail to in an early stage, clearly delineate and define the scope of the project. Therefore these consultants are required to have both specific business knowledge and software knowledge, and they need to be able to determine and monitor the scope of the project remains achievable. In addition, it is important to take most important decisions in the earliest stages of the implementation. The contributing competencies of these roles can best be described as assertive and knowledgeable in an early stage of the implementation initiative.
Assertiveness
ERP experts interviewed as a part of this study offer specific recommendations to external consultants in terms of enhancing personal skills with positive implications on the level of their professional competency. Previously mentioned, consultants are recommended to be politely assertive when representatives of client firm aim to reduce costs at the expense of ERP system functionality and overall quality. It is important to clarify that client intervention to achieve cost reduction is usually results from lack of technical competence about ERP systems, thus, ERP consultants are recommended to stay committed to functionality and quality, deferring management attempts that threaten these priorities. The following quote from interview transcript justifies this argument:
“Within ERP implementations, the client does not come first. Because this means that the consultants does not provide the organizations with advice while that should be its main function. You must set the boundaries of projects in order to make sure project (sizes) stay achievable. You (read: the consultant) can see the consequences of certain decisions whereas your client can not.”
Furthermore, the interviews shed a light into a set of challenges faced by external consultants in ERP system development and implementation. These challenges are found to include rules and regulations that restrict communication with other stakeholders, challenging deadlines for ERP systems implementations and necessity to deliver advanced ERP system staying within the allocated budget.
5. Discussion and Analysis
This chapter contains discussions and analyses of primary and secondary research findings in an integrated manner. The chapter is divided into five parts whereas the first four paragraphs are devoted to the discussion and analysis of an individual research sub-question. The last paragraph presents conclusions on the first four paragraphs.
5.1 Important skills and roles for external ERP consultants
Primary and secondary research findings shed a light into that skills that are considered to be important to be possessed by external ERP consultants. This study has confirmed the importance of distinguishing between functional and interpersonal set of skills (e.g.: O’Mahoney and Markham, 2013). It was found that functional skills and competencies relate
to technical knowledge, which can be acquired via learning, whereas interpersonal skills are closely associated with personal identity. At the same time, interpersonal skills are found to be more important compared to technical ones.
Communication
Communication skills emerge as one of the most important skills that external ERP consultants need to possess. Results of primary and secondary research findings both confirm communication skills as critically important for external consultants. ERP is usually a new phenomenon for the majority of private sector organizations that employ external consultants whereas a consultant is partially assigned with the responsibility of communicating importance and use of ERP systems to employees at all levels. Moreover, external consultants need to be able to comprehend unique aspects of client organization in general and ERP system needs in particular. Research findings indicate that achievement of this task without advanced written and verbal communication skills is overly difficult. The role of non-verbal communication skills via body language has been found paramount as well.
Assertiveness
Business savvy
Business knowledge in general and business savvy in particular has been found as another important set of skills that external ERP consultants need to possess. Consultants need to appreciate profit maximization primary purpose of private sector organizations and it has to be ensured that ERP system contributes to the achievement of this objective in a substantial way. Moreover, time management and working under pressure emerge as important personal skills that need to be mentioned along these lines due to the necessity to complete projects according to agreed deadline. Additional set of professional skills that are found to be important for ERP consultants are found to include conflict resolution skills and technical and operational knowledge.
Roles
The literature review conducted in chapter two has shed a light into different roles that could be assumed by ERP consultants. The in chapter two constructed major roles of consultants consist of business analyst, project manager, system architect and technology consultant. The extent of need for each of these roles depends on a wide range of project-specific factors. In other words, while research findings confirm the relevance of each of these roles for ERP consultants in general, the importance of each role for a specific project depends on a set of factors that can be unique for the given project. A competent ERP consultant has to be comfortable with each of these roles from a professional point of view and perform in each role according to circumstances surrounding the project they are dealing with. Taking into account the nature of ERP systems and the dynamics of development in this area, it can be argued that the roles of ‘system architect’ and ‘business analyst’ are more important for ERP consultants compared to remaining roles. Accordingly, it is critically important for ERP consultants to focus on developing personal and professional skills and competencies that are required to exercise the roles of system architect and business analyst in an effective manner.
5.2 Differences between private and public sector organizations: impact on ERP implementation
Firstly, it may take less time to implement ERP initiatives in private sector organizations compared to organizations operating in public sector. Research findings indicate that due to the concentrated ownership and less level of bureaucracy, decisions about ERP implementation can be taken in a shorter period of time in private sector organizations compared to organizations operating in the public sector. This is because private sector organizations are guided by the main purpose of profit maximization and cost-benefit analysis may represent the only criteria used to make a decision upon the implementation of ERP systems. In public sector organizations, on the other hand, objectives to be achieved tend to be multi-dimensional and decisions related to new system implementation may have to be subjected to certain procedures resulting in slower processes of decision-making.
Secondly, ERP systems can be changed more quickly in private sector organizations. Due to the differences between private and public sector organizations in terms of bureaucracy levels as evidenced by research findings, change management can be implemented in private sector organizations in shorter time as opposed to public sector organizations. It can be argued that ERP systems need to be dynamic reflecting changes in internal and external environments in a timely manner and private sector organizations are better positioned to meet this demand compared to public sector organizations due to a higher level of flexibility. Moreover, as evidenced by the work of Houston (2000), private sector employees are mainly motivated by extrinsic motivational tools such as money and tangible benefits, whereas intrinsic motivational tools such as personal perception of contribution and accomplishment are effective when motivating public sector employees. Accordingly, once convinced about potential contribution of implementing and using ERP systems to the bottom line, private sector employees can become enthusiastic towards the initiative.
Thirdly, employees in private sector organizations may express greater commitment towards the adoption and use of ERP systems. According to research findings, employees have a greater loyalty and commitment towards organizations in private sector compared to the public sector. Greater level of loyalty and commitment in private sector organizations may prove to have positive effects on usage patterns of ERP systems. In other words, it can be argued that private sector employees will exhibit enhanced cooperation and greater commitment towards ERP system because they perceive the system as a tool they will have to deal with in a long-term perspective.
5.3 Effects of enterprise size on ERP implementation
