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Enterprise Information Systems
Vol. 3, No. 4, November 2009, 425–448
How alignment strategies in?uence ERP project success
Mary R. Sumner*
Southern Illinois University Edwardsville, Computer Management and Information Systems,
Campus Box 1051, Edwardsville, IL 62026, USA
(Received 3 May 2009; ?nal version received 15 May 2009)
The purpose of the study was to conduct an analysis of ERP implementations to
develop a grounded theory of why, when, and how the successful alignment of
ERP-supported processes and business needs is achieved over time and to identify
alignment strategies that enable organisations to achieve a ‘?t’ between ERPsupported processes and business needs. The alignment strategies which support
the best practices revealed in the case studies include functional expertise,
knowledge integration, liaison mechanisms, project governance, and the scope
and integration of enterprise-wide processes.
Keywords: enterprise systems; functional expertise; knowledge integration; liaison
mechanisms; project governance
1.
Background and rationale
Enterprise systems are implemented to enable data integration, e?ciency, and crossfunctional process integration (Barki and Pinsonneault 2005, Gattiker and Goodhue
2005). The integration of data and processes requires that the ERP system be aligned
with the best practices that the system is designed to support. This is called ‘tight
coupling’.
When ERP systems are introduced into an organisation, there is often a ‘mis-?t’
between the best practices supported by the software and the existing processes of
the organisation. In order for ERP systems to be successful, the organisation can reengineer its processes to ‘?t’ the best practices supported by the ERP software. In
general, re-engineering or ‘tight coupling’ is needed to achieve the bene?ts of
integration and control that are associated with ERP implementation (Ciborra 2000,
Srivardhana and Pawlowski 2007, Sumner 2002).
However, the ‘gaps’ between the best practices of the ERP software and existing
organisational practices can be quite great (Soh et al. 2003). To address these gaps, one
alternative is to customise the software to support existing organisational processes.
Another alternative is for end-users to do ‘work-arounds’ or improvisations which lead
to ‘drift’. That is, end-users continue to conduct their practices outside the system (Soh
et al. 2003, Bourdreau and Robey 2005, Wagner and Newell 2004).
A number of researchers have examined settings where enterprise systems have
been implemented with ‘work-arounds’. This is known as ‘loose coupling’. ‘Loose
*Email: msumner@siue.edu
ISSN 1751-7575 print/ISSN 1751-7583 online
Ó 2009 Taylor & Francis
DOI: 10.1080/17517570903045617
http://www.informaworld.com
426
M.R. Sumner
coupling’ involves the timing and performance of activities di?erent from the
expectations of the system (Pollack and Cornford 2004, Wagner and Newell 2004,
Soh et al. 2003). The problem with ‘loose coupling’ is that the bene?ts of process and
data integration that should result from ERP implementation are compromised.
The dilemma between re-engineering processes to ?t the best practices supported
by the ERP software or customising the software to ?t current practices is an
organisational challenge. This dilemma calls for a better understanding of alignment
strategies. Hence, the purpose of this study is to determine the alignment strategies
which enable organisations to achieve a ?t between ERP and business needs.
2.
Research objectives
. To conduct an analysis of ERP implementations to develop a grounded theory
of why, when, and how the successful alignment of ERP-supported processes
and business needs is achieved over time.
. To identify alignment strategies that enable organisations to achieve a ‘?t’
between ERP-supported processes and business needs.
3.
Theoretical foundations
The purpose of this study is to analyse the organisational processes which are used
to achieve alignment between ERP functionality and business needs. The theory
of technology-mediated organisational change (Volko? 2007) suggests that an
enterprise system involves a complex and lengthy process of implementation and
change. A number of studies support the contention that ERP implementation is
aligned with competitive strategy. In a study investigating the relationship between
ERP implementation strategy and competitive strategy in ?ve case study ?rms, Yen
and Sheu reported that when ?rms focused on the competitive priorities of ?exibility
and quality, then ERP implementation practices were designed to support these
competitive priorities. Standardised manufacturing and operating processes were
implemented to support quality, consistency, and make-to-stock production. Other
implementation practices included centralisation of decision-making, software
customisation, information sharing, and data accessibility. When local autonomy
was a competitive priority, this resulted in greater package customisation and easier
accessibility to the ERP database. Cross-cultural factors and governmental policies
also in?uenced ERP implementation practices, including local software selection
(Yen and Sheu 2004).
In this study, speci?c alignment strategies will provide a theoretical perspective to
understanding the alignment of ERP-supported processes with business requirements. These alignment processes include functional expertise, knowledge integration, liaison mechanisms, project governance, and scope and integration.
3.1.
Functional expertise
ERP systems must support the functional requirements of the business. In addition,
because ERP systems integrate cross-functional processes, functional area managers
need to understand the inter-relationships among these processes. There is evidence
that knowledge sharing is more e?ective when groups are structurally diverse,
represent di?erent functions, work in di?erent business units, and report to di?erent
managers. Knowledge sharing across functional lines of the business can lead to
Enterprise Information Systems
427
better performance (Cummings 2004). The implication is that integration of ‘diverse
work groups’ supports performance. The research on success factors in ERP
implementation con?rms that business experts should be assigned to the project on a
full-time basis (Brown and Vessey 2003, Motwani 2002, Brady and Gargeya 2005).
