A Critical Success Factor S Relevance Model For SAP Implementation Projects

Managing Business
with SAP:
Planning, Implementation,
and Evaluation
Linda K. Lau
IDEA GROUP PUBLISHING

i
Managing Business
with SAP:
Planning, Implementation
and Evaluation
Linda K. Lau
LongwoodUniversity,USA
Hershey • London • Melbourne • Singapore
IDEA GROUP PUBLISHING

ii
Acquisitions Editor: Mehdi Khosrow-Pour
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Library of Congress Cataloging-in-Publication Data
Managing business with SAP : planning, implementation and evaluation / Linda Lau, editor.
p. cm.
Includesbibliographicalreferencesandindex.
ISBN 1-59140-378-2 (hardcover) -- ISBN 1-59140-379-0 (pbk.) -- ISBN 1-59140-380-4 (ebook)
1. SAP R/3. 2. Business--Data processing. 3. Management information systems. I. Lau, Linda
K., 1958-
HF5548.4.R2M36 2004
658'.05'57585--dc22
2004003750
British Cataloguing in Publication Data
A Cataloguing in Publication record for this book is available from the British Library.
All work contributed to this book is new, previously-unpublished material. The views expressed in
this book are those of the authors, but not necessarily of the publisher.

iii
Managing Business
with SAP:
Planning, Implementation
and Evaluation
Table of Contents
Preface .................................................................................................. vi
SectionI:IntroductiontoERPandSAPTechnology
ChapterI
Principles, Foundations & Issues in Enterprise Systems .................... 1
John Loonam, University of Dublin, Ireland
Joe McDonagh, University of Dublin, Ireland
ChapterII
AnOverviewofSAPTechnology........................................................ 33
Linda K. Lau, Longwood University, USA
ChapterIII
IntegratingSAPAcrosstheBusinessCurriculum ............................. 44
Jane Fedorowicz, Bentley College, USA
Ulric J. Gelinas, Jr., Bentley College, USA
George Hachey, Bentley College, USA
Catherine Usoff, Bentley College, USA
Section II: Impacts and Challenges of ERP/SAP Systems
ChapterIV
The Impact of Agile SAP on the Supply Chain................................... 64
Sue Conger, University of Dallas, USA

iv
ChapterV
B2E SAP Portals: Employee Self-Service Case Study ...................... 90
Andrew Stein, Victoria University, Australia
Paul Hawking, Victoria University, Australia
David C. Wyld, Southeastern Louisiana University, USA
ChapterVI
Enterprise Systems and the Challenge of Integrated Change:
AFocusonOccupationalCommunities ............................................ 110
Joe McDonagh, University of Dublin, Ireland
Section III: Implementation and Management of SAP Systems:
Issues and Challenges
ChapterVII
A Successful ERP Implementation Plan: Issues and Challenges ... 126
Linda K. Lau, Longwood University, USA
ChapterVIII
Benefit Realisation with SAP: A Case Study ................................... 135
Graham Blick, Curtin University of Technology, Australia
Mohammed Quaddus, Curtin University of Technology,
Australia
ChapterIX
Thee-ERPTransformationMatrix .................................................. 158
Colin G. Ash, Edith Cowan University, Australia
Janice M. Burn, Edith Cowan University, Australia
ChapterX
ERP II & Change Management: The Real Struggle for
ERP Systems Practices ..................................................................... 179
Paul Hawking, Victoria University, Australia
Susan Foster, Monash University, Australia
Andrew Stein, Victoria University, Australia

v
ChapterXI
SAPR/3ImplementationApproaches:AStudyinBrazilian
Companies.......................................................................................... 198
Ronaldo Zwicker, University of São Paulo (USP), Brazil
Cesar Alexandre de Souza, University of São Paulo (USP),
Brazil
ChapterXII
ERP Systems Management: A Comparison of Large Sized
BrazilianCompanies .......................................................................... 222
Cesar Alexandre de Souza, University of São Paulo (USP),
Brazil
Ronaldo Zwicker, University of São Paulo (USP), Brazil
ChapterXIII
A Critical Success Factor’s Relevance Model for SAP
ImplementationProjects.................................................................... 240
José Esteves, Universidad Politécnica Catalunya, Spain
Joan Pastor, Universidad Internacional de Catalunya, Spain
ChapterXIV
A Comparative Analysis of Major ERP Life Cycle
Implementation,ManagementandSupportIssuesinQueensland
Government ....................................................................................... 262
She-I Chang, Queensland University of Technology, Australia
Guy G. Gable, Queensland University of Technology, Australia
ChapterXV
OrganizationalKnowledgeSharinginERPImplementation:
LessonsfromIndustry....................................................................... 288
Mary C. Jones, University of North Texas, USA
R. Leon Price, University of Oklahoma, USA
AbouttheAuthors.............................................................................. 317
Index................................................................................................... 325

vi
Preface
At a time when many major corporations, particularly in the technological
field, are continuously laying off workers or outsourcing their IT services to
overseas countries, SAP, Inc. and organizations using the SAP concepts and
software applications, on the other hand, are in need of more IT professionals
familiar with their systems. Although the popularity of SAP has reached an all
time high, there are insufficient research and exploratory studies available in
this field. Therefore, the primary objective of this book is to provide a com-
prehensive overview of this interesting area, and to address several of the
important issues relating to the successful implementation and management of
ERP/SAP systems.
This book is divided into three major sections. The first section consists of
three chapters, which introduces the foundation for ERP and the SAP tech-
nology. John Loonam and Joe McDonagh of University of Dublin in Ireland
begin the book with Chapter 1, entitled “Principles, Foundations, & Issues in
Enterprise Systems”. With the current trends towards globalization and virtual
organizations, coupled with rapid and constant business and technological
changes, enterprise systems have become increasingly important in integrating
and consolidating information across the organizations. Therefore, this intro-
ductory chapter describes the core principles, foundations and issues of en-
terprise systems, reviews the evolutionary process of enterprise systems, iden-
tifies the generic software characteristics, and discusses the benefits and limi-
tations of these systems. Based on a review of current enterprise systems
implementation approaches, several challenges were also uncovered. This
chapter concludes with suggestions to overcome these challenges.
The editor authored Chapter 2, entitled “An Overview of SAP Technology”.
Because this book focuses on the development and implementation of SAP

vii
systems, this chapter will describe the major activities conducted by SAP
since its inception in 1972 and SAP’s flagship software program, that is, the
R/3 system, in detail. This will include the capabilities of the R/3 system, the
three-tier client/server technology it employs, the hardware and software re-
quirements, and several problems associated with its implementation. The two
R/3 implementation tools – namely, the Accelerated SAP and the Ready to
Run systems – are also described.
Because of the increasing demand for ERP/SAP professionals, many aca-
demic institutions of higher learning are redefining their business curricula and
seeing the need to join alliances with ERP software vendors such as SAP, Inc.
to incorporate ERP concepts into their business education. The purpose of
the SAP University Alliance Program is to provide college students with a
better understanding of the business processes and ERP systems integration
using SAP technology, and to facilitate a cross-functional business curriculum
using state-of-the-art information technology. Participating institutions are in-
stalled with the SAP systems so that students can obtain hands-on experience
with the technical applications. Adequately and academically SAP-trained
graduates are better equipped to make strategic financial and operational de-
cisions, and will result in higher employability, increased entry-level salary,
and greater choice of employers. Chapter 3, entitled “Integrating SAP Across
the Business Curriculum,” is authored by Jane Fedorowicz, Ulric J. (Joe)
Gelinas, Jr., George Hachey, and Catherine Usoff of Bentley College in Mas-
sachusetts, USA. The authors explain how academicians can successfully in-
tegrate knowledge of the SAP R/3 systems into the undergraduate and gradu-
ate college courses. They also suggest that this knowledge integration is a far
better learning and instructional technique than the creation of standalone
courses covering ERP concepts. They conclude the chapter with the process
of training faculty to develop and test curriculum materials and to coordinate
the integration effort with each other in the college.
The second section of the book describes the impacts and challenges of ERP
systems. Chapter 4, entitled “The Impact of Agile SAP on the Supply Chain,”
is written by Sue Conger of the University of Dallas in Texas, USA. Most
Fortune 500 corporations have integrated their business functions with at least
one or more ERP software applications to improve the organization’s agility.
While the problems associated with ERP deployment are easily identified, the
concepts of agility as applied to ERP deployment have been ignored in the
literature review. Therefore, the primary objective of this chapter is to deter-
mine the impact of agile ERP software deployment on organizational agility.
The author indicated that agile deployment has competitive benefits both for

viii
the software vendor and for the licensing business organization, and she used
a case study to support her research findings. This chapter concludes with
several recommendations and trends for companies intending to deploy SAP
software applications.
Chapter 5, entitled “B2E SAP Portals: Employee Self-Service Case Study,”
is written by Andrew Stein and Paul Hawking of Victoria University of Tech-
nology in Australia, and David C. Wyld of Southeastern Louisiana University
in Louisiana, USA. Currently, most, if not all, major corporations have al-
ready implemented ERP systems into their operations. Lately, the “second
wave” of functionality in ERP systems targets small and medium-sized organi-
zations, resulting in the development of the business-to-employee (B2E) model,
yielding relatively quick gains with low associated risks. One such “second
wave” product is the Employee Self Service (ESS), a solution that enables
Australian employees’ access to the corporate human resource information
system. This chapter summarizes the research findings of Human Resources
(HR) in modern organizations and the development of an HR ESS portal in a
major Australian organization.
Joe McDonagh of the University of Dublin in Ireland authored Chapter 6,
entitled “Enterprise Systems and the Challenge of Integrated Change: A Fo-
cus on Occupational Communities”. Many organizations rushed to implement
ERP systems, without having a clear understanding of the difficulties in achiev-
ing the benefits promised by such integration. This chapter critiques the nature
of this dilemma and in particular, explores the role of occupational communi-
ties in its perpetuation through time. Specifically, one of the difficulties en-
countered is that the requisite knowledge and expertise are widely dispersed
among diverse occupational communities.
The last section of this book addresses the issues and challenges of the actual
implementation and management of ERP/SAP systems. The benefits of imple-
menting successful ERP systems can never be overestimated. Many of these
benefits are outlined in Chapter 7, entitled “A Successful ERP Implementation
Plan: Issues and Challenges,” which is authored by the book’s editor. This
chapter also describes several critical issues that managers must consider be-
fore making the final decision to integrate all the business functions in the or-
ganization. These issues are categorized under fundamental issues, people,
theorganizationalchangeprocess,andthedifferentapproachestoimplementing
ERP. The chapter concludes with a flow chart, depicting many of the activities
that must be included in an ERP implementation plan. There is a general con-
sensus among IT researchers that, among numerous factors, user involvement

ix
and total support from corporate management are essential for the successful
implementation of ERP systems.
Chapter 8, entitled “Benefit Realisation with SAP: A Case Study,” is written
by Graham Blick and Mohammed Quaddus of Curtin University of Technol-
ogy, Australia. An ERP integration can be both time consuming and costly, but
asuccessfulimplementationwillresultintremendouscostsavingsandincreased
productivity. One such example is the successful implementation of SAP sys-
tems at the Water Corporation of Western Australia. This article identifies the
“benefit realization strategy and realization process” as the key success factor
for this implementation. Therefore, this chapter will describe the benefit real-
ization structure and process, how SAP was successfully implemented, the
benefits realization, and its impact. Finally, the chapter concludes with future
directions for the company.
ColinG.AshandJaniceM.BurnofCowanUniversity,Australia,wroteChapter
9, entitled “The e-ERP Transformation Matrix”. In this chapter, the authors
developed a model of e-business transformation (eBT) for ERP implementa-
tion based on a longitudinal multiple case study analysis of SAP sites. First,
the authors identified the three research models (B2B interaction, e-business
change, and virtual organizing) and the three different stages of e-business
growth (integration, differentiation, and demonstration of value propositions).
After a pilot case study of five Australian SAP sites was conducted, 11 inter-
national organizations in various industries were studied over a four-year pe-
riod. The collected data were then analyzed to develop the proposed eBT
model. By integrating the three e-business growth models and the three stages
of e-business development, the proposed eBT matrix model focuses on achiev-
ing the benefits of B2B interaction from virtual organizing through e-ERP and
the facilitators of e-business change. In conclusion, the proposed model sug-
gests that successful e-business transformation with ERP systems occurs when
business-to-business (B2B) value propositions are realized through the inte-
gration and differentiation of technologies used to support new business mod-
els to deliver products and services online. Further, the proposed model also
indicated that employee self-service and empowerment are important com-
ponents in building extensive relationship with e-alliances. Finally, corporate
management are encouraged to use the proposed matrix model to guide them
in strategizing the organizational transformation.
Chapter 10, entitled “ERP II & Change Management: The Real Struggle for
ERP Systems Practices,” is written by Paul Hawking and Andrew Stein of
Victoria University of Technology in Australia, Susan Foster of Monash Uni-
versity in Australia, and David Wyld of Southeastern Louisiana University in

x
Louisiana, USA. One of the major issues encountered in system implementa-
tion is user involvement and change management. This chapter explores the
change management practices of Australian companies, and identifies the criti-
cal success factors and barriers associated with implementing change man-
agement strategies. Thirty-five major Australian organizations with single or
multiple ERP system implementations were surveyed.
The research findings indicated that many participants considered change
management to be crucial to successful ERP implementations; unfortunately,
the change management process was not properly managed in their organiza-
tions. The main success factor to change management was the provision of
adequate resources, while the main obstacle is the lack of vertical communi-
cation throughout the organization.
Chapter 11, entitled “SAP R/3 Implementation Approaches: A Study in Bra-
zilian Companies,” is authored by Ronaldo Zwicker and Cesar Alexandre de
Souza of the University of São Paulo (FEA) in Brazil. The authors describe
the two different ways of “going-live” with ERP systems (big-bang vs small-
bangs) and the advantages and disadvantages of implementation in phases.
Based on a survey conducted on 53 Brazilian organizations that had imple-
mented SAP R/3, the authors concluded that system configurations, resource
allocation, project management, and the project’s risks are all affected by the
implementation approach used.
Cesar Alexandre de Souza and Ronaldo Zwicker continued their research on
the management of ERP systems, and documented their findings in Chapter
12, entitled “ERP Systems Management: A Comparison of Large Sized Bra-
zilian Companies”. Currently, most, if not all, large and medium sized corpo-
rations have implemented some form of ERP systems. In this chapter, the
authors investigate aspects involved in ERP systems management, such as the
current dynamics of the organizational information technology (IT) use and
the growing concern with IT area costs, and examine how these aspects can
transform the role of IT areas within the organizations. The authors also hope
to expand the knowledge about key issues related to the management of such
aspects. The authors first proposed a model of successful implementation based
on the current literature review of IT implementation. They then analyzed two
large Brazilian companies using the case analysis approach and compared
their research findings to the proposed model. The authors conclude the chapter
with several important observations.
Chapter 13, entitled “A Critical Success Factor’s Relevance Model for SAP
Implementation Projects,” is written by José Esteves, Universidad Politécnica
Catalunya, Spain, and Joan Pastor of the Universidad Internacional de

xi
Catalunya, Barcelona, in Spain. The primary objective of this chapter is to
present a unified model of Critical Success Factors (CSFs) for ERP imple-
mentation projects, and to analyze the relevance of these CSFs along the
typical phases of a SAP implementation project. The authors achieved this
objective by using both the Accelerated SAP (ASAP) implementation meth-
odology and the Process Quality Management method to derive a matrix of
CSFs versus ASAP processes, and then evaluate the CSFs relevance along
the five ASAP phases. The authors are hoping that these findings will help
managers to develop better strategies for supervising and controlling SAP or
other similar ERP implementation projects.
In Chapter 14, “A Comparative Analysis of Major ERP Life Cycle Implemen-
tation, Management and Support Issues in Queensland Government,” She-I
Chang and Guy G. Gable of Queensland University of Technology, Australia,
conducted a study on the major issues involved in an ongoing ERP life cycle
implementation, management, and support. The researchers administered a
survey to a group of ERP system project participants in five state government
agencies who are experienced with the SAP Financials applications.
Finally, the book concludes with Chapter 15, “Organizational Knowledge
Sharing in ERP Implementation: Lessons from Industry.” In general, end us-
ers of ERP systems need to have a broader range of knowledge, which in-
cludes not only the basic business knowledge that are required to complete
their tasks and responsibilities, but also the knowledge of how their work
integrate with other business functions and divisions in the organization. There-
fore, it is essential that ERP users are able to share their knowledge with their
peers. In this chapter, Mary C. Jones from the University of North Texas,
USA, and R. Leon Price from the University of Oklahoma, USA, attempt to
examine how end users can share organizational knowledge in ERP imple-
mentation. They examine knowledge sharing factors such as facilitation of
knowledge sharing on the team; change management/training; and transition
of IPS (integration partner staff) knowledge. The authors collected data from
three firms in the petroleum industry using interviews, analyzed the qualitative
data, and present their research findings in this chapter.

xii
Acknowledgments
The editor would like to express her sincere thanks to everyone
involved in the development and production of this book. First, I
would like to thank all the authors who have written chapters for
this book. Their significant intellectual contributions and profes-
sional support have made it possible for me to put together this
book. My deepest appreciation goes to several reviewers, who took
the time to review chapter proposals and chapter manuscripts in
a timely manner. They provided constructive and comprehensive
reviews, with critical comments, valuable suggestions, feedback,
and insights to the authors.
Finally, I would like to acknowledge the help and hard work of
the staff at Idea Group Publishing. They were actively involved in
this endeavor from day one: from the inception of the book pro-
posal, to the collation and review, and finally, to the publication
of this book. Special thanks and my enormous appreciation to
senior managing editor Jan Travers, managing editor Amanda
Appicello, and development editor Michele Rossi, for their ongo-
ing and tedious work of putting the book together. Thanks to
Jennifer Sundstrom, who worked on the promotion and market-
ing of the book. And, lastly, thanks to Mehdi Khosrow-Pour, for
his encouragement to take on this daunting project.
Linda K. Lau
Longwood University, USA

xiii
Section I
Introduction to
ERP and SAP
Technology

Principles, Foundations & Issues in Enterprise Systems 1
Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written
permission of Idea Group Inc. is prohibited.
Chapter I
Principles,
Foundations&Issues
inEnterpriseSystems
John Loonam
University of Dublin, Ireland
Joe McDonagh
Abstract
The objective of this chapter is to provide a detailed review of the core
principles, foundations and issues of enterprise systems (ES). Since the
late 1990s, enterprise systems have promised to seamlessly integrate
information flowing through the organisation. They claim to lay redundant
many of the integration problems associated with legacy systems. These
promises are timely considering the current trends of globalisation,
virtual organisations, and constant business and technological changes,
features of many strategy agendas. In an effort to better understand the
nature of these packages this chapter reviews the ES evolutionary

2 Loonam & McDonagh
process, and generic software characteristics are also identified, followed
by system benefits and limitations. A review of current approaches to ES
implementation allows for a critique of system outcomes and identification
of challenges facing today’s ES implementations. The chapter concludes
with suggestions for overcoming some of these challenges.
Introduction
Organisationshaveintroducedenterprisesystemsinordertoreduceproblems
associatedwithlegacysystems,copewithyear2000challenges,offerthefirm
greatercompetitiveadvantages,competeglobally,andtoassistthecompany
achieveasingle“integrated”technologicalplatform.Withorganisationsstress-
ingtheneedforgreatersupplychainintegration,thesesystemsofferthefirst
glimmerofhopetoachievesuchintegration. Continuedtechnologicaladvances
“extend” current ES packages along the supply chain, with future systems
focusingonthepenultimategoal,thatis,inter-enterpriseintegration.
However,allisnotasitappears.ReviewingtheESliteraturerevealsproblems
withtheimplementationofsuchsystems.Apartfromthetechnologicalchal-
lengesassociatedwiththeirintroduction,adeepercordhasbeenstruck;that
is,thechallengeofattaininggreaterorganisationalintegration.Studieshave
revealedupto60%dissatisfactionfromESimplementations,withtheprimary
reason for such poor performance emerging from the failure to properly
considerorganisationalandhumanissues.Undoubtedly,forbetterreturnson
ESinvestments,organisationsneedtopayasmuchattentiontoorganisational
andhumanissuesastotechnicalissues.
Thischapterstartswithanhistoricaloverviewoftheinformationtechnology
field. The evolution to ES packages is then presented, reviewing their emer-
gence,natureandfuturetrends.Benefitsandlimitationsofsuchsystemsare
thenconsideredbeforeareviewofcurrentapproachestoESimplementation.
ESoutcomesarereviewed,followedbyacritiqueofsomechallengesfacingthe
field.Thechapterconcludeswithsuggestionsforovercomingsomeofthese
challenges.

Foundations of Enterprise Systems
Inaddressingthehistoricalcontextofenterprisesystems,itisfirstlyimportant
toreviewthenatureofinformationtechnology(IT).AccordingtoWardand
Griffiths (1996), IT has experienced three eras1
since its deployment in
organisations.Theuseofcomputersinbusinessonlystartedinthemid-1950s
andearly1960swiththedevelopmentofmainframecomputing.Earlycom-
puter systems were based on centralised stand-alone machines, which were
used principally for data processing. The 1970s witnessed the arrival of the
micro-computer,offeringincreasingdecentralisedcomputingcapabilitiesalong
withstandardisedsoftwarepackages.Throughoutthe70sorganisationsalso
became aware of the strategic potential afforded by information technology
(Ein-Dor & Segev, 1978) and its ability to leverage greater organisational
competitiveadvantages(McFarlan,1984).The1980ssawtheemergenceof
end-usercomputing,whichwouldassistindisseminatinginformationthrough-
out the entire enterprise. Throughout the 1990s, the concept of business
process reengineering2
and enterprise systems emerged with the belief that
togethertheywouldaddressmanyoftheintegrationchallengesconfronting
organisations.
This brief overview of the history of information technology illustrates the
evolutionarynatureoftheITfield,thatis,itsmovefromcentralisedcomputing
to end-user computing. This transition grew out of the need for greater
organisational-wideITintegration.InitiallycentralisedITsystemsfromthe
1960sand1970sweredeployedbyorganisationstoassistinsingleapplication
functionality,suchasmanufacturingoraccountingsystems.However,fromthe
1980sonwards,addedpressuresfromITsystemstodelivergreaterstrategic
andcompetitiveadvantagesmeantthattypicalbusinessapplicationshadgrown
exponentially3
(Slee&Slovin,1997).Whatstartedoutas“islandsofautoma-
tion”(McKenney&McFarlan,1982),thatis,applicationsrunningseparately
from each other, by the 1980s were often put into a single system in order to
manageandcentralisedatabetter.Thiseventisoftenreferredtoastechnical
integration,oralternativelyas“spaghettiintegration”(Slee&Slovin,1997).
This type of “spaghetti integration” created its own problems. Connecting
different functional areas was not easy, and required huge amounts of pro-
grammedcomputercodeinordertoallowthedifferentfunctionaldatabasesto
“talk to one another”. In turn, this amount of programming often resulted in
systemerrors,inconsistentinformationflows,andperhapsmostworryingfrom

4 Loonam & McDonagh
anorganisationalperspective,theneedforhugeresourcecommitments4
.Bythe
late1980sandearly1990sorganisationswerethereforeexperiencinglargeIT
integrationproblems.Somethingnew,lesscostlyandlesslabour-intensivewas
needed.
In response, software vendors began to launch single application tools that
couldhostanumberofdifferentfunctionalareasfromashareddatabase.These
new software packages became known as Enterprise Resource Planning
systems(ERP)(Lopes5
,1992). Theobjectiveofthesepackageswastobring
allITneedsofthecompanyundertheumbrellaofasinglesoftwaresystem.In
other words these packages promised “seamless integration”6
for adopting
companies(Davenport,2000a).Inaddressingtheprinciplesandfoundations
of these large integrative packages, it is firstly important to examine their
evolutionarytrial.
Evolution of Enterprise Systems
While ES packages are only a recent phenomenon, that is, only featuring
seriously in business and academic press from the late 1990s, they do have a
past. It has been suggested that ES packages are an extension of Material
RequirementsPlanning(MRP)andManufacturingResourcePlanning(MRPII)
packages,withenhancedandgreaterfunctionality(Yusuf&Little,1998).In
addressingthesesystems,wefindthatMRPpackagesdatebacktothe1960s.
In simplest terms, MRP systems involved the calculation of quantities of
materialsandthetimestheywererequiredinordertoimproveoperationswithin
manufacturingorganisations.MRPIIsystemsweretoextenduponthisconcept
during the 1970s, and encompassed new functionality like sales planning,
capacitymanagementandscheduling(Klausetal.,2000).However,duringthe
1980scompaniesbegantorealisethatprofitabilityandcustomersatisfaction
wereobjectivesfortheentireenterprise,extendingbeyondmanufacturing,and
encompassing functions such as finance, sales and distribution, and human
resources.Thisgaverisetotheconceptofcomputerintegratedmanufacturing
(CIM),whichisregardedasthenextevolutionarystepontheroadtowardsES
(Klaus et al., 2000, p. 144). By the early 1990s, with continued growth in
packagefunctionalityandtheneedforgreaterorganisationalintegration,ES
packages began to emerge.

To understand enterprise systems clearly, it is important to define them.
Davenport suggests that they are software packages that promise to deliver
seamlessintegrationacrossenterprisesembracingbothsuppliersandcustom-
ers (Davenport, 2000a). Yet the actual definition of an ES rests somewhat
uncomfortablywithinacademicliterature. Manystudies,forexample,usethe
term Enterprise Resource Planning (ERP) to define what we call Enterprise
Systems.However,thejustificationforusingtheESdefinitionissupportedby
other researchers in the field. Klaus et al., for example, after conducting
researchonsomeoftheleadingacademicsandexpertsintheESfield,found
thatmanyoftheirrespondentsbelievedthattheERPconceptwastooarchaic
andconjuredupconnotationsofES’linkswithitsmanufacturingpast,thatis,
MRP and MRP II systems (2000, p. 141). Davenport advocates that these
packagesshouldbereferredtoas“businesssystems”andnotmanufacturingor
technicalsystems;hencehecoinstheterm“enterprisesystem”(ES)(Daven-
port,1998,2000a).ThistermisalsosupportedbyMarkus(2000c)andRobey
et al. (2001), who believe that the area has moved away from the original
manufacturing concepts of the 1970s, 1980s and early 1990s, and now
embracesenterprise-wideintegrationideologies.
However,thedefinitiondilemmadoesnotstophere.Instead,withthearrival
ofnewtechnologies7
,andtheneedforgreaterbusinessprocessalignment,new
definitionsarecontinuallypresented,namelyInternet-orientedESpackages
(Callaway, 2000), Extended ES packages (Norris et al., 2000), and Enter-
prise-Wide Information Management Systems (Sumner, 1999, 2000). It,
therefore,appearsthataplethoraofdefinitionsaboundwithinthefield.These
definitionsarelikelytocontinueasgreaterenterpriseintegration,andindeed
inter-enterprise8
integrationissoughtbyorganisations.
Yet, in order for us to study the field it is imperative that we define the topic.
ThischapteragreeswithstatementsthatnegateERP’slinkstoitsmanufacturing
past.Infact,somearguethatESpackagesneverhadanythingincommonwith
earlier systems (MRP and MRPII) other than their common promise to
integrate business processes under a single software system. Despite the
ephemeral nature of definitions, the term Enterprise System is probably the
mostappropriatedefinitionavailabletodate.Itridsthefieldofanyconnota-
tions it may have had with its manufacturing past, while at the same time it
conjuresanimageofasystemthatfullyintegratestheenterprisesISneeds.ES
is,therefore,usedthroughoutthischapter.
Asacautionarynote,however,whiledefinitionsareimportant,theyappearto
betransitoryandthereforeshouldnotpreoccupythefield.Instead,itismuch

6 Loonam & McDonagh
moreimportant,regardlessoftheterminologiesused,todefinewhatismeant
bythesedefinitions.Davenportpurports,forexample,thatwhethercustomer-
centric9
or supplier-centric10
, by themselves or in combination with other
technologies,EnterpriseSystemsaredistinguishedbytheirinformationcom-
monality and integration (2000a, p. 3). In other words, an ES should not
necessarily be defined by the number or use of other technologies and tools
alongwiththecentralvendorpackage;insteadthepackageshouldbedefined
byitsabilitytoseamlesslyintegratebusinessprocessesandinformationflows
upanddown,andperhapsmoreimportantlyfromnowon,acrossvaluechains.
Fromthelate1990sonwardsenterprisesystemsexperiencedmassivegrowth
in organisational uptake. By 1998, for example, approximately 40% of
companies with annual revenues greater than $1 billion had already imple-
mentedanES(Caldwell&Stein,1998).InasurveybyAMRResearch,results
showed that from 800 U.S companies queried, 43% of the companies’
application budgets were spent on ES packages, while over half of these
companieshadinstalledanES(1999a).Marketpredictionsweremade,which
estimatedthattheESindustrywouldbeworthover$66billionby2003(AMR
Research,1999a).Unliketheirprehistoricancestors,enterprisesystemswere
fast becoming a core part of everyday IT investments. These systems were
breaking traditional manufacturing links, and soon represented a new “IS
integration”alternativeforallorganisations11
.
Reasons for such organisational interest and ES growth have ranged from
helpingtoreplacelegacysystems,copingwithY2K12
issues,affordingthefirm
greatercompetitiveadvantagesandtheabilitytoallowfirmscompeteglobally.
According to Stefanou, global-wide phenomena such as outsourcing, joint
venturesandalliances,andpartnershipsacrossvaluechainshavecreatedanew
formoforganisationknownasthe“virtualenterprise”.Monolithicandstand-
alonebusinessinformationsystemsaregivingwaytomoreflexible,integrated
andmodularsystemsthatsupportbusinessoperationsacrossthevalue-chain
fromthesuppliertothecustomerend(1999,p.800).TheYear2000problem
alsoactedasareasonforESimplementation,allowingorganisationstousethe
Y2KchallengetoendorseenterpriseintegrationandESimplementations(Hirt
&Swanson,1999).AccordingtoSasovovaetal.(2001),rapidtechnological
changes, pressure from shareholders, fierce competition, deregulation, and
globalisationhaveallcontributedtotheemergenceofESpackages.Davenport
believesthatovercapacityandreengineeringanddealingwithconstantchange
are prime reasons many organisations are implementing enterprise systems
(2000a, pp. 20-22).

