Name: Gustaaf Willem Jacobus van der Feltz Student nr: 1531921 Tel. nr: 06 41 585 727 Address: Noordeinde 27 2514 GB, Den Haag E-mail: willem_feltz@hotmail.com Rijksuniversiteit Groningen
Supervisor: Joanna S. Gusc
Faculty: Business and Economics
Address: Nettelbosje 2
9747 AE, Groningen
E-mail: j.s.gusc@rug.nl
Abstract
In this thesis is described the development of four organizational systems throughout the years what led to the broadening of the initial focus of each of these systems. Due to this expansion, organizations face an increasing interaction and convergence between the systems leading to the formation of a new kind of complex system. This new complex system has to be considered as such, meaning that more factors have to be taken into account and that organizations have to view it in its totality instead of different separate tools. An important situation where organizations have to take this into consideration is during an organizational change. This thesis proposes a model that can serve as a guideline for organizations during the action stage of a system change. The factors have been selected based on the importance given in literature. Centrally situated in the model are the key players, namely the users, designer and management. The other variables are placed at the base of the model since these represent the foundations of the action stage. These are the business vision, the implementation strategy, structural considerations, project schedule and plans, and the legacy. Based on this model the action stage of the EP, which is concluded to be an example of a complex kind of system, is evaluated. As a conclusion the relation between the users and the designer is of particular importance, whereas the role of management during this stage is not very relevant. Each of the other factors play a role, however training is considered to have a significant function whereas structural considerations does not always apply. Finally, based on the model the action stage of the EP implementation is considered successful.
Keywords: Implementation Process; EP; Management Systems; Management Control; Change
The Implementation Factors of a
The Implementation Factors of a Complex System – The EP 2 Table of Contents 1. Introduction 4-5 1.1 Research Objective 5 1.1.2 Research Questions 5 1.1.2.1 Sub-Questions 5-6 1.2 Research Domain 6 1.2.1 Introduction to Company X 6
1.2.2 Company X Cosmetics Nederland 6-7
1.2.3 Introduction to the internship 7
1.2.4 Introduction to the case 8
1.3 Thesis Outline 9
2. Literature Review 10-11
2.1 Preferred Solutions 11
2.1.1 Management Control Systems – From simple mechanisms to a package 11-14
2.1.2 Management Information Systems – From unit-based to company-wide system 14-16 2.1.3 Management Accounting Systems – From only financial to also non-financial 16-17
2.1.4 Enterprise Resource Planning – From an inventory system to an interdepartmental resources
system 17-18
2.1.5 Conclusion 18-19
2.2 Implementing the preferred solution 19-20
2.2.1 Tightness (or looseness) 20-21
2.2.2 Designer Contribution 21
2.2.3 Managerial Support 22
2.2.4 User Involvement 22
2.2.5 Training 22-23
2.2.6 Structural Consideration 24
2.2.7 Business Vision and Implementation Strategy 25
2.2.8 Legacy Systems 25
2.2.9 Project Schedule and Plans 25
2.2.10 Continuous Feedback, Monitoring and Consultation 25
2.2.11 Project Champion 25
2.2.12 New Implementation Model 26
3. Methodology 27
3.1 Definition of the study 27
3.2 Data Sources 27-28 3.2.1 Internship 28 3.2.2 Literature 28-29 3.2.3 Interviews 29 3.2.4 Questionnaires 29-30 3.2.4.1 Population 30-31
3.3 Methods of Data Analysis 31
4. EP 32
4.1 The old system – VP 32-33
4.2 The new system – EP 33-34
5.8 Business Vision 37-38
5.9 Implementation Strategy 38
5.10 Structural Considerations 38
5.11 Project Schedule and Plan 38
5.12 System Legacy 39 6. Conclusion 40-41 6.1 Discussion 41 6.2 Theoretical Relevance 41-42 6.3 Practical Relevance 42 6.4 Limitations 42-43 References 44-48 Appendix I Questionnaire 49-54
Appendix II Interview Questions – User 55-56
Appendix III Interview Questions – Designer 57-58
Appendix IV Results 59-76
The Implementation Factors of a Complex System – The EP 4 1. Introduction
In most organizations information is regarded as one of the most important factors contributing to organization’s competitive advantage. The most generic definition of information comes from philosophy, where information is knowledge for the purpose of
taking effective action (Mason and Mitroff, 1973). Efficiency, on its hand, is commonly
measured in terms of the portion of an outcome, which is realized by the expenditure of a specified amount of money, time, and/or effort (Ackoff, 1958). Growing competition due to the progress of technologies, deregulations and the ever-increasing trend of globalization, has led managers to increasingly rely on information for their decisions, and therefore determine business performance (Mia and Clarke, 1999). One major area where firms nowadays invest in, are the inter- and intra-organizational systems that improve the information flow in order to make the overall functioning more effective and efficient. Company X is such a company, where the environment expects the firm to outperform the competition and where management has to make decisions regarding investments in information technologies that will facilitate the achievement of organizational goals.
Due to the expeditious evolution of organizational systems, theories surrounding it have expanded, leading to the development of discussions regarding the true identities of systems, for example the differentiation made by Leon (2008) between Management Information Systems and Enterprise Resource Planning. The progress made regarding these theories also shown a broadening of boundaries and focus of each type of system. Management Control Systems were first seen as separate mechanisms and tools (Ouchi, 1980; Merchant and van der Stede, 2007). However, new views propose a package of systems interacting with each other, reaching a common goal (Malmi and Brown, 2008). Additionally, Enterprise Resource Planning systems started as being a tool only for managing inventories (Boudreau and Robey, 1999). Yet, the focus of these systems expanded, embracing the broad meaning of the “resources” (Klaus et al., 2000). This meant that not only materials and other raw resources, but also financial and human resources were covered by these systems.
systems. For this reason, when organizations intend to implement a new system, it is important that management, users, and designers, not only look at the separate tools, but also to the complete mix that forms the final, complex system. One of the objectives of this thesis is to provide Company X NL a model, with relevant factors during the implementation of a complex kind of system.
