Stakeholders’ power and interest positions during change By

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Stakeholders’ power and interest positions during change

By Laura Witteveen S2194201 Vilsterkamp 14 7721WH Dalfsen (+31) 629309990 Laurawitteveen@hotmail.com

Master Thesis, MSc BA, Change Management

Report, Business Administration

University of Groningen, Faculty of Economics and Business

24 November 2014 Total number of words: 12.814

Supervisors /University Dr. C. Reezigt Supervisors /NN

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Abstract

This study concerns the relationship between the power and interests of stakeholders to an enterprise resource planning (ERP) system implementation and the usage of that system. The thesis shows that involvement, the decision-making process, and the system influenced the power and interest of stakeholders during and after implementation. Furthermore, organizational goals and resistance influenced the usage of the new system by customers and users. Powerful stakeholders with strong claims used organizational goals to implement and influence the usage of the ERP system. Less powerful stakeholders and powerful stakeholders with low levels of interest in the system influenced the usage of the system by showing resistive behaviors.

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1. Introduction

The implementation of an enterprise resource planning (ERP) system has become a common change event (Cumming et al., 2008). Enterprise system software composes a multi-billion dollar industry, and it is one of the largest information technology (IT) investments an organization can make (Teltumbde, 2000). An ERP system is a packed business software system designed to integrate, standardize, and automate processes within organizations (Boonstra & de Vries, 2012). Researchers and practitioners have mentioned many potential benefits resulting from a successful ERP system implementation: reduced overall costs (communication, inventory, production, labor, IT maintenance, and shipping), improved process flow, better data analysis, improved decision-making processes, improved coordination through the supply chain, and better customer service (Gather & Goodhue, 2005). In spite of the many benefits, organizations underestimate the complexity of implementing an ERP system. Chang (2004) stated the following failure rates of ERP implementations: (a) 90% are delayed or over budget, (b) 67% fail to achieve corporate goals, and (c) more than 40% completely fail. These failure rates are caused by paying insufficient attention when managing the following factors: leadership (42%), organizational culture (27%), human and people (23%), and technology and other issues (8%) (Waters, 2006).

Many problems related to an ERP implementation are due to a mismatch between the system and the characteristics of the organization (Markus & Tanis, 2000). Boonstra and de Vries (2005) mentioned that an ERP implementation involves complicated processes, since many different stakeholders and social structures within the organization are affected by it. This is similar to the findings of Low and Locke (2008), who stated that “ERP implementations are often accompanied by increasing level of stress in organizations that place pressures on organizational relationships and structures” (p. 375). This means that an ERP system implementation can be viewed as an organizational change project rather than a technical process aimed at adopting an information system (Adam & O’Doherty, 2000; Adam & Sammon, 2004; Dery et al., 2006; Palanisamy, 2008; Boonstra & Govers, 2009). However, studies regarding the complex dynamics occurring during the process of implementing an ERP system are scarce (Shin, 2006). One of these studies was conducted by Boonstra and de Vries (2012), who found support for the idea that an ERP system implementation not only encompasses technical processes, but also a change in socially constructed processes. They found that an implementation process becomes more complex and difficult to manage when stakeholders, whatever power they have, oppose the ERP system. This study indicates that stakeholders continuously assess the implementation process based on whether the system fosters their interests.

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5 primarily explored from the perceptions of managers. There are few studies that examined the critical success factors of an ERP implementation viewed from the perspectives of key stakeholders.

To address the research gap of complex dynamics that occur during an ERP implementation, this paper will attempt to discover the underlying mechanisms of the social processes, rather than only the technical processes, by utilizing the perspectives of various stakeholder groups. A power and interests approach will be adopted in order to analyze the influence of different stakeholder groups on the usage of an ERP system and how the power and interest positions of stakeholders are affected by the ERP implementation. By addressing the perspectives of involved and uninvolved stakeholders, a deeper insight will be gained into the way the ERP system is used and how stakeholders enable the system or form a barrier during the implementation process. This leads to the following research questions: How did the ERP implementation affect the power and interests of stakeholders? How do the power and interests of stakeholders influence the usage of an ERP system?

This research is explorative and is concerned with a case analysed by the Income department at the insurance company Nationale Nederlanden (NN) located in the Netherlands. Approximately 2,5 years ago NN started the development of ? (SAP) for their Income department. The company is building the system in stages by a classification of different products, and at the beginning of this year, it converted its first product to SAP.

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2. Theoretical perspectives

This section will provide a brief overview of some relevant theories in the field of information systems and change management. The stakeholder´s theoretical, processual, interpretative, and integrationist model of change and the power and interests perspective will be discussed below.