With the promise of seamless integration (Davenport, 1998), organisations
were able to justify ES investments, believing that these systems were the
answer to their IT integration problems. In response, software companies
providedamyriadofapplicationtools13
thatpromisedenterpriseintegrationof
allkindsandforeverycompany.Comprehendingthenatureofthesevendor
packagesandtheirpromisesrequiresconsiderationofthegenericcharacter-
isticsthatmakeESpackagesdistinctfromotherITinvestments.
Characteristics of Enterprise Systems
FromastudyconductedbyMarkusandTanis(2000c),theauthorsfoundthat
therewerefivecharacteristicsspecifictoenterprisesystems,whichhelpusto
understand what they are, what they can do, and how they differ from other
largeITpackages.Thesedistinctcharacteristicsincludeintegration,thenature
oftheESpackage,bestpractices,assemblyrequirements,andtheevolutionary
natureofthesesystems.Abriefreviewofeachofthesecharacteristicsisnow
offered.
From an integration perspective, one of the core functions of an ES, in
comparisontoallpreviousintegrationtechnologies,isitspromiseto“seamlessly
integrate” all information flowing throughout the organisation (Davenport,
1998).ThischaracteristicisfurtheradheredtobytheESliterature.Enterprise
systems are commercial software packages bought from market vendors.
They differ from previous integration tools in the sense that they are not
developed in-house by organisations, but instead can be customised to the
enterprise’sownspecificneeds.AnothercharacteristicuniquetoESisthesuite
ofbestpracticesaffordedtoimplementingorganisations.Enterprisesystems
are built to support generic business processes that may differ substantially
fromthewaytheimplementingorganisationdoesbusiness.Theyarebuiltto
“fit” the generic needs of many organisations.Someassemblyrequirements
maybenecessaryduringimplementation.Fromatechnicalperspectivetheterm
“seamless integration” seems slightly flawed when considering enterprise
systems. Markus and Tanis believe that the software is “integrated,” but the
organisation’s intentions for the package may not be (2000c). For example,
some firms use bolt-on tools, or an amalgamation of ES vendors in order to
achieve their version of seamless integration. Finally, like all IT systems,
enterprise systems are constantlyevolvingand changing. During the 1980s,

8 Loonam & McDonagh
the MRP systems were developed to run on mainframe architectures, while
currentESpackagesarerunningonclient/serverarchitectures(Nezleketal.,
1999).FutureESwillneedtofocusoninter-enterpriseintegrationfeatures.
Whilethesecharacteristicsaregeneric,theydoprovideuswithanunderstand-
ingofthenatureofenterprisesystems.Thesecharacteristicsalsoallowusto
identifyESpackagesavailableinthemarket.Beforemovingontoreviewthe
benefits and limitations associated with implementations, this chapter will
considersomeofthepossiblefuturedirectionsforthesesystems.
Future of Enterprise Systems
According to AMR Research, in 1998 the ES market was worth $16 billion,
whilebytheendof2003theindustrywillexceedover$60billion(1999a).The
real driver behind such growth, however, comes from the ES “extensions”
sector(Callaway,2000),thatis,applicationsthatincreasethefunctionalityof
thepackageanddiversityofthebusiness.AMRResearchhasestimatedthat
yearly sales of ES extension tools will grow by 70% by the end of 2003, or to
nearly$14billionoftheESindustry(1999a).Asthesetechnologieswillform,
and indeed many are currently forming, such an important part of future ES
packages, this chapter provides a review of the type of extensions required.
TheprimaryreasonforESextensionsrelatestothearchaicnatureoftraditional
ESpackages.Withconstantchangeanorminbusiness,ESpackagescontinue
togrowindiversityandfunctionalitytosuitemergingorganisationalneeds.
These extensions need to occur organically14
, ensuring that the integration
integrityoftheESpackageismaintained.Fourmainextensiontypeshavebeen
identified;including(1)customerrelationshipmanagement(CRM),(2)supply
chainmanagement(SCM),(3)e-business,and(4)businessintelligence(BI)
tools(Callaway,2000).
According to Greenberg, customer relationship management (CRM) is “a
comprehensivesetofprocessesandtechnologiesformanagingtherelation-
ships with potential and current customers and business partners across
marketing,sales,andserviceregardlessofthecommunicationchannel.The
goalofCRMistooptimisecustomerandpartnersatisfactionbybuildingthe
strongestpossiblerelationshipsatanorganisationallevel”(2001,p.16).Many
ESpackagevendorsarebeginningtorealisethatsatisfyingthecustomershould

be a core element or function of the entire package. Davenport reports that
leadingESvendorsareaddingfunctionssuchassalesforceautomation15
and
customer service software16
(2000b, p. 173) to their packages. According to
AMR Research, the CRM market, which reached $1.4 billion in 1997, will
reach$16.8billionby2003,clearlyillustratingtheimportanceforESvendors
tocontinueintegratingCRMcapabilitiesintotheirsoftwarepackages(1999b).
The objective of supply chain management (SCM) is to “cut costs by taking
excess time, redundant effort, and buffer inventory out of the system, and to
improveservicebygivingcustomersmoreoptions,fasterdelivery,andbetter
visibility into order status” (Davenport, 2000a, p. 238). ES packages with
added SCM tools can extend the internal system out to the supply end of the
organisation. According to Norris et al. (2000), ES packages with SCM
functionality afford greater extensions to the enterprise (2000, pp. 85-88).
Thesecomponentsinclude:(1)supplychainreplenishment,whichintegrates
production and distribution processes using real time to improve customer
responsiveness, (2) e-procurement, which is the use of Web-enabled tech-
nologiestosupportkeyprocurementprocessessuchasrequisitioning,sourc-
ing,contracting,ordering,andpayment,(3)collaborativeplanning—thisisa
B2B17
workflowacrossmultipleenterprisestosynchroniseproductionplans,
product flows, and optimise resources, (4) collaborative product develop-
ment,whichinvolvestheuseofe-businesstoimproveproductlaunchsuccess
and time to market, (5) e-logistics, where Web-based technologies are used
tosupportwarehouseandtransportationmanagementprocesses,andfinally
(6) supply Webs—these are a futuristic function of current supply chain
components,buttheirobjectiveistointegratesupplychainsofvariousbuyers
andsellerstocreateavirtualtradingcommunitythroughoutthesupplychain.
Many ES packages and SCM vendors18
today already have incorporated, or
areincorporating,manyoftheseSCMfunctionsandbusinessprocesses.
ThemostprevalenttooltoallowESpackageextensionshasbeentheInternet,
inparticularthepracticeofe-business.NotonlyhaveWeb-enabledtechnolo-
gies allowed ES packages to integrate with supply chain management and
customerrelationshipmanagementtechnologiesupanddownthesupplychain,
butalsothesepackageshaveenabledinter-enterprisecollaborationforgreater
valuechainintegration.Web-enabledESpackagesalloworganisationstohave
an e-business19
presence. Two other technologies, which offer greater func-
tionalityanddiversitytoESpackages,havealsoemergedasaresultofWeb-
enablement.Theseinclude(1)componentisationand(2)bolt-ontools.Inan
efforttooffergreaterflexibilitywithESpackages,manyorganisationsareusing

10 Loonam & McDonagh
componentisation tools, that is, the redevelopment of the package using
object development tools, component interface protocols such as CORBA,
integrationstandardssuchasextensiblemark-uplanguage(XML),andseman-
ticagreementssuchasthoseprovidedbyCommerceOne(Sprott,2000).The
keytocomponentisationisthatenterprisesareabletocustomisethepackage
to suit their needs, rather than having to accept the standard package and its
proposed set of best practices. Therefore, the organisation might not have to
buytheentirepackage,butbitsofit,andmatchthesetoothervendorpackages,
and the companies own legacy systems to achieve their own version of
organisationalintegration.AnotherapproachtoassistESintegrationisthrough
bolt-ontools.Thesearetools,suchasmiddlewareorthirdpartyvendortools,
whichalloworganisationstomassagetheirESpackageswithothertechnolo-
giesinordertoachievegreaterintegration.Bolt-ontoolscanbereferredtoas
bestofbreedtechnologies(Davenport,2000a,p.87),whichcanpartnerwith
otherleadingedgesoftwarevendorstoofferasuiteofapplications.
One of the cited problems with ES packages is their inability to provide
managers with sets of data that can assist decision-making and analytical
diagnosis.Forthecostandlengthoftimeittakestosuccessfullyimplementsuch
systems,thelackofdecisionsupporttoolsavailablemeansthattraditionalES
packagesarenothingmorethanlargecentraldatabases.AccordingtoDaven-
port,duetothe“insufficientcapabilitieswithinESpackages,mostfirmstoday
trytoextractdatafromtheirESpackages,andthenmassageitwiththird-party
query and reporting tools, third-party data warehouse management tools, or
thirdpartystatisticalanalysistools”(2000b,p.174).Inanefforttoremedythis
problem, efforts are being made to include these functionalities in future ES
packages. Callaway talks about how some ES packages are using business
intelligencetools,suchastheformeronlineanalyticalprocessing(OLAP)or
decision support systems (DSS) tools to turn data into knowledge and allow
executivesmakebetterdecisions(Callaway,2000,pp.113-115).According
toAMRResearch,thebusinessintelligence(BI)industrywillbeworthmillions
bytheendof2003,andwillassistingeneratingmassiverevenueforESvendors
throughnewsoftwarelicenses(citedinStackpole,1999).Davenport(2000a,
2000b) expects the knowledge management field to become part of ES
packages.Knowledgerepositories,intheformofdatawarehousinganddata
mining,willbecomepartoftheESpackagetoassistwithbetterstrategymaking
andcompetitiveadvantages.
FutureESpackagesneedtopayconstantattentiontotechnologicaladvances
andorganisationalneeds.Suchattentionwillincreasepackagefunctionalityand

continuedESgrowth.Vendorshavealsoidentifiedexpansionintonewmarket
sectorsasanimperativeforassuringcontinuedESgrowthandprosperity.
TheSmalltoMediumSizedEnterprises(SMEs)arebeingtargetedassucha
market sector. Up until a few years ago, organisations that implemented ES
packages were predominantly large conglomerate type companies20
, often
withamanufacturingbase,forexample,pharmaceuticals,oilcompanies,and
otherindustrialmanufacturingcompanies.However,withtheemergenceof
Internettechnologies,implementationupgradedifficultiesandcostofowner-
ship have been dramatically reduced. According to Markus et al., Web-
enablementmeansthatindividualusersalmostanywhereintheworldcannow
access ES data and processes without requiring a local ES client or the
technical support this entails (2000b, p. 185). Portals have also helped to
reducethetotalcostofpackageownership,byallowinguserstosetup“hubs”
where they can communicate online, for example, mySAP.com (Hayman,
2000, p. 138). Another fundamental solution for implementation upgrade
difficultiesandhighcostofownershipisapplicationhosting.Enabledbythe
Internet,inwhichtheESvendor(oranotherserviceprovider)runsthesoftware
foranadopter,pricingthisserviceisonapertransactionbasis(Markusetal.,
2000b, p. 185).
SMEs,withsmallbudgets,arethereforeinanidealpositiontonowembrace
ESimplementations.Withthisknowledgeinmind,ESvendorshavebeenquick
totargetthismarketsector,particularlyEuropeanmidsizecompanieswhere
researchhasshownthatthemarkethereforITproductsandservicessurpasses
US$50billionperyear(VanEverdingenetal.,2000).Withthelargercompany
sector21
almostsaturated,smalltomidsizecompaniesprovideahugeoppor-
tunityforcurrentESvendorsandfuturemarketgrowth(Callaway,2000).
The future of ES packages will therefore involve constant technological
configuration in order to meet changing organisational demands. Greater
emphasis will be placed on total supply chain integration, with various new
technologiesofferingsuchextensions,andinter-enterpriseintegrationpromis-
ing to be the penultimate prize. ES packages will also be expected to act as
knowledge warehouses and support decision-making and corporate intelli-
gence.ESpackageswillnolongerbeexclusivetolargecorporations;instead
theSMEmarketpromisestobethemostlucrativefromavendorperspective
overtheforthcomingyears.

Enterprise System Benefits
InaddressingtheprinciplesandfoundationsofESpackagesitisnecessaryto
reviewthebenefitsandlimitationsthesepackagesbestowuponimplementing
organisations. A review of ES literature reveals some of these issues. ES
benefitswillbedealtwithfirst,followedbyESpackagelimitations.
ESbenefitscanbedividedintofivecategories:(1)operational,(2)managerial,
(3) strategic, (4) IT infrastructure, and (5) organisational benefits (Shang &
Seddon,2000)22
.OneofthemainbenefitsforintroducinganESpackageisto
achieve greater operational benefits. Such benefits can assist in reducing
generallabourandinventorycosts.Withasinglecentraldatabasethereisalso
lessduplicationoftasks.FromamanagerialperspectiveanESpackageisan
integrativesystemthatgathersallinformationflowingthroughtheorganisation
(Davenport, 2000a). Top management are therefore able to make plans and
betterdecisionswiththeaidofthisenterprise-wideinformation.Newadvances
intechnology,andESpackages23
,willmakedecisionmakingacorepartofthe
ES package.
Such benefits in management will invariably allow for greater strategic
benefits.ESpackagescanassistinbuildingstrategicpartnerships,supporting
alliances,creatingnewbusinessopportunitiesandmarketsanddevelopinga
competitiveadvantageforthefirm. Thetightlinksalongthesupplychainallow
ES users to have a greater understanding of customers’ needs. This in turn
allowscompaniestodevelopcustomisedproductsforclientsatlowerprices.
ESpackagescanassistindevelopingagreatercompetitiveadvantageforthe
implementingorganisation.
ES packages afford organisations with an opportunity to implement an inte-
gratedITplan,thatis,greaterITinfrastructurebenefits.Theintroductionof
anESpackageassistsinintegratingafirm’sbusinessprocessesandremoving
disjointedlegacysystems,unstableITarchitectures,andITexpenditurerelated
tomaintenanceofthesesystems.ESpackagesassistinpreventingredundant
dataentry,duplicationofdata,andprovideasingledatabasefororganisational-
wide data. ES packages also support organisational change and business
processreengineering,thereforeprovidingthefirmwithneworganisational
benefits.AnESpackagefacilitatesorganisationalculturalchangebyallowing
the ES package to give the enterprise a specific vision.

Enterprise System Limitations
Like all IT systems, there are as many limitations as there are benefits for
enterprise systems. These issues will now be discussed. Excessive focus on
technicalaspectstothedetrimentofbusinessaspectshasbeenidentifiedasa
leadingfactorformanyESfailures(Kreammergaard&Moller,2000,Sedera
et al., 2001). Sarker believes that a significant amount of ES projects fail
because human aspects are often “overlooked” or “remain to be resolved”;
hence the focus is on technology and not the organisation (2000, p. 414).
EstevesandPastoralsobelievethatfailureoccursbecause“toooften,project
managersfocusonthetechnicalandfinancialaspectsofaprojectandneglect
totakeintoaccountthenontechnicalissues”(2001,p.1019).Financialcosts
of ES packages can be enormous. According to Scheer and Habermann,
“Baan, Peoplesoft as well as SAP calculate that customers spend between
three and seven times more money on ES implementation and associated
servicescomparedtothepurchaseofthesoftwarelicense”(2000,p.57).The
authorsbelievethattheratiorangesbetween5:1forESimplementationefforts
andthecostofsoftwarelicenses.Thereasonstheygiveforsuchcostsaredue
tothescaleofbusinessprocessreengineering(BPR)andchangemanagement
issuesinvolvedintheimplementationofthesoftware.Stewartreinforcesthis
pointsuggestingthatESimplementationsfailbecauseofpoororganisational
attentionindealingwiththeissuesofriskorientationanduserinvolvement.They
maintainthatESimplementationsarefundamentallyagentsfororganisational
changeandsuchchangerequireseffectiveleadershippractices(2000,p.966).
SorbelievesthatusinganESpackagecanrobanorganisationofitscompeti-
tiveadvantage (1999,p.229).ThispointisfurthersupportedbyPorter,who
statesthatifeveryoneinaparticularindustrysectorornichemarketistoadopt
ES packages, then everyone will have the same set of best practices as
determinedbythesoftwarevendorandESpackage(2001).ESpackagescan
be structured, systematic packages that make the organisation “fit” the soft-
wareratherthanthesoftwarefittotheneedsoftheenterprise,thatis,inhibiting
organisationalflexibility.Thislevelofinflexibilitycanprohibitorganisational
change and business process growth (Sor, 1999, pp. 229-230).
DongbelievesthatthechallengetoESimplementationliesinthenatureofthe
system; that is, they are generic solutions reflecting a vendor’s rather than a
customer’s assumptions of what organisational best practices are. It pushes
companies toward fullintegration,and changes various business processes

into generic ones even if the company wants to customise some of these
business processes. Therefore, the real paradox facing organisations imple-
mentingESprojectsisrootedintheirabilitytoseamlesslyintegrateallbusiness
processesacrosstheenterprise.ThefewerchangesmadetoanES,thegreater
thelevelofintegrationandrealisedbenefitsfortheimplementingorganisation
(2001, p. 243). However, accepting the generic nature of an ES package
means companies are accepting vendor integration, not company-specific
integration; this in turn may not achieve the desired integration sought by
adopting companies. Soh et al. talk about the problem of “cultural misfits”
with ES packages, that is, the gaps between the functionality offered by the
packageandthatrequiredbytheadoptingorganisation(2000,p.47).Dueto
the fact that ES implementations are more complex and larger than other
packagedsoftwareimplementations,the“misfit”problemisexacerbatedwhen
implemented in a non-generic type organisation (2000). In other words, ES
packages are designed by western vendors for western type organisations.
Countries such as Japan often find the implementation of ES packages
particularlydifficult,asthereisaproblemwithculturalidentity.Inshort,Soh
et al. point to “cultural misfits” with ES software, particularly when it is
implementedoutsideofNorthAmericaandEurope(2000).
SmythbelievesthatESimplementationdisappointmentscanbelargelyattrib-
uted to the size and complexity of the packages and the associated problems
incustomisationandorganisationalchange(2001,p.1228).Anotherproblem
forESpackagesisthecostofworkaroundsandupgradesinspecificmodules,
particularlywhenanorganisationiscustomisingthepackagetosuitorganisational
business needs. With add-ons or bolt-on technologies the cost and mainte-
nance of the project increases dramatically (2001, p. 1228). Sasovova et al.
believe that limitations to ES packages arise when external assimilations,
suchasmergers,acquisitions,anddivestiturestakeplace.Suchoccurrences
causehugeexternalandinternalchanges,andmaketheprocessofbothsystem
and business process integration all the more difficult, particularly if new
businessprocessesandoldlegacysystemshavetobeintegratedfromthenew
companies into the central ES package (2001, p. 1143). Markus and Tanis
(2000c)talkabouttheover-relianceordependenceonESsoftwarevendors.
Reliance on a single-vendor can weaken the organisation’s ability to be
technologicallyindependent,forcingtheenterprisetogointoanappeasement
modewiththesoftwarevendor.

Approaches to Implementation
With ES benefits and limitations in mind, the chapter now examines the
approaches to implementation. According to current ES literature, there are
two popular approaches, often used simultaneously, for assisting with the
delivery of ES projects. These include the use of an implementation process
modelwithsupportingcriticalsuccessfactors(CSFs)forprioritisingmodel
phases.
Muchofthecurrentacademicliteraturehascontributedtoassemblinglistsof
perceivedCSFsnecessaryforESprojectimplementation(Al-Mashari,2000a,
2000b; Bingi et al., 1999; Brown & Vessey, 1999; Nah, 2001; Rosemann et
al., 2000; Somers & Nelson, 2001). Parr and Shanks see CSFs as “those few
criticalareaswherethingsmustgorightforthebusinesstoflourish”(2000b,p.
292).InordertofurtherassistimplementersunderstandtheroleofCSFswithin
theimplementationprocess,severalacademicstudieshavedevelopedimple-
mentationprocessmodels.ParrandShanksbelievethattheseprocessmodels
help to “extend previous research that has simply enumerated CSFs for the
entireimplementationprocess”(2000b,p.290).
Examples of process models include Ross’ five-phase model based on case
studyresearchofESimplementation(2000).Thesephasesincludedthestages
ofdesign,implementation,stabilisation,continuousimprovement,andtransfor-
mation. Somers and Nelson (2001) divide their CSFs into six phases, which
includeprojectinitiation,adoption,adaptation,acceptance,routinisation,and
infusion.EstevesandPastor(2000)dividedCSFsintoanorganisationaland
technologicalgrid,bothbeingonceagainsub-dividedintostrategicandtactical
domains. Similarly, Kraemmergaard separates his analysis of ES CSFs into
organisational,business,andtechnologicalareas.
Placing CSFs into process models allows practitioners and researchers to
maximise the potential impact CSFs have throughout the implementation
process. The basic tenets from all these different models include a planning
phase,animplementationphase,andanevaluationphase,supportedbyCSFs.
Process models allow organisations to move through the implementation
processinasystematicmanner.PrioritisingCSFsallowsfirmstoidentifythe
mostimportantelementsnecessaryforprojectsuccessandatthestagesthey
should be conducted during the process model.

Understanding Outcomes
Understanding approaches to ES implementations leads to questioning the
successrateofsuchprojects.Onthewhole,studieshaverevealedalessthan
satisfactoryperformanceratefromESimplementations.Accordingtoasurvey
conducted in December 200024
, for example, only 34% of the organisations
were“verysatisfied”withtheirESinvestments(McNurlin,2001).Sammonet
al.believethatover90%ofESimplementationsarelateormorecostlythanfirst
anticipated (2001b, p. 1131). Research conducted by the Standish Group
International shows that 40% of all ES installations achieved only partial
implementation; nearly 28% were scrapped as total failures or never imple-
mented,whileonly25%werecompletedontimeandwithinbudget(citedin
Crowe et al., 2002, p. 3). Further surveys also support these findings, even
amongES“extensions”;forexample,whereinastudyamong145European
companiescarriedoutbyCapGeminiErnst&Young,theyfoundthat68%of
companiessurveyedcouldnotprovideanyevidenceofexpectedpayoffsfrom
theirCRMinvestments(FinancialTimes,2001).Similarly,inSCMthenumber
ofpoorperformanceshasbeenupto60%,wheresupplychainsarealsoslow
toreturnanyinvestmentsforimplementingorganisations(Larsen,1999).
Addressing Challenges
With outcomes such as these there are clearly obvious challenges facing
organisationsimplementingESpackages.Thequestion,ominouslyenough,to
askis“why”dosuchpoorperformancesexist?Thischaptersuggeststhatthe
answer to this question lies in two parts. The first part is as a result of the
approaches taken when implementing ES packages, while the second part
deals with the nature of the ES package.
ES literature, and indeed practice, assumes a systematic approachtoimple-
mentation. Thismeansthataprocess-orientedapproachtoimplementationis
adopted,withprioritisationofCSFsthroughouttheproject.However,accord-
ingtoRobeyetal.,studiesofcriticalsuccessfactorsofferfewsurprises(2001).
TheauthorsbelievethatfindingsthatpointtothenecessityofCSFs,suchastop
managementcommitment,arenotsubstantiallydifferentfromfactorsthatare
criticaltothesuccessofmostITprojectsandtoorganisationalchangeofother

kinds.Thisbeliefisalsoheldforthedevelopmentofimplementationprocess
models, which according to Robey et al. act as more of a description than an
explanationofESoutcomes(2001).Theybelievethatbyadoptingsuchastage
approachtoESprojectimplementation,researchisnotcarefullyexaminingthe
eventsthatoccurduringESimplementation.Theprocessmodelstodatetend
to“assumethatorganisationalchangesfollowESimplementation”(Robeyet
al., 2001, p. 10).
When we review reasons for poor ES performance, we find that “the main
implementation risks associated with ES projects are related to change
managementandthebusinessreengineeringthatresultsfromintegratingan
organisation” (Sammon et al., 2000a). In a study by Deloitte and Touche
(1998), the main reasons cited for poor ES performance range from people
obstacles (which according to the study contributed to 68% of the problem),
businessprocesses(whichwereat16%),andinformationtechnologyissues
(whichwereat12%)(citedinCroweetal.,2002).Manyprocessmodelstend
to move through the implementation process using CSFs as benchmarks,
withoutpayingadequateattentiontotheorganisationalandhumanelementsof
the project. This chapter suggests that, while process models and CSFs are
excellentforillustratingtheimplementationchallengesinvolvedinatypicalES
project,greaterattentionneedstobegiventoorganisationalandhumanissues.
The second part of the suggested answer cuts to the very core of an ES’s
existence,thatis,questioningtheirnaturetopromise“seamlessintegration”.
When ES packages first emerged in the late 1990s, this was the battle cry of
many vendors and service providers alike, for example, consultants and
trainers.Overhalfadecadelaterthisquestionstillremainstobeanswered;that
is,doESpackagesprovideforseamlessintegrationofallinformationflowing
throughoutthecompany?Inordertoanswerthisquestionweneedtoexamine
thecharacteristicsofintegration.ESpackagesarecomprisedoftwotypesof
integration:thesearetechnologicalandorganisationalintegration.
Inmanywaysthemostobviousintegrationneedcomesfromthetechnological
sphere,whereduetooutdatedlegacysystemsanddysfunctionalinformation
flows, ES packages are implemented in an effort to rid companies of these
problems. Perhaps the greatest area of concern for ES packages in terms of
technologicalintegrationcomesfromquestioningwhetherthesesystemsare
achievingtheirinitialobjective,riddingtheorganisationofitsoldlegacysystems
andcreatingseamlessintegrationthroughouttheenterprise.Thereisevidence
tosuggestthatthisprocessmaybeexperiencingsomedifficulty.Accordingto
Themistocleous(2000),forexample,ESpackagesareoftenincorporatedwith

oldlegacysystemsinordertoimprovetechnologicalintegration.Thispointis
also supported by Markus et al., who found that many companies needed to
retainsomeformoftheiroldlegacysystem,preferringnottocustomisetheES
package for fear of the old adage of “thou shalt not change SAP” (2000a, p.
260).
Thechallengeoftechnologicalintegrationisfurtherreinforcedbyorganisational
reactions.Whileseamlessintegrationreceivesmuchanecdotalattention,the
realityis,unfortunately,quitedifferent.Glick,forexample,tellsusthatmany
organisationstodaybelieve“integrationtobeamyth”(Glick,2001).Accord-
ingtoresearchconductedbyVansonBourne,“realworldintegrationisvery
differenttothevendors’marketinghype”(citedinGlick,2001,p.19).Somuch
sothatmanyCIOsandprojectmanagersarepreferringtoputtheirintegration
issuesonthelongfingerasmuchaspossible,believing“integrationissuestobe
of perennial importance, but simply too difficult and time consuming to
achieve”;henceitisnotaveryappealingsubjectformost(Adshead,2001,p.
8).
However, technological integration can ever only be successful if there is
organisationalalignmentbetweenthetechnologyandbusinessprocessesofthe
enterprise. ES literature reviewed talks about the absolute need for
organisational integration as part of the success of ES packages. As
Davenport purports, “computer systems alone don’t change organisational
behaviour”;itisthe“companiesthatstressedtheenterprise,notthesystem,that
gainedthegreatestbenefits”(1998,pp.129-130).Organisationalintegration
relates to how the business processes are aligned, or realigned, with the ES
package, and how the elements of change are integrated into the overall ES
strategy.
Asstatedalready,theproblemwithmanyapproachestoESimplementationis
theirinability,oroftenfailure,toaddresstheorganisationalandhumanissues.
FormanyorganisationstheimplementationofanESpackagemeansmassive
reengineeringofitsbusinessprocessesandthemanagementoforganisational
change.Unfortunatelyhowever,thisfactisseldomreflectedinimplementation
models.Take,forexamplethecontributionofcriticalsuccessfactors.While
CSFsstudiescitebusinessprocessreengineeringandchangemanagementas
imperativetosuccessfulESimplementation,resultsshowthatmanycompanies
donotfeelasferventabouttheseissues.Onestudy,forexample,fromalistof
22 critical success factors, found that companies ranked business process
reengineering16th
,whilechangemanagementcamein19th
(Somers&Nelson,
2001). The fact that these organisational integration imperatives ranked so

lowlyreflectsthedegreeofsatisfactioncompaniesoftenexperiencewiththese
processes.Onecouldalmostsaythatcompaniesthatrateorganisationalissues
solowhaveaslimchanceofsucceedingwithanESimplementation.
Overcoming Challenges
Suggestionswillnowbemadeforassistingorganisationsovercomesomeof
thesechallenges.ThischaptersuggeststhattheimplementationofESsoftware
shouldbesplitintothreestages:(1)pre-implementation,(2)implementation,
and (3) post-implementation. The first stage, which is probably the most
crucial,shouldbeconsideredbeforeprojectlaunch.Itlistssomeofthecritical
successfactorsthatcanassistwiththe“why”and“what”questions,thatis,why
do we need an ES package and what needs to happen before launch. The
secondstagelistsfactorsforconsiderationindealingwiththeweaknessesof
processmodels(andinvariablythechallengeoforganisationalintegration),
whilethethirdstagedealswithissuesforconsiderationafterprojectcomple-
tion.WhilethisappearstobearathersimplemethodforviewingESimplemen-
tations,itdiffersfrompreviousapproachesinitstreatmentofCSFs,process
models, and attention to pre and post-implementation issues. It is also sug-
gestedthatthesestagesarenotviewedinasystematicmanner,butinsteadas
asystemicaidforcomprehendingsomeofthemajorissueswithESimplemen-
tations.
The suggestion during thepre-implementation phase is for organisations to
startwithansweringthe“why”question.IfthefirmidentifiesESasamethod
forachievingorganisationalgain,thiswillleadtothe“what”question.Typical
questionstobeaskedatthisstageconcerntherelevanceofESpackages.Does
my organisation really need an ES package? Weigh up the pros and cons to
suchanimplementation,consideringtheaforementionedbenefitsandlimita-
tions and indeed challenges. Ask yourself why you are implementing such a
package;whatdoesyourorganisationhopetogainfromit?AnESpackageis
an excellent system for achieving an envisioned level of organisational and
technical integration; however it is a complex and long-term commitment.
Justifyyourreasonsfromalong-termcommitmentperspective.
Thepre-implementationstageisanidealphasetoconductareviewofcritical
successfactors.CSFsarevaluableinofferingadviseon“what”todo.IfanES
packagehasbeengiventhegreenlight,thesuggestionhereisfororganisations

toidentifytheirowncriticalsuccessfactors.Thisallowsfirmstocompareand
contrasttheirCSFstoprescribedCSFsemanatingfromempiricalinquiry.It
also gives organisations a perspective on their own critical success factors
ratings.Forexample,ifthefirmplacedlittleemphasisonorganisationalchange,
thatis,itreceivesalowrankingontheirCSFs,thenthefirmimmediatelyknows
that greater attention is required in this area for ES project success.
This chapter will now review some of the typical critical success factors25
mentionedintheESliterature.Topmanagementsupport isoftencitedasthe
most important CSF. Their task is to provide commitment, vision, and
leadership, allocate resources, and develop a strategy that is inclusive of the
new project. Similarly, every project needs an individual that is personally
committedtoitssuccess,thatis,aprojectchampion. Thechampionrepresents
theproject at every level in the organisation and continually seeks support
for it.
Anotheroftencitedcriticalsuccessfactoristhatofchangemanagement. ES
packagesintroducelarge-scalechangethatcancauseresistance,confusion,
redundancies,anderrors.Aprojectofthismagnitudeinvolvesmassivecultural,
human,andorganisationalchange.Itisvitalthattheseissuesaredealtwithin
tandemwithESimplementation,notaftertheprojectiscompleted.Business
process reengineering (BPR) allows organisations to align their business
processes with the ES package. The objective of BPR is to bring greater
performancetotheorganisationthroughbetterquality,speed,cost,andservice
ofproduct.
A final example of some of the leading CSFs is that of the role vendors and
consultants play during project implementation. From the beginning the
expectations of both of these groups needs to be clearly identified. A sound
relationshipwiththevendorcompanyisanimperativeforsuccess.Considering
the amount of power the vendor has in the relationship, that is, due to the
enterprise-wide nature of the ES package, it is not merely a selection of a
software company; it is the selection of an organisational partner. This
relationship needs to be built upon trust, open communication, and a strong
emphasisoncollaborationandmutualpartnership.Iftheuseofaconsultantis
decidedupon,theirselectionisequallyasimportant.However,caremustbe
takenwhenhiringconsultants;theorganisationandtopmanagementmustknow
whytheseconsultantsarerequiredandwherebesttoemploythemthroughout
theimplementationprocess;otherwise,“foreverypoundspentonESsoftware
licences, companies could spend a further 5 to 7 pounds on related services,
mainly consultancy” (Adam & O’ Doherty, 2000). This point is further