Prior to the implementation stage, investments in terms of financial resources and time spent are made. The importance of this phase is emphasized in that the loss of these investments will largely depend on the development of the actual implementation, which in this thesis will be referred as the “Action” stage (Kolb/Frohman model, 1970). Therefore it is important that several factors that can determine the success or failure of the whole change are taken into account.
1.1 Research Objective
This thesis is divided into two parts. It first intends to provide a model concerning the implementation process of a complex system that has elements of more than one type of system. Thereafter, it purports to make an evaluation of the implementation process used by Company X NL for the EP (EP) based on the newly created model.
1.1.2 Research Questions
The research objective can be translated into the following research question and sub-questions:
1. What kind of model for the implementation process can be suggested for a complex type of system?
2. To what extend can the implementation process of the EP be considered a success?
1.1.2.1 Sub-questions
a. What is a complex system?
b. What are the key characteristics of an implementation process for a complex system?
The Implementation Factors of a Complex System – The EP 6 c. What is the EP?
d. What kind of system is the EP?
e. Based on the relevant factors, how was the development of the implementation process?
1.2 Research Domain
The research will be pursued at Company X, with focus on the Dutch cosmetics department. The following section will provide further description concerning the organization, the department and the role of the researcher.
1.2.1 Introduction to Company X
In 1876 Company X was founded by a 28-year-old merchant, John Company X. Its first product was a washing powder, based on water-glass. A major step in the business was the over-take of a drug- and perfumery-store, Peter in 1898. In later years Company X also grew in the industrial and glue sector. Currently, Company X operates in three business areas: Laundry & Home Care, Cosmetics/Toiletries and Adhesive Technologies. Jointly all the Company X products made an Operating Profit of 451 million euros worldwide in the third quarter of 2011.
1.2.2 Company X Cosmetics Nederland
With a worldwide portfolio of leading brands in several sectors, Company X has proven to be a strong competitor in every business area they’re in. The Cosmetics/Toiletries sector, with worldwide sales of 3,399 million Euros, represented about 22% of the annual sales worldwide in 2011. In The Netherlands, the influence of this sector on the overall performance of Company X NL is no less important.
1.2.3 Introduction to the internship
The research is based on my experience during an internship at the sales cosmetics department. The most important clients of this team are Ahold (Albert Heijn and Etos), DA, and independent drugstores. The main function of this team is to regulate the sales of products in various categories. One of the main activities of these managers is to govern and determine promotion activities that are related to price reductions. This is generally done in cooperation with the marketing department, however, it is sales that finally decides what it will be.
During this period, I was responsible for the monthly evaluation of promotion activities such as 2 Shampoos for €6,- at Etos in the weeks 44-45. In addition, I controlled all the orders of Albert Heijn and DA and inserted them in the monthly turnover sheet where also prognoses are made for each action. Another task, which belonged to this internship, was to prepare an offer for the client concerning a promotion activity. In this offer calculations are made regarding the discounts given to the retailers and the final consumers. Finally, the internship also included doing several analyses related to market developments, which managers could use when making decisions.
1.2.4 Introduction to the case
Within the department of cosmetics, there has always been a challenge concerning the communication effectiveness between the disciplines of sales and marketing. This communication issue is mainly related to special events which occur on a regular basis such as price promotions, promotions with co-packs, launches and re-launches of products. These events are of great importance for Company X Cosmetics NL considering that the average
Sales
Ahold & Drugzelfstandig (AH, Etos, DA and
smaller drug-‐ retailers) AS Watson (Kruidvat, Trekpleister) Superunie & Bijeen (Super de Boer, C1000, and
other food-‐ retailers)
Marketing
Body & Skin
Styling
Hair Coloring
The Implementation Factors of a Complex System – The EP 8 sales in promotion in 2011, through all its clients, represented about 45,6% of the annual sales.
In the past, promotion development, creation and follow-up was done with different ‘isolated’ tools, characterized by a large amount of manual input/rework and with a complete lack of integration between the several tools. The VP, as this system was called, was a cause for the formation of several issues through the different departments. The following diagram shows a follow-up of the consequences caused by the VP:
Dutch and Belgian management decided that it was time to introduce a new system, which in their eyes is a better and more complete tool to control the whole process, from the production to the delivery. This new system, EP (EP), should optimize the coordination between the sales and marketing department, and eventually reduce the Out of Stock levels, delays and attain the reliability required by its clients and customers. The idea is to first implement it in the Netherlands and afterwards, based on its success, implement it in the Belgian subsidiary.
'VP' inneNicciency
Stress, uncertainty, frustration
Incomplete events, delays, higher Out of Stock levels
ConNlict with the client, Increasing costs
1.3 Thesis Outline
The first section of the thesis will give an overview on relevant theories concerning different systems. These systems have been chosen based on the knowledge already generated during the internship and the interactions with account managers. The following section is intended to provide an insight on the most relevant factors during the implementation process based on theory of different types of systems. Finally it will propose a model designed for the implementation of a complex type of system.
Following this theoretical section, the thesis will provide with more insight on the EP. First, it will give a clear explanation on the contents of the system. Afterwards, the implementation process will be analyzed according to information acquired from designers and users. The thesis intends to conclude with an evaluation of the action stage of the EP and provide Company X NL with suggestions for future implementations of complex systems.
The Implementation Factors of a Complex System – The EP 10 2. Literature Review
The Kolb/Frohman model (1970), shown in the following figure, suggests several stages before a MIS can successfully fulfill its purpose. Although it represents the stages for the implementation of an MIS, it does provide a general perspective on the way a complete change process looks like, therefore it will be used as reference for a change model for any type of system. Through this model the direction and focus of this paper can be clarified.