2.1 Stakeholder theory

Freeman (1984) originally introduced the stakeholder model as a map in which seven stakeholder groups are identified: Shareholders, employees, customers, competitors, government, suppliers, and civil society. The concept of the stakeholder is defined in many different ways. However, the most widely known definition is from Freeman (1984), which states, “A stakeholder in an organization is (by definition) any group or individual who can affect, or is affected by the achievement of the organization’s objectives” (p. 255). Since this study is based on an ERP implementation, stakeholders are defined as “any group or individual who can affect or is affected by the ERPs” (Freeman, 1984, p. 225). The stakeholder theory provides methods and tools for managing and identifying stakeholder goals and objectives, for example Mitchell et al.’s (1997) stakeholder typology and Eden and Ackermann’s (1998) power-interest grid. Stakeholders are managed and identified by the inside-in and inside-out perspectives (Freeman, 1984). The inside-in perspective examines internal organization stakeholders, such as employees and managers, while the inside-out perspective considers groups (i.e., shareholders) connected to the company; however, it does so to a lesser degree than the inside-in perspective. The stakeholder approach is based on three statements: an organization owns a number of constituencies that affect others or are affected by stakeholders, stakeholder groups and the organization are affected by interactions and outcomes of processes undertaken by these groups, and the perceptions of these groups affect the viability of strategic action.

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7 The stakeholder perspective has not often been considered; the majority of those studies have been managerially focused. One of these studies from a stakeholder perspective concerning E-commerce and information systems (ERP) was conducted by Boonstra (2006). This study revealed that stakeholders’ interests are affected by the ERP system implementation, as well as how stakeholders viewed proposals to implement an ERP system in different ways. Boonstra (2006) suggested that an ERP implementation can be perceived as a negotiation process wherein various stakeholders try to use the ERP project to defend or to advance their individual or group interests. Other studies have suggested that stakeholder groups hold conflicting views on IT-related problems and that this is caused by cultural differences (Infinedo & Nahar, 2007). According to Schein (1992), top managers and IT personnel belong to different subcultures. Similar research by War and Peppard (1999) showed that there are cultural gaps between IT and business departments because these departments have different IT goals. A study by Singletary et al. (as cited in Infinedo and Nahar, 2007) indicates that benefits and disadvantages of an ERP implementation are affected by differences between managers, end users, and IT professionals. Finally, research by Bradley and Lee (2004) revealed that technicians and managers have different understandings about the levels of the training that should be provided.

2.2 Models of change (processual, interpretative, and integrationist)

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8 Orlikowski’s (1992) integrationist model proposes that there is interaction between people and technology during the system development, implementation, and use, and therefore, they can alter technologies. This also means that this interaction determines the results of IT investments. Due to this continuous interaction between people and technology, the system implementation will be different than originally expected (Buchanan & Badham, 2000). Assessing the power and culture relationships among different stakeholders and how they interact with the system is essential for understanding how a system is functioning in an organization. A study by Boonstra and de Vries (2009) was based on these theoretical perspectives, and they found that an ERP implementation is not solely related to the technical features of the system, but also to the way the ERP system is implemented and how it influences the culture, processes, finances, and power within the organization. This implies that an ERP implementation affects the interests of stakeholders, which often leads to opposing views held by various stakeholders.

2.3 Power and interests perspective

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9 stakeholders also use these power sources for promoting their own interests during the implementation process. Powerful stakeholders that have a high level of interest in ERP implementation can force less powerful stakeholders to use the system, even when the less powerful stakeholders’ individual interests in the system are low (Standifera & Wall, 2003). On the other hand, when stakeholders have a high level of interest in the system, but they lack of power to implement and use the system, it will be difficult to convince other stakeholders, with low individual interest, to use the system.

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3. Methodology

In this research, a qualitative approach was used to analyze a single case. The main objective of this study was to explore the underlying mechanisms that connect the power and interests of stakeholders to an ERP implementation and the usage of the system. The research questions are explorative and are designed to explore how the ERP implementation affects the power and interests of stakeholders and how these stakeholders influence the usage of an ERP system. The grounded theory approach seemed to be appropriate to follow, since the central issues in this study were unclear and had not been comprehensively examined (Eisenhardt, 1989). By using the case-study approach, a number of phases were conducted. First, there was a business phenomenon that was not thoroughly explained in academic literature. Second, this phenomenon was observed through the use of a single case. Third, an explanation was developed while findings were compared to existing theories. Finally, proposals were made to change or add information from the existing theories (Eisenhardt, 1989).

3.1 Data collection

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11 in this research. If the data had been collected from solely involved stakeholders, it might have offered a subjective view, which may have resulted in unreliable research results. Nevertheless, this does not signify that the uninvolved stakeholders were not affected in some way. The five stakeholder groups who contributed to the findings of this study are the following: Eight sales/service employees and sustainability employees (SSE), two relationship managers (RSM), two managers (M), two project team members (PTM), and three intermediaries (C). However, it is important to mention that several involved stakeholders occupied other positions before 1 January 2014. Two of the sales/service employees were formerly members of the pilot team and one of them was also active as a business tester in the project team for approximately 1,5 years. One of the managers was involved in the development process of the new products related to SAP for approximately 1,5 years.

The primary source of data collection was semi-structured interviews with individual respondents. Semi-structured interviews were chosen as an instrument to secure the standardization of the process because standardization often increases the reliability of studies (van Aken et al., 2007). The semi-structured interviews were based on specific questions; however, some room was left for additional information. By doing so, the researcher gained more information and understanding about the situation.