supportedbyCaldasandWood,whofoundfromtheirresearchthatwhile91%
ofthecompaniessurveyedhiredexternalconsultantsduringtheESimplemen-
tationprocess,only47%ofallrespondentsclaimedthattheconsultingfirmwas
influentialduringtheimplementationprocess,whileonly23%citedthatthe
consultants had the necessary skills and experience relevant for the project
implementation(1999,p.8).
The main objective of the implementation stage is to make suggestions for
overcoming ES challenges, that is, the problems encountered with process
modelsandorganisationalandtechnicalintegration.Thefirstsuggestionisfor
implementers to move beyond process models and critical success factors.
WhiletheseinstrumentsplayavitalroleinstructuringtheESproject(particu-
larly CSFs role at the pre-implementation stage), they are however limited
whendealingwithactualimplementationandthewiderorganisationalissues.
Suchwiderissueswillnowbedealtwith.
OneofthemainchallengesfacingorganisationsimplementingESpackagesis
their approach. Critical success factors assist in highlighting “what” the
organisation shoulddo; however, they tell us little about “how” we actually
implement the system. The suggestion here is that for every critical success
factorused,thequestiontoaskishow thisfactorshouldbeaddressedduring
implementation. For example, top management support is cited, by many
studies, as the most important critical success factor for ES implementation
success. Yet, we appear to know little about what top management support
really entails. How much support is required, when should top management
support occur, that is, at what stages of the implementation process? Who
should be involved in the top management team? How do we measure top
management support? What do top management actually do during project
implementation;thatis,shouldtheyorganisesteeringcommittees,psychologi-
cally or physically get involved in project implementation? Or how do we
maintaintopmanagementsupportfortheentirelengthoftheproject(particu-
larly ES projects which can take a couple of years to fully implement). This
approach should be adopted for all critical success factors; that is, the most
importantquestiontocontinuallyaskduringESprojectimplementationis:How
doesthisfactoraffectprojectimplementation;thatis,whatisitsrole?
Similarly,forprocessmodelsthesameapproachisrequired.Processmodels
areexcellentforoutliningthestagesinvolvedinanESproject.However,once
again they fail to tell us anything about how things actually occur. Several
empiricalstudiestalkabouttheprocessesorstagesESsoftwaregoesthrough.
However, the central, and most important element of any implementation

process is missing, that is, the effects on the organisation. As academic and
businesspressrepeatedlyiterate,ESpackagesaremoreaboutorganisational
issuesthansoftwareissues.Processmodels,sometimes,tendtoassumethat
theorganisationalandhumanissueswillbesubsumedduringmodelprogress.
This is, unfortunately, very erroneous, and for many companies, a terribly
expensive mistake to make. This chapter suggests that for the betterment of
processmodels,becauseundoubtedlytheyprovideaveryclearandsystematic
structureforESimplementations,anorganisationalchangemodelshouldbe
includedduringprojectimplementation.
Thechallengeforprocessmodelsistoconcurrentlyaddresstechnologicaland
organisational change issues. A model that depicts both the process and
organisational change issues is therefore the ideal. This chapter calls for an
“integratedmodel,”whichincorporatesbothtechnologicalandorganisational
issues,thusensuringtheyareaddressedsimultaneouslyduringprojectimple-
mentation.Atypicalprocessmodeldealswithissuessuchasprojectdesign,
implementation,stabilisation,continuousimprovement,andtransformation,or
an example of another process model with terms such as project initiation,
adoption,adaptation,acceptance,routinisation,andinfusion. Mostmodels,
forsomereason,tendtohavefivephasesanduselanguagethatattheveryleast
sounds technical, systematic, and structured. In other words, the softer
systemic issues, such as organisational change and integration, appear to be
ignored. Organisational change models would include features such as
coalition building, vision sharing, strategy building, and communication of
changeissues,developingbroad-basedactionsandgeneratingshort-termwins
fortheprojectwithintheenterprise.Withoutattentiontotheseissues,astrong
focus on technical integration will occur to the detriment of organisational
integration. Using process models alone, therefore, limits the level of
organisationalintegration,andinvariablylevelofsuccessforESimplementa-
tion.
PerhapsthemostimportantthingtorememberaboutanESimplementationis
itscyclicalnature.Theimplementationprocess,ineffect,doesnotend;thatis,
theprojectshouldcontinueintoapost-implementationstage.Asorganisations
are faced with constant change, this change will also reflect upon the ES
package. This is particularly true when we consider the changing nature of
technology and organisational business processes. Today, firms with ES
packagesarefacedwiththechallengeof“extending”theirorganisationaland
technicalintegrationsfurther.Thesechallengesarecomingfrominter-enter-
prise integration needs. In an effort to keep up with these changes, and more

importantlytoensuretheESinvestmentmaintainsitsoriginalpromise,thatis,
offeringtheenterpriseseamlessintegrationofallinformationflowingthrough
the organisation, firms need to pay constant attention to their ES packages.
This attention becomes part of the post-implementation phase. Companies
should be on the lookout for new business developments (such as a new
business process or a merger with a competitor). An analysis of how these
changes may impact on the ES package should be conducted. Adding
extensionstotheESpackagecanbedifficultandforsomeorganisationsthis
hasendedupgoingfullcircle;thatis,withconstantbolt-onandadd-onstheES
package can lose its single application uniqueness and become a web of dis-
integrationlikeformerlegacysystems.Thesolutiontothisproblemistolead
with organisational changes first and deal with technical issues afterwards.
PerhapsthebestwaytomaintainESintegrityistofocusonbusinessprocesses
that are unlikely to receive radical changes over forthcoming years. For
business processes that will receive a lot of change apply an a la carte26
ES
policy, that is, a pick and mix approach to integration.
Further Inquiry
WhilethefieldofESliteraturehasreceivedmuchattentionoverthepastfive
years, the area remains prescriptive at best and empirically vacuous. The
studies that do attest to empirical investigation focus upon building critical
successfactortaxonomiesorthedevelopmentofprocessmodels.Whilesuch
inquiry offers the field valuable knowledge about factors necessary for ES
implementation and methods for conducting such a process, empirical gaps
relatingtodeeperorganisation-wideissuesexist.Forthepurposesofclarity,
suggestionsforfurtherinquirywillbedealtwithfromapre-implementation,
implementation,andpost-implementationperspective.
From a pre-implementation perspective, further inquiry is needed when
reviewingthefollowingareas.
• MarketSector:HowcanaSMEknowwhetheranESsolutionisrightfor
theirorganisation?WhatarethedifferencesintermsofESimplementa-
tionsforlargecompaniesandsmalltomidsizecompanies?

• OrganisationalReadiness:Howcantheorganisationtellifitisreadyfor
anESimplementation?Whatarethefactorsthatneedtobeinlinebefore
projectbegins?Howcantheorganisationtellifconsultantsarerequired,
and how can the firm make the best of their hire?
• Vendors:Whataffectsdovendorshaveontheorganisation?Whatisthe
relationship between the vendor company and the implementing
organisation? What are the organisational consequences and costs of
choosinganinappropriateESvendor?
• Integration:WhatarethealternativestoESimplementation?Whatisthe
roleofESpackagesininter-enterpriseintegration?Isthereaneedfornew
processmodelsandCSFsforinter-enterpriseintegrations?
Fromanimplementationperspective,furtherattentionisrequiredwithinthe
CSFs and process models arena.
• Critical Success Factors: How does a typical CSF (e.g., top manage-
mentsupport)affectESimplementation?WhatstagesshouldeachCSF
be implemented at during the project? How can CSF influence be
measured? What are the costs for poor CSF implementation?
• Process Models: Greater attention to the “how” questions is required.
Many process models tell us what we should be doing, but there is little
empirical evidence suggesting how we can actually conduct such pro-
cesses.Thereisalsoaneedforachangemanagementmodelwithaninbuilt
ES process model. Such a framework would assist organisations in
aligningbothvitalmodelsforprojectimplementation.
Finally, post-implementation issues in need of further inquiry include the
followingareas.
• Technology: How has dependence on vendors affected the ES imple-
mentation? Is there a constant need for software upgrades and bolt-on/
add-onextensions?
• Organisation:HowhastheESimplementationaffectedtheorganisation-
cultural,social,hierarchical,andeconomicaffects?Hastheorganisation
experiencedagrowthinperformanceasaconsequenceofESimplemen-
tation?Howcansuchadvancesbemeasured?Whatcontributionshasthe

ESimplementationmadetoorganisationalknowledge/organisationallearn-
ingandintellectualcapital?
• Future:WhatprocessesexistforensuringtheESimplementationremains
cyclical by nature? How will new technology and business processes
affect the current ES package?
Conclusion
ESpackagesofferorganisationsahugeopportunityforintegratingtheirentire
ITplatform.Priortothesepackagesfirmswereconstantlyfacedwithdifficul-
tiesinaligningtechnologytothebusinessneeds.Asaresult,theimplementation
of an ES package now alleviates a lot of the former integration problems.
However, caution must be maintained with such implementations. Certain
challengesexist,namelythepoorattentionorganisationalandhumanissues
receive,resultinginpooroverallperformances.Greaterfocusonorganisational
changeandreengineeringofbusinessprocessesisrequired.Todatemuchlip
servicehasbeenpaidtotheseareas,yettheproblemspersist.Criticalsuccess
factors, while valuable in determining what the firm requires for an ES
implementation,needstofocusonthe“how”question.Processmodelsneed
tobemoreinclusiveoforganisationalchangeissues,withthischaptercallingfor
thedevelopmentofanintegratedmodeltodealwithsuchorganisationalchange
and technological issues. Future ES packages will extend the integration
challengetoembraceinter-enterpriseintegration.However,beforeweengage
on this route we firstly need to resolve enterprise integration challenges.
Understandingtoday’sissueswillmaketomorrowsomucheasier.
Endnotes
1
ThefirsteraisDataProcessing(DP).Thiseraallowedorganisationsto
improveoperationaleffectivenessbyautomatinginformationbasedpro-
cesses (Ward & Griffiths, 1996, p. 11). The second era is Management
InformationSystems(MIS).Duringthe1970s,thiseraallowedfirmsto
increasemanagementeffectivenessbysatisfyingtheirinformationrequire-
ments.Finally,withthedevelopmentofend-usercomputing,the1980s

witnessedtheemergenceofthethirdphase,thatis,thestrategicinforma-
tion systems (SIS) era. The objective of this phase, according to Ward
andGriffiths,wastoimprovecompetitivenessbychangingthenatureand
conduct of business (1996, p. 11).
2
BPR is the fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical, contemporary
measures of performance, such as cost, quality, service and speed.
3
Accordingtotheauthorstypicalbusinessapplicationsgrewby5,400%.
4
Frombothahumanandfinancialperspective.
5
Within academic press. Lopes (1992) appears to be the first cited
referencetocointhetermERP.ThetermERPwasusedbymanystudies
untilrecently,butduetoitsdefinitionalsimilaritytoMRPsystemstheterm
hasbeendroppedwithinthisstudy,infavourofjustEnterpriseSystems,
thatis,systemsthatincorporatetheentireenterprise.
6
Davenport(2000)referstotheselargesystemsasintegratingallbusiness
processes of the company seamlessly under a single package.
7
New ES packages are including supply chain management (SCM),
customerrelationshipmanagement(CRM),bolt-ontechnologiesfrom
thirdpartyvendors,ande-businesssolutions.
8
Inter-enterpriseintegrationiswherecompaniesconnecttoothercompa-
nies along the value chain. It is often referred to asvalue chain integra-
tionandwillbecomeavaluablefunctionalityoffutureESpackages.
9
Forexample,customerrelationshipmanagement(CRM)software.
10
Supplychainmanagement(SCM)software.
11
EvenforSmall-to-Mediumsizedorganisations.
12
Year 2000 (Y2K).
13
Examples of typical ES vendors include SAP-R/3 (www.sap.com),
OracleApplications(www.oracle.com),Peoplesoft(www.peoplesoft.
com), One World-JD Edwards (www.jde.com), and BaanERP,
(www.baan.com). There are dozens of packages on the market today,
eachcompetingintermsofnewfunctionalityandtheabilitytointegrate
ever-changingbusinessbestpracticesintotheorganisation. However,of
allthepackages,theGermanproducedSAPsystemhasthelargestshare
of the ES market, followed closely by Peoplesoft, Baan, J.D Edwards,
and Oracle packages (Callaway, 2000).

14
In other words extensions should become part of the ES central system
as opposed to remaining separate tools to the package.
15
Includesapplicationssuchassalescallplanning,callreporting,contact
management,salesteamcommunication,productconfiguration,timeand
expensereporting,andsalescollateraldatabases.
16
Includes call centre automation, field service tracking and dispatch,
customerproblemtrackingandresolution,andproductproblemanalysis
andreporting.
17
Business-to-Businessrelationship.
18
SuchasManugisticsandi2Technologies.
19
Where companies can conduct B2B (business-to-business) or B2C
(business-to-consumer)business.
20
Oneofthemainreasonsforthisisduetothehighpriceofsystemupgrades
andcostsofimplementation.
21
Larger companies comprise firms that have earnings greater than $250
million.SMEhaveearningsofanythingless (Callaway,2000,p.29).
22
ThisstudylooksatESbenefitsfromseniormanagement’sperspective.
The authors developed their own classification of ES package benefits
becausetheESliteraturedidnotappeartoprovideanyrigorousmethods
forcomparingESbenefits;hencethefivetypesofbenefitslistedabove.
23
Incorporatingdecision-makingtoolssuchasOLAPintoESpackagesand
thedevelopmentofknowledge-enabledESpackages.
24
Study was called “ES post implementation issues and best practices”.
Onehundredandseventeenfirmsacross17countriesweresurveyedon
theirsatisfactionwithESimplementationprojects.
25
Thelistinthischapterisnotdefinitiveandisusedasanexplanatorytool
only.ForadetailedviewofCSFs,theISandESliteratureisrepletewith
studiesdetailingtaxonomiesandlists.
26
This term is used to denote a pick and choose approach to implementa-
tion.

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Ward, J., & Griffiths, P. (1996). Strategic planning for information sys-
tems. John Wiley & Sons Ltd.
Yusuf,Y.,&Little,D.(1998).Anempiricalinvestigationofenterprise-wide
integration of MRPII. International Journal of Operations & Produc-
tion Management, 18(1), 66-86.

An Overview of SAP Technology 33
Chapter II
An Overview of
SAPTechnology
Linda K. Lau
Abstract
This chapter commences with a brief description of Enterprise Resource
Planning (ERP), follows by a description of SAP, the largest enterprise
software provider in the world. The timeline of activities since its inception
in 1972 are summarized in a table. SAP’s flagship software program, the
R/3 system, is portrayed in more detail. The capabilities of the R/3 system,
the three-tier client/server technology it employs, its hardware and
software, and several problems associated with its implementation and
use are discussed. The two R/3 implementation tools – namely, the
Accelerated SAP and the Ready to Run systems – are also described.
Introduction
Since first envisioned in the 1960s, integrated information systems have
expandedtremendouslyinscope,evolvingfrominventorytrackingsystems,to

34 Lau
MaterialsRequirementsPlanning(MRP),andfinallytoEnterpriseResource
Planning (ERP) (Brady, Monk & Wagner, 2001). Today, almost every
organization integrates part or all of its business functions to achieve higher
efficiencyandproductivity.Sinceitsconceptionin1972,SAPhasbecomethe
largestdeveloperofenterprisesoftwareapplicationsintheworld.
Thepurposeofthischapteristoprovidereaderswithageneralunderstanding
of ERP and a more detailed description of SAP and its flagship product, the
R/3 system.AfterdescribingthemajoractivitiesundertakenbySAPoverthe
past 30 years, the bulk of the chapter is devoted to describing SAP R/3’s
capabilities,itsthree-tierclient/servertechnology,thehardwareandsoftware
needed,andsomeproblemswiththeR/3system.Twoimplementationtools–
namely, the Accelerated SAP and the Ready to Run systems – have been
developedbySAPtoexpeditethelengthysystemimplementationprocess,and
both are described in the next section.
Enterprise Resource Planning (ERP)
Enterprise Resource Planning (ERP) is the process of integrating all the
business functions and processes in an organization. It achieves numerous
benefits. First, a single point of data entry helps to reduce data redundancy
while saving employees time in entering data, thereby reducing labor and
overheadcostsaswell(Jacobs&Whybark,2000).Second,thecentralization
ofinformation,decision-making,andcontrolleadstoincreasesinefficiencies
ofoperationsandproductivity,aswellascoordinationbetweendepartments,
divisions, regions, and even overseas operations. This is especially true for
multinationalcorporations,forwhichglobalintegrationcouldresultinbetter
communicationsandcoordinationaroundtheworldandtheglobalsourcingand
distribution of parts and services could provide appropriate benchmarks for
worldwide operations. Third, the sharing of a centralized database provides
business managers with accurate and up-to-date information with which to
makewell-informedbusinessdecisions. Further,itreducesdataredundancy
whileimprovingdataintegrity.Fourth,functionalintegrationconsolidatesall
sortsofdata,suchasfinancial,manufacturing,andsales,totakeadvantageof
bulkdiscounts.ERPisespeciallyimportantforcompaniesthatare“intimately
connected” to their vendors and customers, and that use electronic data
interchangetoprocesssalestransactionselectronically.Therefore,theimple-

mentationofERPisexceptionallybeneficialtobusinessessuchasmanufactur-
ing plants that mass-produce products with few changes (Brady, Monk &
Wagner,2001).ERPprovidescompanieswithacompetitiveadvantage.
Withtherapidgrowthofe-commerceande-businessinrecentyears,coupled
with the growing popularity of concepts such as supply-chain management,
customerrelationshipmanagement,e-procurement,ande-marketplace,more
and more organizations are integrating their ERP systems with the latest
business-to-businessapplications.Thisnewchallengeisoftenreferredtoas
Enterprise Commerce Management (ECM). The major enterprise software
providers are Oracle, PeopleSoft, J.D. Edwards, and SAP.
SAP AG
Systemanalyse und Programmentwicklung (SAP) was founded in 1972 in
Mannheim, Germany, by five former IBM systems engineers. In 1977, the
company was renamed Systems, Applications, and Productions in Data
Processing (SAP), and the corporate headquarters was moved to Walldorf,
Germany.TheprimarygoalofSAPistointegrateallthebusinessfunctionsin
anorganization,sothatchangesinonebusinessprocesswillbeimmediatelyand
spontaneously reflected by updates in other related business processes.
Designingrevolutionaryandinnovativesoftwarepackagesimplementedona
multi-lingual(inmorethan20languagesby2003),multi-currency,andmulti-
nationalplatform,SAPistheworld’slargestenterprisesoftwareproviderof
collaborativee-businesssolutions(Buck-Emden,2000).
Initially,theR/1system(abbreviatedfor“runtimesystemone,”indicatingreal-
timeoperations)wasdevelopedin1973tosolvemanufacturingandlogistics
problems. Over time, it expanded into other contemporary markets such as
services, finances, and banking, and added more business functions; for
instance, the Asset Accounting module was added in 1977. The more inte-
grated,mainframe-basedR/2systemwaslaunchedin1979.Thefirstversion
oftheR/3systemwasreleasedin1992,whiletheInternet-enabledRelease3.1
wascompletedin1996. By2002,SAPhadannualsalesof$8.4billion,making
itthethirdlargestsoftwarevendorintheworld(behindMicrosoftandOracle).
Currently, SAP employs over 29,000 people in more than 50 countries, has
1,000 partners around the world who have installed 64,500 systems, serves
morethan10millionusersat20,000organizationsinover120countries,and

36 Lau
Table 1. Timeline of SAP, Inc.
Year Activities
1972 • Founded by five former IBM employees in Mannheim, Germany.
1973 • Developed a standard, real-time financial accounting software package, which formed the basis for other software
applications that was later known as the R/1 system.
1975 • Developed second standard product, a Materials Management Program with modules for Purchasing, Inventory
Management, and Invoice Verification (Brady, Monk & Wagner, 2001).
1977 • SAP became a closely held corporation (GmbH).
• The company was renamed Systems, Applications, and Productions in Data Processing (SAP).
• The corporate headquarters was moved to Walldorf, Germany.
• Added another central module, Asset Accounting.
• Developed a French version of the Financial Accounting Module.
1978 • Began developing the R/2 system, a more integrated version of its software products.
1979 • SAP R/2 was launched.
1980s • Developed additional modules for Cost Accounting, Production Planning and Control, Personnel Management, and
Plant Maintenance.
• Expanded into international markets.
1981 • Completed the development of the R/2 system, which can handle different languages and currencies.
1987 • Began developing the R/3 system, which incorporated the following concepts:
o relational database management systems
o graphic user interfaces
o a runtime environment developed using C programming language
o implementing applications in ABAP/4
1988 • Became SAP AG, a publicly traded company.
• Established subsidiaries in numerous foreign countries.
• Established SAP Consulting GmbH as a joint venture with Arthur Andersen.
• Sold its 1,000th system to Dow Chemical.
• Unix became the preferred development platform for R/3.
• Launched the SAP University Alliances (UA) program in Germany.
1992 • Released R/3 Release 1.0 in October.
1993 • Cooperated with Microsoft to integrate PC applications with the business applications and to include Windows NT
platform.
1994 • Opened a new U.S. development center in Newtown Square, PA, to develop new software technology for the R/3
system.
• With R/3 Release 2.1, a complete Kanji version was available for the Japanese market.
1995 • R/3 Release 3.0 was ready.
• Included IBM’s AS/400 platform.
1996 • R/3 Release 3.1 was Internet-enabled.
• Developed Customer Relationship Management (CRM) and Supply Chain Management (SCM) software applications.
• The Ready-to-Run R/3 (RRR) program was available in the United States in August 1996.
• The R/3 system was broken down into five components as part of the SAP Business Framework.
• Launched the SAP University Alliances (UA) program in United States.
1997 • R/3 Release 4.0 was released, which included developments in the area of Supply Chain Management (SCM).
• The Ready-to-Run R/3 (RRR) program was available in Europe in June 1997.
1998 • SAP was listed on New York Stock Exchange.
• Most of Fortune 500 companies are clients.
• Refocused marketing efforts on midsize companies (less than 1,000 employees).
• Developed industry-specific pre-configured versions of R/3 for 19 different industry sectors.
• Allowed application hosting; that is, a third-party company is allowed to provide the hardware and support.
• Focused on new dimension products such as Customer Relationship Management (CRM), Supply Chain Management
(SCM), and Business Intelligence.
1999 • Delivered http://mySAP.com.
• R/3 Release 4.6 was available for shipping.
• Developed Accelerated SAP (ASAP) implementation methodology to ease the implementation process.
2000 • SAP formed SAPHosting, a subsidiary dedicated to the Internet application service provider and application hosting
business.
• SAP formed strategic alliance with Commerce One to create SAPMarkets, a subsidiary dedicated to creating and
powering globally interconnected business-to-business marketplaces on the Internet.
• Started the High School Alliance program, where 34 American schools participated to teach students accounting and
entrepreneurship using SAP software.
2001 • SAP acquired Top Tier Software and signed an agreement with Commerce One, moving into the electronic business
market and forming SAP Portals.
2002 • Established the 7th
research center in Queensland University in Australia.
2003 • Five hundred universities in 36 countries participated in the SAP University Alliance program.
• There were more than 2,200 SAP-proficient faculty members and 130,000 students enrolled in courses supported by
SAP software.

specializes in 23 industries (SAP Innovation Report, 2003). SAP has estab-
lishedseven“bleedingedgetechnology”researchcentersaroundtheworld.
The latest research center, located at Queensland University in Australia,
conducts research on voice recognition and mobile computing. The other
corporateresearchcentersarelocatedinPaloAlto,CA;Karlsruhe,Germany;
Brisbane, Australia; Sophia Antipolis, France; Montreal, Canada; and
Johannesburg, South Africa (SAP Innovation Report, 2003). These centers
conduct research on e-learning, mobile computing, intelligent devices, e-
collaboration,advancedcustomerinterfaces,andtechnologyforapplication
integration.AsillustratedinTable1,SAP,Inc.hasparticipatedinmanymajor
activities over the past 30 years that helped to secure its current standing in
today’s software industry (Brady, Monk & Wagner, 2001; Buck-Emden,
2000;http://SAP.com).
Tokeepupwithcustomers’demandforeasierandquickersystemintegration,
SAPnowfocusesontheconceptofsystemreusability,reapingbenefitssuch
asshorterdevelopmenttime,lowerdevelopmentcosts,andimprovedsolution
homogeneity for the organizations. Further, the reusability approach also
resultsinshorterlearningcurveandlesstrainingforSAPuserswhoarealready
familiarwiththeproducts.Toincreasetheusers’acceptanceoftheintegrated
system, SAP is now employing a new development paradigm of getting
customersandusersdirectlyinvolvedinthesystemdevelopmentprocess.
THE R/3 System
The R/3 system is a powerful enterprise software package with several
significantupdatesoverthemainframe-basedR/2version.TheR/3systemhas
threemajorfunctionmodules:SAPFinancials,SAPHumanResources,and
SAPLogistics(Larocca,1999).Thefinancialsmoduleisanintegratedsuiteof
financial applications containing submodules such as financial accounting,
controlling,investmentmanagement,treasurycashmanagement,enterprise
controlling,andrealestate.Allissuesregardingrecruitmentandtrainingare
managedusingthehumanresourcesmodule,whichcontainspersonneladmin-
istrationandpersonnelplanninganddevelopmentsubmodules.Thelogistics
modulemanagesissuesrelatedtosalesanddistribution,productionplanning,
materialsmanagement,qualitymanagement,plantmaintenance,logisticsinfor-
mation systems, project systems, and product data management. The R/3

38 Lau
Reference Model is equipped with more than 8,000 configuration options
(Jacobs & Whybark, 2000). The newest version of R/3 is the SAP R/3®
Enterprise, which has new and continuously improved functions, provides
flexibility and optimization, and utilizes innovative technology to manage
collaborativee-businessprocesses.
Capabilities of the R/3 System
While designing the R/3 system, SAP developers choose the best, most
efficientwaysinwhichbusinessprocessesshouldbehandled,andincorporate
these “best practices” into the system (Brady, Monk & Wagner, 2001).
Therefore, clients of the R/3 system may need to redesign their ways of
conductingbusinesstofollowthepracticesdictatedbytheR/3developers.In
somesituations,organizationsmayneedtoreengineertheirbusinessprocesses
infundamentalways,revampingoldwaysofconductingbusiness,redefining
job responsibilities, and restructuring the organization. R/3 systems can,
however, be customized to address global issues where different countries
have different ways of doing business; country-specific business practices
pertainingtoaccounting,taxrequirements,environmentalregulations,human
resources,manufacturing,andcurrencyconversionrulescanbebuiltintoR/3
systems.
UnliketheR/2system,theR/3systemrequiresonlyasingledataentry,andit
providesuserswithimmediateaccesstoandcommonusageofthedata.This
newsystemwasdesignedaroundbusinessprocessesandapplicationssuchas
salesorders,materialrequirementsplanning,andrecruitment.Animportant
advantageoftheR/3systemisitsabilitytorunonanyplatform,includingUnix
and Windows NT. R/3 also utilizes an open architecture approach, so that
third-party software companies are allowed to develop add-on software
packagesandintegratehardwareequipmentsuchasbarcodescanners,PDAs,
cell phones, and Global Information Systems with the R/3 system (Buck-
Emden,2000).Sophisticatedandmoreadvanceduserscandesigncustomized
graphicaluserinterfaces(GUI)screensandmenusand/orcreateadhocquery
reportingtreesandcustomizedreportsusingtheABAP(AdvancedBusiness
Application Program) Workbench developer’s tools (Larocca, 1999). The
object linking and embedding (OLE) technology allows files from other
applicationssuchasMicrosoftOfficeandCorelOfficetobeeasilyintegrated
withtheR/3system.TheSAPOn-lineHelpDocumentation,availableinboth
standard and compressed HTML, is contained on a separate CD-ROM.