3.2.
Knowledge integration
Organisational knowledge is embedded knowledge, knowledge which resides in
specialised relationships among individuals and groups and in the particular norms,
attitudes, information ?ows, and ways of making decisions that shape their dealings
with each other.
(Badaracco 1991)
Knowledge integration is the extent to which knowledge is shared across the
organisation and enables its members to better perform their tasks (Grant 1996).
Common knowledge includes specialised knowledge that is common to all
members of a group; it is integrated knowledge (Grant 1996). Knowledge
integration is the combination of specialised knowledge to create new knowledge
and to improve the organisation’s capabilities (Sabherwal and Beccera-Fernandez
2005).
An example of knowledge integration is functional managers who have technical
knowledge and can bring this technical knowledge to address real business problems.
Another example of knowledge integration is IT managers who have functional
business knowledge and can communicate with their functional manager counterparts. Knowledge integration is facilitated by the collaboration between team
members with functional business knowledge and team members with technical
knowledge.
The relationship between IS professionals and managers has to be one of mutual
understanding.
(Keen 1988)
Shared knowledge between IS professionals and line managers is important for
e?ective IS performance (Nelson and Cooprider 1996). Shared knowledge removes
barriers to understanding and acceptance between IS and line managers, (Krauss
and Fussell 1990), makes it possible to use IT to support the functions of the ?rm
(Henderson and Venkatraman 1993), and fosters interdependence that is critical in
complex environments (Schrage 1990).
Mutual trust and in?uence between IS professionals and their line customers
leads to increased shared knowledge (Nelson and Cooprider 1996). Mutual trust, the
expectation shared by IS and line groups that they will meet their commitments to
each other, is developed by repeatedly working together. Mutual in?uence is the
ability of groups to a?ect the key policies and decisions of each other. Mutual
in?uence results in mutual policy making and decision making, leading to shared
knowledge. Once shared knowledge is achieved, then groups can achieve superordinate goals that are bene?cial to both groups.
In a study of the factors that facilitate knowledge management in implementing
ERP systems and their association with achieving competitive advantage, Li and
Zhao found that organisational preparation for knowledge management, access to
information networks and communications systems, and employee education and
training were important items for knowledge management. Integrating the use of
428
M.R. Sumner
ERP and improving users’ skills and knowledge to use ERP were critical to success,
so organisations need to provide employee learning and training to achieve the
results of ERP. This means creating a learning environment that is critical to
learning new processes. ERP systems fail when users are unwilling to adapt to new
processes and do not have su?cient training (Li and Zhao 2006).
3.3.
Liaison mechanisms
Liaison mechanisms facilitate the sharing of knowledge between functional groups
and IT professionals in ERP projects. Liaison mechanisms facilitate knowledge
integration because these liaison mechanisms facilitate communications and coordination. Cross-functional team structures increase information processing and
improve intra-organisational communication. In contrast, permanent teams may
have a negative e?ect on knowledge transfer and may reduce knowledge integration
(Ford and Randolph 1992). Liaison mechanisms can in?uence decisions related to
ERP/business ‘?t’. Cross-functional project teams are associated with knowledge
integration and project success (Cohen and Bailey 1997).
3.4. Project governance
Project governance is the key to assuring that ERP project decisions support overall
business goals. Governance structures in the IT domain are steering committees
which are responsible for measuring the impact of IT investments on business
results. In the ERP project literature, the role of a steering committee is a commonly
mentioned critical success factor (Mabert et al. 2003). The steering committee is
responsible for making sure that investments in ERP are justi?ed in terms of business
outcomes.
3.5. Scope and integration
Business process integration is related to the scope of the ERP implementation, since
greater scope means that cross-functional business processes are integrated to a
greater extent (Ranganathan and Brown 2006). Purchasers of multiple ERP modules
have greater ?nancial bene?ts and better process outcomes than purchasers of single
modules (Ranganathan and Brown 2006, Hitt 2002, Karimi 2007). In addition,
implementing ERP across multiple locations creates standardised processes and
common data across the enterprise and translates into better operating performance
and lower costs (Volko? 2007). The implementation of ERP in every unit also makes
the above-mentioned strategies (functional expertise, knowledge integration, liaison
mechanisms and governance) more important than in the implementation of a single
module within a business unit.
A number of studies support the contention that a commitment to process
improvement and the creation of a standardised infrastructure has a positive e?ect
on successful ERP implementation. Since total quality management (TQM) is a
philosophy that emphasises process improvement, and since ERP transforms a
company’s business processes, companies with a TQM focus can facilitate the
transition to ERP (Li et al. 2008).
Companies implementing ERP must re-engineer business practices, including employee training, production planning and control, and quality management
Enterprise Information Systems
429
(Al-Mashari et al. 2003). Having a manufacturing infrastructure in place prior to
enterprise systems implementation has positive e?ects on successful ERP implementation and positive e?ects on customer-focused performance, production/
operations performance, and ?nancial performance (Li et al. 2008). Manufacturing
infrastructure includes organisational change, quality management, process reengineering, sta? learning and training, organisational policies, and measurement
and reward systems (Hayes et al. 2005).