Figure 2.1 Kolb/Frohman model (1970)
The focus of this thesis is on the “Action” stage where the actual process of implementation of the system takes place. In other words, it is where the real job of implementing the new system begins (Ginzberg, 1978). It can also be characterized as being the stage where the Information Technology is installed, where organizational procedures are revised and developed, and where members are trained in the new procedures and in the IT application (Cooper and Zmud, 1990). This phase is of particular importance for Company X NL, considering that it is the first time that users will start using the new system and that further decisions will be made based on their satisfaction levels (Ginzberg, 1981). For this reason, this stage can be considered as one of the most important in the change process. It is essential for organizations to be ready to act accordingly and to take into account several issues such as communication, training and implementation strategies. The duration of this stage can vary according to the complexity, and organizational change required by the new system (Kolb and Frohman, 1970). It can be considered to be finalized by the time it is possible to make an
Scouting • Assessing needs and abilities; choosing a point of entry
Entry
• Developing initial statement of problems; goals and objectives; developing commitment and trust; establishing "felt need" for change.
Diagnosis • Gathering data to deNine problem; assessing available resources.
Planning
• DeNining speciNic operational objectives: examining alternative solutions and their impacts.
Action • Implemmenting the preferred solution
Evaluation • Assessing how well objectives were met; deciding to evolve or terminate.
evaluation and assess whether the intended objectives are met (Kolb and Frohman, 1970). The phases before and after will not be analyzed considering that the opportunity of participating in this change process was only limited to the “Action” stage.
The following chapter will start by taking a look at the characteristics of possible solutions that organizations might choose in confronting certain control issues. These issues might vary from control problems such as compliance with codes of conduct, to matters related to inventory management or budgetary control. The descriptions will then serve as a guideline in selecting the variables for the implementation of a system that has attributes of more than one type of system. This chapter will conclude with the proposal of a model that can be used by organizations when implementing complex systems.
2.1 Preferred Solutions
An important question to be answered before attending the actual implementation in more detail is, - “What type of system is the EP?”
As explained by one of the account managers, the EP can be described as “a system that
connects departments in order to be able to process the planned promotional events in an effective manner”. Another manager mentioned the importance of the EP in the way control is
executed either regarding inventories, budgets or promotional activities. These two short explanations and the knowledge accumulated during the internship with regard to the EP, give some general guidelines on where to look at when trying to answer the above-mentioned question. Finally the main goal of this section will be to provide different theories regarding several systems in order to be able to characterize the EP. Additionally it intends to ascertain whether there is a trend in the evolution, where systems broaden their focus leading to an overlap between them.
2.1.1 Management Control Systems - From simple mechanisms to a package
The Implementation Factors of a Complex System – The EP 12 A Management Control System was defined by Anthony (1965) as the process by which managers ensure that resources are obtained and used efficiently and effectively in the accomplishment of the organization’s objectives.
According to Ouchi (1980), there are three mechanisms through which an organization can seek to cope with the problem of evaluating, rewarding and controlling a team of individuals. The first mechanism relies on the market efficiencies to reduce ambiguity of performance evaluation or the goal congruence between parties. Next, the bureaucracy mechanism deals with control by means of rules, which are considered to be key elements of information. The third and final mechanism described is the clan mechanism that is primarily guided through the values and beliefs of an organization.
On the other hand, Merchant and van der Stede (2007), define four ways through which Management Control can take shape. First, results controls are a combination of results and rewards, informing or reminding the employees as to what result areas are important and motivating them to produce the results the organization rewards. Secondly, action controls, these ensure that the employees perform certain actions known to be beneficial to the organization. Thirdly, personnel controls builds on employees’ natural tendencies to control and/or motivate themselves. Finally, cultural controls shape the organizational behavioral norms and encourage employees to monitor each other’s behavior through codes of conduct, group-based rewards, tone at the top or intraorganizational transfers.
As a conclusion, the authors mention that for the control problems that cannot be avoided, managers must implement one or more control mechanisms with the above mentioned characteristics, which they call ‘management controls’. The interaction between these control mechanisms can then be referred as a Management Control System.
having its own function and objective, meaning that these controls should not be characterized as a single system, but as a package of systems.
In their model, the authors categorize five different types of management control; cultural controls, planning, cybernetic controls, reward and compensation and administrative controls.
Figure 2.2 Management Control Systems Package (Malmi and Brown, 2008)
Planning sets out the goals of the functional areas of the organization and the standards to be achieved in relation to these goals. By these means it clarifies the expected behavior from the employees. In addition, Planning can enable co-ordination through aligning a set of goals across the functional areas of an organization, thereby controlling the activities of groups and individuals.
A cybernetic system is a decision-support mechanism that detects certain unwanted variances on which the employees and managers should react. It is a control system that links targets, such as budgets, to behaviors, making the people responsible accountable for their actions.
In their paper, Malmi and Brown (2008) suggest that organizations should employ performance targets in conjunction with monetary incentives to motivate employees. Therefore an effective reward and compensation system should provide goal congruence between the goals of individuals and groups within an organization, and the objectives of the whole organization. Often, this rewards and compensations are linked with cybernetic controls, however, rewards can also take other forms, such as employee retention or non-financial group-based rewards.
The Implementation Factors of a Complex System – The EP 14 relationships and contacts between the employees, the functional specializations as well as the co-ordination of activities either horizontally or vertically.
Lastly, the cultural controls are divided into clans-, values- and symbols-based controls. Values controls relate to the issue that employees behave according to the same values and beliefs as the organization. The symbol-based controls, most often are seen in the infrastructures the organization, for example an open space for encouraging open communication, or the dress code addressing the formality of the work atmosphere. Finally the clan controls can be compared to the clan mechanisms that work by establishing values and beliefs through ceremonies and rituals.
Theories concerning Management Control Systems have evolved through time. This can be noticed from the above-described theories. A clear change of the mindset is that control instruments are not seen anymore as single standing mechanisms, but as interacting devices that finally compose the whole Management Control System. This is an important evolution that was, among other factors, made possible due to the rapid evolution of Management Information Systems. These systems will be covered in the following section.