In1996,theR/3systemwasbrokendownintothefollowingfivecategoriesof
components as part of the SAP Business Framework to better streamline
businessoperations:industry-neutral,industry-specific,Internet,complemen-
tary,andcustom.SAPcontinuestodevelopsoftwarecomponentssuchasthe
SAP Advanced Planner & Optimizer (SAP APO), SAP Customer Relation-
ship Management (SAP CRM), and SAP Business Information Warehouse
(SAPBW),toformthetechnicalfoundationforthehttp://www.mysap.com/e-
businessplatform.
The Three-Tier Client/Server Technology
Itwastheadventofinexpensivehardwareandtheimprovementofclient/server
technology in the 1990s that propelled SAP to develop the SAP R/3 system,
whichwasdesignedfortheclient-serverenvironment.Theclient/serverdistrib-
utedcomputingarchitectureallowsuserstoaccessthesystemviaanycomputer
that is connected to the network, even working from home. The R/3 system
utilizesthesamethree-tierhierarchyconfigurationastheRelationalDatabase
ManagementSystem(RDBMS).TheuserinterfacelayerreferstotheGUIof
theclientcomputer,whichservesasameansfortheendusertocommunicate
withtheapplicationsanddatabaseservers.Thebusinesslogiclayerconsistsof
theapplicationserver,whichperformsalltheadministrativefunctionsofthe
system,includingbackgroundprocessing,printing,andprocessrequestman-
agement.Theinnermostlayerconsistsofacentralcomputerthatcontainsthe
databaseserver,thedatadictionary,andtheRepositoryInformationSystem,
whichisusedtoretrieveinformationontheobjectsinthedatadictionary.An
improvedversionofthethree-tierarchitectureisthefour-layerclient/server
configuration, with an additional layer for Internet service (Buck-Emden,
2000).
Hardware and Software Components
ThehardwarecomponentsofanSAPR/3installationincludetheserversthat
house the databases and software programs, the client workstations for user
interfaces,andthenetworkcommunicationssystemthatconnectsserversand
workstations.ThesoftwarecomponentsofanSAPR/3installationconsistof
thenetworkinfrastructure,theoperatingsystems,thedatabaseengine,andthe
clientdesktop. Severalapplicationprogramsareinstalledontotheservers: the

40 Lau
mainfunctionmodules,thecustomizedaswellastheinterfaceprograms,and
the ABAP/4 (Advanced Business Application Program) developer’s work-
bench programming tools. ABAP programmers use ABAP/4 to develop
regularapplicationprogramsthatareincludedwiththeR/3systemaswellas
customized software programs for their clients (Buck-Emden, 2000). Some
commonly used ABAP/4 tools are: the ABAP List Processing, used to list
reports; the ABAP Query, used to develop queries; the Screen Painter, used
to design screens; and the Menu Painter, used to create menus. Third-party
vendorsarepermittedtodevelopcustomizedadd-onsoftwareprogramstobe
linkedwiththeR/3system.ThedatarepositoryfortheRDBMSandthebasis
module(asaprerequisiteforallapplicationmodules)arealsoinstalledontothe
servers.
Problems with SAP R/3
AlthoughSAPtoutsitsR/3systemasarevolutionary,efficient,andinnovative
software program, the system does have a few drawbacks. Because of the
complexity of the R/3 system, many assumptions must be made in order to
confine the number of configuration options available. However, once the
systemisconfigured,alltheoptionsarefixedandcannotbechanged.Further,
users must enter all the fields before they are allowed to proceed to the next
screenoractivity(Jacobs&Whybark,2000).Consequently,manypeoplefind
theR/3systemtoberelativelyrigid.Nevertheless,theflexibilityoftheSAP
systemcanbeimprovedbyinstallingspeciallydesignedcustomizedapplica-
tionsdevelopedbyABAPprogrammers.
A second potential problem with R/3 has been mentioned above. In order to
increasetheefficiencyofdoingbusiness,SAPdevelopersincorporated“best
practices” into the R/3 system. Basically, they decided how clients should
conducttheirbusinesses.However,notallbusinessesagreewiththisphiloso-
phy, and this approach may not be acceptable or applicable to some organi-
zations.Insuchinstances,itmaybeextremelyimportantfororganizationsto
continue with their usual ways of doing business and hence for the system
administratortoconfigurethesystemaccordingtotheseestablishedpractices
(Jacobs&Whybark,2000).ThesesimplymaybeincompatiblewiththeR/3
system.
SAPattemptstoincorporateallbusinesspractices,includingenvironmental
and other regulations into the R/3 system. However, three types of misfits

(relating to data, process, and output) can occur due to incompatibilities
betweensoftwarefunctionalityandorganizationalrequirements(Sohetal.,
2000).MajormultinationalcorporationsthatinstalledsimilarR/3systemsin
several different countries could experience any of these mismatches in the
systemsduetodifferencesinculturalandregulatoryenvironments.Theunique
context of each country in which an organization operates must be carefully
enmeshedintothetraditionallyWestern-biasedbusinesspracticesinherentin
theR/3systems.Further,thereistheproblemofmigrationbetweensoftware
versions,inwhichthenewerversionissometimesnotbackward-compatible
withtheolderversion.
WhenusingtheSAPOn-lineHelpDocumentation,theversionnumberlisted
on the Help CD-ROM must correspond with the version of the SAP GUI
(Larocca, 1999). However, even when the two versions correspond, incom-
patibilitiesmaybepresent,becausechangesandupgradesinahigherversion
of the software are not updated in the Help CD-ROM of the same version
number.Further,theHelpCD-ROMhaslimitedsearchingcapabilitiesonsome
concepts,renderingthehelpfeatureaninefficientsupporttool.Inaddition,not
allmaterialsareproperlytranslatedfromtheoriginalGermanversion,andnot
allthehelpdocumentationhasbeentranslated.
Two R/3 Implementation Tools
R/3systemimplementationisbothexpensiveandtime-consuming;acomplete
implementationcancostbetweenoneandseveralmilliondollarsandcantake
more than three years. Only Fortune 500 corporations can afford such
extensivedeploymentofERPasR/3systemsrepresent.Inanattempttotarget
small and medium-sized companies as well as large organizations that are
interestedinonlypartialERPintegration,SAPdevelopedtwoimplementation
alternatives: the Accelerated SAP and Ready to Run R/3 programs.
The Accelerated SAP (ASAP) program is a rapid implementation tool de-
signedtoinstallthefullR/3systemquicklyandefficientlybyfocusingontools
andtrainingandutilizingafive-phase,process-orientedstrategyforguiding
successful implementation (Larocca, 1999). The five phases are project
preparation,businessblueprint,realization,finalpreparation,andgoliveand
support.

42 Lau
Designed for small to medium-sized companies, the SAP Ready to Run R/3
(RRR) program complements the ASAP system by bundling the server and
network hardware systems with a pre-installed, pre-configured base R/3
system, an operating system, and a database management system (Larocca,
1999).Thisapproachyieldssignificantcostandtimesavingsbyreducingthe
implementationschedulebyasmuchas30days.TheRRRsolutionincludesa
speciallydevelopedonlinetoolcalledtheSystemAdministrationAssistant,
whichallowsaminimallytrainedsystemadministratortomanagethesystem
effectively. A RRR system can be purchased through any SAP hardware
vendor partner such as Hewlett-Packard, Compaq, IBM, NCR, Siemens, or
SunMicrosystems.ItcanbesupportedbyoperatingsystemssuchasMicrosoft
Windows NT, IBM AS/400, and Unix. The databases supported by the R/3
systemsincludeMicrosoftSQLserver,DB2,Informix,Oracle,andDynamic
Server. All the options in the SAP system are configured using the SAP
ImplementationGuide(IMG).
Conclusion
This chapter provides readers with a general understanding of Enterprise
Resource Planning (ERP); of SAP, the third largest software vendor in the
world; major activities undertaken by SAP; and of SAP’s R/3 system. The
capabilities of the R/3 system include complete system integration, global
accessibility, scalability, and open architecture. The three-tier client/server
technologyreferstotheuserinterfacelayer,thebusinesslogiclayer,andthe
databaseserverlayer.ThehardwareelementsforanR/3installationincludethe
usualserversandclientworkstations,butthesoftwarerequirementsaremore
elaborate. Some of the problems associated with the R/3 system include the
adoptingorganization’sneedtoreengineerbusinessprocesses,themisfitsand
mismatchesbetweensystemfunctionalityandorganizationalrequirements,and
inadequaciesintheSAPOn-lineHelpDocumentation.TheAcceleratedSAP
andReadytoRunsystemsaretwoimplementationtoolsdesignedtoexpedite
theimplementationprocess.

References
Brady, J., Monk, E., & Wagner, B. (2001). Concepts in enterprise resource
planning.Boston,MA:CourseTechnology.
Buck-Emden, R. (2000). The SAP R/3 system: An introduction to ERP and
business software technology. Reading, MA: Addison-Wesley.
Jacobs, R., & Whybark, C. (2000). Why ERP? A primer on SAP implemen-
tation. New York, NY: Irwin McGraw-Hill.
Larocca, D. (1999). SAMS teach yourself SAP R/3 in 24 hours. Indianapo-
lis, IN: SAMS.
Lau,L.(2003). ImplementingERPsystemsusingSAP.InM.Khosrow-Pour
(Ed.), Information technology and organizations: Trends, issues,
challenges, and solutions (pp. 732-734). Hershey, PA: Idea Group
Publishing.
SAP Innovation Report 2003: SAP makes innovation happen. Retrieved
March11,2003,fromhttp://www.sap.com/company/innovation/index.asp
Soh, C., Sia, S., & Tay-Yap, J. (2000). Cultural fits and misfits: Is ERP a
universal solution? Communications of the ACM, 43(4), 47.

44 Fedorowicz, Gelinas, Hachey & Usoff
ChapterIII
Integrating
SAPAcrossthe
BusinessCurriculum
Jane Fedorowicz
Bentley College, USA
Ulric J. Gelinas, Jr.
George Hachey
Catherine Usoff
Abstract
This chapter describes the integration of the SAP R/3 system into courses
across the undergraduate and graduate business curriculum at Bentley
College. It argues that the integration of the SAP R/3 system into existing
business courses, rather than creating standalone courses covering
enterprise systems concepts, is a preferable way to immerse students in

Integrating SAP Across the Business Curriculum 45
information technology issues and help them understand how enterprise
systemshavesignificantlytransformedtheworkplace.Theauthorsdescribe
the processes used to train faculty, develop and test curriculum materials,
and coordinate the integration effort. Learning objectives and SAP R/3
curricularcontentaredescribedforMBA,accounting,andfinancecourses.
Introduction
Businessschoolfacultyhavealwaysstruggledwiththesometimesantithetical
demandsofprovidingstudentswithlifetimecareerknowledgewhilegiving
them enough practical skills to obtain a good entry level position upon
graduation.Aprimeexampleofthisdilemmarelatesto“hands-on”computer
skills.Outsideofthedomainofinformationsystemswherelearningprogram-
ming languages and database management skills are key to the curriculum,
businessfacultyfacevalidcriticismwhentheirhands-onexercisesarenothing
more than computerized versions of textbook problem solving. It is not
adequatetoacquaintstudentswithsimulatedandsimplifiedversionsofreal
business computer system issues. To be truly useful, classroom computer
applications must both reflect the theory of a subject area and expose the
studenttoreal,andthereforecomplex,softwareanddata.Suchexposuregives
the students an increased appreciation of technology’s role in their intended
careerpathswhiledemonstratingthechangestechnologybringsaboutinthe
business processes and workflow of the area under study. This, then, is the
powerful lesson resulting from intensive immersion into the real world of
informationtechnology.
A primary mechanism for exposing students to the synergy of information
technologyandbusinesstheoryisenterprisesystems.Enterprisesystemsare
usedbycompaniesandgovernmentalorganizationsofallsizestosupportand
integrateinternalbusinessprocesses,andincreasingly,tointeractwiththeir
businesspartners.Theresultsaresimplifiedandautomateddataentry,more
sophisticatedanalysisfordecision-making,andcoordinationamongpreviously
isolated business functions. Thus, exposure to enterprise systems gives stu-
dents a more accurate and sophisticated picture of the way business works
todayandwillcontinuetoevolveinthefuture.
ManycollegesanduniversitieshavejoinedSAP’sEducationalAlliance(EA)
program in the past few years and have used SAP’s R/3 enterprise system in

existingandnewcourses. However,someschoolshavebeenmoresuccessful
than others in integrating SAP R/3 across disciplines within their business
curriculum.OneofthemoresuccessfuleffortshasbeenundertakenatBentley
CollegeinWaltham,MA,USA.AcriticalsuccessfactoratBentleyhasbeen
thecarefulalignmentofenterprisesystemsapplicationswithinthecurriculum
andwiththemissionandstrengthsoftheCollege.Inthischapter,weoutlinethe
Bentleyperspectiveontechnologyintegrationinourclasses,demonstratehow
enterprisesystemsandSAP’sR/3systemfitwiththegoalsoftheCollege,give
examplesofhowSAPR/3facilitatestheteachingofawiderangeoftopicsand
courses, and provide guidance on the resources needed to successfully
accomplishthesegoals.
Three Levels of Technology Integration
ThePresidentofBentleyCollege,JosephMorone,promotestheintegrationof
technologyatcollegesanduniversitiesonthreelevels(Hulik,1998).InLevel
One, a school acquires the infrastructure necessary to support the use of
informationtechnology(IT)bystudents.Thisinvolvespurchasingthehardware
and software necessary to support a computer lab on campus, distance
learning, and high-tech classrooms. This level of IT infrastructure has now
becomeapracticalnecessityinhighereducation.Nevertheless,theresources
necessarytosupportLevelOneintegrationaresubstantial.
In Level Two, a school seeks to include curriculum aimed at graduating
informationtechnologyspecialists.Thislevelmayinvolvethecreationofnew
degreeprogramsdesignedtoproducecandidatesthatwillbedemandedinthe
marketplace.Generally,thisinvolvestherecruitmentofhigh-levelIT-savvy
facultytonurturethesespecialists.Intoday’shighlycompetitivemarketforIT
faculty,thisislikelytobeanexpensive,butneverthelessnecessary,proposition
formanyschools.
InLevelThree,thecontentofthecurriculumchanges.Theintegrationisnot
limited to how a course is being taught. Rather, the integration entails a
transformation of what is being taught in the classroom. Level Three is the
mostdifficultlevelofintegrationtoreach.Itmeansthatnon-ITdegreecourses
mustbeinfusedwithITapplicationsandconsiderationoftheirorganizational
impacts.Thisintegrationusuallynecessitatesaheavytimecommitmentfromthe

faculty,especiallythosenotadeptattheuseofIToritsapplicationinnon-IT
courses.Tosuccessfullyusetechnologyasateachingtool,instructorsmustbe
giventhetimeandresourcesneededtoprovideaLevelThreeexperiencefor
theirstudents.
A number of colleges and universities have chosen to integrate SAP’s R/3
systemorotherenterprisesystempackagesintotheircurriculumbycreating
standalone courses covering enterprise systems concepts (see, for example,
Becerra-Fernandez,Murphy&Simon,2000).ThisisanexampleofLevelTwo
integration.AtBentleyCollegewehavechosentointegrateSAP’sR/3system
into existing courses and to direct system usage toward program and course
objectives,consistentwithLevelThreeintegration,throughlectures,discus-
sions,andexercises.
InthischapterwedescribeBentley’sSAPprogramobjectivesandtheoverall
approach taken to implement SAP R/3 in our courses. For example, faculty
were trained using a combination of external SAP R/3 training and in-house
workshops. Assignments were piloted in one course and then adapted to
others.Afterthisbackground,wedescribehowR/3wasintegratedintomany
courses and used to accomplish specific course objectives. Finally, we
summarizetheresourcesthatwererequiredtoaccomplishourR/3integration
objectives.Includedhereisadiscussionoftheimportanceofcollaborationwith
organizationsusingSAP.
Getting Started (and Restarted)
The initial attempt to integrate SAP into the curriculum at Bentley revolved
aroundtheintroductionofanew,full-time,cohort-basedMBAprogram.The
original concept was that R/3 exercises would be introduced in each of the
introductoryfunctionalcoursesandintheBusinessProcesscourse,toprovide
anunderlyingthemeandintegratingmechanismtotheprogram.Toaccomplish
this,BentleybecameamemberofSAP’sEducationalAlliance(EA)program.
As a member of the EA, the college received the R/3 software, a quota of
trainingdays,andothertypesofsupportthatwouldhelpfacultylearntoadapt
thesystemtotheirclasses.Thisinitialendeavorfailedforanumberofreasons,
theprincipalonebeingthatmanyofthefacultyinvolvedwerenotsuccessfulin
integrating R/3 with course content in a meaningful way.1
The vision of

meaningful integration that we had was insufficient given the difficulty of
determiningwhattodowiththesystemoncewegotit.Meaningfulintegration
ofR/3intocoursesrequiresadedicatedeffortbyindividualfacultymembers
andsubstantialsupportfromavarietyofsources. Afterthisinitialstart,oneor
twofacultyfromtheoriginalfull-timeMBAgroup,plusothersfromtheFinance
andAccountancyDepartments,formedacriticalmassoffacultywhowerestill
determinedtointegrateR/3intotheirclasses.
In contrast to the slow start in the MBA program was the early success in the
AdvancedAccountingInformationSystems(AdvancedAIS)course,where
enterprise systems were (and remain) an important topical area of study to
thoseobtainingadegreeinAccountingInformationSystems.Intheveryfirst
semester of SAP’s availability on campus (spring semester, 1997), students
were exposed to SAP in the Advanced AIS class and were offered attractive
internshippositionsworkinginthethenBigFiveenterprisesystemssupport
areas. Nonetheless,thiswasanisolatedoffering,anditslackofintegrationwith
therestoftheAIScurriculumdiluteditsusefulnesstostudents.
ThediscontinuitybetweenthecorporatestyletraininginR/3thatwasoffered
tofacultyandtheircourseobjectivescontributedtothefrustrationoftheinitial
faculty group, as did the nature of the R/3 training database (called IDES),
which is delivered with the system to all EA members. SAP’s R/3 training
courses are organized by levels in each SAP module2
. Thus, level 2 courses,
which provide the introduction to the system for most faculty, offers an
overviewofthefunctionalactivitiesthatcomprisethatmodule.Thistraining
consists of lectures on the features of the module and exercises that demon-
stratehowthesystemshouldoperate.Suchanapproachisveryappropriatefor
corporatestafferswhowillworkintentlywithasmallportionofR/3,butdoes
notmatchtheneedsoffacultywhomusttiesystemuseintobroadercourseand
educationalobjectivesratherthanjustpresentingsystemoptionsanddetails.
Facultyneededtoseemoreofthe“bigpicture”ofenterprisesystemsuseinan
organization to determine how the learning from the training class could be
integratedwithbusinesscoursesinameaningfulway.Mostfacultyneededto
take several R/3 training courses before they had enough knowledge to start
buildingthebiggerpicture.
ThetemptationformanyfacultybeginningtouseR/3wastotaketheexercises
taught in R/3 corporate training and use them directly in their classes. In this
attempt, frequent problems surfaced due to the fact that most SAP training
courses depend on the inclusion of additional data above and beyond what

comes with the IDES database that EA members receive. To get these
exercises to run at an EA school, one must add data to the system such as
inventoryitemsandcustomerrecords,andperformsomecustomizationand
configuration such as closing and opening accounting periods and setting
numberrangesfortransactions.ManyoftheseactionsaretakeninwhatSAP
refers to as the implementation guide (IMG). But instructions about how to
access and use the IMG are given in level 3 SAP training courses, and are
outsideoftheexpertiseofthetypicalfacultymember.SAPtrainershavethe
requisite expertise or support staff to accomplish such customizing for their
trainingexercisestowork.Butsimilarresourceswerenotavailabletosupport
curriculumdevelopmentandintegrationatanEAschool.
Despitethesedifficulties,anumberoffacultyatBentleyrecognizedthevalue
of R/3 integration in their classes and persisted in using the system, making
incremental progress each semester. A jolt was given to the effort in its third
yearwhenare-rolloutofSAPwasundertaken.Thekeydifferencebetweenthe
firstattemptandthesecondtointegrateSAPexercisesatBentleywasthatone
ofthefacultyinvolvedintheefforthadbeengrantedaone-yearsabbaticalto
figureouthowtointegratethesystemintoexistingandnewcourses.Heused
histimetotakeanumberoflevel3SAPtrainingclasses.Thisallowedhimto
helpothersmakethenecessarychangestofacilitatetheeffectivedemonstration
ofthesystem’scapabilities.Inaddition,somefacultyinthegroupwhoattended
SAP training would immediately attempt the exercises on the Bentley R/3
system and would consult with their training instructors to determine what
adjustments needed to be made. This realization about the effort and knowl-
edge required to translate the training available into business curriculum
applicationswasveryimportantindeterminingifare-rolloutoftheeffortwas
possible.3
Thecoregroupoffacultyinterestedinthere-rolloutdecidedthatthe
pedagogicalbenefitswereworththeburden.
The first step in the re-rollout was the creation of an SAP User’s Group of
facultyandtechnicalstaffwhowouldmanagetheresource,shareexercisesand
insightsintousingthesystem,andplanforthegradualspreadofSAPusageinto
coursesoutsideaninitialcore.TheinitialgroupofcourseswithR/3exercises
wasdeterminedbytheteachinginterestsofthefacultyinvolvedandincluded
AccountingInformationSystems(AIS),AdvancedAIS,CostManagement,
TreasuryManagement,ITAuditing,andBusinessProcesses.
OnelessonfromthefirstexperienceswithR/3isthatbothfacultyandstudents
need a great deal of support in order to have a successful encounter with the

technology.Ourinitialeffortsinvolvedasingle,part-timestaffmemberwho
oversawtherunningoftheserverandprovidedlimitedfacultysupport.There
were no student assistants in the computer lab who could help students with
SAP problems, leaving individual faculty to troubleshoot when they were
available to do so. In the restart period, we found it took three part-time
technicalstaffpeopletoprovideongoingsupportofthesystem.Inaddition,one
recentMBAgraduatewashiredhalf-timetoprovidefacultysupportandtwo
graduatestudentsprovidedassistancetostudentsinalearninglab.Thislevel
of support is adequate for our present level of usage.
Coordination Across the Curriculum
Asthegroupmetovertime,itwasclearthattheyhadtwomajorpedagogical
objectivesfortheintegrationofSAPintotheirclasses.Thesetwoobjectives
correspondwiththebenefitsthatcompanieshopetoattainwithinvestmentsin
informationtechnology(IT)thatZuboffenunciatedinherclassic1985article
entitled “Automate/Informate: The Two Faces of Intelligent Technology”.
Zuboff (1985, p. 8) asserted that when firms use IT to automate, they are
lookingto“replacehumaneffortandskillwithatechnologythatenablesthe
same processes to be performed at less cost and with more control and
continuity”.Atthesametime,however,computerizedbusinessapplications
alsogenerate“informationabouttheunderlyingprocessesthroughwhichan
organizationaccomplishesitswork”.Managerscanusethesedatato“informate”
the firm or find out more about the firm’s underlying processes. At Bentley,
SAPisintegratedintocoursestoaccomplishlearningobjectivesinbothareas,
automatingandinformating.
Enterprise systems such as SAP’s R/3 certainly embody both capabilities
enunciated by Zuboff. These systems are customized to reflect the business
processes of companies that implement them. They allow for the automatic
transmissionofinformationderivedfromthebasictransactionsofthecompany
across the various modules of the system. For example, in the order-to-cash
process,theshippingdepartmentwillpostagoodsissueatthepointwhenthe
items ordered by the customer are ready to be shipped. This action, initiated
intheSalesandDistribution(SD)module,resultsintheautomaticupdatingof
thecustomer’saccountandtherelevantgeneralledgeraccountsintheFinancial

Accounting(FI)module,adjustmenttotheinventorylevelsmaintainedinthe
Materials Management (MM) module and even the reports in the Treasury
(TR)modulethatforecastwhenthecashflowimplicationsofthetransaction
willberealized.Inaddition,byautomatingallofthesefunctions,therolesofthe
accountant, sales staff, inventory manager, and corporate treasurer must be
redesignedtoreflectamovefromdataentryactivitytodecisionsupport.
Ourexercisesallowstudentstoviewhowthesystemtrackseverystepofsuch
processes. Students can experience how an enterprise system facilitates the
functioningoftheorganization’sbusinessandprovidesrecordsthatbusiness
eventshaveoccurred.Theseareboth“automate”typefunctions.Thus,wecan
illustratehowtheinformationflowsacrossmodulesinanintegratedsystemand
how the enterprise system provides IT support for a company’s business
processes.
As transactions such as those in the order-to-cash process occur, the R/3
system stores tremendous amounts of transaction data in more than 13,000
tables. System users can access these data directly by going to the tables
themselvesorbyusinganyofthevariousreportingroutinesthatcomewitheach
module.Consequently,enterprisesystemsendthefragmentationofinformation
thatoccurredwhencompanieswereusingindividual“legacy”systemstokeep
track of activity in each functional area of the firm and which were poorly
integrated (Davenport, 1998). The use of data for decision making begins to
approximatethehigher-levelanalyticalprocessthatZuboffcallsinformating.
SeveralexercisesaskstudentstorecognizetheuseofSAPR/3-generateddata
forinformating.
The SAP users group at Bentley College has gradually expanded to include
sevenfacultywhohaveadaptedR/3exercisesintomostoftheirclassesatboth
the undergraduate and graduate levels. Others have also begun to adopt
exercises in other sections of SAP-centric courses. The SAP modules and
features that have been covered in various assignments include Materials
Management(MM),SalesandDistribution(SD),FinancialAccounting(FI),
Treasury(TR),Controlling(CO),AuditInformationSystem,andUserMain-
tenance.Tables1and2summarizethepresentusesofSAPinourundergradu-
ate and graduate courses. In the following sections, we expand on the
objectivesandactivitieswithinthecoursessummarizedinthetables.

SAP Functionality Finance Accountancy and
Accounting Information Systems
Corporate
Finance and
Accounting
Business Processes
(SD and MM)
Accounting Financial Accounting and Reporting I
Controls Accounting Information Systems
IT Auditing
Audit IT Auditing
Treasury Corporate
Treasury
Management
Corporate
Treasury
Management
Reporting Corporate
Treasury
Management
Cost Management
Advanced AIS
Cost Management
and Decision
Support
Cost management
Advanced Topics in Cost
Management
Table 1. Uses of SAP R/3 in the Bentley College undergraduate curriculum.
SAP
Functionality
Finance Accountancy and
Information Age
MBA
Business
Processes (SD
and MM)
Business Process and Systems
Assessment
Business
Processes
Accounting Financial Accounting Problems I
Controls Business Process and Systems
Assessment
IT Auditing
Audit IT Auditing
Treasury Short-Term
Financial
Management
Financial
Statement
Analysis for
Decision-Making
Reporting Short-Term
Financial
Management
Advanced AIS
Table 2. Uses of SAP R/3 in the Bentley College graduate curriculum.
Course-by-Course Descriptions
This section outlines the courses into which R/3 has been successfully inte-
gratedatBentleyCollege.Eachcourseisbrieflydescribed,andasetoflearning

objectivesisprovidedthatexplainshowtheSAPR/3systemisusedtoenhance
thetheoreticalmaterialpresentedinthecourse.
The Accounting Information Systems (AIS) course is required of all under-
graduateandgraduateAccountancyandAISmajors.Themainthemesofthe
course are to expose students to the major business processes in companies,
understandtheoperationalandinformationalcomponentsofthoseprocesses,
identifyappropriateinternalcontrolstoassureprocessquality,andintroduce
thestudentstotheinformationtechnologyusedwithintypicalbusinesspro-
cesses. Enterprise systems are a major theme within the course, and two
extensive assignments based on SAP are integral in achieving the following
objectives:
• Illustrate basic business processes, focusing on how SAP integrates
businesseventswithintheorder-to-cashandpurchase-to-payprocesses.
• Create customer, trading good, and vendor master records, and show
howsalesandpurchaseactivitiesarecompletedandlinkedthroughtheir
documentflow.
• Identify how internal control is supported by integrated enterprise sys-
tems.
• Demonstrate how integrated systems are used to accomplish business
objectives.
• Familiarizestudentswiththecomplexityofaleadingenterprisesystem
product.
• Contrastthetheoreticalexamplesofthetextbookwiththeircomplements
inalivesystemenvironment,includinginformationtechnologyoptionsand
documentationofrealsystemactivity.
Advanced Accounting Information Systems
The Advanced Accounting Information Systems course is required for all
undergraduateandgraduateAISmajors,andisapopularelectiveforAccoun-
tancystudents.ThiscoursecoversarangeofcurrentITtopicsrelatedtodata

andsoftwarequalityandthecreationanduseofnontraditionalmanagement
reports, using a range of information technology products and resources. A
major topic within the course entails selecting and implementing enterprise
systems.Insupportofthisactivity,thecourseincludesasoneofitstextsabook
onenterprisesystemselection.Thestudentsalsoaregiventheoptionofsitting
foranSAPcertificationexam. TheobjectivesofSAPactivitiesinthiscourse
are to:
• Introduce students to the reporting in SAP R/3 and have them execute
somereportswithineachfunctionalmoduletoillustratebusinessreporting
functionality.
• Linkthetheoryofsystemselectionoptionstoarealandcomplexsystem.
Intermediate Accounting
TheIntermediateAccountingcourseisrequiredforundergraduateAccoun-
tancyandCorporateFinanceandAccountingmajors.Asimilarcourse,witha
similarR/3assignment,isrequiredofstudentsintheMSAccounting(MSA)
program.Theassignmentisrelatedtothevaluationofaccountsreceivableand
recognition of bad debt in SAP and is assigned after those topics have been
coveredinclass.Theobjectivesforthisassignmentare:
• Locate a customer master record and determine the payment terms for
creditsales.
• Locateandanalyzecustomeropeninvoices.
• Execute an R/3 program to value accounts receivable for periodic
reporting.
• ExecuteR/3programstoageaccountsreceivableandrecordtheallow-
ance for doubtful accounts and bad debt expense.
• Explain how the configuration of the R/3 system at Bentley College
controlsthevaluation,recording,andreportingofaccountsreceivable,
allowance for doubtful accounts, and bad debt expense.

Cost Management
TheCostManagementcourseisarequiredcourseforundergraduateAccoun-
tancyandCorporateFinanceandAccountingmajors.Thiscourse“emphasizes
analysis,interpretation,andpresentationofinformationformanagementdeci-
sionmakingpurposes”.Thereforetheobjectivesofthiscourseareverymuch
alignedwiththecapabilitiesofanenterprisesystemandhowitmightsupport
theanalysis,interpretation,andpresentationofinformation.TheR/3assign-
mentrequiresthatthestudentsnavigatethroughdatathatarealreadyentered
intoaparticularcompany’sdatabasetothinkabouthowtheinformationmight
specificallysupportmanagementdecision-making.Throughthelearningobjec-
tivesof thisassignment,thestudentsobtainasenseofwhattypesofsystems
theymaybeinteractingwithintheirfuturecareersandhowsuchasystemmay
be used to access, analyze, and format information to support management
decision making. The learning objectives for using SAP R/3 in the Cost
Managementcourseare:
• Recognizethebreadthanddepthofdataintheenterprisesystemdatabase
thatsupportstherevenuecycleoftheorganization.
• Understandthenatureofthedataandhowtheyspecificallysupportthe
executionofthebusinessprocess(here,salesanddistribution).
• Understand how the information in customer master records might be
combined with transactional data to present information in the most
effectivewaytosupportspecificdecisions.
• Understandtheintegrationoftheenterprisesystembytracingthedocu-
mentflowinitiatedbythesalestransaction.
• Executesimplereportsfromthesalesinformationsystem.
• Understand how the specific report generated would support manage-
mentdecision-making.
Advanced Topics in Cost Management
The Advanced Topics in Cost Management course is an elective course that
hastheCostManagementcourseasapre-requisite.Studentsintheadvanced
courseshouldhavedonetheSAPR/3assignmentinthepreviouscourseand

therefore have met certain learning objectives already related to using R/3
generatedinformationtosupportdecision-making.Theadvancedcoursethen
buildsontheseobjectivestoexploreotheraspectsofanenterprisesystem.In
keeping withtheobjectivesofthecoursetocoveradvancedtopicsrelatedto
costingsystems,theuseofR/3inthisclassfocusesontheactivitybasedcosting
(ABC)moduleinR/3.ThelearningobjectivesforusingR/3intheadvanced
costmanagementcourseare:
• Experiencethebasicfunctionalityoftheactivitybasedcostingmodulein
anenterprisesystem.
• Understandtheuseofandtherelationshipbetweencostcenters,second-
arycostelements,activitytypesandprices,businessprocesses,andcost
objectsintheexecutionofanactivitybasedcostingsystem.
• Document the underlying ABC model that is implied by the enterprise
system’srepresentation.
• Evaluatetheuseofanenterprisesystemforactivitybasedcostingalong
thedimensionsof:theeaseofuseofthesoftware,theeaseofunderstand-
ingtheunderlyingABCmodelthroughthesystem,andtheusefulnessof
theapplicationoftheABCmodelfordecisionmaking.
• CompareandcontrasttheABCapplicationintheenterprisesystemtoa
softwareproductspecificallydesignedforactivitybasedcosting.
• Understand the trade-offs between using an enterprise system for a
specific application versus using a best of breed software designed
specificallyforthatapplication.
IT Auditing
TheInformationTechnology(IT)AuditingcourseisrequiredofallAccounting
Information Systems (AIS) majors and may be elected by Accountancy
majors.Asimilarcourseisofferedatthegraduatelevel,isrequiredforMSAIS
students, and may be elected by MSA (MS Accountancy) and IAMBA
(Information Age MBA) students. Similar SAP-related assignments are re-
quired in the graduate and undergraduate courses. The IT Auditing course
introduces three typical aspects of IT audits: the audits of computerized
informationsystems,thecomputerfacility,andtheprocessofdevelopingand

implementinginformationsystems.Throughreadings,casestudies,exercises,
anddiscussion,studentslearntoplan,conduct,andreportonthesethreetypes
ofaudits,andtoapplyITauditingtechniquesandadvancedauditsoftware.The
learningobjectivesforusingSAPR/3intheITAuditingcourseare:
• Beabletoplan,conduct,andreportonanapplicationauditandanaudit
oftheITenvironment.
• Understandtheauditchallengesposedbyemergingtechnologies.
• Appreciate the role of the IT auditor as a business and management
advisor.
• IdentifywaysinwhichadvancedITauditingtechniquesandauditsoftware
can be used.
• Beabletoextract,download,andanalyze,usingauditandothersoftware
packages, data from the R/3 system.
• Create user accounts and user roles and audit those to determine that
desirablelevelsofsecurityhavebeenachieved.
Treasury Management
CorporateTreasuryManagement(CTM)isanelectiveintheundergraduate
programs in Finance and Corporate Finance and Accounting. CTM is an
appliedcoursethatbuildsonthefinancialtheorydevelopedinothercourses.
GivenitspracticalorientationandbecauseSAP’sR/3systemhasaTreasury
Modulewithmostofthetypicalfeaturesusedbytreasurypersonnelinmajor
companies, this course is a logical candidate for R/3 exercises. And, this
orientationalsohelpstosetthecourseobjectivesfortheR/3exercisesthathave
beendevelopedforit;namely:
• Illustratesomeofthebasicfunctionsandprocessesofcashmanagement,
including how a transaction is posted, how the system disseminates
information across the FI and TR modules and updates customer and
generalledgeraccounts,andhowitimpactsthecashmanagementreports.
• UnderstandwhytheLiquidityForecastandtheCashPositionreportsare
importanttoolsfortreasurymanagementdecision-making.