4.
Research methodology
The study uses the grounded theory approach (Glaser and Strauss 1967). In the
grounded theory approach, qualitative data is gathered and used to guide the theorybuilding process. The data collection phase used case studies, interviews, and
observations in the context of ERP implementations. The ?rst round of interviews
was designed to identify ERP implementation practices and to develop core
categories for organising the data. The second round of interviews applied the
theoretical concepts gathered from the ?rst round of interviews to depict the
relevance of the theories of alignment strategies in the context of ERP
implementation.
4.1. The case studies
The study used a case study design. The case studies consisted of ?ve organisations
implementing enterprise systems between 1996 and the present. The organisations
participating in the study included two companies implementing SAP, one company
implementing Peoplesoft, one company implementing Oracle, and one ?rm using a
best-of-breed approach. In the follow-up timeframe, the company implementing
Oracle transitioned to SAP as a part of a global SAP implementation. As you can see
from Table 1, the companies were large, global Fortune 500 ?rms, ranging from $3
billion to $32 billion in sales.
Another commonality among these ?rms is the extensive scope of their respective
ERP implementations. In each case, the enterprise system supported multiple
business functions, including:
. Sales and distribution.
. Materials management.
. Production planning.
Table 1.
Firm pro?les.
Firm type
Sales
Firm A: Consumer
Firm B: Chemical
Firm C: Aerospace
16,700,000,000
8,650,000,000
32,400,000,000
Firm D: Financial
Services
Firm E: Consumer
3,000,000,000
13,930,000,000
ERP
Project justi?cation
SAP
SAP
Best of
breed
Peoplesoft
Operational e?ciency, cost reduction
Global business process standardisation
Lean manufacturing, common
business processes
Re-engineering of business processes
SAP
Worldwide data integration,
centralisation of ?nancial controls
430
M.R. Sumner
. Financial accounting.
. Controlling.
. Quality management.
Each of the companies implemented ERP at multiple sites. It should be noted
that several organisations implemented ERP on a global scale and employed the
same implementation strategies across multiple locations as they used in the US
implementation. The use of multiple case studies provided an opportunity to study
patterns between competitive priorities and ERP implementation practices.
4.2. Data collection
Using the grounded theory approach, there were two phases of the project. The ?rst
phase entailed data collection using structured interviews, and the second phase
entailed structuring of the data around the theoretical frameworks depicting
alignment strategies.
Two rounds of interviews were conducted. The ?rst round of interviews
regarding ERP implementation was conducted to obtain information on the ERP
implementation practices and critical success factors for the ?ve ERP projects.
The second round of interviews was conducted to identify changes in ERP
implementation strategy and alignment as these projects evolved over time. The
second round of interviews was conducted several times between two and ?ve
years after the ?rst round of interviews. This provided a longitudinal perspective.
Each set of interviews was conducted with the project manager responsible for
ERP project implementation. Additional interviews were conducted with ERP
project team members. Following each interview, the interviewer took detailed
notes and organised these notes into a matrix for the purpose of qualitative data
analysis. A second researcher collected similar data for each case study, and the
interview results were validated by comparing the structured interviews with each
other.
4.3.
First phase: data collection
The data were collected using structured interviews. Interviews were conducted with
ERP project managers in the case study organisations. The preliminary interviews
used the project retrospective instrument (Nelson 2005) to obtain data on the project
characteristics, project management organisation, project timeline, project risk
assessment, project success measures, and critical success factors. See the Appendix
for the structured interview form. The interview transcripts were used to classify data
into core categories.
The focus of the interviews included:
(1) Motivations for the ERP project, including business and system bene?ts
used as project justi?cation.
(2) Project leadership and management, including the project manager
experience, project team characteristics, and the project steering committee.
(3) Project characteristics, including project timeline and costs.
(4) Project scope, including the percentage of business processes supported by
the system.
Enterprise Information Systems
431
(5) Skill sets of IT professionals and end-users relevant to ERP.
(6) Business process re-engineering: the extent of ‘vanilla’ implementation and
the extent of customisation.
(7) Project success, as measured by on-time, on-budget completion.
(8) Project quality, including the extent to which the system met user
requirements, use, and maintainability.
(9) Issues that took place when the system went live, user acceptance, and
lessons learned.
(10) Measures of ERP e?ectiveness, including business outcomes and achievement of systems goals.
(11) Critical success factors for project success, including project
manager expertise, training e?ectiveness, top management support, role of
the project champion, change management, and steering committee
leadership.
4.4.
Second phase: coding, analysis, and conceptualising
During the second phase, the data were organised using the theoretical
concepts derived from the ?rst interview round in order to identify phenomena
in the data supporting the key theoretical constructs. The interpretations of the
issues found in the data were relevant to the theoretical framework, which is
consistent with exploratory and interpretive research design (Stebbins 2001,
Walsham 2006). The alignment strategies and issues relevant to them were
investigated.
5. Findings: case studies of ERP implementation
In this section, the ? …
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