Several other measurements were taken to increase the reliability of this study. First, interviews were conducted in enclosed rooms to ensure that others could not hear them. Secondly, interviews were not performed early in the morning to avoid respondents’ potentially negative moods. Finally, interviews were executed at different moments during the day to experience a multitude of circumstances. The interview questions were sent to the respondents (if possible) to give them some time to prepare for the interview and so they might think about possible answers. The in-depth interviews lasted between 45 and 90 minutes, although a few lasted up to 2,5 hours.

All semi-structured interviews were recorded and transcribed to systematically analyze the data. After each interview, necessarily adjustments were made in the interview guide to improve the quality of the interviews and to gain deductive and inductive results. All interviews were in Dutch, so quotations were translated to English.

3.2 Case description

This exploratory research was conducted at the Income department of a large insurance company. Since January 2014, this Income department had a new organizational team structure. The department consists of approximately 60 employees broken into four teams: the accounting team, relatiebeheer 1 and 2, and grootzakelijk.

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12 thus the maintenance costs were too high. The Income department also wanted to save costs within the division. As a consequence, Change and IT and the Income department preferred to cooperate in this process. The purpose of the system for the Income department was to replace manual jobs with automatic processes (SAP). The responsibilities of processing data were shifted from the department to the customers (intermediaries and end customers). To clarify, previously, customers sent their offers or policies on paper (post) or by email to the Income department and this department uploaded these offers manually into the system. The new process empowered customers to submit their policies or offers in an electronic environment (via a portal). The external portal is connected to the internal SAP system; thus, all incoming data are processed automatically into SAP.

Various parties started with the development of SAP ERP approximately 2,5 years ago. The business (Income department), product management, and marketing and communication cooperated to develop the requirements for the product design. SAP experts used these requirements to start working on the development of the new products in SAP. Meanwhile, a project team conversion was composed with eight business analysts, IT specialists, and three end users. The project team structure was based on an incremental software development framework for managing the product development (Scrum). Scrum adopts an empirical approach; this implies that the project team accepted that the problem could not be completely defined and thus tried to quickly deliver and respond to emerging requirements. Every two weeks, the project team made a selection of which features were going to be developed in the system. The deadline for the development of these features was two weeks, and after these two weeks, they continued with new features. It involved a participative decision-making process within the project team; however, the product owner eventually determined which features were developed. By using an empirical approach, the system development was not completely finished after the implementation. Furthermore, the Income department also established a pilot team in which various employees from the Income department were involved. The pilot team invited approximately 25 intermediaries to cooperate with them in testing the new products in the new system landscape. They selected both small and large intermediaries, where large intermediaries had more of their own expertise in house and smaller intermediaries were more dependent on the expertise of insurance companies.

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13 team discovered that SAP was more complex than they had estimated, so they needed more time for the development of the system. The original project plan was based on advice of SAP consultants, who apparently drafted unrealistic plans. Eventually, the conversion was performed on 1 January 2014, which meant a delay of 1,5 years. As a result, the new products and the conversion of 20.000 customers to SAP almost coincided. Thus, there was no time for people to become used to the system and to overcome inexperience. This had an exceptional impact on the organization, individuals, and customers.

3.3 Data analysis

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4. Results

4.1 Power and interest of stakeholders

The interests of stakeholders in the system after the ERP implementation were varied. Table 1 presents the interests of stakeholders by respondent group. This variation can be explained by several factors; one of them is the level of involvement in the implementation process. Some respondents were involved in a project team and/or pilot team. The Income department decided to involve three employees from the business in a project team, and subsequently, they involved more people in pilot teams. In general, the uninvolved stakeholders showed lower levels of interest in the system than those involved. However, the sales/service employees were more interested if the system would work as intended. This was because the system automatically processed less data than estimated. The data that was not processed automatically needed to be processed manually (mutations) by the users, which takes considerable time. The following quotation illustrates the problem:

If it should work as intended, then it would be an advantage. Because you remove or minimize one important bottleneck and those are the working stocks. In addition, the advisor knows what he can expect. He enters the date in adviseur.nn.nl, SAP processes this automatically, and the advisor receives an automatic output. However, until now, I have not experienced any advantages of SAP considering the situation. (SSE)

One involved sales/service employee who was formerly a business tester in the project team showed great interest in the system compared to his colleagues:

We are only speaking about the things that are going wrong, but we don’t see how much is going automatically. That is a great benefit. Others don’t have an insight into that or, at least, they don’t realize how many offers and mutations are processed directly. (SSE)

As the above quotations show, involvement in the implementation process leads to more expertise and understanding of the system and an increased interest. The stakeholder’s increased interest can be explained by the obtained expertise of the system during the implementation process. Because of this, the respondent was knowledgeable of the benefits of the system, even though not everything was working as intended in the current situation.

Another respondent who was actively involved in the development of the new products since the beginning also showed a high level of interest in the system. The manager mentioned this:

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15 The above quotations illustrate that the respondent thinks that the system is a great advantage for intermediaries, but the intermediaries did not experienced the system in the same way. They did not have much interest in the system: "We are not going to enter the same data for each insurer. Thus, we are working on a portal for ourselves” (C).