2.1.2 Management Information Systems – From unit-based system to company-wide system
Management Information Systems contribute to the overall efficiency through which organizations deal with the available information. These are systems for collecting, sorting, retrieving and processing information that is used, or desired by one or more managers, in the performance of their duties (Ein-Dor and Segev, 1978).
Figure 2.3 Management Information System (Lucey, 2005)
A system to convert data from internal and external sources into information and to communicate that information, in an appropriate form, to managers at all levels in all functions to enable them to make timely and effective decisions for planning, directing and controlling the activities for which they are responsible. (Lucey, 2005 p. 2)
Most often, a system consists of several sub-systems with sub-goals, which in combination will contribute to the main goal (Oz, 2006). The same happens between departments. For example, the marketing department aims at promoting sales, while the production department handles the technical aspects of a new product, and the financial department aims at maintaining the costs low. Each of them has their own goals, however the main goal is to take the company forward and improve its position in the market. A distinction can be made on the openness of the system (Oz, 2006). This concerns whether the system is connected to other systems or whether it stands alone. A closed system, is a system where no information flows out to another system. For example, a textual formatting system where the user enters the data and then prints it for personal use, is a closed system. An open system, on the other hand, interacts with other systems, and jointly they are able to provide the user with the needed information. An accounting system is a perfect example of an open system. It records accounts receivables, payables and calculates the cash flow, the instant it receives payroll figures from the payroll sub-system. Therefore, all sub-systems are open since they interact with each other, meaning that the objectives are also interconnected.
The Implementation Factors of a Complex System – The EP 16 available technology and by employing systems that encourage cooperation between units (Stair and Reynolds, 2011).
An example of a MIS is the Transaction Processing System that acts at the boundaries of the organization by registering and recording transactions with other parties (e.g. cash register). Another type of MIS is the Customer Relationship Management system that can provide managers with information regarding the behaviors of customers and therefore predict when the customer is about to switch to the competitor (Oz, 2006).
2.1.3 Management Accounting Systems – From only financial to also non-financial
As with MIS, Management Accounting Systems can be conceptualized as formal systems designed for providing information to managers (Bouwens and Abernethy, 2000). In theory the term Management Accounting Systems, Organizational Controls and Management Control Systems are sometimes used for the same purpose. However, MASs narrow the variety of information to practices such as budgeting and product costing (Chenhall, 2003). These systems are considered to be only a part of the entire spectrum of control mechanisms used to monitor, measure, motivate and sanction the actions of managers and employees (Macintosh and Quattrone, 2009).
Traditionally, MASs were mostly focused on financial aspects of operations, such as product costs and budgets (Abernethy, 2000; Vaivio, 1999). During the years, however, an evolution has occurred which broadened the scope of these systems by including non-financial perspectives and variables such as customer retention rate and employee productivity rate. These non-financial measures provide more penetrating control, going beyond the boundaries of the diagnostic roles of the financial measures (Vaivio, 1999). By means of employing these different types of measures, MAS is considered a system that provides benchmarking in addition to the internal, and historical information traditionally generated by management accounting systems (Mia and Clarke, 1999).
limited to providing information that is internally focused, financial, and historically-based. A broad-scope involves also external information, non-financial and future-based. The integration dimension refers to the intradepartmental information transfer. Meaning, it consists of information about the functioning of other departments, and how their decisions can influence each other’s performance. This information can be related to the volume of output produced by one department and the costs and revenues linked to this output. Further, the aggregation dimension implies the grouping of information according to the functional level and the time period. Through aggregation, departments can clearly monitor their progress and take appropriate measures if needed. Lastly, the dimension regarding the timeliness refers to the frequency of reporting and its speed. Frequency meaning how information is provided to managers while speed regards the time lag between the request and reception of the information.
A good example of the broadening of the focus of accounting systems is the Balanced Scorecard (Kaplan and Norton, 1992). This approach, to evaluate whether the performance of an organization is in accordance to its strategy, measures several perspectives through the use of different indicators. This system not only asses the traditional financial and accounting measures, such as the cash flow and the return on equity, but also the customer satisfaction (e.g. customer retention rate), the learning and growth (e.g. training of employees), and the internal business processes (e.g. product quality) (Kaplan and Norton, 1992).
2.1.4 Enterprise Resource Planning – From an inventory system to an interdepartmental resource system
The Implementation Factors of a Complex System – The EP 18 The origins of the ERP lies in the early systems of inventory control focused on the most efficient way to manage the large volumes of inventory. However, companies realized that it was expensive to keep large amounts of inventories. As a result a computerized system was introduced to keep track of the materials used in production, aiming to maintain inventories low. This subsequently evolved into a system supporting the planning of sales and production levels, involving more departments in the functioning of the organization (Umble et al., 2003). After years of evolution, ERP can be defined as a customizable, standard application software which includes integrated business solutions for the core processes (e.g. production planning and control, warehouse management) and the main administrative functions (e.g. accounting, human resource management) of an enterprise (Rosemann, 1999). Klaus et al. (2000) on the other hand, define an ERP system as a comprehensive package of software solutions seeking to integrate the complete range of business processes and functions in order to present a holistic view of the business from a single information and IT architecture.
An ERP-system has also additional characteristics that distinguish it from other systems (Klaus et. al, 2000). Firstly, these systems are clearly application softwares, therefore differentiating itself from data management software and operating software. It is based on an integrated database that stores master and transactional data in a consistent way. ERP aims to support all business functions of an enterprise, especially, procurement, production, material management, logistics, financial accounting, asset management, quality management, sales and strategic planning. Another feature is that it targets multiple industries with different characteristics being very hard to list all the functions of an ERP. However, an example of its functionality across different industries is the coordination of information between manufacturing and retailing. Finally, its frequent use is a relevant aspect considering it does not focus on less structured or irregular processes such as marketing, product development or project management.