• Helpstudentsunderstandthestructureofthebankingsubledgeraccounts
usedtocleartransactions.
• Developanunderstandingofthecheckclearingandmanualbankstate-
mentclearingprocesses,developanunderstandingofhowtheLiquidity
Forecast and Cash Position reports change as a check and/or bank
statement is cleared through the system and see how the customer sub-
ledgerandgeneralledgeraccountsareupdatedinthecheckandstatement
clearingprocesses.
Business Processes
TheBusinessProcesscourseisarequiredcourseforallMBAstudents.This
course“providesaconceptualframeworkforunderstandingthefundamentals
and characteristics of business processes”. To complement this framework,
SAP R/3 is used to demonstrate how information technology facilitates the
execution and analysis of business processes. Two candidate business pro-
cessesarethefocusoftheR/3assignments,thesalesanddistributionprocess
and the procurement process for materials. For each of these processes,
students create master records and execute transactions in R/3. In addition,
theyareaskedtoconsidertheuseoftheresultingdataindecisionsthatcould
be made to execute the business process or to improve the process. Students
in this class also study and prepare a case analysis on the non-production
purchasingprocessinacompanythatisconvertingthisprocessfromalegacy
system to R/3. Therefore, learning objectives related to R/3 are achieved
throughboththetraditionalR/3assignmentsandaspartofacasethatfocuses
on a specific business process. The learning objectives for theuseofSAPR/3
in the Business Process course are:
• Understandtheintegrationofanenterprisesystembyenteringtransac-
tionsandtracingthedocumentflowacrossfunctions.
• Recognizethebreadthanddepthofdataintheenterprisesystemdatabase
thatsupportstheorganization’sbusinessprocesses.
• Explain how efficiency and control objectives are met by an integrated
system.
• Understandhowspecificreportswouldsupportmanagementdecision-
making.

Resource Requirements
There are three main categories of resources required for effective SAP R/3
curriculum integration: adequate funding, faculty time, and administrative
support. Funding is required for membership in the EA, for hardware if the
schoolhostsitsowninstanceofR/3,forsupportstaff,subsidizedtrainingfees
(whenfeesapply),andforairfareandlodgingwhenfacultyattendtraining.The
EAprovidesthesoftwareforafeeeitherthroughhavinganinstanceofR/3on
the school’s own servers or by allowing connection to a UCC (University
Competency Center). Support staff should be knowledgeable about the
underlying database system chosen for the R/3 instance, and with systems
maintenance(forcreatingusers,allocatingtablespace,andcopyingclients).
We have three staff dedicated on a part-time basis to SAP-related activities.
Inadditiontofunding,thelargestresourcerequiredisfacultycommitmentand
time.ThefacultyatBentleyhavespenttimeattendingworkshops;developing,
testing and revising exercises; meeting with corporate representatives of
companies that use SAP software; meeting with administrators to keep the
SAPeffortintheforefront;presentingworkshopstoeducateotherfaculty;and
makingpresentationstooutsidegroupstospreadtheknowledgeoutsideofthe
school.
TargetedsupportforfacultymembershasalsohelpedtosustaintheSAPeffort
atBentley.Aswaspreviouslymentioned,oneoftheSAPteachingteamwas
fundedforafullyearsabbaticaltoimmersehimselfinSAPandtogainhigher-
level knowledge that would allow him to make the necessary changes to
exercisesortotheR/3systemtogettheexercisestorunsmoothly.Thisfaculty
member also received a grant from SAP to continue his efforts after the
sabbatical.Becauseoftheconcentratedamountoftimethisfacultymember
was able to devote to learning and thinking about R/3, he has become a
championoncampusforcurriculumintegration.
Inadditiontothetechnicalsupportrequiredtomaintainthesoftware,Bentley
hasfounditessentialtohavetwoothertypesofsupportstaff.Oneisaperson
whoworksdirectlywithfacultytodevelopandtestexercisesandtheothertype
consistsoftutorswhodirectlysupportstudentsworkingonassignments.The
facultysupportpersonalsoregularlyoffersintroductoryworkshopstostudents
so each faculty member does not have to provide those in class. This person
should have technical R/3 skills as well as business knowledge, so he or she
understands the objectives of the business assignment as well as how to

accomplish those objectives in R/3. Having the tutors to work directly with
studentswithspecifiedhoursinalabhashelpedtoreducestudentanxietylevels
andfreedupinstructors’timethatwouldotherwisebetakenupwithextensive
studentquestions.
As with any major endeavor in an organization it is important to have top
administrators’supportfortheproject.Theadministrationhasprovidedtravel
fundsforfacultyandstafftoattendtraining.Hardwarehasbeenpurchasedto
host the system and upgraded to increase performance of the system when
necessaryasmoreusersareinvolved.Theschooldidnothireanynewtechnical
staffspecificallybecauseoftheirSAPskillsbuttheyhavemadetechnicalstaff
timeavailabletosupporttheeffortandhiredanSAPconsultantonanhourly
basis when necessary to supplement the more general technical staff. The
administration has also demonstrated flexibility in targeting other existing
resources (e.g., graduate tutors in the lab) for SAP R/3 support.
Inadditiontofunding,facultytime,andsupportstaff,cooperationfromlocal
corporationsthatuseSAPsoftwarehasbeenausefulresource.Thefacultyand
localcompanyrepresentativeshaveinteractedinseveralwaystobolsterfaculty
efforts. Corporate professionals have participated in making a video that
demonstrates the link between SAP R/3 and a key business process, helped
facultytodesignrealisticassignments,spokeninclassesaboutimplementation
and use of SAP R/3, provided relevant sabbatical projects, and shared
experiences with faculty in interviews. These corporate relationships have
providedinvaluableinsighttothefacultythattheycanusetomakethelearning
experiencemuchricherforthestudents.
Collectively, these efforts make the introduction to SAP in the business
curriculum a broader experience than what the students would get in a
corporatetrainingsetting.Althoughthestudentswillnotcomeoutofourdegree
programs with detailed hands-on SAP expertise, they will leave with an
appreciation of how enterprise systems support business processes and
businessdecisions.Theystarttheirprofessionalcareerswithaframeworkfor
integrating IT and business that can be easily supplemented by the specific
trainingthecompanyrequiresfortheirparticularposition.Ourexperienceto
dateisthatthesestudentsarehighlyregardedbyrecruitersforpositionsinIT
consulting, business process analysis, and IT auditing in enterprise systems
environments.

Going Forward
As we move forward with our efforts to integrate SAP R/3 exercises in our
classes, the SAP Users’ Group is looking to both deepen its own use of the
systemandbroadentheextentofparticipationbyfacultyattheCollege.Our
guidingprincipleinrequestingadditionalresourcesistherecognitionthatthese
resourcesmustshowadirectlinktocurriculumdevelopment.Therearetwo
areasinwhichweintendtofocusadditionaldevelopmentefforts,controlling/
profitabilityanalysisandreporting.
Additionaldevelopmenteffortsinthecontrolling/profitabilityanalysis(CO/
PA)areawillinitiallybefocusedinanewcourseonPerformanceManagement
and Evaluation, which is the capstone for a major in Corporate Finance and
Accounting.ThecoursehasasectiononITformanagersandweareplanning
to include exercises to demonstrate some of the reporting capability of the
system in the CO/PA area.
WehavefoundittobeamoredauntingtasktoeffectivelyuseR/3’sreporting
capabilities in a way that deepens students’ understanding of the system. In
particular,weplantodevelopexercisesthatbettersimulatethewaystudents
willuseanenterprisesystemintheirprofessionalcareers,asadecisionsupport
technology,toenrichtheirexperiencewithR/3,anddeepentheirunderstanding
ofhowinformationtechnologyshapesdecisionmaking.
AnexampledrawnfromKaplanandNorton(1992,p.75)illustratesthetype
of exercise we would like to develop. They make the point that an efficient
informationsystemiscriticaltohelpingmanagerssolvebusinessproblems.
Theypinpointthesystem’sdrill-downcapabilityashelpingmanagersdiscover
the source of problems that show up in aggregate data. “If the aggregate
measure for on-time delivery is poor, for example, executives with a good
informationsystemcanquicklylookbehindtheaggregatemeasureuntilthey
can identify late deliveries, day by day, by a particular plant to a particular
customer.”Giventhecapabilityofenterprisesystemstoaccumulateinforma-
tionandtodisplayitfrommanydifferentperspectives(byplant,productline,
geographic region, marketing region, etc.), this seems to be an appropriate
focus of our attention. In this way we will have more fully achieved learning
objectivesinZuboff’stwofacesofIT.Wewillhavehelpedstudentsunderstand
howIT can automateANDinformate.
Enterprisesystems-basedcurriculumisanimportantcomponentofBentley
College’s goals to provide a level 3 educational experience for our students.

Oureffortstodatehavemetwithsuccessasmeasuredbystudententhusiasm
and recruiter interest. Our plans for extending R/3 integration across the
curriculumwillonlyimprovethequalityoftheeducationalexperienceatthe
College.
Endnotes
1
Four years after its launch, the cohort-based MBA program currently
incorporates SAP in the Business Processes and Finance classes.
2
NotethatSAPcourselevelshavenorelationshiptotheBentleyCollege
levelsofITintegration.
3
Inthepasttwoyears,SAPhasbeenofferingtrainingworkshopsspecifi-
callyforfaculty.Thishasmadethetransitionfromlearningtoimplementing
mucheasierthanitwasundertheoldmodelofhavingcorporate-centered
trainingavailable.
References
Becerra-Fernandez,I.,Murphy,K.E., &Simon,S.J.(2000,April).Integrat-
ing ERP in the business school curriculum. Communications of the
ACM, 43(4), 39-41.
Davenport,T.H.(1998,July/August).Puttingtheenterpriseintotheenterprise
system. Harvard Business Review, 121-131.
Hulik,K.(1998,April).Morone,Bentleypresident,foreseesradicalchange
overtakingMBAcurricula.MBANewsletter.
Kaplan, R.S., & Norton, D.P. (1992, January/February). The balanced
scorecard – Measures that drive performance. Harvard Business Re-
view, 71-79.
Zuboff,S.(1985).Automate/informate:Thetwofacesofintelligenttechnol-
ogy. Organizational Dynamics, 14(2), 5-18.

Section II
Impactsand
Challengesof
ERP/SAPSystems

64 Conger
ChapterIV
The Impact of
Agile SAP on the
SupplyChain
Sue Conger
University of Dallas, USA
Abstract
Enterprise Resource Planning (ERP) packages, such as SAP, present
different competitive challenges to vendors and users. Vendor
competitiveness demands an agile deployment process for ERP software
while offering increased functionality. User competitiveness depends on
obtaining optimal benefits from ERP while not sacrificing competitive
agility. This research shows that as deployability of SAP software becomes
more agile, using organizations experience increased business agility. In
additiontoagileERPdeployment,theimportanceofprocessunderstanding
and targeted agility impacts are shown to influence user SAP outcomes.

The Impact of Agile SAP on the Supply Chain 65
Introduction
As technology advances and the rate of change accelerates, the typical
organizationhascometorelyonEnterpriseResourcePlanning(ERP)asatool
formanagingmaterialsandinformationacrossfunctionalsilos.ERPsenable
agilemanufacturingoperations,especiallyintheareaofsupplychainmanage-
ment.Bymakingbusinessprocessesandinformationvisible,andtherefore,
capableofmanagement,ERPprovidesameansforcompaniestoimprovetheir
customer experience, time to market, order fulfillment, and, eventually, net
income (Ross, 1999).
SeveralseriousliabilitiesofERPexist,however.ERPpackagesarenotcheap
andhavelong,idiosyncraticimplementationcycles;businessprocesses,once
changed,becomefrozeninplace,withbusinessimprovementeitherelusiveor
notseenuntilmanymonthsaftercompleteorganizationalproductionhasbegun
(Ross, 1999).
Most large business organizations now use one or more ERP software
packagestointegratetheirsupplychainsandthus,improvetheirorganization’s
agility.However,whiletheproblemsofERPdeploymenthavebeendiscussed
inmanycasestudies,theconceptsofagilityasappliedtoERPdeploymenthave
been ignored (cf. Biggs, 2001; Basu & Humar, 2002; Lee & Lee, 2000;
McCormick & Kasper, 2002).
Inthisresearch,wesoughttodeterminetheimpactonorganizationalagility
providedbyagileERPsoftwaredeployment.WeapplyagilityconceptstoSAP
installationstodemonstratetheapplicabilityofagilitytheorytoERPimplemen-
tation. We show that agile deployment has competitive benefits both for the
softwarevendorandforthelicensingbusinessorganization.
Intheremainderofthisreport,softwaredeploymentandtheextentofagility
with which the software is deployed are discussed using a case study of an
organizationthatdeployedSAP’sERPsystem;then,weanalyzesurveyresults
forseveralorganizations. Wedevelopthenotionthatthemoreself-awarethe
organization,themoretheirpotentialgainfromdeployingERPsoftware.We
concludewithrecommendationsandtrendsforcompaniesseekingtoimprove
their business process operations through SAP software deployment, and
recommendations and trends for SAP, Inc. to improve their product deploy-
mentagilityand,thereby,improvetheircustomers’agility.

66 Conger
Background
The Supply Chain
A manufacturing supply chain traditionally is comprised of sources of raw
materials,manufacturing,inventorymanagement,distributiontowholesalers,
warehousesorretailers,andfinally,consumerswhopurchasetheproduct(see
Figure1).
Asupplychaincanbelooselyortightly-coupled,andcanaccommodateany
varietyofnetworkedrelationshipsbetweenmanufacturers,logistics,service,
internal,orexternalorganizations.Theparticipantsinasupplychainrequire
connectivity,therightinformation,inausefulformat,andattheneededtime,
to inform decisions. Thus, an organization’s supply chain is a network of
organizationsthatmustbeabletoassimilatechangeandhavetheabilitytoreact
tonewrequirements;ideally,thesupply networkisabletoreactasone(Hult
et al., 2002; Lau & Hurley, 2001).
Agility
Agilityisthetermappliedtoanorganization’sabilitytoreacttounanticipated
marketchange,defininginformedrapidtransformationoforganizationalpro-
cess and product (Goldman et al., 1995). Most work refers to agility as
applyingtosupplychainactivities,althoughitisnotlimitedtothem(cf.Dove,
2001;Hultetal.,2002;Lau&Hurley,2001).Bothmanufacturingandservice
organizations’abilitytochangetotakeadvantageofmarketchangesdirectly
affects their profitability (Power & Sohal, 2002; Weber, 2002).
Duetothepaceatwhichbusinessisconducted,thesupplychainmustbeable
torespondwithagility.Tobeagileandabletorespondtounanticipatedchange,
Figure 1. Typical supply chain (adapted from Dove, 2001).

theentitieswhichcomprisetheagilesupplychainmustaddressfourmainagility
characteristics: 1) cooperate to enhance competitiveness, 2) enrich the
customer, 3) master change and uncertainty, and 4) leverage the impact
of people and information (Goldman et al., 1995; Meade & Sarkis, 1999;
Sarkis,2001;vanHoeketal.,2001).Inthischapterwefocusontheseagility
principlesfordeterminingtheimpactsofdeployingERPsoftwaresystems.
• Cooperating to enhance competitiveness requires that all partners
work toward a common goal with clearly delineated processes and
individualsidentifiedtoensureinformationaccuracy,responsibility,andto
supportdecisionsbasedupontheshareddata. Allpartiesinvolvedneed
to have a stake in the collaboration’s outcome to ensure long-term
commitmentandanunderstandingofwhatisexpectedofthemandothers
in the relationship (Forger, 2001). The outcome is an ability to bring
productstomarketfasterandmorecosteffectively.Theoptimalstrategy
for doing this is using existing resources regardless of location and
ownership.
• Customer enrichment occurs through the provision of solutions to
customerproblemsinadditiontotheprovisionofproducts.Enrichment
may be through, for instance, customization of a Web experience or
increasedvisibilityintoasupplier’sownsupplychainandmanufacturing
process.
• Mastering change and uncertainty is the ability to rapidly reconfigure
humanandphysicalresources.Anagileorganizationcansupportmultiple,
concurrent organizational configurations keyed to the requirements of
different market opportunities, and can change process or product as
needed.
• Leveraging of people and information implies longevity of employ-
ment,empowermentofevermore-highlyskilledworkers,andtheuseof
technologytoprovideinformationsupporttoallaspectsofthebusiness.
Partoftheabilitytomanageinformationistheabilitytomanageemployee
knowledge, leveraging it to provide a basis for swift, informed change
management.Someexamplesoflarge-scalechangeinitiatives,suchas
BaldrigeAwardimprovements,TQM,and6-Sigma,enhanceorganiza-
tional business execution and increase agility of change management
effortsintheimplementingorganization.Small-scalechangeinitiativesare
equallyvaluable,forexample,forincreasinginformationaccesstoexpand
a person’s job.

68 Conger
As manufacturing companies move toward e-business, they seek to reduce
inventory and logistics costs at the same time that the technology to manage
agilee-relationshipsisstillmaturing(Biggs,2001;Nellore&Motawani,1999;
Schwartz, 2001). Methods of cost reduction frequently require software
applicationstobettermanageinformationandbusinessprocesses.Thesoft-
ware must be as agile as the processes it supports.
Softwaredevelopmentagilityisaconceptthathasbeenappliedrecentlytoa
furtherstreamliningofdevelopmentpracticesfromrapidapplicationdevelop-
ment(RAD)andtraditionalprojectlifecycleactivitiestoincludeactivitiesthat
directly lead to completion of some software or application need (Radding,
2002). This research extends the concept of software agility to software
deployment.
Deployment
Deploymentistheprocessofsoftwareimplementationthatincludesactivities
relatingtotherelease,installation,integration,adaptation,andactivationofan
initialproductrelease(adaptedfromHalletal.,1997)(seeFigure2).Theease
or difficulty with which software is deployed has direct effects on its initial
selection,theextenttowhichsoftwarecanbeintegratedwithexistinglegacy
Figure 2. Initial software deployment life cycle process (adapted from
Hall et al., 1997).

applications,thetimefromwhichsoftwareisselecteduntilitisfullyoperational,
and the extent of customization to the software, company structure, and
business processes (Bermudez, 2002; Biggs, 2001; Durand & Barboun,
2002; Ross, 1999).
Figure 2 depicts the relationships between the five basic stages of software
deployment,whicharedefinedbelow.
• Release. With respect to software deployment, a release is a software
packagethatincludesnewand/orupgradedsoftware,platformrequire-
ments,instructionsoncustomizationandinstallation,andadescriptionof
changedfunctionality.Fromthereleasedescriptionandorganizational
needsanalysis,customerorganizationsdecidewhetherornottoinvestin
the change (Lee & Lee, 2000).
• Install. Installation is the establishment of operating platforms and
connectivity,physicalsetupofsoftware,andestablishmentoftheinitial
settings for operation (Singh et al., 2002).
• Adapt. Adaptation is the customizing or altering of software, business
processstructure,ororganizationstructuretofittheneedsofthebusiness
environment(Halletal.,1997).InsomeERPimplementations,organiza-
tionsoptforlittlesoftwarecustomizingand,instead,changetheirstructure
to fit the software (Higgens, 2001; Price-White, 2001). In others,
extensive software customizing is done to fit the organization (Brown,
2001;Higgins,2001).ERPimplementationsprovideanopportunityto
optimizethebusinessprocessandorganizationstructurewhilecustomiz-
ing the ERP software to fit the optimized process (Ross, 1999).
• Integrate.Inapplicationdevelopment, integrationistheconnectingof
one software or its transactions to another software, for instance, to
legacyapplicationsordataminingsoftwarepackages(Halletal.,1997).
Forexample,anorderdevelopedinabrowser-basedInternettransaction
may flow through an XML application to be processed and tracked
through SAP. Integration can be to front-end, middle, or back-end
software relative to the ERP package.
• Activate. Activation includes training, conversion, and phasing the
product into production (Hall et al., 1997). For early SAP versions, the
implementationprocesswastheresponsibilityofthecustomer.Custom-
ers tended to use third party consultants and the consultant companies’
implementationprocessesthatmayormaynothavefittheirorganizations.

70 Conger
Activationofsoftwareisthemostdifficultactivitybecauseorganizational
changeisusuallyaconcomitantactivity.
ERP software is viewed as difficult to deploy, a fact that has hampered its
selection and implementation by all but the largest organizations (Meehan,
2001). Return on ERP investment is a long, uncertain process (Ross, 1999).
In the last five years, research by large vendors has led to many initiatives to
provide “plug-and-play” software deployment (e.g., Microsoft, 1997; van
Hoffetal.,1997).Hands-offdeploymentforPCsandothercomputerproducts
has been a goal for several years, while SAP and other ERP vendors have
worked both to improve their product deployment and to improve their
customers’abilitytoreacttomarketchangethroughtheuseoftheirsoftware
(Johnson, 1999; Singh et al., 2002; Songini, 2002).
For instance, to address user concerns, MySAP, named to imply infinite
customizability,andSAPBusinessOneareexpectedtoeaseSAPdeployment
and are expected to be easier to use, cheaper to operate, and less complex to
understand (Songini, 2002). Furthermore, SAP, in the continuing quest for
agility,continuestoworkwithbusinesspartnerstodelivercustomsolutions.
Thenext sectiondescribesacasestudyconductedwiththeCelaneseCorpo-
ration, a large SAP user, to determine the extent to which agile deployment
characteristicsareidentifiable,andhowtheyrelatetocustomerdeploymentof
thesoftware.
Case Study
Celanese Background
Celanese, A.G., exemplifies deployment issues. In 1993, the chairman of
Hoechst, A.G., a German multi-national corporation, announced that his
companywoulddeploySAP’sERPsoftwarethroughouttheorganization.
PartofthemotivationforHoechst’simplementationofSAPwasthelooming
Y2K problem and, at least in the U.S., its accompanying software tax
consequences(Bockstedt,2002).U.S.taxlawsequatesoftwaremaintenance
toplantandequipmentmaintenanceand,assuch,itisabusinessexpenseinthe
yearofthework.Conversely,purchasedsoftwareissimilartobuildinganew
buildingandmaybecapitalizedandwrittenoffoveraperiodofthesoftware’s

projectedusefullife,sometimesasmuchas20years.Facingmulti-milliondollar
expenditures for Y2K fixes, and knowing that every problem might not be
identifiable in advance, Hoechst, like hundreds of other large corporations,
optedforenterpriseresourceplanning(ERP)softwarewiththehopethatthey
couldmoreefficientlymanagetheirsupplychainatthesametimetheyfinessed
theirY2Kproblems,bysimplyreplacingthesoftwarecausingtheproblem,all
withfavorabletaxconsequences.
To soften the edict and also hopefully alleviate some ERP implementation
problems,eachHoechstdivisionwasallowedtodetermineitsownSAPfate
bydecidingitsownneedsforcustomization.BythetimeSAPwasinfullglobal
production, there were 12 versions of SAP within Celanese, with dozens of
versionsinallofHoechst.
Celanese, originally a U.S. corporation purchased by Hoechst in 1987, was
divestedasaGerman-run,Celanese,A.G.,in1999(Aventis,2002).Celanese
currentlyisa$5billioncompanywithapproximately12,000employeesand
three main product lines: chemicals, acetates, and polymers (see Figure 3,
Celanese, 2002).
In 2002, Celanese had 12 active production versions of SAP throughout its
organization (Bockstedt, 2002). Mr. Russell Bockstedt, Chief Information
Architect, discussed the history of SAP in Celanese and the issues for the
currentinitiatives.Unlessotherwisecited,theCelaneseinformationisfromthat
discussion.
Figure 3. Celanese product mix.

72 Conger
In 1993, when the first projects were initiated, SAP was at SAP Release 2.2.
For the sites implementing that version, including Dallas, TX; Summit, NJ;
Frankfurt,KY;Frankfurt,Germany;Tokyo,Japan,andothers,customization
variedfromalmostnothing(Kentucky)toasignificantextent(Dallas)toadd
functionalityCelaneseneeded.Overthelastnineyears,Celanesehasinstalled
fivesoftwareupgradestoenhancetheinitialSAPversions.These,alongwith
the current effort are the focus of this research.
Currently,Celanesehasembarkedonanew“1-SAP”projecttointegratethe
12disparateSAPsintoasingleversionofSAP(Berinto,2003).Thesteering
committee for the project is comprised of a corporate plant manager, CIO,
chief architect/integration manager (Bockstedt), and a project director. The
plant manager has overall budget and management responsibility for the
project, the planner acts as the project office, and Bockstedt is charged with
allimplementationactivities.Theorganizationalstrategyistoreviewshared
servicesthroughouttheorganizationasthe1-SAPprojectbeginsproduction
to determine how consolidation may provide more efficient and effective
operationineacharea.1-SAPisscheduledtophaseintoproductionbeginning
in early 2004.
In the next section, we briefly describe SAP’s changes since 1995. The
changes to SAP’s software deployability and the resulting agility gains are
discussedwithCelanese’sinitialandon-goingimplementationexperiencesand
the impacts of SAP’s changes on Celanese. We demonstrate that as SAP
becamemoreagileinitsdeployabilityandfunctionality,Celanese’sownagility
wasfurtherenabled.Thatis,anorganizationthatcommitstoERPsoftwarethat
is agile – easily, continuously, and intelligently changed – enables its own
continuousagility.
ERP and the Supply Chain
Inthissection,SAPandthemajorchangesithasundergoneinCelanesesince
1995 are summarized. SAP was originally conceived to integrate all depart-
ments and functions across a company with application modules that main-
tainedinternaldataconsistencyandappearedasasinglesystemservingvaried
organizationalneeds(Scheer,1994).
ThebenefitsofSAParetoutedasprovidingbusinessprocessandinformation
visibilityacrossanenterprise,thusprovidinganintegratedsingle“view”ofan
organization(Scheer,1994).Theunderlyingstructuresweredesignedorigi-

nally to support manufacturing operations. Subsequent releases included
supportforaccounting,reporting,analysis,andplanning.
Because initial SAP (c. 1994-1997) was infinitely flexible but extremely
complexinitsinstallationprocess(10,000+switchsettings),onceinstalledit
becameinflexiblewithoutsignificantadditionalcustomapplicationdevelop-
ment(Brown,2001).TodayERP,ingeneral,andSAPinparticular,includes
automated,integratedsupportforhumanresources,payroll,manufacturing,
purchasing, and inventory (Koch, 2002). Each major release of SAP has
simplifieddeployabilityinmovingfromswitchsettingstointeractivetemplate
completion.Eachreleasehasalsobecomemorefunctionallyflexibleinterms
of providing more options and simpler integration interfaces (SAP, 2003;
Yankee Group, 2003). For example, mySAP.com Internet software suite
allowsanenterprisetointegratebetweenselected“plug-and-play”software
partners(i.e.,withlittleornorequiredcustomization).
In short, for each aspect of software deployment, SAP has improved its
methods, architecture, interfaces and/or software; in essence, SAP has be-
comemoreagile.
SAP Agility and Celanese Agility
Inthissection,wedescribethecharacteristicsofagilityandhowtheyrelateto
both SAP and Celanese’s implementation of SAP over the last seven years.
Release
The first Celanese decision to deploy SAP was by edict, motivated by Y2K
issues and a desire to improve the organization. Subsequent changes and
upgradesweredonelessbecausethereleasedescriptionswereattractive,than
because a business need forced the upgrade (i.e., client “pull” rather than
vendor“push”).Ingeneral,theSAPenvironmenthasbeenrelativelyunchanged
and has proven to be a stable software product for about four years (1999-
2003). Some changes did occur; for instance, the financial aspects of the
softwarewereupgradedtoaccommodatethechangetoEurocurrency.Forthe
acetatebusiness,amovetoSAP4.6cwasdonebecausespecificfunctionality
wasdesired.Inallothercases,theonlyreasonforchangingwasanimminent
withdrawalofsupportfortheversioncurrentlyinproduction.
SAP provided tools that maintained its competitiveness by offering new
featuressuchasEuroconversion(seeFigure4,1.1).Byremainingcompetitive,

74 Conger
SAPenabledCelanesecustomerenrichment(seeFigure4,1.1a).Inturn,the
features in SAP 4.6c motivated a Celanese upgrade, thus enriching the
customerbyprovidingdesiredfunctionality(seeFigure4,1.2).SAPproduct
stability supported Celanese’s capability to leverage its information assets
whileminimizingtheon-goingcostofthatinformation(seeFigure4,1.2a).
Install
In 1993, SAP customizing efforts were programmed in ABAP, the SAP-
proprietarylanguage.Integrationwithlegacyapplicationswasclumsy.Inthe
currentversionofSAP,customizingusesJavaandJavaScript.Thethousands
of switch settings that characterized early SAP have been replaced with
programmedtemplatesthathidethecomplexityoftheunderlyingdecisiontree
thatsupportssixlevelsofdetail.Foreachlevel,theclientorganizationenters
answers to questions that are increasingly detailed and moves from the
organizationdescription,tologicalbusinessrules,tophysicalrequirements.If
morethansixlevelsofdetailarerequired,furthercustomizingofthesoftware
ispossible.
Celanesehastakenadvantageofthisgreatersimplicityandhasbeenforcedto
haveadeeperunderstandingofitsbusinessprocessestocorrectlyconfigurethe
softwaretofiteachdivision’sneeds.Thisdeeperunderstandinghasevolved
fromthedevelopmentofstaffskillsandknowledge.Theinitialimplementation
thatwason-goingfrom1993through1996wasmanagedusingalifecycleand
conversionplanprovidedbytheconsultantswhowerebroughtinasexpertsin
SAPtoleadtheimplementationteams,installtheswitchsettingsofSAP,and
performcustomprogramming.Aswithmanyconsultingengagements,manyof
the consultants were true SAP experts, but few had the domain expertise
necessarytocustomizethecomplexitiesofCelanese’scorechemicals,fibers
andengineeringresinsbusinesses.Thislackofdomainknowledgepartially
explainstheextendedinstallationphase.
Celaneserecognized,bythe1996implementation,thattheyneededtodevelop
andmaintaintheirownin-houseSAPexperts,developtheirowninstallation
process, and also keep in-house the domain expertise that allowed them to
customizeSAP.
WhilethepeopleinvolvedintheinitialSAPimplementationshaveallmovedup
thecorporateladder,manyarestillinvolvedinon-goingimplementationsand
upgrades,andothershavebecomethe“users”forwhomthechangesarebeing
made. Thus, Celanese has been able to leverage its staff knowledge, by

continuouslybuildingtheirtechnical,productanddomainskills.Thecompany
hassmoother,fasterimplementationstodaythantheinitialimplementations
eventhoughmanyareasorganizationallycomplexandcoverasmuchofthe
business.Theon-goingSAPupgradesusemostlyin-houseresourceswithfew
extra staff supplied by contractors; none of the teams are led by outside
consultants.
ThechangetotemplatesincreasesSAPagilityinenhancingitscompetitiveness
bymakingitsproducteasiertoinstallandsetupthansomeofitscompetitors
(Figure 4, 2.1). From Celanese’s perspective, the change to templates has
increaseditsleverageofpeopleandinformationsincetheyhavecontinuedto
useacorestaffofpeoplewhohaveworkedoneverySAPimplementation(see
Figure4,2.1a).Further,byhidingthecomplexityoftheswitchsettingsinthe
software, SAP increased Celanese’s ability to master the change and uncer-
tainty relating to product installation (see Figure 4, 2.1b). By faster, easier
implementation,Celaneseexperiencedenhancedcompetitivenessbyallowing
thecompanytofocusonitscorebusinessesratherthansoftwareimplementa-
tion (see Figure 4, 2.1c).
Adapt
Celanesehasdoneallvariationsofadaptationoverthelastsevenyears.While
theextentofcustomizationvariedgreatlybylocation,withlittleintheR&D
plantinKentucky,andsubstantivecustomizationintheTiconacorporateoffice
in Dallas. Several projects begun in 1993 were not actually phased into
production until October 1996. For these systems, all hardware was new,
allowingthecompanytomoveawayfromIBMmainframestomoregeneric
client-serverarchitectureswithmoregenericequipmentandsoftware.Hard-
wareleaseshaveexpiredeverythirdyear,givingCelaneseanopportunityto
upgrade at less expense than purchase of hardware would have allowed.
Bockstedtsaysthis“technologyrefresh”cyclehasbecomearecurringpartof
theITorganizationplanandbudgets.
Celanese customization of SAP software over the last seven years related to
softwareimmaturity.Forinstance,Celaneseproduces“LettersofCertifica-
tion” for its products that certify engineered properties of a product, for
instance,tensilestrength. TheSAP2.2versionofcertificationlettersdidnot
accommodate the degree of complexity necessary for Celanese’s letters of
certification.InSAP2.2andotherearlyversionsofSAP,softwareforletters
ofcertificationwashighlycustomizedbyCelanese.