The project outcomes were different from what the project teams and consultants had proposed. Since they worked more with the system than estimated, this also influenced the interest of the users in the system. Additionally, there was no time left to educate and train employees; thus, they did not know how to work with the system. Peers were also not able to support each other, since there was one person at the department with sufficient knowledge about SAP. In addition, managers lacked the resources to support their employees and also lacked understanding of the system:

I am able to work with the system, but it is a cumbersome way of doing things. On many points, you should adjust things, a lot of layers. It is okay, but I don’t think that is the approach of the system, if we have to perform the mutations, then it isn’t efficient. (SSE)

One manager observed this:

The sentiment that I experienced was it is not working. It has many limitations. I don’t understand it. I don’t know how it works. I have questions from the customers, what a mess, and I didn’t receive any education. There was a lot of negative emotions about the system. The emotions are, in that way, if they are really true that is something different (M).

Another factor that explains how the interests of stakeholders are affected by the ERP implementation involves the inflexibility of the system. The system forced employees to provide custom fit to the customers, which is especially important for the relationship managers who try to convince customers to do business with them. Additionally, the system was missing some important features, which was also a disadvantage for the customers:

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16 The fact that there are problems with SAP, that does have influence on my work. I hope it can go as efficiently as possible because that saves me time, which I can spend on my customer, and that is what I like much more. (RSM)

An SSE also added this:

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18 Furthermore, the interview data revealed that knowledge was an important source of power. The importance of knowledge power can be explained by the level of involvement of stakeholders in the implementation process and their involvement in the decision-making process. The degree of stakeholders’ power changed during the implementation process and after the ERP implementation. This was caused by centralized decision making:

I think it is really good that we decided. They formally informed us about that, that there are a number of people in that team and they will decide everything. No discussion. Thus as a manager, I didn’t have influence on that anymore. (M)

An SSE went on to say this:

The temporary manager gave us all the freedom to decide what we thought was the right thing to do, and now to a lesser extent, that is logical; you should work stricter now because of the enormous working pressure, especially on the telephone, but also by email. So yes, you should follow a certain pattern. (SSE)

After the conversion, involved stakeholders from the business moved from the project team to new positions at the Income department. Due to this, their power decreased. However, the power of the people who were still involved in a project team increased. Because there was a lack of knowledge of SAP in the department, employees became dependent on people with expertise to make decisions (project teams and IT). Thus, the ERP implementation altered the division of power between the sales department and the designers of the system. Empowerment for the most employees decreased after the ERP implementation because the inflexibility of the system decreased their freedom to make decisions:

The system will not determine what I will do. On the other hand, we transferred to standardization so we say that everything that the system can handle is possible and everything that the system can’t process is theoretically not possible anymore. Previously, you had more freedom in that; you had more possibilities. (RSM)

As the following quotation illustrates, it was also related to missing features of the system:

The issues that I encounter and also intermediaries are the way of collecting insurance premiums. You can’t change that anymore once it is on direct payment. Then we can’t change the payment to the intermediary. It is the policy of NN, but with the old system it was much easier to deviate from that rather than with this system. (SSE)

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19 “You can’t change the premiums in SAP. If we are also going to do that with the remainder products, then I think it will have an enormous influence on my work”.

On the other hand, for some employees, their level of empowerment should increase compared to their former function. However, this was not directly related to the implementation of SAP, but more to a new organizational structure (new functions) aligned with the new system. Thus, in some way, this was affected by the new system, but it clearly depended more on the previous career of the employee:

I think I am going to feel more responsibility, if we are going to do more mutations and rear-end treatments. Because you are going to help a customer from A to Z. Due to this, I think you should be more responsible in order to help the customer, compared to my former function. (SSE)

The effect of the ERP implementation on the power positions and interests of stakeholders have been discussed above. However, there is also another side: how do stakeholders influence the outcomes of the project. This side will be explained below.

4.2 The influence of stakeholders on the project results

Top managers had a major influence on the project results. According to several respondents, they had clear interests in the system in order to save costs. They needed these cost savings for the stock exchange. This decision was not driven by internal change forces. External pressure from the European Commission forced them to separate the two companies, NN and ING. As a result, they were listed in the stock exchange as independent companies in order to stay profitable. To be successful as a company in the stock market, stakeholders must invest in the company by buying shares, but they will only do this when shares are attractive to buy. The Income department also wanted to save costs by replacing old systems with a new generic landscape (SAP ERP) because top management ordered the Income department by means of organizational goals to save costs within the division. Thus, there was some overlap in organizational and operational goals, as one respondent explained:

We want to innovate and convert at a low cost level. Thus, there is some overlap with the objectives. If they have certain objectives related to the cost level and we are not able to achieve them, then we need to explain that. Because they want that, NN is going to the stock exchange, which makes it difficult, so that is often also a political game. (PL)

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20 functions in the system to make the system more flexible to customer demands. Afterward, there was no time to educate and train users. Top managers did not approved the Income department’s proposal, as the follow quotation illustrates:

We couldn’t convince the board of directors to postpone the cost savings for another year. The board of directors stated, “you wanted to receive money for investment and we would like to have that money back. You told us that you were going to earn back the first part of the investment from 1 January of 2014 and now you are going to tell me that it is going to be until January 2015. That is not acceptable”. (PL).