2.1.5 Conclusion
shape to the whole system. This overlap and interaction can lead to the characterization of a new kind of system that has characteristics of several types of systems. This complex system will have to be seen in its totality instead of different separated tools. Meaning that a variation of factors has to be taken into account and that organizations have to view this complex system in its totality. This leads to the need of new approaches towards associated theories that can assist organizations when dealing with system-related issues.
An important situation where organizations have to look at systems as being complex, is during a system change. Since the focus of this thesis concerns the implementation process of the EP, which later will be characterized as being complex, the following section will identify the most relevant factors regarding the Action stage of a change process of a complex system.
2.2 The influence of implementation factors
In today’s competitive business environment, the key resource of every organization is information. If the organization does not have an efficient and effective mechanism or system that enables it to give the decision-makers the right information at the right time, then the chances of that organization succeeding are very remote (Leon, 2008). In this case we consider efficiency being a measure of what is produced by what is consumed, and effectiveness, a measure of the extent to which a system achieves its goals; it can be computed by dividing the goals actually achieved by the total of the stated goals (Stair and Reynolds, 2011).
The Implementation Factors of a Complex System – The EP 20 The following table provides an overview on the most significant characteristics according to the system type.
System Type Implementation Factors Authors
End User Involvement Sharma and Yetton (2003); Ginzberg (1978)
Designer Contribution Sharma and Yetton (2003); Ginzberg (1978)
Managerial Support Purvis et al. (2001); Aladwani, 2(001)
MCS
MCS/MAS
Tightness (or looseness) Merchant and van der Stede (2007); Holland
and Light (1999); Macintosh and Quattrone (2009)
Training Sharma and Yetton (2007); Wegner, (1987);
Argote, (2005) MIS
Structural Considerations Markus (1983); Zmud and Cox (1979)
Business Vision Holland and Light (1999); Somers and Nelson,
(2001); Kaplan and Norton (1992)
Legacy Systems Holland and Light (1999)
Project Schedule and Plans Holland and Light (1999)
Continuous Feedback, Monitoring and Consultation
Holland and Light (1999) ERP/MAS
ERP
Project Champion Holland and Light; Somers and Nelson (2001)
Table 2.1 Implementation Characteristics
2.2.1 Tightness (or looseness)
According to Malmi and Brown (2008), Management Control has much to do with the internal issues of the organization, such as the culture, remuneration models and budgetary constraints. The main question, therefore, when implementing a MCS is what will the effect be of these systems on the employees. Bearing in mind that an organization is nothing without its people, it is important that it treats every single step of a change with proper care.
Considering that an MCS can take several shapes and affect the behavior of employees in different ways, we can conclude that it is impossible to provide one clear implementation process. However, some general remarks can be mentioned which are relevant to almost any type of control systems.
employees will act as the organization wishes. The tightness is manifested in different ways depending on the type of control. In the case of results controls, results dimensions must be congruent with true organizational objectives, performance targets must be specific, there has to be an effective communication of results, and results should be directly linked to the accomplishment. Action controls should only be tight if it is highly likely that employees will not engage consistently in all the actions critical to the operations success. This is mainly because tight action controls can also have severe downturns such as, discouraging innovation and creativity, focus on known or established actions of lesser importance, and induce negative behaviors. The relevance of this topic for this thesis lies in the degree to which managers force the usage of the new system instead of the old one. For example there can be cases where employees can continue to use the old working method, and the new one is not yet considered as the standard. Management can impose employees to use the new system by defining penalties, rewards, or simply completely remove the old system. According to Holland and Light (1999), the best way of achieving implementation success is by imposing the complete usage of the new system instead of the old one. This reduces uncertainty and increases employees’ determination and motivation to continue with the system change.
2.2.2 Designer Contribution
The Implementation Factors of a Complex System – The EP 22
2.2.3 Managerial Support
There are also some issues linked to managers who decided in the first place that it was time for improvement. As with the designers, their own behavior is the aspect on which they have most control. Purvis et al. (2001) discuss that management support is primarily relevant because most new systems during their implementation phase are very resource intensive. That is, they can require a large amount of working hours, infrastructure, training, consultants and money. In most cases, the effects of the change are not directly visible, and due to the high costs, it can be a challenge for managers to maintain their support on the project. Further, actions of support by senior management in the form of personal involvement and organizational communications are of significant relevance for success (Purvis et al., 2001). Particularly when management is faced with unwanted attitudes from users who resist the implementation process. The role of management, in such a situation is to proactively react to these situations instead of confronting them, a way to realize this is by showing support (Aladwani, 2001).
2.2.4 User Involvement
A successful new system implementation also requires the additional involvement of the end user (Sharma and Yetton, 2003). Firstly, users must take time to think about the improvements to be made and the consequences they will have on the daily operations. If there is a mismatch between their wants and needs, the project is bound to turn into a failure. Secondly, the user must be willing to consider new modes of functioning, and therefore putting an effort in trying to achieve the goals of change. Finally, the user must recognize that his time and commitment is required and that he is responsible for the relation with the designer. The user must demand the designer to be a change agent instead of a technician. In addition, a periodical check of the user with his own demands should keep the project in the right direction (Ginzberg, 1978).
2.2.5 Training
responsibilities of organizational members (Zmud and Cox, 1979). A way of overcoming these complexities is by clarifying and improving the implementation phase through training.
According to Alter and Ginzberg (1978), the “Action” stage is where the user and designer implement the “best” alternative, providing the necessary training for the effective use of the system in all affected parts of the organization. In their study, Sharma and Yetton (2007) find out that the effect of training on implementation success is contingent on both technical complexity and task interdependence. This is represented in the following figure.