76 Conger
AccordingtoBockstedt,manyofthecustomizedfunctionswereembodiedin
new releases of the software so that de-customizing was necessary when
upgrading was done. For instance, the letters of certification function in the
currentsoftwarereleasedoeshaveallthefunctionalitynecessaryforCelanese.
Therefore,theneedtocustomizethisfunctionhasdisappearedwithtime.
Contrarytomuchliteratureaboutenterpriseresourceplanningimplementations
atthetime(Brown,2001),Celanesereorganizationswereplannedasneeded
to streamline a business process and were more coincident to SAP than they
were dictated by it. For instance, North American Ticona reorganized at the
same time the first SAP was installed; however, the region also experienced
significantcustomizingofthesoftware. So,thereorganizationwastostreamline
the business processes along with the streamlined, customized software
supporting those processes. Conversely, the European groups, and North
AmericanChemicalsgroupinstalledSAP,andthenalternatedenhancingthe
organizationandthesoftwareovertime.
Currently, Celanese is working on a joint development project with SAP to
develop a transportation planning solution for North American Ticona. The
planistoeventuallymigratethesoftwaretootherCelanesesites.Becausethe
solutioniscustomized,noreorganizationsareplanned.
TheoriginalSAPimplementationwasincreasinglylessagileastheextentof
customizationincreased.TheLettersofCertificationexample(andthechange
to Euros cited above) demonstrates one instance of SAP’s becoming more
adaptable to their customers’ needs to enrich their customers (see Figure 4,
3.1). Celanese, in turn, received enhanced competitiveness from SAP’s
provisionofpreviouslyproprietarysoftware.Byprovidinggeneric,configurable
LetterofCertificationsoftware,theCelanesefearofupgradeandcustomizing
cost decreasedandtheirconsiderationofupgradesshiftedfromexternality-
driven(e.g.,SAPremovalofsoftwaresupport)tobusinessneed-driven(see
Figure 4, 3.1a).
The joint venture increases the agility of both parties to the venture. SAP
increasesitscustomerenrichment(seeFigure4,3.2),leveragesitscustomers’
people and information expertise (see Figure 4, 3.3), and in the bargain
enhances its own competitiveness (see Figure 4, 3.4). Celanese enhances its
competitivenessindevelopinga“custom”solution(3.4a)andleveragesitsand
SAP’speopleandinformationexpertise(seeFigure4,3.3a).Further,Celanese
hasmasteredtheuncertaintyofthischangebydevelopingitforthemselves(see
Figure 4, 3.1a).

Integrate
ERPsoftwareexemplifiestacticalsoftwarethatwasdeployedwiththeexpec-
tationofprovidingflexibilityandagilityacrossorganizational,functionalsilos.
Theabilitytointegrateinformationacrossfunctionsandtoraisethevisibilityof
business processes throughout an organization are valued as necessary to
maintaining competitiveness. However, early ERP, because of installation
complexitiesandlongleadtimetoproduction,reifiedbusinessprocessesinits
software at the same time that it raised their visibility. Thus ERPs in the late
1990sstifledtheverycreativityandagilityforwhichtheirusingorganization
strived(Brown,2001).
Celanese offers some examples of this hope and reification. One hope in the
originalimplementationwastodevelopaservicecalled“One-callCommit,”
whichallowedacustomer,whetherviatelephoneorInternet,toplaceanorder,
verifyavailabilityofinventory,andobtainacommittedshippingdateinasingle
contact. SAP R/2, the original software installed, checked only a single
“primary”manufacturingplant’sinventory.Inadditiontowantingotherplants’
inventorieschecked,Celanesedesiredsearchesofwork-in-processandother
inventoryclassificationsaswell.Therefore,themulti-plant,multi-sourcecapa-
bility was customized for the 1996 implementation and it has not changed
substantiallysincethen.Thus,Celanese’shopetosignificantlyimprovecus-
tomer service occurred at the expense of flexibility in what became a fixed
process. The company did achieve 90% 1-Call Commit success. In this
instance,Celanese’sabilitytoactswiftlywithinformedintelligentbusiness
changewasagoalwhichpartiallyeludedthemwithitsfirstERPimplementation.
ThenewversionofSAPbeinginstalledhasfewofthelimitationsoftheoriginal
softwareincheckingproductsourcesandallofthecustomizedprogramming
for 1-Call Commit is being dismantled and replaced as part of the upgrade.
Thus, SAP’s sensitivity to its own original limitations and removal of those
limitations enhanced its competitiveness (see Figure 4, 4.1). Further, by
removingthoselimitations,SAPenrichesitscustomers’experience(seeFigure
4, 4.2) and leverages its customers’ and its own people and information by
acting on requests for changes through its user groups (American SAP User
Group(ASUG),AustralianSAPUserGroup(AUSUG),SAPphire,etc.)(see
Figure 4, 4.3). From the customer perspective, Celanese experiences en-
hanced competitiveness any time a limitation to change is removed from a
monolithicproductituses,suchasSAP.Byprovidingtheflexibilitytodothe
product sourcing as needed by the company, Celanese’s competitiveness is
increased(seeFigure4,4.1a);Celanese’sabilitytomasteruncertaintyinterms

78 Conger
ofnewrequirementsintheirindustriesisenhancedbecausetheyarenolonger
tied to a single method of, in this case, product sourcing (see Figure 4, 4.2a).
Activate
ThefirstimplementationsofSAPforNorthAmericaTiconawentintoproduc-
tionin1996,asadvisedbytheconsultingpartnerswhomanagedtheimplemen-
tation and recommended by SAP to gain the most favorable outcomes.
Celaneseuseda“bigbang”cut-overwhichprovedtobeapainfulexperience
withnumerousbugsandfixesrequiredforthefirstsixmonthsofproduction.
But,thecompanycommittedtomakingSAPsuccessfulandeventuallyitwas.
CurrentversionsofSAParemoremodularand,therefore,deployableaseither
stand-alone processes or as processes integrating single aspects of a supply
chainorbusiness.SAP’sarchitecturalrevisionshavemadeitmoreamenable
to partial, controlled, “small bang” implementations as a result of its re-
architectedsoftware.
Sincethatfirstimplementation,Celanesehasphasedimplementationsbasedon
region,function,orproduct;planningandexecutionofphasedimplementations
has become easier as SAP has evolved. Several examples of this include
functional, regional order processing for Ticona North America that did not
changemanufacturing,financeorgeneralledger;regionalproductprocessing
for Acetel™ only for Ticona Europe; and two staged-functional product
implementationsforprocurement,followedbyfinanceandplantmanagement
for the Acetate™ business.
SAPsmodularityincreaseditscompetitiveness(5.1)andenricheditscustom-
ers(seeFigure4,5.2)bymakingitmoreeasilydeployedbyprovidingstand-
alonecomponentsandsingle-componentupdatecapabilities.Inaddition,by
increasing the marketability of its products as stand-alone components, the
effect is to decrease SAP’s uncertainty about package attractiveness by
allowing its marketing teams to target individual components (see Figure 4,
5.3). The ability to stage implementations based on its business needs has
contributedtoCelanese’sabilitytoreacttochangesinitsbusinessmorequickly
thanifanentireSAPimplementationwererequired(seeFigure4,5.2a). Thus,
SAP’ssupportofmultiplemethodsofproductconversionimprovesCelanese’s
competitivenessandchangemanagementagility.

Summary of SAP Agility Effects on Celanese Agility
The evolution of ERP at Celanese shows that as SAP has become more agile
andfunctional,Celanese’sagilityhasalsoimproved.AsCelaneseinstallsever
moreagileSAP,itsabilitytomanageandcompeteeffectivelyisalsoenhanced.
Figure 4 summarizes the discussion and identifies the deployment agility
Figure 4. Summary of SAP agility impacts by deployment stage.

80 Conger
improvementsinSAPandtheimpactonCelaneseandtheirbusinessagility.
Whethertheeffectisadditiveormultiplicativeisunknown.
Figure4summarizesDeploymentphases—Release,Install,Adapt,Integrate,
andActivate—andthedimensionsofagilityimpactedbythechangesmadeby
both SAP and Celanese in these phases.
Figure5showsthatformanyoftheSAPincreasesinagilesoftwaredeployment
and increased functionality there are one or more increases in the business
agilityofCelanese. Celaneseappearstohavetakensignificantadvantageof
SAP’s capabilities over the last six years given the constraints of the early
software.Ifaccurateforthisparticularorganizationtype(MNC),themultiple
secondaryagilityincreasesinCelanesehighlightthenotionthatSAP(andall
ERPvendors)shouldconcentrateupgradesandchangesinsuchawaythatit
maximizesnotonlytheirownagilitybutalsothoseofitscustomers.
Organizational and Vendor Challenges
ThreemainchallengespresentthemselvesforERPuserorganizations’consid-
eration. First, ERP software is viewed as difficult to deploy, a fact that has
hampereditsselectionandimplementationbyallbutthelargestorganizations
Figure 5. Agile deployment of SAP and its benefits to Celanese system.

(Ross,1999).TheproblemtobesolvedbyallERPvendorsishowtoprovide
the diversity of services offered, while at the same time simplifying their
software’sdeployment.
Second,noteverySAPincreaseinagilityleadstoaspecificCelaneseagility
benefit.ForSAP,thisfindingposesachallengetoidentifythosechangesthat
most facilitate and simplify customer deployment and use of their software,
thereby enhancing the client organization’s agility, and to prioritize those
changesforearlyimplementationintheirsoftware.
Last,Celanesedidnothaveagoodunderstandingofitsbusinessprocessesin
itsinitialSAPimplementation.TheyrealizedthattheirsuccesswithERPrelied
inpartontheirabilitytodevelopanintimateunderstandingoftheirbusiness
processesandhowtheycouldbeleveragedtominimizeSAPcustomization.
Overtime,Celanesedocumentedtheirbusinessprocesses,thusmakingthem
capable of management and integration in the 1-SAP project. This growing
maturityofCelaneseinitsunderstandingofitsbusinessprocessesisachallenge
forothercompaniesthatseektodeployERPsoftware.Overthenextdecade,
businessprocessdocumentationandspecificmanagementwillbeoneofthe
keyproblemsfacingorganizationalexecutives.
Survey
Survey Method
BasedonthefindingsoftheCelanesecasestudy,aquestionnairesurveywas
conductedtodeterminetherelationshipbetweenERPdeploymentandagility
outcomes (Conger & Meade, 2002; a copy of the survey can be obtained by
writing the author). Telephone and e-mail surveys were conducted between
September 2002 through December 2002, with a total of 12 surveys relating
specificallytoSAPimplementations.Thenumberofcompletedsurveyslacks
sufficient power to conduct adequate statistical analysis; therefore, non-
statisticalanalysisisconducted.
Results
Theresultsforthethreelowestandthreehighestorganizationsareshownas
spider diagrams with a low-rated organization contrasted with a high-rated
organization in Figures 6 through 8. The upper left quadrant of the spider

82 Conger
diagramsdepictsresultsfortheimplementation/deploymentoftheERPsoft-
wareintermsofperceivedqualityofinstallation,adaptation,integration,and
activationforselecting,planning,andactuallyimplementingtheERPsoftware.
The right half of the diagram illustrates the perceived agility outcomes for
leveraging people, enhancing customer experience, managing change, and
increasingcompetitivenessoftheorganization.Thelowerleftquadrantofthe
Figure 6. SAP organizations A and B.
Figure 7. SAP organizations C and D.

diagramsdepictsthegeneraloutcomes,includinghowwelltheimplementation
metmanagementexpectations,increasedknowledgemanagement,andoverall
executivesatisfactionwiththeERPprojectresults.
First,thelow-ratedorganizationsarediscussed(Figures6-8,leftdiagrams).
Resultsoftwoofthethreelow-ratedorganizations(Figures6and7)showthat
the lower the implementation/deployment ratings, the lower the agility out-
comes.Theresultsareinconclusiveforthelow-ratedorganizationinFigure8,
whichappearstohavehighlyperceivedimplementationratingscoupledwith
pooragilityoutcomes.
Forthehigh-performingorganizations(rightdiagramsofeachset),theresults
arealsomixed.Thehigh-performingorganizationsinFigures6and7exhibit
expectedresults:thehighlyperceivedimplementation/deploymentactivitiesare
coupledwithhighlyperceivedincreasesinagilityoutcomes.Thehigh-perform-
ingorganizationinFigure8isinconsistentwithazeroratingfortheEnhance
Customeroutcome.Theintervieweestatedthatnocustomeroutcomeswere
planned;thereforeitwasnotchanged.
Some analysis of the anomalous organization results is required. Further
discussionwiththeorganizationsuncovereddifferentprioritiesforthelow-
rated organization in Figure 8 to reduce headcount. Thus, their leverage
peopleresultedfromhavingareducedstaffperformingmorework,coupled
Figure 8. SAP organizations E and F.

84 Conger
with the high-performing organization in Figure 8 not having customer en-
hancementasapriority.Theseresultsindicatethatorganizationalpriorities,at
leasttosomeextent,drivetheexpectedERP-deploymentoutcomes.
Theresultsfromthespiderdiagramanalysis,coupledwithintervieweecom-
ments,pointtotwoconclusions:First,thatpoorERPplanninganddeployment
resultinpooragilityoutcomesandsecond,thatgoodplanninganddeployment
resultinpositiveagilityoutcomes.
Organizational and Vendor Challenges
Several issues result from the surveys: Agile deployment appears to be a
measurable,importantissue;theneedforprocessunderstandingiskeytoERP
deploymentsuccess;andprioritiesareimportanttodeterminingERPdeploy-
mentoutcomes.
AgiledeploymentisanissuethatwillbecomeadefiningfactorbetweenERP
vendors who survive in that field and those who will not. At this writing, i2,
whichisknownforitsdifficultdeployment,ishavingcorporateproblemsand
severalvendorshavelefttheERPbusiness.Inaddition,companiesthatoptfor
self-deploymentofnewERPsoftwarearemostlikelygoingtohavesignificant
deploymentproblems.
Nosoftwarebyitselfcanprovideacompetitiveadvantage;processmanage-
ment along with quality work is also necessary. Understanding by client
organizationsoftheirbusinessprocesseswillcometobeunderstoodasakey
factorindeterminingsuccessofERPdeployment.
Literatureonproblemanalysisandresolutionalwaysadmonishestoensurethat
therightproblemisbeingsolved.ERPdeploymentdemonstratessimilarneeds
inthatorganizationalprioritiestendtodrivetheexpectedoutcomes.Research
onERPdeploymentmustattendtothisorganizationalrealitybyattendingto
prioritiesandtheirimpactontheoutcomes.Organizationsshouldspecifically
define their goals withbefore andaftermeasures of goal achievement.
Solutions/Recommendations
ERPsoftwareisbecomingcommoditizedasvendorofferingsbegintoresemble
each other in the functions supported. Agile product deployment should

becomeapriorityofERPvendorssinceitwillbeincreasinglyimportantinthe
ERPselectiondecisionsofmanycompanies(YankeeGroup,2003).
Businessprocessunderstandingisstillunknowninmostbusinessorganizations.
As managers become more aware that business process understanding is
crucialtobecomingormaintaininganindustryleadershipposition,organiza-
tionswillspendsignificantmoniestomaptheirbusinessprocesses,seekingto
activelymanagetheiractivities.
Future Trends
TwotrendsappeartounderlieSAPandagilitydiscussion.Thetrendsrelateto
SAPsoftwareagilityandclientorganizationsagilityneeds.Thesearediscussed
below.
SAPwillcontinuetobecomemorefunctional.AsSAPbetterunderstandsthe
impact of their software’s deployment and functional agility on their client
organizations,theywillbegintospecificallyidentifyagilityimpactsastargetsfor
development.
LargeorganizationsseekingtooptimizetheircommitmentstoSAPwillidentify
strategic areas for development partnerships with SAP to maximize their
strategicgoalattainment.Asorganizationsbetterunderstandtheiragilityneeds,
they will press SAP to develop software that meets those needs.
Conclusion
ManufacturingorganizationsuseEnterpriseResourcePlanning(ERP)soft-
ware, such as SAP, to make visible and manage their supply chains. ERP
software,however,hasalongpaybackperiod,costsmillionstoinstallacross
asupplychain,andrequiressomeorganizationalchange.ThechallengetoERP
vendors has been to determine how to simplify and smooth both initial and
upgradesoftwareinstallations.
Agilityistheabilityofanorganizationtoreacttounanticipatedmarketchange
andtodefineinformedrapidtransformationofoneorbothoftheorganizational
process and product. Deployment encompasses all activities required of the

86 Conger
usingorganizationtoinstall,customize,integrate,andplaceintoproduction
purchased software. This research reported on the results of a case study at
CelaneseCorporationtoidentifythecharacteristicsofagilesoftwaredeploy-
mentinanSAPuserorganizationanditsimpactoftheorganization.Inaddition,
a subsequent survey evaluated the impact of increased agile deployment on
SAPclientorganizations.
TheresultsoftheseanalysesshowedthatasSAPbecomesmorefunctionaland
more agile to deploy, ripple effects are seen in the agility of the SAP client
organizations. In addition, while agile deployment appears important, the
surveyresultsshowthatpriorplanningandknowledgeofbusinessprocesses
andspecificgoaldefinitionappearcrucialtogainingthedesiredorganizational
agilityoutcomes.BusinessesthatseektomaximizetheirreturnontheirSAP
investmentshouldperformabusinessprocessanalysisbeforetheydoanyERP
implementation.Then,theyshouldspecificallyanalyzethetradeoffsonorgani-
zationchangeversussoftwarecustomizationtoinformtheplanningprocess.
Organizations that have a successful deployment process, with excellent
understandingoftheirbusinessprocessesandattendantchanges,appearbest
abletogaintheagilityresultstheysoughtfromtheinstallationofthesoftware.
Endnote
* Eachinstanceofanagilecharacteristicisidentified.Thesearesummarized
in Figures 4 and 5.
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90 Stein, Hawking & Wyld
Chapter V
B2ESAPPortals:
Employee Self-Service
Case Study
Andrew Stein
Victoria University, Australia
Paul Hawking
David C. Wyld
Southeastern Louisiana University, USA
Abstract
The global ERP industry that blossomed in the 1990’s automating back
office operations has made moves to introduce a “second wave” of
functionality in ERP systems. In 2002/3 there was an expanded focus on
mysap.com, small to medium enterprises and the expansion into “second
wave” products. Companies around the world are exploring various
Internet business models to evaluate their business potential and risk
implications and a number of companies have realised the relatively quick
gains with low associated risks that can be achieved through the business-
to-employee (B2E) model. Employee Self Service (ESS) is a solution based
on this model that enables employee’s access to the corporate human
resource information system, and Australian companies are increasingly

B2E SAP Portals: Employee Self-Service Case Study 91
implementing this solution. This chapter presents the findings of a research
project that looks at the changing nature of Human Resources (HR) in
modern organisations and the development of an HR ESS portal in a
major Australian organisation.
Introduction
CompaniesaroundtheworldareexploringvariousInternetbusinessmodels,
mostlyB2BandB2C,toevaluatetheirpotentialandbusinessimplications.A
numberofAustraliancompanieshaverealisedtherelativelyquickgainswith
low associated risks that can be achieved through the business-to-employee
(B2E) model. Employee Self Service (ESS) is a solution based on the B2E
model that enables employees’ access to the corporate human resource
informationsystem.TheglobalERPindustry,includingthemarketleaderSAP,
blossomedinthe1990s,automatingbackofficeoperationshasmademoves
tointroducea“secondwave”offunctionalityinERPsystems.Theseproducts
were basically enhancements to the ERP software and included Business
InformationWarehouse(BW),KnowledgeWarehouse(KW),StrategicEn-
terpriseManagement(SEM),CustomerRelationshipManagement(CRM),
EmployeeSelf-Service(ESS)andAdvancedPlannerandOptimisation(APO).
Table1presentsSAP’sAsia-Pacificimplementationsofsomeofthesecond
waveproductspresentedwithusersegmentandkeymarketidentified.
Thechangeindemandforthesecondwaveproductsisshowninthepurchase
patterns for 2001 and 2002 (Bennett, 2002). In Australasia in 2001, Supply
Chain Management (SCM) accounted for 15% and CRM for 20% of SAP
Table 1. Second wave implementations by year (Bennett, 2001).
Software Implementations User Segment Key Market
CRM 70 >50 AU/NZ
e-Procurement 56 >50 AU/JP/SG
BW 263 1-20 AU/JP
APO 73 1-20 AU/NZ
ESS 33 >20 AU
Workplace 122 >20 AU/Korea

sales revenue. In 2002 SCM accounted for 22% of revenue with CRM 21%,
Portals11%andSupplierRelationshipManagement(SRM)exchanges11%.
ThereareseveralreasonsforthisdiversificationofERPsystems:integrationof
businessprocesses,needforacommonplatform,betterdatavisibility,lower
operating costs, increased customer responsiveness and improved strategic
decision making (Iggulden, 1999). This slowing in demand for core ERP
systemshasresultedinaddedfunctionalityinstalled,likeEmployeeSelfService
(ESS), to prepare organisations for e-business. Many of Australia’s larger
companiesandpublicsectororganisationsareimplementingESSfunctionality
asanadjuncttotheirenterpriseresourceplanning(ERP)systems.Thesetypes
ofsystemsareenterprise-wideandareadoptedbycompaniesinanattemptto
integrate many of their human resource business process and provide better
data visibility. They claim to incorporate “best business practice” and it is
understandablethegrowthincompaniesimplementingESSsolutionshasbeen
significant(WebsterBuchananResearch,2002).Thereturnoninvestmentof
ESSapplicationshasbeensubstantial(Lehman,2000),withESStransforming
labour intensive paper based HR forms to digital enabled forms, allowing a
50%reductionoftransactioncosts,40%reductioninadministrativestaffing,
80% reduction in management HR duties and a 10-fold speed-up of HR
processes (Workforce, 2001).
Approximately 320 of Australia’s top companies have implemented SAP’s
ERPsystem(SAPR/3),andoftheseapproximately150haveimplementedthe
HR module, with 33 implementing the ESS component. These companies
includeToyota,Westpac,RMIT,NationalAustraliaBank,Siemens,Telstra,
and Linfox. In recent times there has been a plethora of research associated
with the impact and implications of e-commerce. Much of this research has
focused on the various business models such as business-to-business and
business-to-consumerwiththeimportanceofdevelopingcustomerandpartner
relationships being espoused. There has been little attention paid to the
potential of business-to-employee (B2E) and the role that B2E systems can
playinimprovingbusiness-to-employeerelationships.Thischapterlooksatthe
developmentofthehumanresources(HR)ESSportalandpresentsthefindings
ofacasestudyofaleadingAustraliantelecommunicationscompanythathas
implemented a “second wave” ESS portal. A model based on work by
Eckerson (1999) and Brosche (2002) depicting portal maturity is presented
and analysis shows that the ESS portal can be categorised as first generation
withan“AccessRich”focus.Planneddevelopmentsformovingtheportalto
second generation with a content focus are presented.

From HRM to HRMIS to eHR
Thefunctionofhumanresourcemanagementhaschangeddramaticallyover
time.Ithasevolvedfromanadministrativefunctionprimarilyresponsiblefor
payrolltoastrategicrolethatcanaddvaluetoanorganisation.Companieshave
nowrealisedtheimportanceofthisfunctionandareinvestingresourcesinto
supportingHumanResourceInformationSystems(HRMIS).Theevolutionof
HRtoeHRhasbeenacceleratedbytheconvergenceofseveralorganisational
forces.TheinternalprocessofHRischangingitsrolefromsupporttoamore
strategicplaceintheorganisation.Therolehasdevelopedfrombeingprimarily
administrativetosupport,andthentotheroleofabusinesspartner.Atthesame
timeHRisastable,reliablebusinessprocessthathashighrecognitionwithin
theorganisationandtoucheseveryemployee.ThishighrecognitiongivesHR
a rapid acceptance when being given the “e” treatment. Another important
forceactingonHRisthe“addingvalue”imperative.Organisationsareinvolved
in a “war on talent” (Link, 2001) and organisations see eHR as an important
technologicaltoolinwinningthewar.HRhasseizedthischangeinorganisational
focusandadoptedtheB2Emodeltofurtherenhancethebusinesspartnerrole.
InternettechnologycontinuestoshapethewaythatHRinformationisbeing
deliveredtoemployees.
Therearethreemaindeliveryplatforms–CustomerServiceRepresentative
(CSR),InteractiveVoiceResponse(IVR)andWebapplications–however,
thefrequencyofuseischanging.Customerserviceusage(CSR)andinteractive
voiceresponse(IVR)gain20-30%ofemployeeenquiries,withWebapplica-
tionsgaining50%ofemployeeenquiries(Anonymous,2002).Thecustomer
servicerepresentativeisstillthedominantaccessmethodforcomplextransac-
tions. WebaccessisreplacingIVRaspreferredself-servicemethodinlarge
organisations.
Manyoftheworld’sleadingcompaniesareusingERPsystemstosupporttheir
HRinformationneeds.Thisispartlyduetotherealisationoftheintegrativerole
HR has in numerous business processes such as work scheduling, travel
management,productionplanningandoccupationalhealthandsafety(Curran
&Kellar,1998).TheB2Emodelinvolvestheprovisionofdatabases,knowl-
edge management tools and employee related processes online to enable
greateraccessibilityforemployees(Deimler&Hansen,2001).Theybelieve
thattherearelargesavingstomakefromimplementingB2Esolutions.