The power, interests, and urgency of top managers to implement the SAP system had a major influence on the project results. Table 2 displays additional information about the project results by respondent group. One respondent explained this:

I understand that the conversion has technical costs because how soon you start, how soon you will save costs. I understand it all, but it was too much. In addition, there was no time to educate people; as a consequence, people were really thrown into the deep. As one colleague stated, flying without a license” (SSE)

Another respondent added this:

I understand that it is all about cost savings, etc., and that they want to go to the stock market at the end of the year. But I think they should have stabilized things first, so that people are more used to the situation. Now they first destroy a lot of things, and now you should rebuild it again. I think that is a shame, and I do not really understand that” (SSE).

Due to this decision, the system was missing some important functionality and was not working properly. There were a multitude of technical issues with the system; because of this, users had to work more with the system than estimated. Due to those technical issues, considerable data, which otherwise would be processed automatically, had to be processed manually. Processing data manually in the system is time consuming and is rather complex when users are not educated or trained to work with the system. There was only one person at the department who had sufficient knowledge about it; however, he was not able to work on the working stocks. As a consequence, the working stock in SAP increased significantly:

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21 The lack of expertise with and understanding of the system also affected the way the system was used, as this manager argued:

The danger is that everybody clicks enter because we said that everybody must click enter. So then everything will go fine. This is too black and white. But we don’t understand yet the background of the system. Why are you doing that, what will happen then, are you sure that everything will go well this way, are you sure you want to click enter. (M)

Furthermore, customers and users were forced to work with the system. Because the project team converted 20.000 insurance policies from the old system to the new generic landscape, users could no longer use the old systems for these products. Even that employees were forced to work with the new system by removing the old one; there was a limited use of SAP. Due to this, the working stocks increased significantly. Interestingly, one manager mentioned the following:

You see now, even though it is not my desired way of working, you bring people to a higher level. Because we were forced to work with the system, because customers are asking questions, you see that 80% of the questions that we couldn’t answer in the beginning, we can answer them now. (M)

The interview data revealed that users did not experience that in the same way. Users lacked expertise with and understanding of the system and the system was not easy to work with. Employees were also not in the position to obtain resources to make adaption easier. As a consequence, employees’ reactions became extremely negative regarding the system, and some employees developed resistance to the new system: “I avoid it intentionally. Sometimes when you are searching for something, and you think about it, okay, but where my personal opinion is? So no, I don’t think it is an enjoyable system to work with” (SSE).

Another organizational goal that influenced the way the system was used involves a quality label. Telephone calls increased significantly after the conversion. As a result, waits were sometimes more than one hour. Last year, they received a quality label for Klant gericht verzekeren. This quality label has several criteria, and one of them is quickly answering phone calls. Thus, the main priority of top management (and middle management) was telephone accessibility. Additionally, managers did not have the power and resources to provide organizational support to their employees in order to make adaption easier. Thus, middle management was not in the position to influence their team members to work with new system, which resulted in a limited use of the system and high working stocks in SAP, as this respondent noticed:

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22 This does not imply that employees should not work with the system, but there were no incentives related to performing mutations in the system. Thus, users had the freedom to decide if they were going work with the system. As this respondent mentioned, “I bounded myself, no creativity anymore. If they desire from me that I will arrange the telephone, then I will do that” (SSE).

Another respondent explained it this way:

We must be dedicated to the telephone. You can put off your phone to do some other things, but if it takes too long, then they will ask if you can do that another time when it is quieter. The main priority is that you can serve the customer on the telephone. And that is quite difficult, since I still have notes from last week, which should have been already processed manually in SAP. (SSE)

Furthermore, customers were also forced to work differently, but several customers resisted working this way and continued working the old way by sending emails. This was because customers did not want to take the responsibility of processing data, and according to them, it took too much time:

They are sending a lot of emails now, and then in general, the standard construction is to send an email back with “Great that you may be our customer. You can do it there and there, really easy, fast.” It is really important to mention the benefits. (M)

The manager went on to explain this:

Several agencies don’t want to do it. They argue that is your responsibility. I want to send one email to seven insurers. I want to have an offer for that, and damn, I am not going to enter data in seven different systems. That takes me too much time. That is a discussion you hear. But at the large agencies, it is more about the fact that if I am going to enter the data in the system, then it is also my responsibility and risks if I make a mistake. (M)

For some customer, the Income department made an exception and decided to take the responsibility by processing the data manually but only when there was a delay in processing the claim. Because some customers were already waiting for three months or more for their insurance claim or health insurance payment, since the working stocks in SAP were so high, it would not be customer friendly if customers should perform the tasks by themselves. In addition, there were some powerful stakeholders (intermediaries) with low levels of interest that resisted working this way and were able to convince the company to make exceptions for them:

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23 goes’”. But I think it is really good to make choices, for the top 15 most important agencies, I may understand it that we will do it for them. But still I don’t agree that our people should do that, then we should hire a typist office. (M)