Figure 2.4 Training and IS implementation success (Sharma and Yetton, 2007)
The Implementation Factors of a Complex System – The EP 24 Finally, the role of task interdependence can be divided into three arguments. First, the introduction of an interdependent-use of an Information System innovation is often accompanied by new business process that disrupt the status quo. By means of training the application knowledge is restored. Second, as mentioned before, training develops the collaborative task knowledge, improving individuals’ ability to learn from each other’s skills and knowledge, facilitating the task interdependence. Third, the transactive memory, which is related to the knowledge pool created by means of training, also diminishes the disadvantages of task interdependence.
2.2.6 Structural Consideration
An additional relevant issue regarding the implementation process of a MIS concerns the structural considerations. New information systems may stipulate a division of roles and responsibilities different from existing ones. They may form interactions that are different with the current organizational culture. In this light, systems can be viewed as a vehicle for creating organizational change (Markus, 1983). Interaction that arises due to the management support in the implementation phase may create another type of structure that facilitates change and empowers communication between layers. These changes in structure can have a temporary character (Zmud and Cox, 1979), limiting its duration until the completion of the change or implementation. This subject is not considered a key aspect influencing the implementation success, however it does facilitate communication and finally it will lead to increased management support.
2.2.7 Business Vision and Implementation Strategy
2.2.8 Legacy Systems
Legacy systems dictate the starting point for implementation. These systems summarize organizational structure, culture around the existing information technology (Holland and Light, 1999). For example, if the legacy is very complex, than the amount of technical and organizational change needed is high. A smooth transaction depends on the amount of differences between the systems.
2.2.9 Project Schedule and Plans
Project schedule and plans should be clarified beforehand. This reduces uncertainty and maintains the momentum in the implementation. This schedule should specify the phases of the implementation and the roles that each player has during this process.
2.2.10 Continuous Feedback, Monitoring, Support, and Consultation
During the entire implementation, the aspect on which the designers and managers can exert the most control is on their own behavior. This can determine the success or failure of a system. Continuous feedback, monitoring, support, and consultation is imperative, not only in the relation between the user and the developer, but also between management and users. Through this, key players are constantly aware of what is happening and barriers that might arise can be overcome more effectively.
2.2.11 Project Champion
The Implementation Factors of a Complex System – The EP 26
2.2.12 Implementation Model
As mentioned before, the above-described aspects can be regarded as being the most relevant factors during the action stage based on the importance given by researchers in their papers. In many cases, factors are important for more than a single type of system. For example, management support and user involvement was brought-up in articles concerning ERP (Holland and Light, 1999), as well as MCS (Purvis et al., 2001) and MIS (Lucey, 2005). The following model brings these characteristics together. Despite the fact that the system is complex due to the variety of characteristics, it does not mean that its implementation model also needs to be complex. Users, designers and management are the key players around whom the whole implementation process takes place. Around these players we propose a circular shape representing the continuous need for feedback, support, monitoring and consultation between these players. The designer is responsible for a proper training since he is the one with the most knowledge concerning the new system. Management has to decide on the motivation or pressure imposed on the users to use the new system. In addition there should be a project champion among the users who acts as a promoter of the change, and is able to assist other users in case the designer is not present. Finally, the alignment of the business vision with the new system, the implementation strategy, the structural changes, the schedules and plans for the change and the consideration to be made concerning the existing systems, are issues that lie at the base of the action stage, meaning that these factors are of particular importance and should be taken into account before and during the process.
Based on this model the action stage of the EP will be evaluated. This provides a structured manner to study and assess the development of this stage, and it can serve as being a reference for future system changes.
3. Methodology
In the following section the research design and its methodology will be described. This involves a complete description regarding the interviews and questionnaires, the information personally gathered through own experience, as well as the method of data processing and analysis. Before attending these issues, a timeline is provided in order to understand the evolution of this thesis.
3.1 Definition of the study
This thesis can be viewed in two separate parts. Namely, the first part can be regarded as being the “reflection” type of pure research. This concerns the theoretical part of the paper, where a description is made of several different implementation characteristics that are linked to separate types of systems. According to Eastherby-Smith et al. (2002), “reflection” is an outcome from pure research, where an existing theory or group of theories are re-examined, resulting in the modification or transformation of original ideas. In this case the modification entails the proposition of a model that integrates the most relevant characteristics in the action stage of the described systems. This results in a model to be used for complex systems, which will then be used as a guideline for the evaluation of the EP.
The second part of the paper consists of a case study where the “reflection” from the first part is used in order to analyze the action stage of the EP. This is the most relevant section for Company X NL considering that a favorable outcome can facilitate the transition from the action stage to the evaluation phase, where assessments are made and where is decided to evolve or to terminate the project.
3.2 Data Sources
The Implementation Factors of a Complex System – The EP 28 for example: secondary data analysis (e.g. literature review), using experience from other persons, and a discussion with a focus group. On the other hand, explanatory techniques concentrate on statistical methods to explain relations between variables. The data for the statistics can be retrieved from different types of surveys, for example interviews or questionnaires.
In the case of this thesis, qualitative type of data is collected from the internship, literature and interviews. The interviews are considered to be a qualitative source since they provide information concerning the system and are not used for statistical purposes. The questionnaires, on the other hand, represent the quantitative source. Based on the answers, a statistical analysis can be made on which the final conclusions can be formulated.
3.2.1 Internship
During the internship one of the tasks was to assist the account manager with the preparation of promotional activities. This preparation includes several steps such as, the planning of the promotion, spreading the budgets, making the offer and calculating forecasts. Throughout the six months many promotional activities have been processed, meaning that with the accumulated experience and the additional training on the EP, the researcher has gained a clear perspective on the workings of the new system. This has led to the starting point of the theoretical section where four specific types of systems are described, aiming at narrowing the focus of the thesis.
3.2.2 Literature
(Koninklijke Bibliotheek) were visited to search for relevant textbooks and journals regarding the theoretical review and the methodology.
In order to have a better understanding of the EP, the manual was studied and the power point presentations regarding the introduction of the new system were used as guidelines for the section regarding the EP.