Business-to-Employee (B2E) Models
With advances in network and browser technology companies have been
movingmoreandmoreoftheircorporateinformationresourcestoWebbased
applications,makingthemavailabletoemployeesviathecompanyintranet.
Originally these applications only allowed employees to view and browse
electronicversionsofexistingdocuments.Companiesfoundthattherewasa
saving in publication costs and an empowerment of employees through the
increasedavailabilityofcorporateproceduresandknowledgetoenablethem
toperformtheirday-to-daytasks.Theincreasedfamiliarisationofemployees
in the use of browser technology and the maturing of this technology within
companieshasresultedintheseapplicationsevolvingtoincorporatetransac-
tionalinteractions.Thishasanumberofbenefits,includingthemovetowards
paperlesstransactionsandtheimpliedreductioninadministrativeoverheads
and the provision of better level of service to employees. Hamerman (2002)
setstheEmployeeRelationshipManagement(ERM)landscapewithcorpo-
rate, personal and employee elements set out in a diagram (see Figure 1).
Hamerman(2002)seesERMsuitesasbeingplatformsforinformationdelivery,
process execution and collaboration in the organisation. The advantages in
empoweringemployeesthroughanERMsuiteinclude:
Figure 1. The employee relationship management landscape (Hamerman,
2002).
ERM/B2E
ESS/eHR
HCM
Corporate, Job &
Workplace
Personal & HR Self-
Service
Employee Development &
Staffing

• Multiplevaluepropositions,
• ConsistentportalGUIs,
• Allemployee24x7,
• Real-timedynamicinformationdelivery,and
• Comprehensivecollaborativeworkenvironment.
Employees can now access a range of information pertinent to themselves
withouthavingtorelyonothers.Theycancomparepayslipsforanumberof
givenperiodsandtheycanviewtheirsuperannuationandleaveentitlementsand
then apply for leave online. Human resources (HR) for many companies are
evolvingfromthetraditionalpayrollprocessingfunctiontoamorestrategic
directionofhumancapitalmanagement(Malis,2002).AsHRhasevolved,the
level of associated administrative duties has increased proportionally, with
someresearchestimatingthatasmuchas70%ofHRpersonneltimeisspent
onadministrativeduties(Barron,2002).Thishasbeenestimatedtorepresent
acostofupto$US1700peremployeeperyear(Khirallah,2000).Ithasbeen
estimated (Wagner, 2002) that HR paper forms cost $20-$30 to process,
telephonebasedHRformscost$2-$4toprocessbutInternetbasedHRforms
costonly5-10cents.Inanattempttoexploitthesecostdifferencescompanies
have looked to the Internet for the solution.
B2E: Employee Self Service
B2EEmployeeSelfService(ESS)isanInternetbasedsolutionthatprovides
employeeswithabrowserinterfacetorelevantHRdataandtransactions.This
enablesemployees’real-timeaccesstotheirdatawithoutleavingtheirdesktop.
Theycanupdatetheirpersonaldetails,applyforleave,viewtheirpaydetails
and associated benefits, view internal job vacancies and book training and
travel. The benefits of this type of technology have been well documented
(Alexander, 2002, McKenna, 2002; Webster Buchanan Research, 2002;
Wiscombe, 2001). They include reduced administrative overheads and the
freeingofHRstaffformorestrategicactivities,improveddataintegrity,and
empowerment of employees. One report identified a major benefit as the
provision of HR services to employees in a geographically decentralised
company(NetKey,2002).Tangiblemeasuresincludereductionsinadminis-
trative staff by 40% and a reduction in transaction costs of 50% (Wiscombe,

2001) and the reduction of processes from two to three days to a few hours
(NetKey,2002).ArecentstudyofUKtop500firmsrevealedthatthemajority
of B2E solutions were still at a basic level and have focussed on improved
efficiencyandelectronicdocumentdelivery(Dunford,2002). Ordonez(2002)
maintains the theme of information delivery in presenting ESS as allowing
employees access to the right information at the right time to carry out and
process transactions; further, ESS allows the ability to create, view and
maintaindatathroughmultipleaccesstechnologies.CompaniessuchasToyota
Australiaarenowextendingthisfunctionalitybeyondthedesktopbyproviding
access to electronic HR Kiosks in common meeting areas.
TheCedargroup(CedarGroup,1999,2000,2001,2002)carryoutanannual
survey of major global organisations and their B2E intentions. The survey
coversmanyfacetsofESSincludingtechnology,vendors,drivers,costsand
benefits. The average expenditure in 2001 on an ESS implementation was
$US1.505million.Thiscostisbrokendown:
• Software 22%,
• Hardware 18%,
• Internalimplementationcosts18%,
• Externalimplementationcosts17%,
• Marketing10%,and
• ASPs 17%.
Looking at this cost from an employee perspective sees the average cost of
ESSimplementationrangingfrom$US32/employeeforalargeorganisation
(>60,000 employees), to $US155/employee for a medium size organisation
(7,500employees).ThefundingfortheHRESScomesfromtheHRfunction
in North American and Australian organizations, whereas the Head Office
fundstheminEuropeanorganisations.ThemaindriversforESSare:
• Improvedservice(98%),
• Betterinformationaccess(90%),
• Reduced costs (85%),
• Streamlinedprocesses(70%),and
• Strategic HR (80%).

Employees can use a variety of applications in the ESS, and the main ones
identifiedintheCedarsurveyareemployeecommunications(95%),pension
services (72%), training (40%), and leave requests (25%), along with many
others.Managersuseself-servicedifferentlyinthethreeregionsofthesurvey.
North American managers use MSS to process travel and expenses (42%),
Europeanmanagerstoprocesspurchaseorders(48%)andAustralianmanag-
ers to process leave requests (45%). Employee services can be delivered by
a variety of methods, and the Web-based self-service (B2E) is undergoing
substantial planned growth from 42% in 2001 to 80% planned in 2004. The
trendisforimplementingHRMISapplicationsfrommajorvendorslikeSAPor
PeopleSoft.ESSimplementationsshowoverwhelmingsuccessmeasures,with
53% indicating their implementation was successful and 43% somewhat
successful.ThevaluepropositionforESSincludes:
• Average cost of transaction (down 60%),
• Inquiries(down10%),
• Cycle time (reduced 60%),
• Headcount(70%reduction),
• R.O.I. (100% in 22 months), and
• Employeesatisfaction(increased50%).
The culmination of the Cedar group reports lists the barriers to benefit
attainmentandcriticalsuccessfactorsinESSapplications.NorthAmericaand
Australianorganisationbothlistcostofownership/lackofbudgetasthemain
barriers,whilstEuropeanorganisationsperceivelackofprivacyandsecurityas
themainbarriers.Otherbarriersinclude:lackoftechnicalskills,unabletostate
businesscase,lowHRpriorityandHRMSnotinplace.Aswithothercomplex
IT application projects, executive commitment, internal collaboration and
availabilityoftechnicalskillstoimplementtheapplicationareallconsidered
importantsuccessfactors.
Web Portals
The term “portal” has been an Internet buzzword that has promised great
benefits to organisations. Dias (2001) predicted that the corporate portal
would become the most important information delivery project of the next

decade. The term “portal” takes a different meaning depending on the view-
pointoftheparticipantintheportal.Tothebusinessusertheportalisallabout
informationaccessandnavigation;toabusinesstheportalisallaboutadding
value;tothemarketplacetheportalisallaboutnewbusinessmodels;andtothe
technologist a portal is all about integration. The portal was developed to
addressproblemswiththelarge-scaledevelopmentofcorporateintranets.
Corporateintranetspromisedmuchbuthadtoaddressmultipleproblemsinthe
organisation (Collins as reported in Brosche, 2001, p. 14). On the user side
employees must make informed and consistent decisions and are being
imploredtoaccessmultipleinformationsourcesontheWeb.Onthetechnology
sideIntranetsitesinorganisationshaveproliferated,resultinginanincreasein
searchcomplexityforcorporateusers.Earlyversionsofportalsweremerely
Web pages with extensive document linkages, a gateway to the Web. These
earlyversionshavebeenreplacedbymoreadvancedportalversions.Eckerson
(1999) proposed four generations of portals (see Table 2) and he proposed
thatportalscanbeanalysedbytheinformationcontent,informationflowand
thetechnologyfocusthatmakeuptheportal.JustastheIntranetproliferated
withinorganizations,portalsarenowstartingtomultiply.Themegaportalis
beingdevelopedinthehopeofaddressingtheunfetteredexpansionoffunction
specific portals. The portal management system or the mega portal is being
developedtotakecontrolofportalproliferationandhastheaimofenhancing
Table 2. Portal generations (Eckerson, 1999).
Generation Descriptor Features
First Referential Generic Focus
Hierarchical catalogue of pages
Pull Flow
Decision support
Second Personalised Personalised Focus
Push and Pull Flow
Customised Distribution
Third Interactive Application Focussed
Collaborative Flow
Fourth Specialised Role Focussed
Corporate Applications
Integrated Work Flow

business process convergence and integration. Shilakes and Tylman (1998)
coined the term “Enterprise Information Portal” (EIP), and this definition
encompassedinformationaccess,applicationnatureandInternetgatewaythat
areapparentinthesecondandthirdgenerationsoforganisationalportals.One
areathatisbeingdevelopedviaportaltechnologyisemployeerelationships.
We have already looked at ESS as an example of a B2E system; some
additional employee applications are M2E (Manager-to- Employee), E2E
(Employee-to-Employee)andX2E(external-to-Employee).Takentogether,
all these relationships are considered part of the ERM strategy (Doerzaph &
Udolph,2002).AnERMstrategyismadeupofthefollowingcomponents:self-
service technology, collaboration tools, communication tools, knowledge
managementtechniques,personalisationfocusandlastly,accesstechnology.
The access technology can encompass employee interaction centres like
hotlinesorhelpdesksorenterpriseportals.GeneralMotorsisoneoftheleading
HRportalsimplementedintheworldandtheyhaveproposedthreegenerations
of HR portals (Dessert & Colby, 2002).
ThethreephasesarepresentedinTable3andarepresentedinfiveorganisational
dimensions. A model of portal architecture is proposed by Brosche (2002,
p.19) and depicts a portal having core, key elements and specialisation
components. The components proposed by Brosche (2002) can be further
categorised as having an information focus, technology focus or a process
Table 3. Generations of HR portals (Dessert & Colby, 2002).
Dimensions 1st
Generation 2nd
Generation 3rd
Generation
User
Stickiness
Static Web
High Usage
Search
Dynamic
Personalised
Robust Search
Anywhere Access
Analytics
Dashboard
Communications
& Collaboration
News
Chat
Jobs
Unified Messaging
Targeted Push versu Pull
Role-Based
e-Learning
e-Culture
Broadcast Media
Information
Access
Online Publications
Links
Launching Pad
Dynamic publishing
Native Web Apps
Content Integration b/w functions
Online Publishing
Int Content
Services Travel expenses
Payroll
E-Procurement
Life/Work Events
Communities
e-Health
Role Based
Online Consulting
Technology Web/App servers
Unsecured
Basic login
Content Management
LDAP
Int e-mail, chat, IM,
Federated services
Wireless
Multi-media
Broadband

focus. We can further combine Eckerson generations with Brosche portal
modelandanalyseanorganisation’sportalbyitsinformationfocus,technology
focus and process focus and categorise it as being first, second or third
generation(seeFigure2).
UsingthisproposedcategorisationofportalswewillanalysetheESSportalof
amajorAustralianorganisationandlocatethestageofportaldevelopmentitis
currentlyin.
Case Study
Auscom B2E Solution
ThemovetoB2EESSportalsisdetailedthroughtheuseofacasestudy.Case
studyresearchmethodologywasusedasthechapterpresentsanexploratory
lookatimplicationsofESSimplementations.Yin(1994,p.35)emphasisesthe
importanceofasking“what”whenanalysinginformationsystems.Yingoes
furtherandemphasisestheneedtostudycontemporaryphenomenawithinreal-
life contexts. The etic or outsider approach was used in this case study. This
approachemphasisesananalysisbaseduponanoutsider’scategorisationof
themeaningsandreadingoftherealityinsidethefirm.Theanalysisisbased
uponobjectivemethodssuchasdocumentanalysis,surveysandinterviews.
Assumptionsthatweregleanedintheanalysisofmaturityofportaldevelopment
Figure 2. Portal generations by Brosche categories.
Portal Generations
Portal Categories
First
ACCESS
RICH
Second
CONTENT
RICH
Third
APPLICATION
RICH
Information Focus Aggregated Personalised Integrated
Process Focus HR Forms HR Publication HR Application
Technology Focus Browser
Search
Publishing
Application
Workgroup/Mobile
Access

werequeriedandclarifiedbyinterview.Walsham(2000,p.204)supportscase
study methodology and sees the need for a move away from traditional
informationsystemsresearchmethodssuchassurveystowardmoreinterpre-
tativecasestudies,ethnographiesandactionresearchprojects.Severalworks
have used case studies (Benbasat et al., 1987; Chan & Roseman, 2001; Lee,
1989) in presenting information systems research. Cavaye (1995) used case
studyresearchtoanalyseinter-organisationalsystemsandthecomplexityof
informationsystems.Asinglecompanywaschosenforcasestudyresearchin
attempt to identify the impact of an ESS implementation and the associated
development along the ESS to Portal path. The chosen company attended a
forum on ESS conducted by the SAP Australian User Group (SAUG). The
casestudycompanywaschosenbecauseitisaleadingAustralianorganisation
with a long mature SAP history and had implemented SAP ESS module.
Initially,informationwascollectedasaresultofthecompany’spresentationat
theESSforuminJune2002.Interviewswereconductedfirstlybye-mailwith
twomanagersfromAuscom;onemanagerwasfromCorporateSystemsand
theotherfromInfrastructureServices.Thesepredeterminedquestionswere
thenanalysedandenhancedandformedthebasisoftheinterviewssupported
by observations through access to the ESS system. Interviews were tran-
scribed and follow-up queries and clarification of points were conducted by
telephone. Projectdocumentationandpolicydocumentswerealsosupplied.
TheinitialcasestudywascommencedinOctober2002byEngleby,Nurand
Romsdal(2002)andthenrefinedandextendedinDecemberbytheauthorsof
thischapter.Thenameofthecasestudyorganisationhasbeenwithhelddueto
conditionssetinthecasestudyinterview.
Australian Communications Organisation (Auscom)
AuscomisAustralia’sleadingtelecommunicationscompany.Itwasprivatised
in 1997 and currently has 40,000 full-time employees, 20,000 contractors,
2,000 information systems and 50,000 desktops (Greenblat, 2002). It offers
afullrangeofcommunicationsandinformationservicesproducts,including
local, long distance, mobile, Internet and subscriber television. In the year
endingJune2002ithad$AUD20billionofsalesandaprofitof$AUD3billion.
Auscom’s vision is to be a world-class, full service telecommunications by
deliveringcompany-wideprocessimprovement,productivitygainsandcost
efficiency(Auscomvision,2002).Itcouldbeviewedinthesamestrategiclight
assay,aleadingEuropeantelecom,DeutscheTelecomAG.Oneoftheareas

thatAuscomhadanalysedandfeltwasabletobetterdelivertheirvisionwas
HR. The existing HR system was cost bloated, process fragmented and had
poor data access. Auscom wanted to explore the strategic aspects of HR,
especiallytheconceptof“employerofchoice,”andinstigated“PeopleOnline”
in May 2001. The project was to be developed in three phases: Phase 1
introduced ESS to provide simple HR employee based transactions and
information search facilities. Phase 1 had two components, MyDetails, the
simpleemployeeHRESSandPeopleSearch,theinformationsearchcompo-
nent.Phase2wouldintroduceworkflowforbothHRandnon-HRprocesses.
Phase3wouldprovideadditionalfeatures,butisreally“overthehorizon”at
this stage. Phase 1 was rolled out in May 2002 and phase 2 was scheduled to
be rolled out in November 2002 with Deloitte consulting the development
partner. The business case for phase 1 identified four groups of benefits:
quantifiablecostsavings,increaseddataintegrity,enablingprocessre-engi-
neeringande-enablingtheworkforce.Detailsofthebenefitmetricswerenot
availableduetocommercialinconfidence.Fourmonthsaftertheimplementa-
tion an external organisation carried out a review and analysed the business
requirements, performance, implementation and project management of
PeopleOnline. An analysis of the review is presented with reference to the
portalgenerationsinFigure2.
Information Focus
Information stickiness refers to the ability of the ESS to draw and retain the
user. The Mydetails application did provide enhanced stickiness but
PeopleSearch did not. The review team found that the needs of super/power
users in switchboard/reception, who use PeopleSearch extensively, had not
beenanalysedenoughintheinitialbusinessrequirementsanalysis.Therewas
alsoaproblemwhencostconsiderationscreatedascopeandsoftwarechange
andprojectrequirementsofthespecialpoweruserswasnotre-visitedafterthis
change.Therewasalsoanoperationalproblemwhereservicelevelagreements
did not have adequate time/penalty clauses and or metrics built in, thereby
causingperformanceproblemstobeneglected.Overall,theMydetailscompo-
nentdidenhancestickinessasitprovidedthefullrangeoftypical“PULL”ESS
features:personaldetails,pay,leave,bankandbenefitpackages.Thistypeof
ESS site is typically a first generation “ACCESS RICH” site with predomi-

nately“pull”features(StaticWeb,HighUsage).Theinformationprovidedto
the user was limited to HR or employee based information. There was no
processinformation,businesstransactioninformationorproductinformation
provided.Therewasnoacross-functioninformationflows.Theaccessfocus
of the portal would indicate that the portal was immature and still first
generation.
Process Focus
Thisdimensionlooksattheextentthattheportalreachesouttootherareasof
theorganisationandtheextentthattheportalenablescollaborationandcross-
integrationbusinessprocessoperations,likee-procurement,travelexpenses
authorisation,payroll,timeandHRdatamanagement.Theservicesprovided
by the Phase 1 project was limited to HR type data including payroll. The
extension into other areas of the organisation and across business units is
scheduled for Phase 2. The Peopleseach component enhanced communica-
tions by providing one-stop search facility in the whole organisation. It was
important that this communication tool should have been aligned to the
corporateintranetlookandfeel.Therewaslittlecollaborationbuiltintothis
phase. Again this type of portal with moderate communications but limited
collaborationfeaturesisafirstgeneration“ACCESSRICH”HRportal.
Technology Focus
The IT model of the HR infrastructure was based around SAP R/3 with ESS
added functionality for self-service and SAP’s WhosWhos application for
searchcapability.HalfwaythroughthebusinessrequirementsanalysisAuscom
droppedWhosWhosandreplaceditwithanin-housesearchpackage.Therisk
ofupgradingtheInternetbrowserfromIE4toIE5createdmajorproblemsto
the extent that the system was written to IE4 compatibility. There was no
contentmanagement,publishingcapability,workgroup,collaborationore-mail
access.Again,lookingattheFigure2thetechnologydimensionisclearlyfirst
generation“ACCESSRICH”portal.

Conclusion
“MSS and ESS are the ‘killer applications’ of the HR world. They
represent a pivotal point in the technology of HRMS” (Johnston,
2001)
ESShasproventoprovideanumberofquickwinsinthebusiness-to-employee
e-businessmodel.Itprovidesanumberofbenefitstocompaniesandstream-
linesmanyoftheHRprocesseswhileatthesametimeempoweringemployees.
A recent Tower Perrin report (2002) showed that ESS portals have been or
are being adopted by 73% of organisations and that eHR has taken hold in
organisations.DavidWhitefromDeloitteTouché(2002)confirmedtheaccep-
tanceofeHRportalsintothelexiconofe-enablement:
“A Successful technology-enabled HR strategy combines business
strategy with emerging technologies and existing infrastructure to
produce an integrated, comprehensive plan for how HR will
deliver services, provide information, and process transaction.”
Compared to other e-business solutions it has a relatively low impact on the
organisation,employeesandprocesses.Therisksareminimalasitprovidesa
Webinterfacetoanexistingsystemandimprovesdataintegrity,asemployees
areresponsibleformuchoftheirowndata.However,aswithmostITprojects,
ESSportalsdopromisetoprovideextendedfunctionalityintoandacrossthe
organisation.ManycompaniessuchasGMUSA(Dessert&Colby,2002)are
nowevolvingtheirESSsolutionsintoemployeeportalswheretheHRfunction-
ality is just another tab that appears on their Web page with their business
transactions, corporate data, calendar and e-mail functionality. ESS should
eventuallydisappearasatermasWebinterfacesbecomestandardincorporate
portalswheretheemployeehasoneinterfacetocarryoutallbusinessrelated
transactions.WecananalysetherelativepositionsofAuscomandGMportal
maturitybyreferringtoTable4.Auscomdevelopedtheirfirstgenerationportal
tobeprimarilyaninformationpullapplicationwiththemainfocusontraditional
HRforms.Littlecollaborationorcommunicationapplicationsweredeveloped
inthefirstreleaseandassuchthisplacetheAuscomportalfirmlyinthe“access
rich”type.Thenextversionoftheportalwaslookingattheonlineroutingof
standard HR transactions, online recruitment, talent management and an

enhancedemphasisontraining.ThisdevelopmentwouldmovetheAuscom
portalintothe“contentrich”andpartiallyintothe“applicationrich”phases.The
GM portal, as shown in Tables 3 and 4, has moved beyond this “access rich”
phaseintothecontentandapplicationphase.Auscomseemtobemovinginthe
right direction, if somewhat behind GM. There seems to be no doubt that the
technologyexiststomoveanorganisationlikeAuscomfromfirstgeneration
“access rich” to second generation “content rich” and onto third generation
“applicationrich”portal.
Futureworkdevelopedfromthischaptercouldincludelookingatorganisations
thathaveimplementedB2EHRportalsandseeingiftheycanbecategorised
into the three generations of portals as depicted above. Another important
aspect would be to look at the drivers and obstacles in developing portal
solutionstogetherwithimplementationissuesandproblems.Itwouldalsobe
important to chart the development of portal resources, including content,
“portlets”andportalcommunities.Therearemanytermsusedtodescribethe
movefromtraditionalHRtothe“e-enabled”versionsofHR:HRMIS,eHR,
B2E,ESS,WebenabledESS,HRportal,ESSportalandseveralothers.What
isnotvagueistheunderstandingthattheseareinformationdeliveryplatforms
thathavemuchpotentialtodelivernotonlycostfocussedsavingsbutthemore
important strategic HR benefits being sought by modern organisations. The
recent Cedar report (2002, p. 1) commented:
“HR self-service and portal technologies are maturing as strate-
gic, comprehensive solutions that support building high perfor-
mance workforces, while sponsored and supported by HR, these
technologies are increasingly part of enterprise to employee solu-
tions.”
Table 4. Portal generations by Brosche categories.
Portal Generations
Portal Categories
First
ACCESS RICH
Second
CONTENT RICH
Third
APPLICATION RICH
Information Focus Aggregated
Auscom Portal
Personalised Integrated
General Motors Portal
Process Focus HR Forms
Auscom Portal
HR Publication HR Application
Technology Focus Browser Search
Auscom Portal
Publishing
Application
Workgroup/Mobile Access

WhenamajorAustralianorganisationleadsthewaywithmoderne-enabled
applications,thestageissetforotherAustralianorganisationstobeaggressive
followers. We will watch with great interest the march to ESS and then the
advancementtoHR/corporate/enterpriseportals.
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110 McDonagh
ChapterVI
EnterpriseSystems
and the Challenge of
IntegratedChange:
A Focus on Occupational
Communities
Joe McDonagh
Abstract
While the business press is awash with claims that investing in enterprise-
wide systems is the key to delivering superior economic performance,
unfortunately it appears that reaping the benefits of such IT investments
is fraught with difficulty. Indeed, the introduction of IT into work
organisations is generally marred with persistent reports of
underperformance and failure. This chapter critiques the nature of this
dilemma and in particular explores the role of diverse occupational
groups in its perpetuation over time. This dilemma is sustained over time
by the behavioural patterns of diverse occupational groups that have
vested but divergent, interests in exploiting IT. Executive management
tend to view the introduction of IT as an economic imperative while IT
specialists tend to view it as a technical imperative. The coalescent nature

Enterprise Systems and the Challenge of Integrated Change 111
of these two imperatives is such that the human and organisational
aspects of IT related change are frequently marginalised and ignored.
Achieving a more integrated approach to the introduction of IT is
inordinately difficult since the narrow perspectives embraced by the
executive and IT communities do not naturally attend to change in an
integrated manner.
Introduction
Whilethebusinesspressisawashwithclaimsthatinvestinginenterprise-wide
informationsystemsisthekeytodeliveringsuperioreconomicperformance,
unfortunatelyitappearsthatreapingthebenefitsofsuchinvestmentsisfraught
with difficulty. Indeed, the introduction of enterprise systems in work
organisationsisgenerallymarredwithpersistentreportsofunderperformance
andfailure.Thischaptercritiquesthenatureofthisdilemmaandinparticular
explorestheroleofoccupationalcommunitiesinitsperpetuationthroughtime.
Thechapterconcludesbywayofnotingthateffectinganintegratedapproach
totheintroductionofenterprisesystemsthataccountsforeconomic,technical,
human,andorganisationalfacetsofchangeisinordinatelydifficultsincethe
requisiteknowledgeandexpertisearewidelydispersedamongdiverseoccu-
pationalcommunities.
A Historical Dilemma
Undoubtedly,theinfluenceofcomputerbasedinformationsystemshasbeen
pervasivethroughoutthelastfourdecades.Abriefhistoricaltourbearswitness
to such pervasiveness: from electronic data processing in the 1950s, data
processing in the 1960s, management information systems in the 1970s,
strategicinformationsystemsinthe1980s,toenterprisesystems,electronic
business,electroniccommerce,andelectronicgovernmentinthe1990sand
2000s.Eachdecadehaswitnessedrapidadvancesintechnologicalinnovation
whichwhencombinedwithpivotaladministrativeinnovationshaveofferedthe
promiseofmajorbenefitsatmultipleorganizationalandinter-organizational
levels.

112 McDonagh
Itisindeedfairtosaythatwhatbestcharacterisesthispresenteraofcomputer
based information systems from earlier eras is the dominant focus on the
promiseofextendingthereachoftheenterprise(Champy,2002;Davenport,
2000; Hammer, 2001; Porter, 2001), enabled by significant advances in
informationandcommunicationtechnologies(PriceWaterhouseCoopers,2001).
Should we eagerly nurture the fulfilment of this promise or should the many
claimsaboutespousedbenefitscauseustoembraceamorecautiousresponse?
A cautious response may be advisable!
Considerrecentevidencethatconfirmsthatrealizingthebenefitsofenterprise-
wideinformationsystemsposesaformidablechallengeformanyprivateand
publicsectororganizationsalike.Forexample,inasurveyof117firmsacross
17countries,only34%ofrespondentsconfirmedthattheywereverysatisfied
with their investments (McNurlin, 2001). Furthermore, in excess of 90% of
enterprise systems implementations overrun in terms of cost or time or both
(Sammonetal.,2001).ResearchconductedbytheStandishGroupconfirms
that28%ofenterprisesystemsimplementationsareabandonedforavarietyof
reasons (Crowe et al., 2002).
Evidence of the nature outlined above is not new. Reflecting briefly upon
organizations’experienceswithinformationtechnology(IT)throughoutthelast
four decades, it appears that the much-vaunted promise of IT investment
yieldingsignificantgainhasregularlyfailedtomaterialize(Cleggetal.,1996;
McDonagh,1999).Indeed,manyorganisationsappeartoexperiencesignifi-
cant underperformance and failure with regard to their IT investments as
opposedtothepromiseofsuperiorperformancesofrequentlyclaimedinthe
businesspress.Considerforamomentanumberofhighprofilecaseswherethe
introduction of IT has been a fiasco.
• After a total of $125 million dollars had been invested, Hilton Hotels
Corporation,MarriottCorporationandBudgetRent-A-CarCorporation
cancelled what had become a major IT failure (Oz, 1994).
• FoxMeyerDrug,alargeTexas-basedpharmaceuticalcompany,filedfor
bankruptcy in August 1994 as a consequence of a $65 million dollar
enterprise system investment that went devastatingly wrong (James,
1997).
• The California Department of Motor Vehicles embarked on a major
project to revitalise its driver’s licence and registration applications
process. By 1993, after $45 million dollars had been spent, the project
wascancelled(Johnson,1995).