The above data analysis leads to the following conceptual model (see Figure 1). The data analysis has revealed that several mechanisms, including involvement, decision-making processes, and the system, have contributed to the effect of the ERP implementation on the power and interest positions of stakeholders. The mechanism’s organizational goals and resistance explain how stakeholders’ interest and power influence the usage of the ERP system. First, the level of involvement influenced the expertise with the system, interest in the system, and their power position. Secondly, centralized decision making altered the distribution of power between employees from the sales department and the designers of the system. Thirdly, the system features decreased some employee’s empowerment and lowered their interests in the system. Furthermore, organizational goals and resistance negatively influenced the usage of the ERP system. Organizational goals were used by powerful stakeholders (top management) with urgent claims, and resistive behaviour occurred among powerful and less powerful stakeholders (users and customers) with low level interests in the system. Stakeholders’ usage of the system also influenced the power and interest because, when using the system, some users perceived the system as too complex and user-unfriendly, which decreased their interests in the system and their knowledge power (information) acquired by working with the system.

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Figure 1: Overview of causal relationships affecting power and interest of stakeholders, and the

project results.

Urgency and driving forces to implement the ERP system

Power and interest position of stakeholders

Power and interest attributes

Involvement Decision making process

The system

Resistance

Organizational goals

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5. Discussion

This section presents the results from the data analysis and links them to several existing theories. The structuration theory and interaction theory will be used to explain how stakeholders’ power and interest plays a role during and after an ERP implementation. The equity implementation model, status quo bias theory, and the technology acceptance literature will be used to explain why people resist or accept change.

5.1 Structuration theory

The influence of the ERP implementation on the power positions of stakeholders and how less powerful and more powerful stakeholders influence the usage of the ERP system can be explained from a structurational perspective on technology. Giddens (1984) described three modalities of structures that link the interaction of human action to institutional properties, including interpretive schemes, norms, and resources. The modalities of structuration determine how the institutional properties of social systems mediate human action and how human action shapes social structure. Giddens (1979) defined the linkage between the realms of social structure and human action as the process of structuration. Orlikowski and Robey (1991) argued that information technology constitutes a central part in this structuration process. Information technology is a medium, which provides a set of interpretive schemes, through which users come to structure and understand their world. Interpretive schemes are “standardized, shared stocks of knowledge of knowledge that humans draw on to interpret behavior and events, hence achieving meaningful interaction” (Orlikowski and Robey, 1991, p. 148). Information technology institutionalizes interpretive schemes due to formalizing, encoding, standardizing, sharing and taking for granted those stocks of knowledge. This implies that information technology contributes to the structure of signification. This was not yet identified in the analyzed case (in the current situation), where the ERP system did not translate human action into routines, and thus, users could not use the new system to structure and understand their world.

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29 Furthermore, another explanation can be found in the interaction between structure of domination and power mediated by resources. Resources are “the means through which intentions are realized, goals are accomplished, and power is exercised” (Orlikowski & Robey, 1991, p. 148). Information technology is a resource which human actors can use to perform their information processing activities and to make decisions. The design and deployment of information technology institutionalizes a structure of domination through the allocation of resources that alters the distribution of power within the organization. Implementing information technology may produce power struggles within organizations because it represents organizational conflict, challenge, and change (Orlikowski, 1988). Information is an important source of power (Pfeffer, 1981), and information technology determines differential access for human actors to acquire information. This was identified in the analyzed case, where the distribution of power changed between the sales department and the designers of the system. The designers obtained a significant degree of knowledge power and the power of the sales department decreased. As mentioned, this was caused by a low degree of involvement and knowledge transfer between these two departments. Furthermore, information technology is useful for controlling behaviour through the formalization of sanctions and the creation of an institutionalized moral order. Norms are “the rules governing sanctioned or appropriate conduct, and they define the legitimacy of interaction within a setting’s moral order” (Orlikowski & Robey, 1991, p. 148). The coalition that built and deployed the information technology will reinforce and internalize their goals, ideologies, and the culture of the organization. Although human actor’s hold conflicting goals and ideologies, the coalition will use the technology to reflect their goals and ideologies. In the analyzed case, this was observed because the decision-making process was centralized at the project teams (coalition). Thus, the project team was in the position to reinforce and internalize its goals and ideologies. However, centralized decision making had some negative influence on uninvolved stakeholders’ interest, but involved stakeholders embraced the new system. The organizational culture aids in explaining this. When an organization has a culture of participative decision making, human actors are encouraged to participate in the change project and are committed to the change (Jones et al., 2005; Robey et al., 2002). Employees will embrace the new system, since participation gives them a sense of ownership and control in their work (Ke & Wei, 2007).

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30 Gash, 1994). This is influenced by training, communication, and previous experiences. The technologies in practice are influenced by other structures enacted in the use of technology, such as the culture, incentive structure, and authority structures. Several employees did not believe that the system would enhance their job performances (low interest) because, in part, the features of the system constrained them when doing business with intermediaries and they were more concerned with relationship management. In addition, other structures, such as incentives, were mainly related to sales and there were no incentives for working with the system. As previously mentioned, their empowerment decreased after the implementation, and employees were confronted with authority structures when trying to resolve issues with the system. It seems that those other structures also influenced their level of interests in the system and lowered their empowerment.