3.2.3 Interviews
According to Burgess (1982, p.165) the main goals of the interview ‘is the opportunity for
the researcher to probe deeply to uncover new clues, open up new dimensions of a problem and to secure vivid, accurate inclusive accounts that are based on personal experience’. This
translates the choice of performing two interviews with the designer and two interviews with one account manager. Namely, the first two interviews provided a general idea concerning the functioning and ideas behind the EP. Whereas the second two interviews were more focused on the theory and subject of the thesis, providing good insights for the formulation of questionnaires to be distributed among the respondents. After the analysis of the questionnaires a final informal interview was planned with one user in order to obtain answers to questions regarding some outcomes of the data analysis.
The account manager who was chosen for the interview has over five years of experience at Company X NL. He started as a marketer and afterwards moved to sales where he currently fulfills the function of key account manager. With his experience in two departments (marketing and sales) where the EP was implemented the interview gained more dept and relevance for this research. The designer has over 6 years of working experience at Company X, and has broad knowledge about developing software systems. In addition, when not working on a new project, the main focus lies on the planning and logistics divisions of cosmetics in the Netherlands and Belgium.
The first interviews had a rather informal character, while the second session was more formal (Appendix II, III), where the researcher prepared a list of questions and where clear instructions were given concerning the questions and answers.
3.2.4 Questionnaires
The Implementation Factors of a Complex System – The EP 30 can be sure that an instrument measures the attribute supposed to measure. Whereas reliability concerns whether the same result will be provided if an instrument is administered to the same individual on two different occasions (Eastherby-Smith et al. 2002). A starting point to assure these requirements is the proper design of the questionnaire. Most of the questions are in the Likert interval scale format (strongly disagree, disagree, neither disagree or agree, agree, strongly agree). This technique is mostly effective when it is required to attain people’s ideas on certain issues or conclusions. In addition, it ‘can obtain summated value in order to
measure a more general construct’ (Flynn et al., 1990). The questions are focused in
gathering information on the action stage of the EP based on the model described in chapter
2.2.12. This information will provide the means to evaluate the action phase according to each
factor. Furthermore, respondents will have to choose the department to which they belong. This provides the means to filter whether there are obvious differences between the two, and whether further research is needed.
To prevent misunderstanding of words, definitions of “implementation process”, “legacy”, “structural considerations”, “project schedule and plans”, “project champion” and “tightness” were given. The questions were then divided according to the variables in the model. This gave the questionnaire more structure and therefore provided the respondents a better understanding about the questions.
3.2.4.1 Respondents
do not have to work with the system on a daily basis, rather they only have knowledge about the basics.
3.3 Methods of data analysis
One of the issues with qualitative data is how to transform very “complex and context-bound
information into a format which tells a story in a way that is fully convincing to the reader”
(Eastherby-Smith et al. 2002). According to Eastherby-Smith et al. (2002), there are two different ways to analyze qualitative data. Firstly, content analysis is primarily characterized by the attribution of ‘numbers’ to the data. This way the researcher can codify the data, and thereby, find patterns or inconsistencies in the gathered data. The second method of analysis is the grounded analysis. This method is mainly distinguished by the fact that the researcher follows his feeling and intuition, with the objective of producing similar or distinctive patterns in the data that can be exploited for interpretation (Eastherby-Smith et al. 2002). The section concerning the conclusions made regarding the literature mainly is characterized by the application of the grounded methodology. Conclusions are made based on the interpretations from the literature and the generalized perspective on the future developments of these theories is, for most part, based on conscious reasoning.
The Implementation Factors of a Complex System – The EP 32 4. EP
As mentioned before, the department of cosmetics Company X NL always struggled with the effectiveness in the communication process between the departments of sales and marketing. The complete lack of integration between several tools needed for planning promotional campaigns was one of the main reasons for which management decided that it was time for a new approach towards this issue.
4.1 The old system - VP
In the past promotion development, creation and follow-up was done in different ‘isolated’ tools, characterized by a lot of manual input/rework and with a complete lack of integration between the several tools. Although the actual VP was only a separate tool of the whole system, the grouping of the following tools was also called the VP.
4.2 The new system – EP
Due to the above-mentioned issues, management decided to develop a system that would encourage integration between tools and improve the communication between departments. This system was developed in-house and therefore no external intervention was needed. As with the VP, the EP is also a tool that is part of a system. However, the total combination of tools is referred as EP. By the implementation of the new system, six tools needed by the VP become four:
The EP tool intends to coordinate the planning of several types of promotional activities, such as: promotions without packing (price promotions); 100% repeat; packing cartons; co-packing displays/trays; co-co-packing with special premiums; and launch/re-launch/delisting. With the VP, the file formats between activities differed and often separate tools were needed. However, now only one is required, facilitating the tasks of managers.
Next to the actual tool EP, there is also the new one, OPX. Within this tool it is possible to do the follow up of budgets for different promotions, meaning it will be easier to distribute resources through future activities. Also there will be more transparency, with a central, up-to-date overview of promotional planning. This will additionally provide Company X NL the possibility of strengthening its brand & accountmatrix.
YXZ is a tool made for nation wide promotions for which co-packing is needed. The main advantage of YXZ is that it can link with information from other countries. This information is essential for planning purposes and steers the activities of the co-pack coordinator. Currently the YXZ is out of maintenance, however this is not a problem since there are hardly any co-packed national promotions in the Netherlands.
The Implementation Factors of a Complex System – The EP 34 The interaction between the different tools is the main strength of the EP. It facilitates the communication between departments and provides transparency regarding the available information. This ‘package’ of systems, makes the EP a particularly complex system, difficult to characterize according to the traditional theories. It has characteristics of Management Control Systems, namely the budgets and the approval for all activities from superiors are good examples of control. On the other hand, it also distinguishes itself as being a Management Information System since it converts data into information, and communicates that information in an appropriate form to managers, to enable them to make timely and effective decisions (Lucey, 2005). Moreover, characteristics of a Management Accounting System are also found in the budgeting, but also in product costing and promotion profitability. Finally, one of the primary tasks of the EP is to constantly ensure the availability of products by managing shortages and optimizing stock levels. These objectives can easily be related to an Enterprise Resource Planning system, considering that these type of systems can be defined as customizable, standard application software’s that include integrated business solutions for processes such as, production planning and control, and warehouse management (Rosemann, 1999).