5.2 Interaction theory

As mentioned, the ERP system affected employees’ power positions, through features of the system, from the sales department. For some employees, the level of empowerment decreased due to the features of the new system, which caused forms of resistance. In order to interpret these events, the interaction theory will be used. The interaction theory holds that the interaction of technical features of the system within the social context of that system cause resistance. Systems can change the balance of power in an organization: when people lose power, resistance occurs and those who gain it will accept the change (Markus, 1983). For instance, organizations with decentralized authority structures are resisted by people when the new system centralizes control over data. This is closely related to the analyzed case, where employees from the sales department were accustomed to making their own decisions (empowerment), but the new system constrained them with features that lowered their empowerment. As a result, the power of the employees from the sales department decreased and the designers of the new system obtained more knowledge power. For some individuals, this may explain their resistance to the system.

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31 concerned with providing service to customers (Mishra & Mishra, 2013). In the current situation, the system constrained users in providing service to customers due to problems and missing functionalities. Another theory that explains user resistance is the people-determined theory, which suggests that people resist a new system because of certain personal dimensions. The data analysis showed that some people tried to work with the system and some did not, even when the circumstances were the same. Self-efficacy for change and for organizational support may explain this. Self-efficacy will be discussed later.

The interaction theory focused mainly on analyzing conflict and struggle for power between different users groups and not the individual itself or between the individual and the employer. As mentioned above, people also showed resistance behaviour without a loss of power. This leads to the following theory: the equity-implementation (E-I) model. This model is also concerned with the two other levels of analysis.

5.3 Equity-implementation model

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32 the sales department, where users may have felt that the employer (top management) had obtained greater relative gains in the form of cost savings than the user himself/herself (increased working pressure). The issue of procedural fairness might also be relevant in the analyzed case. Users might have feel inequity because they did not have the power to influence the implementation process, since the majority of the users were not involved in the change project and they preferred to be. However, the E-I model does not include normative and control beliefs and the cost or threats associated with the new IS. Therefore, the status quo bias theory will be discussed in order to explain resistance or acceptance.

5.4 Status quo bias theory

The main objective of the status quo bias theory is to explain why people prefer to maintain their current status or situation (Kim & Kankanhalli, 2009). The status quo bias theory consists of three categories: rational decision making, cognitive misperceptions, and physiological commitment (Samuelson & Zeckhauser, 1988). In the first category, rational decision making implies that people make an assessment of relative costs and benefits of change before switching to a new alternative. They identify two types of costs: transition costs and uncertainty costs. Transition costs include the transient (learning costs) and permanent costs (loss of work due to the new IS) incurred in adapting to the new system. In the case analyzed, the costs were much greater than the benefits of the new system. The same is true for the permanent costs people experienced before the ERP implementation with regard to the reorganization and the system replacing manual work with automatic processes; people lost their colleagues and that this might happen again in the future. This also created fear and uncertainty, since people were afraid to lose their jobs, which leads to uncertainty costs. Uncertainty costs are the psychological uncertainty or perception of risk related to the new alternative; people may be unsure and anxious about the resulting change, which can cause status quo bias. This was evident in the case analyzed, where people became dissatisfied, emotional, and negative about the change because of a lack of a clear vision and/or plan.

Another category of the status quo bias theory is cognitive misperceptions, which implies that the perceptions of losses will appear to be larger than for gains. This may explain the status quo bias of customers toward the change. Interestingly, the new systems had great benefits for the customers but not everyone experienced that. It seems that the losses, in terms of entering data by themselves, appeared to be larger than the increased efficiency and effectiveness of the system.

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33 feelings and decreased inner activation to work with the system. Social norms include norms prevalent in the work environment of the change, which can cause status quo bias. For instance, colleagues may influence other people to accept or resist a new system. The influence of social norms was not observed in the analyzed case; this may be explained by the organizational culture. Before the ERP implementation, the organization redesigned its organizational structure. By doing this, people from different departments, with different cultures and backgrounds, merged into one division. This implies that the department’s organizational culture was not strong after the implementation. These different cultures influenced the way the people used the system because, when organizations have different cultures, people will also have different interpretations and perceptions about the change; this affects the status quo bias (Lau & Woodman, 1995). This was observed in the analyzed case; employees with a sales background were more concerned with the customer rather than the system than employees with an administration background.

Furthermore, another factor that explains status quo bias involves efforts to feel in control. Individuals wish to determine their own situations and do not like to lose control by switching to an unknown system (Samuelson & Zeckhauser, 1988). As previously mentioned in the data analysis, for some employees the degree of empowerment decreased after the ERP implementation. It seems that this gave them a feeling of losing control and increased their resistance to the new system. On the other hand, for some employees, their empowerment increased compared to their former functions. Those employees showed little resistance, and it seems that empowerment increased their control within the situation.