5. Data Analysis and Results
This chapter shows the relevant information retrieved from the interviews and from the surveys. The first two pilot interviews were important for the direction of the theoretical chapters and the thesis in general. These two interviews clarified that the thesis would concern the EP, and in particular the action stage of the change process.
For this section however, the second two interviews are more relevant. These interviews provided the guidelines for making the survey, and they gave better insights on some topics. Therefore the following parts make reference to, not only the surveys, but also the interviews. In some cases, where the formal interviews and the surveys couldn’t explain the results, reference will be made to a last informal interview. This interview was performed after analyzing the results of the surveys, with the intention of retrieving clarification concerning certain results. The results and the analysis is divided into the separate factors, providing a clear overview of the outcomes.
5.1 Marketing vs Sales
Users from marketing and sales mostly agree in their responses. The major variation between the two departments is that sales is more explicit and unambiguous in some answers. For example in question 7 and 15, 57% of the respondents answer, “strongly disagree”, whereas marketing disagrees with a response rate of 43% and 29% respectively. Despite this difference, the conclusions that can be made for one department can also be made for the other, since no specific contradictions are found in the data. Therefore, when analyzing the data, the following sections will not make a distinction between marketing and sales.
5.2 Designer
The Implementation Factors of a Complex System – The EP 36
5.3 Management
For the surveys management was identified as being the direct supervisor. For the account managers, management was composed by the key account managers and subsidiary directors. Management involvement in the implementation process was however, not considered to be very important. Only 21% found management’s contribution to be relevant, and most users did not approach them when having problems with the EP, nor did they receive feedback from them. In the interview, the designer stated that “they (management) stayed more on the background and regularly showed interest on the progress of the implementation”. This was not considered to be a negative issue because “the change had no strong influence on the culture or organizational structure” (designer). Moreover, from the 14 respondents, 11 found that management was committed to the change process, and 8 regarded their support to be sufficient.
5.4 User
Overall users were able to make suggestions for improvements of the EP (71%), and most of these suggestions were appreciated and actually applied to the new system. As mentioned by the interviewee (user), this gave users an extra motivation to actually understand the system. The only discrepancy in the answers is that 9 account managers agreed to the fact they had suggestions for improvement of the system, yet only 6 of them explained their suggestions to the designer. The reason for this cannot be retrieved from this data. However, after the last informal interview, the user explained that not all suggestions were of great importance and therefore not worth to mention. For example, a separate color for each of the tabs where different information has to be filled in. Finally, the majority was satisfied with the outcome.
5.5 Training
hours of training, biasing to a certain extent the training-hour average. The reason for this is because this person was chosen to be the “project champion”. This topic will be described in more detail later in this chapter.
Regarding the quality and the amount of training, 13 respondents believed that the training was good and enough. Finally, 8 users received training from the designer whereas the other 6, from another user. The satisfaction levels between the two groups does not vary much, however only 1 account manager that received training from another user, qualified the training as being neither good nor bad.
On average account managers spent around 2 hours during the first month coping with problems in EP, whereas today they only spend about 24 minutes. According to the interviewee (user), the primary reason for these problems emerge when users have to plan a new kind and different sort of promotional activity. In most of these cases confusion arises concerning the information required and the people that need to be involved in such promotion. Finally, technical problems, such as the inability of uploading a document or inserting information in a certain field are issues that can happen occasionally.
5.6 Tightness
From the answers to the questionnaire and from the interviews, it is made clear that it was not possible to use the old system during the implementation process. Consequently, users were obliged to use the new system. Further, no penalty or reward system was used for motivation purposes. One manager actually stated that “no such system was needed since they had no other way to do their job.”
5.7 Project Champion
The Implementation Factors of a Complex System – The EP 38 the interview that one account manager received more training, so that this person could assist other users and provide training himself, when she was not at the office.
5.8 Business Vision
Concerning the vision and objectives of the EP, respondents mostly agreed that they coincide with the overall business vision, and that the departments of marketing and sales follow the same view regarding the EP. In addition, 71% agree that the objectives of the EP were made clear before its implementation.
5.9 Implementation Strategy
According to the designer it was essential to develop a customized system that could attend the needs and objectives of the organization. Company X decided to build and design the EP in-house for several reasons. First, it had the knowledge to design such a system. Secondly, the designer was acquainted with the way the account managers worked and the culture present in this department. Thirdly, it was less expensive than to hire an outside firm to fulfill the task. Finally, the designer stated that the change was not radical in terms of strategy, meaning no extra help was needed. Overall, the users considered this implementation strategy to be effective, with 50% agreeing and 29% strongly agreeing with this statement.
5.10 Structural Considerations
Most of the respondents (71%) neither agreed nor disagreed with the statement that there was a secondary structure with the purpose of facilitating the implementation process. This might be due to the fact that respondents did not understand the question leading to such a response outcome. However, in both interviews it was made clear that there was no need for such a supportive structure due to the small amount of users, and the openness of the business culture. Nevertheless, 57% agreed that the existence of a separate structure might have facilitated the communication between the players.
5.11 Project Schedule and Plan
with the VP. The second stage was made of training sessions, followed by the third stage, where the users actually started using the EP, however with regular presence of the designer at the office. Finally, the users were given more independence, and the implementation process was considered to be complete. All account managers (13) agreed to the fact that there was a clear implementation plan and that they were briefed about the change, before the actual implementation.
5.12 System Legacy
The Implementation Factors of a Complex System – The EP 40 6. Conclusion