5.5 Technology acceptance literature

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34 employees with low self-efficacy. People with high self-efficacy also had more interest in the system, even when the degree of power and available resources were the same. Employees’ anxiety and uncertainty can be reduced by an organizational culture of support and collaboration, which increases their openness to sharing information with others (Ke & Wei, 2007). Boudrea and Robey (2005) argued that it is important for project leaders, power users, and peers to support users in using the system. A culture of support and collaboration gives employees the feeling they are valued in the organization, which encourage employees to embrace the ERP implementation (Eisenberger & Fasolo, 1990). This may explain resistive behaviour of employees with low self-efficacy, since there was little support from peers, power users, or project leaders in using the system; as observed in the analyzed case, this did not encourage these employees to embrace the new system.

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6. Conclusion

In this section, propositions will be developed based on the research findings and existing literature. Consequently, the practical implications for practitioners, future research, and limitations of this research will be discussed.

6.1 Theoretical implications

The above conducted discussion of the results compared with relevant theories has provided more understanding about how the interests and power positions of stakeholders are affected and how they influence the usage of an ERP system. The structuration theory was used to explain how stakeholders influence the usage of a new system. The interaction theory was relevant when explaining the altering power positions after a technology implementation. The equity-implementation model, status quo bias, and the technology acceptance literature provided more understanding about why people resist or accept change. In this section, propositions will be developed for future empirical testing.

First, the features of the system lowered the sales department employees’ power (empowerment) to make their own decisions. After the implementation, the employees and managers became dependent on the knowledge of IT and the project teams. On the other hand, for some employees, their level of empowerment increased compared to their former function. However, this was not directly related to the implementation of the system but more too changing job positions. In addition, the many problems with the system after implementation affected the stakeholders’ levels of interest. This leads to the following proposition:

Proposition 1: The design of the system alters the power distribution between the users and the designers of the system.

Secondly, the level of involvement during the implementation process influenced the interests of stakeholders in the system. Involved stakeholders obtained greater expertise with and understanding of the system. Due to this, they viewed the new system more positively compared to uninvolved stakeholders. Therefore, the next proposition was developed:

Proposition 2: Involvement in the implementation process leads to more expertise with and interest in the system and lowers resistant behaviour toward the system.

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36 Proposition 3: Centralized decision making by a particular group increases the knowledge power of that particular group and decreases the power and interests of uninvolved stakeholders.

Powerful stakeholders (senior management) forced less powerful stakeholders (employees and intermediaries) to use the system by making it impossible to use the old systems. The urgency of top management to implement the new system, due to other organizational goals, negatively influenced the way the system was used because the system was not fully developed and there was no time to educate or train users. Additionally, another organizational goal involving a quality label also had a negative influence on the usage of the ERP system. After the implementation, the main priority of top management (and middle management) was telephone accessibility and not working on the working stocks in SAP, which significantly increased after the conversion. This leads to the following propositions:

Proposition 4a: Powerful stakeholders with urgent claims to implement the system, by means of other organizational goals, lead to a limited use of the ERP system.

Proposition 4b:Misalignment between organizational goals and operational goals leads to negative project outcomes.

There were some powerful intermediaries with low levels of interest in the system who had been in the position to refuse to use the system (resistance). Even less powerful stakeholders with low levels of interest in the system were able to influence the usage of the new system through resistive behaviours. One reason for this was that middle management did not have the power and resources to influence other stakeholders (customers and users) to work with the system. Therefore, the following propositions have been developed:

Proposition 5a: A low degree of empowerment of middle management leads to more resistance and limited use of the ERP system by users.

Proposition 5b: A low degree of power and interest leads to more resistance toward the system.

6.2 Practical implications

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37 of system development. In addition, managers should not underestimate the complexity of ERP systems. Firstly, they should implement the system when it is sufficiently tested and completed. Secondly, users need time to accustom themselves to the system. Thirdly, informal and formal support systems are significantly important to the acceptance of the system.

6.3 Limitations and future research

This research has several limitations. First, the research examined a unique case, which constrains the generalizability of the findings. Therefore, this study cannot be repeated elsewhere under the same circumstances. Second, the study was conducted after the conversion stage, which made it more difficult to observe the changing power and interest positions of stakeholders during the implementation process. Another limitation relates to the reliability of this study; the data was analyzed, observed, and interpreted by one researcher. Fourth, the interviews with the respondents were recorded. This may have influenced the outcomes of this study because people may have hesitated to discuss their emotions, opinions, etc. Another limitation involves the theory development approach. The propositions that have been developed in this study have not yet been tested. Thus, it is unknown whether the propositions are true or false.

One important outcome of this study relates to the knowledge power of stakeholders. Future research could explore this source of power during ERP implementation in more detail. There were several other changes occurring that affected the outcomes of the implementation. For instance, the organization was pressured by the institutional environment because the company’s goal was be listed in the stock exchange. Additionally, several other insurance companies were also implementing ERP systems, which also may have pressured the organization to implement its own. It would be interesting to explore the relationship between the institutional environment and ERP implementation. Furthermore, this study was performed during one phase of the implementation process. Future research could investigate stakeholder’s interests and power positions and their influence during different phases of the implementation process. Consequently, the researcher could observe stakeholders’ changing power and interests during ERP implementation.

6.4 Acknowledgements

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Stakeholders’ power and interest positions during change By