• Having invested £600 million, the Child Support Agency in the United
Kingdom admitted that its new system was a failure and was being
abandoned (Jones, 1997).
• Aftersevenyearsandabout$500milliondollarstryingtoimplementthe
mainframe-basedSAPR/2enterprisesoftwarepackage,DowChemical
scrappedtheprojectandstartedfromscratchwithaclient/serverversion
instead(CambridgeInformationNetwork,1999).
• Havinginvested£878milliononamagneticstripecardthatneversawthe
lightofday,theUKGovernmentadmittedthatitsPATHWAYinitiative
was a failure and was being cancelled (Ranger, 2000).
Thereissignificantevidencetosuggestthatfailuresofthenatureoutlinedabove
are a constant feature of the IT landscape (McDonagh, 2000; Ranger, 2000;
Sabbagh, 1998). A recent analysis of 27 sources of evidence between 1979
and 1998 concludes that around 50% of IT initiatives fail or are completely
abandoned,whileanother40%aredeliveredlateandoverbudget(McDonagh,
1999).Unfortunately,thepercentageofinitiativesthatdeliverbusinessvalueis
aslowas10%(Cleggetal.,1996;Johnson,1995;Kearney,1990;McDonagh,
1999).
Learning from Failure
ConsideringthatsuchpooroutcomesfromITinvestmentinitiativeshasbeena
pervasive theme both in management literature and organisational practice
throughout the last four decades, how can one readily account for such
outcomes?Tounderstandthepersistentnatureofthisphenomenononemust
understandtheessentialnatureofthechallengeinvolvedintheintroductionof
ITintoworkorganisations.Thatchallengenecessitatesfosteringanintegrated
approach to the management of change, an approach that concurrently co-
ordinatesandintegrateseconomic,technical,humanandorganisationalfacets
ofchange.Recognisingthesystemicnatureofthischallengeitisdisappointing
thentofindthatmostIT-enabledchangeinitiativesaredominatedbyeconomic
andtechnicalconsiderationstotherelativeexclusionofhumanandorganisational
considerations(Lunt&Barclay,1988;More,1990).Thetangiblenatureofthis
dilemma readily manifests itself when one considers that extant empirical

114 McDonagh
researchsupportstheassertionthateconomicandtechnicalconsiderationsare
unlikelytofeatureprominentlywhenITfailstodeliver(Cleggetal.,1996).
What then are the consequences of failing to nurture a systemic approach to
change that concurrently accounts for economic, technical, human, and
organisationalaspectsofIT?Indeed,theyappearrathergravesincefailingto
attend to human and organisational facets of change are considered to be the
rootofmuchIT-relatedunderperformanceandfailure(Benyon-Davies,1997;
Lucas,1975).Lucas(1975)statesthatthedifficultieswithITareprimarilyof
a behavioural nature, a view well supported by Bariff and Ginzberg (1982).
Otherwritershavesuccinctlynotedthat90%oftheproblemsencounteredin
IT-enabled change are of a human and organisational nature (Clegg et al.,
1996; Isaac-Henry, 1997; Long, 1987).
Recent literature on enterprise-wide information systems provides potent
confirmatory evidence that failure to address the human and organisational
aspectsofchangealltoofrequentlycontributestoratherpooroutcomesinsuch
investments (Esteves & Pastor, 2001; Sarker, 2000; Sedera et al., 2001;
Smyth,2001).
A brief examination of the human and organisational factors frequently
marginalizsedinIT-enabledchangeinitiativessuggestsmajorareasofconcern
(McDonagh,1999):
• Lackofguidingbusinessandtechnologystrategies
• Lackofattentiontoorganisationstructure,design,andculture
• Lack of attention to job design, task design, and the nature of work
• Lackofattentiontoexistingprocedures,practices,andsystems
• Lackofattentiontomanagementstyle
• Lackofattentiontoindustrialrelations
• Lackofattentiontoeducation,training,andawareness
• Lackoffitbetweenthesystemandtheorganisation
• Lackofattentiontoknowledge,skill,experienceandattitudeofexecu-
tives, experts, and users
• LackofattentiontoITspecialists’limitedcognitiveskills,socialskillsand
humancodes
• Lack of attention to users’ capabilities including cognitive style, stress
adaptation,motivationandcommitment

• Lack of appropriate systems development and project management
methods
• Lack of attention to the underlying assumptions that drive the systems
developmentprocess
• Lackofuserparticipationanduserownershipinthesystemsdevelopment
process
• Lackofattentiontosystemsimplementation
• Lackofattentiontothecompositionandeffectivenessofprojectteams
• Lackoforganisationalresourcesandsupport
Considering the wide array of evidence that suggests that human and
organisationalaspectsofchangeareroutinelymarginalisedandignoredinIT-
enabledchangeinitiatives,itisworthconsideringwhythisdilemmapersists
throughtime.Areorganisationalactorsgenuinelyunawareofthehumanand
organisational facets of change, or in a more sinister sense, do they wilfully
colludetomarginaliseandignorethesekeydimensionsofchange?Whilethe
themes of both individual and collective learning are chic in the field of
managementandorganisationstudies,onecouldbeexcusedforbelievingthat
organisationslearnlittle,ifanything,fromtheirdifficultieswithIT-enabled
change. In the words of Andriole and Freeman (1993), “we seem to learn
relativelylittlefromourmistakes...wearenotlearningfromourexperience”.
An Occupational Quandary
ReflectingonsuchpooroutcomesfromITinvestmentinitiatives,itishardly
surprising that the introduction of IT into work organisations offers a potent
arenainwhichorganisationalactorsareregularlydrawnintoamilieuofintense
discord. Evidence of such discord abounds. Many IT specialists are consid-
eredlackinginthecoreskillsrequiredtointegrateITwiththebusiness(Martin
etal.,1995).Companydirectorshavelittlefaithinthebusinessjudgementof
their IT counterparts, even though IT is recognised as critical to corporate
success (Stammers, 1997). Bosses tend to accuse IT colleagues of hiding
behindtechno-babbletocovertheirlackofbusinessacumen(McGinn,1997).
IT people are often aloof and uncooperative, uncomfortable with teamwork
andunabletolisteneffectivelytousers(Vora,1997).Indeed,arecentsurvey

116 McDonagh
of340CIOs(chiefinformationofficers)intheUnitedStates,theUK,Germany
and France noted that CIOs show a lack of business acumen and shrewdness
and are generally perceived as geeks and not business professionals (Korn/
FerryInternational,1998).
Conversely, a UK survey of 1,000 full-time IT professionals and 200 IT
employerscarriedoutbyHarrisResearchrevealedthat32%ofITprofession-
alsfeltthat“seniormanagementdidnotfullyappreciatetheroleofITintheir
business” (Briggs, 1996). Similarly, a survey of the UK’s top IT directors
carriedoutbytheButlerGrouprevealedthat73%didnotthinktheirbusiness
managerswereITfocused(Briggs,1997).ITspecialistsaccusemanagement
of profound ignorance when it comes to new technology (McGinn, 1997).
ThosewhoworkinIToftencomplainthattheirnon-ITcolleaguesdonotreally
understandthetruepotentialoftechnology.Thisisheldtobeespeciallytrueof
directors, who can seem radically out of touch (Hallahan, 1998). Golden
(1997) sums it up when he says that all too often there is a yawning gap of
understandingbetweenbusinessmanagementandITprofessionals.
Castigations of the nature outlined above have persisted throughout recent
decades (Fitz-enz, 1978; Oliver & Langford, 1987). Consider the assertion
made two decades ago that the average software engineer “is excessively
independent – sometimes to a point of mild paranoia. He is often eccentric,
slightly neurotic, and he borders upon a limited schizophrenia” (Fitz-enz,
1978). While Oliver and Langford (1987) note that such discord is rooted in
ill-understooddifferencesincognitivestyleitremainsthatsuchpolarisationis
notuncommon.
Itisofinteresttonotefromtheabovethatmuchofthediscordsurroundingthe
introduction of IT in work organisations appears to manifest itself in the
polarisationofdiverseoccupationalgroups,namelyexecutivemanagementand
ITspecialists.“Informationtechnologyhasapolarisingeffectonmanagers;it
eitherbedazzlesorfrightens.Thosewhoareafraidofitshunit,whilebedazzled
IT departments frequently become prisoners of their own fascination, con-
structingelaboratetechnologyarchitecturesandenterpriseinformationmod-
els”(Davenport,1994).Thelevelofinter-groupdissenthighlightstheneedfor
a deeper understanding of how such groups separately and collectively
influencetheprocessofintroducingITintoworkorganisations.
On closer inquiry, it emerges that the plight with IT is of an enduring nature
sustained by the behavioural patterns of polarised occupational groups who
have vested, but divergent, interests in exploiting IT (McDonagh, 1999).
ExecutivemanagementviewtheintroductionofITasaneconomicimperative,
whileITspecialistsviewitasatechnicalimperative.Thecoalescentnatureof

thesetwoimperativesissuchthathumanandorganisationalconsiderationsare
regularlymarginalisedandignoredduringtheprocessofintroducingITinto
workorganisations(McDonagh,1999;McDonagh&Coghlan,2000).
Reflectingmorecloselyonthemannerinwhichtheexecutivecommunityshapes
theintroductionofITinworkorganisations,itbecomesincreasinglyapparent
that this worldwide community of practitioners has a potent effect on IT-
enabledchange(McDonagh,1999).
• Many senior executives see people as costly impersonal resources that
generateproblemsratherthansolutions.
• ManyseniorexecutivesembraceanarroweconomicfocusonITbelieving
thatITmerelyoffersanopportunityforrationalisationandcostreduction.
• Many senior executives see IT as a cost-pit rather than a strategic
capability.
• Many senior executives embrace a short-term focus on IT and exert
inordinatepressuretoachieverapidpaybackandshort-termgain.
• IT executives charged with delivering business value from IT are more
oftenthannotexcludedfromboardsofmanagement,executivemanage-
ment teams, and the corporate strategy process.
• ManyseniorexecutivesfailtocommittotheITstrategyprocess.
• Theclearseparationofmanagerialandtechnicalworkservestoreinforce
andinvigoratethedividebetweenbusinessandIT.
Inasimilarvein,ITspecialists,asaworldwidecommunityofpractitioners,have
aprofoundimpactupontheintroductionofITinworkorganisations(McDonagh,
1999).
• Much of the community embraces a technical focus on IT, attending
primarilytothetaskandtechnologycomponentsofworkorganisations
intowhichITisbeingintroduced.
• Thetools,techniques,andmethodsusedbythecommunityofpractitio-
nerssustainthisnarrowtechno-centricagenda.
• Much of the community is genuinely unaware of the human and
organisationalfactorsthataccountforthemajorityofIT-relatedunder-
performanceandfailure.

118 McDonagh
• There is no apparent incentive for the community of practitioners to
embraceamoreholisticperspectiveonIT-relatedchange.
ConflictanddiscordbetweentheexecutiveandITcommunitiesisundoubtedly
apredictableoutcomeconsideringthemannerinwhicheachcommunityshapes
IT-enabled change. Each community assumes a limited perspective on IT-
enabled change, executives assuming an economic focus and IT specialists
assumingatechnicalfocus.Eachcommunitysharesapredilectiontodesign
people out of rather than into systems. Similarly, each community shares a
genuinelackofknowledgeconcerningthehumanandorganisationalaspectsof
IT. The dominance of these foci regularly results in a “task and technology”
approachtotheintroductionofITinworkorganisations(Blackler&Brown,
1986).
A Paucity of Action
Itremainsunclearthenastowhomisresponsiblefornurturingamoreintegrated
approach toIT-enabledchangethatconcurrentlyattendstoeconomic,tech-
nical,humanandorganisationalconsiderations.CleggandKemp(1986)and
Clegg(1995)notethatITspecialistsseetheirjobasbeingcompleteoncethe
software application has been developed. Similarly, Markus and Benjamin
(1997) note that
“Deeply held beliefs that IT can cause change lead both line
managers and IT specialists to restrict their own efforts as change
agents. With everyone assuming that change management is the
job of someone – or something – else, there is often no one left to
perform change management tasks. Change then fails, and lack of
learning about the root causes of failure promotes future fail-
ures.”
ConsideringthepowerandinfluencethatboththeexecutiveandITcommuni-
ties exert on the process of introducing IT into work organisations, the
challengeofembracingamoreintegratedapproachseemsdaunting.Inlightof
this, and without being prescriptive, how can organisations influence the
processofintroducingITtoensurethathumanandorganisationalissuesare

given equal consideration with economic and technical ones? One distinct
possibilityistoconsidertheinvolvementoforganisationdevelopment(OD)
expertise since such expertise is generally well grounded in the human and
organisationalfactorsthatmustbeaddressedforchangetobeeffective(Burke,
1994).
OD focuses upon the process of planned change and as such focuses on
“people, and groups that operate inside organizations and on the processes
associatedwithteamwork,changeandintegration”(Worleyetal.,1996,p.3).
Furthermore, organization development “gives equal standing to both the
strategicandbusinessissuesthatdefineanorganization’sperformancepoten-
tialandthehumanandorganizationalissuesthatultimatelydeterminewhether
theperformanceisfullyrealized”(Worleyetal.,1996,p.13).Thiselaboration
onthenatureoforganisationdevelopmentsuggeststhatasafieldoftheoryand
practiceitisideallysuitedtoaddressingthechallengeofintegratedchange,with
aparticularemphasisonhumanandorganisationalaspectsofsuchchange.
Reflecting upon the earlier argument about the manner in which diverse
occupationalcommunitiesshapetheintroductionofITinworkorganisations,
itwouldappearthatattemptstoshapeamoreholisticapproachtoIT-enabled
changemustconfronttwokeychallenges.Thefirstchallengeinvolveslegitimising
asystemicapproachtochangeintheknowledgethatkeystakeholdersappear
toplaceinordinateemphasisoneconomicandtechnicalconsiderationstothe
detriment of human and organisational considerations? Creating legitimate
spaceforattendingtohumanandorganisationalfactors,asapartofasystemic
approach to change, is a rather formidable task in its own right.
Thesecondchallengeinvolvescreatinganenvironmentinwhichbehavioural
scienceknowledgeandexpertiseareperceivedtobeaslegitimateastechnical
knowledge and expertise. Crafting such a balance appears difficult as
organisationsappearreadilywillingtomakemajorinvestmentsinacquiringIT
competencies with rather scant attention given to OD based competencies.
ConsiderlargefinancialservicesorganisationswhereoneislikelytofindIT
specialistsintheirthousandsandODspecialistsintheirtens.
Notwithstanding the above challenges, over the last two decades, various
writerswithinthedisciplinesofODandIThaveadvocatedapotentialrolefor
OD-based expertise. Despite such advocacy, it remains that the IT and OD
communitiesareequallypolarisedwithrespecttotheirperspectivesonchange.
IT specialists pursue a technocentric agenda, ignoring the human and
organisationalconsequencesofthatagenda(McDonagh&Coghlan,2000).
Similarly,ODspecialistspursueanexplicitlyhumanisticagendaanddonot

120 McDonagh
considertheITdomainasonetowhichtheycannaturallycontribute(Burke,
1997; McDermott, 1984).
ThepotentialroleforahumanisticfocusintheprocessofintroducingITisa
centralthemeforneithertheODcommunitynortheITcommunity.Whilesome
elements in both communities have pointed to the need for an integrated
perspective on IT-related change, the reality remains that the IT community
does not understand OD and the OD community does not understand IT
(Markus&Benjamin,1997a,1997b).Consideringthelackofunderstanding
between these communities, should we be surprised to find that IT-related
changeremains,forthemostpart,technicallydriven?
Conclusion
Asnotedearlier,outcomesfrominvestmentsinenterprisesystemsappearno
betterornoworsethanoutcomesfrominvestmentsinITingeneral.Whilethe
process of introducing IT into work organisations warrants an integrated
perspectiveoneconomic,technical,humanandorganisationalaspectsofIT,it
appearsthattechnicalandeconomicconsiderationsdominatethepractitioner
landscape.Paradoxically,whenITfailstodeliverasitsooftendoes,humanand
organisational considerations are the prime determinants of such
underperformanceandfailure.Recentliteratureonenterprisesystemsprovides
potentconfirmatoryevidencethatfailuretoaddressthehumanandorganisational
aspectsofchangealltoofrequentlycontributetoratherpooroutcomesinsuch
investments (Esteves & Pastor, 2001; Sarker, 2000; Sedera et al., 2001;
Smyth,2001).Thisposesanintractabledilemmaformanyorganisations.
Thedilemmaisofanenduringnature,sustainedbythebehaviouralpatternsof
polarised occupational groups who have vested, but divergent, interests in
exploitingIT.ExecutivemanagementtendtoviewtheintroductionofITasan
economic imperative while IT specialists tend to view it as a technical
imperative.Thecoalescentnatureofthesetwoimperativesissuchthathuman
andorganisationalconsiderationsareregularlymarginalisedandignoredduring
theprocessofintroducingITintoworkorganisations.
Implementing a more integrated approach to the introduction of IT that
accountsforeconomic,technical,human,andorganisationalconsiderationsis
inherently difficult since the requisite knowledge and expertise are widely
dispersed among diverse occupational groups (Andriole & Freeman, 1993;
Clegg et al, 1996, 1997; Coghlan & McDonagh, 1997; McDonagh &

Coghlan, 1999, 2000). This calls for expertise that cuts across the social,
behavioural, computer, mathematical, engineering, management, and even
physical sciences (Andriole & Freeman, 1993). Those who understand the
technology tend not to appreciate the wider organisational issues, and those
whohavetheknowledgeoftheseareoftentechnicallynaive.Thisplacesavery
highpremiumonfindingwaysofintegratingdifferentformsofknowledgeand
expertise (Clegg et al., 1996).
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Section III
Implementation
andManagementof
SAP Systems:
IssuesandChallenges

126 Lau
ChapterVII
ASuccessfulERP
ImplementationPlan:
Issues and Challenges
Linda K. Lau
Abstract
This chapter commences with a brief description of Enterprise Resource
Planning (ERP), followed by a discussion of the benefits provided by an
integrated ERP system. Next, the chapter describes several critical issues
that managers must consider before making the final decision to integrate
all the business functions in the organization. These issues are categorized
under fundamental issues, people, the organizational change process, and
the different approaches to implementing ERP. A well-defined plan is the
first step to a successful ERP implementation. Therefore, the chapter
concludes with a flow chart, depicting many of the activities that must be
included in an ERP implementation plan.
Introduction
Thevisionofanintegratedinformationsystemsstartedinthe1960s,evolving
from the inventory tracking systems to Materials Requirements Planning

A Successful ERP Implementation Plan 127
(MRP),andfinallytoEnterpriseResourcePlanning(ERP)(Brady,Monk&
Wagner,2001).Today,almosteveryorganizationintegratespartorallofits
businessfunctionstogethertoachievehigherefficiencyandproductivity.
ERPistheprocessofintegratingallthebusinessfunctionsandprocessesinan
organizationtoachievenumerousbenefits.First,asinglepointofdataentry
helpstoreducedataredundancywhilesavingemployeestimeinenteringdata,
thereby reducing labor and overhead costs (Jacobs & Whybark, 2000).
Second,thecentralizationofinformation,decision-making,andcontrolleads
toincreasesinefficienciesofoperationsandproductivity,aswellascoordina-
tion between departments, divisions, regions, and even countries. This is
especiallytrueformultinationalcorporations(MNC),inwhichglobalintegra-
tioncouldresultinbettercommunicationsandcoordinationaroundtheworld.
Theglobalsourcinganddistributionofpartsandservicescouldalsoprovide
appropriatebenchmarksforoperationsaroundtheworld. Third,thesharing
ofacentralizeddatabaseprovidesbusinessmanagerswithaccurateandup-to-
dateinformationtomakewell-informedbusinessdecisions.Further,itreduces
data redundancy while improving data integrity at the same time. Fourth,
functional integration will consolidate all sorts of data, such as financial,
manufacturing, and sales, to take advantage of bulk discounts. ERP is espe-
ciallyimportantforcompanieswhoare“intimatelyconnected”totheirvendors
andcustomers,andwhouseelectronicdatainterchange(EDI)toprocesssales
transactionselectronically.Therefore,theimplementationofERPisexception-
allybeneficialtobusinessessuchasmanufacturingplantsthatmassproduce
products with little changes (Brady, Monk & Wagner, 2001). Nevertheless,
therevolutionaryandinnovativeERPsoftwaresystemquicklyexpandsinto
other business areas such as finance and retailing. ERP also provides
companieswithacompetitiveadvantageovertheircompetitors.
Important Issues to consider before
Implementation
Beforeintegratingbusinessfunctions,managersmustconsiderseveralimpor-
tant issues that will help them decide whether an ERP integration is the right
choicefortheirorganization(Lau,2003).Thesepertinentissuesareclassified
under the following categories: fundamental issues, organizational change
process,people,andthedifferentapproachestoimplementingERP.

128 Lau
Fundamental Issues
First,managersmustconsiderthefundamentalissuesofsystemintegrationby
analyzingtheorganization’svisionandcorporateobjectives(Jacobs&Whybark,
2000). For instance, does management fully understand its current business
processes, and can it make implementation decisions in a timely manner? Is
managementreadytoundertakedrasticbusinessprocessreengineeringefforts
toyielddramaticoutcomes?Ismanagementreadytomakeanychangesinthe
structure,operations,andculturalenvironmenttoaccommodatetheoptions
configuredintheERPsystem?Istheorganizationfinanciallyandeconomically
preparedtoinvestheavilyinanERPimplementation?
Next, management needs to decide on the key related implementation and
business issues and how to proceed. Certainly, ERP is not suitable for
companies that are experiencing rapid growth and change in an unstable
environment,areundergoingchangeinthecorporatemanagementandphiloso-
phy, or that will be experiencing merger or liquidation in the near future.
Understandably,therewillbemoreforeseeablesystemintegrationproblemsif
oneofthemergingcompaniesisinthemidstofanERPupgradebecauseitmust
dealwithscalability,anewITinfrastructure,andadifferentcorporateculture
simultaneously(Radcliff&LaPlante,1999).Further,ERPintegrationisnot
recommended for companies which require a lot of flexibility to succeed or
whichmanufactureproductsthatareconstantlychanging(Jacobs&Whybark,
2000). Similarly, companies that have very little experience with formal
informationsystemsorhaveconstantlychanginginformationsystemsrequire-
mentswillnotbenefitfromanERPimplementation.
Finally,organizationsneedtoexploitfuturecommunicationandcomputing
technology to integrate the ERP system with e-business applications. Often
times,additionalnewhardwareandspecializedprofessionalsareneededtorun
thepowerfulsoftwaresystem.Dependingonthesizeofthecompanyandthe
modulesinstalled,thecostofimplementationcanrangefromonemilliontofive
hundred million dollars, and will take as long as two years for a mid-size
companyandsevenyearsforalarge,multinationalcorporationtocomplete.
People
People-related issues such as corporate philosophy and leadership style can
play an important role in the ERP implementation process. Research has

concludedthatactivetopmanagementsupportandcommitmentareessential
tothesuccessofanysystemimplementation. Frequently,executivecouncils
andsteeringcommitteesconsistingoftopmanagersaredevelopedtoplanand
manage the IT initiatives (Ross & Weill, 2002). Such senior managerial
involvementtendstoincreasetheoptimizationofITbusinessvalues.
Employeescanbequitewaryofanykindofchangeinthebusinessprocesses,
particularlyduringperiodsofeconomicdownturn.Ill-trainedemployeeswho
fightthechangesinthebusinessprocesstendtobepoorperformers.Therefore,
toincreasethechanceofasuccessfulERPimplementationandtoreduceusers’
resistancetochange,endusers,especiallythosewhoareveryknowledgeable
with the operations, must be involved in all stages of the implementation
process. Employees must also be educated about the ERP installation. Such
educational endeavor should include a concise introduction to the basic
conceptsandarchitectureofERPsystems,includingactualscreenshotsofthe
functionmodules.Duringthesetrainingsessions,itisimportanttodiscussthe
managerialissuesinvolvedandtobuildabasicunderstandingoftheintegration
concepts prior to the actual installation of the ERP system. Further, any
business-to-business initiatives, reengineering projects, alliances, and the
introductionofnewtechnologiesshouldalsobeaddressed.
Projectmanagersmusttakechargeoftheimplementationprocessatalltimes.
Theymustoverseethereengineeringofthekeybusinessprocesses,reassign
job responsibilities, restructure the organization’s chart, and redefine work
relationships. Further, they must also learn how to manage the software
vendorsandanyoutsideconsultants.
The Organizational Change Process
ERPimplementationrequiresorganizationstoreengineertheirkeybusiness
processesinfundamentalways,revampingoldwaysofconductingbusiness,
redefiningjobresponsibilities,andrestructuringtheorganization.Formajor
multinational corporations (MNC), the ERP systems must be customized to
addressglobalissueswheredifferentcountrieshavedifferentwaysofdoing
business,andtoincorporatecountry-specificbusinesspracticespertainingto
accounting,taxrequirements,environmentalregulations,humanresources,
manufacturing, and currency conversion into the integrated systems. While
integrating the information systems across various countries, three types of
misfits(relatingtodata,process,andoutput)canoccurduetoincompatibilities

130 Lau
between software functionality and organizational requirements as well as
differences in cultural and regulatory environments (Soh, Sia & Tay-Yap,
2000).Theuniquecontextofeachcountryinwhichanorganizationoperates
must be carefully enmeshed into the traditionally Western-biased business
practicesinherentintheERPsystems.
Diese et al. (2000) describe an eight-level process that managers can use to
managechange.Thefirststepistocreateacomprehensivechangevisionand
to make the vision operational. Then, a change strategy is defined to assess
readinesschangewithintheorganization,toselectthebestchangeconfigura-
tion, and to establish change governance. The third process is to develop
leadership, in order to lead the change program and to develop leadership
capability.Commitmentfromteamsisbuiltthroughcommunication,managing
resistance, and transferring of knowledge and skills. The fifth process is to
manageemployeeandstakeholders’performancebyestablishingneeds,and
implementingperformancemanagementandpeoplepractices.Businessben-
efitsaredeliveredthroughthebuildingofbusinesscases,andquantifyingand
sustainingbenefits.Thenextprocessistodevelopcultureintheorganizationby
understandingthecurrentculture,andthentodesignthetargetcultureandto
implementculturalchange.Thefinalprocessistodesigntheorganizationby
understandingthecurrentorganization,andthentodesignthetargetorganiza-
tionandtoimplementorganizationalchange.
Different Approaches to Implementing ERP
Another important question for managers to consider is how much to imple-
ment. Depending on the tasks and processes involved in the installation
process, there are several approaches to implementing ERP. For instance, is
theorganizationembarkingonanambitiousjourneyofrevampingthewhole
enterprise using a complete integration, or is the organization employing a
franchisingstrategyofimplementingapartialintegrationacrossafewdivisions
withuncommonprocesses(Koch,2002)?Thecompleteintegrationapproach
was quite popular during the 1990s among the Fortune 500 corporations
because ERP implementation was touted as the perfect solution to the Y2K
problem. On the contrary, the franchise approach is employed by large or
diverse companies that do not have many common processes across the
organizations.IndividualERPsoftwarepackageswiththeirowndatabaseare
installedineachbusinessdivision,whilecommonprocessessharingcommon
information are installed across the organization. This is a good strategy for

companieswhowouldliketoeaseintoERPimplementation,bystartingwith
a pilot installation and slowly moving into other business units. Another
approach is for small companies interested in experimenting with ERP, by
starting with a few key processes or a particular module. Such “canned”
processes would require little reengineering, thereby maintaining minimal
disruption to the daily business operations. However, such IT endeavors
seldomresultinextensivebenefitstotheorganizations.
Thebiggertheorganization,themorecomplexthebusinessprocessesareand
thegreaterthedifficultiesinimplementingtheERPsystem(Brady,Monk&
Wagner,2001). Organizationsconsideringapartialimplementationmustdeal
withtheproblemsassociatedwithusingmultiplevendors.Theyalsoneedto
considersimultaneousversuspiecemealimplementationbecauseoftheripple
effectcausedbydecisionsmadeinonemodule.Ingeneral,inordertomaintain
a smooth transition of the business processes and operations, simultaneous
integrationofthewholesystem,insteadoffunctionalordepartmentalintegra-
tion,ishighlyrecommended.
The ERP Implementation Plan
The flowchart in Figure 1 depicts several activities that must be performed
beforeimplementinganERPsystem.First,managersmustconductafeasibility
studyofthecurrentsituationtoassesstheorganization’sneedsbyanalyzingthe
availabilityofhardware,software,databases,andin-housecomputerexper-
tise, and make the decision to implement ERP where integration is essential
(Buck-Emden,2000).Theymustalsosetgoalsforimprovementandestablish
objectives for the implementation, and calculate the break-even points and
benefitstobereceivedfromthisexpensiveITinvestment.Thesecondmajor
activityinvolveseducatingandrecruitingenduserstobeinvolvedthroughout
theimplementationprocess.
Third,managerswillformaprojectteamorsteeringcommitteethatconsistsof
expertsfromallfunctionalareastoleadtheproject.Afteradecisionismade,
a team of system consultants will be hired to evaluate the appropriateness of
implementinganERPsystem,andtohelpselectthebestenterprisesoftware
providerandthebestapproachtoimplementingERP.Inmostsituations,the
consultant team will also recommend the modules that are best suited to the
company’soperations(manufacturing,financials,humanresources,logistics,

132 Lau
Figure 1. The ERP implementation plan.
Need
ERP?
Hire consultants to
select software and approach
Recommend
modules
and options?
STOP
Convert data and test
Maintain system
No
No
Yes
Yes
Install ERP system
Configure system
Pre-implementation training
Recruit end user involvement
Study organization’s needs
Assemble project team
STOP
Refine system development

forecasting,etc.),systemconfigurations,andbusiness-to-businessapplica-
tionssuchassupply-chainmanagement,customerrelationshipmanagement,e-
procurement,ande-marketplace.
The importance of adequate employee and manager training can never be
overestimated. ITanalystsusuallyrecommendthatmanagersreserve11%of
theproject’sbudgetfortraining. Differentkindsanddifferentlevelsoftraining
mustbeprovidedtoallbusinessstakeholders,includingmanagers,endusers,
customers, and vendors, before the system is implemented. Such training is
usuallycustomizedandcanbeprovidedbyeitherinternaloroutsidetrainers.
Thesysteminstallationprocesswilladdressissuessuchassoftwareconfigura-
tion,hardwareacquisition,andsoftwaretesting.Dataandinformationinthe
databases must be converted to the format used in the new ERP system and
servers and networks need to be upgraded. This is also the time to refine
systemsdevelopment,andensurethatthebusinessfunctionsarealignedwith
ITneeds.Anongoingsystemmaintenancewilladdressissuesandproblems
thatariseduringoperations.Apost-implementationreviewisrecommendedto
ensurethatallbusinessobjectivesestablishedduringtheplanningphaseare
achieved.Neededmodificationsaretackledduringthisphasetoo.
Conclusion
AnERPimplementationisahugecommitmentfromtheorganization,costing
millions of dollars, and can take up to several years to complete. However,
when it is integrated successfully, the benefits can be enormous. A well-
designed and properly integrated ERP system allows the most updated
informationtobesharedamongvariousbusinessfunctions,therebyresultingin
tremendouscostsavingsandincreasedefficiency.Whenmakingtheimplemen-
tationdecision,managementmustconsideredfundamentalissuessuchasthe
organization’sreadinessforadramaticchange,thedegreeofintegration,key
businessprocessestobeimplemented,e-businessapplicationstobeincluded,
andwhetherornotnewhardwareneedtobeacquired.Inordertoincreasethe
chanceofuseracceptance,employeesmustbeconsultedandbeinvolvedinall
stagesoftheimplementationprocess.Providingpropereducationandappro-
priate training are also two important strategies to increase the end-user
acceptancerate.Theorganizationisalsogoingthroughadrasticchange,with
changesinthewaybusinessesareconducted,theorganizationbeingrestruc-

134 Lau
tured,andjobresponsibilitiesbeingredefined.Tofacilitatethechangeprocess,
managers are encouraged to utilize the eight-level organizational change
processrecommendedbyDieseetal.(2000).Managerscanimplementtheir
ERPsystemsinseveralways,whichincludethewholeintegration,thefranchise
approach,andthesingle-moduleapproach.Finally,thechapterconcludeswith
a flowchart, depicting many of the activities that managers must perform to
ensureaproperERPimplementation.
References
Brady, J., Monk, E., & Wagner, B. (2001). Concepts in enterprise resource
planning.Boston,MA:CourseTechnology.
Buck-Emden, R. (2000). The SAP R/3 system: An introduction to ERP and
business software technology. Reading, MA: Addison-Wesley.
Diese, M. et al. (2000). Executive’s guide to e-business: From tactics to
strategy. New York, NY: John Wiley & Sons, Inc.
Jacobs, R., & Whybark, C. (2000). Why ERP? A primer on SAP implemen-
tation. New York, NY: Irwin McGraw-Hill.
Koch, C. (2002, February 7). The ABCs of ERP. http://www.cio.com/
research/erp/edit/erpbasics.html
Lau,L.(2003).ImplementingERPsystemsusingSAP.InM.Khosrow-Pour
(Ed.), Information technology and organizations: Trends, issues,
challenges, and solutions (pp. 732-734). Hershey, PA: Idea Group
Publishing.
Radcliff,D.,&LaPlante,A.(1999,November29).Whenmergermaniahits
ERP. Computerworld, 44.
Ross,J.,&Weill,P.(2002).SixITdecisionsyourITpeopleshouldn’tmake.
Harvard Business Review, 87.
Soh, C., Sia, S., & Tay-Yap, J. (2000). Cultural fits and misfits: Is ERP a
universal solution? Communications of the ACM, 43(4), 47.

Benefit Realisation with SAP: A Case Study 135
ChapterVIII
BenefitRealisation
with SAP:
A Case Study
Graham Blick
Curtin University of Technology, Australia
Mohammed Quaddus
Curtin University of Technology, Australia
Abstract
SAP is one of the dominating enterprise resource planning (ERP) software,
which is used as an essential part of enterprise-wide information systems.
While it can significantly contribute towards an organization’s
competitiveness by increasing efficiencies across various functional units,
it can, on the other hand, bring about disasters if implemented incorrectly.
Literature presents both implementation successes and failures. This
chapter presents a successful SAP implementation in the WATER
CORPORATION in Western Australia. A “Benefit Realisation Strategy
and Realisation Process” was considered to be the key success factor in
the implementation of SAP. The chapter describes the benefit realisation
structureandprocessanddiscusseshowSAPwasimplementedsuccessfully
within this framework. The benefits realisation and its impact are
presented. Finally, future directions are highlighted.

136 Blick & Quaddus
Introduction
ThecurrentwaveofInformationTechnology(IT)-enabledchangeappearsto
bejustthebeginning.Theexpectedlong-termimpactofinformationtechnology
isroutinelycomparedtosuchtechnologiesaselectricity,theinternalcombus-
tionengine,theprintingpress,andeventhewheel.Literaturesuggeststhatits
arrivalrepresentsaneconomicandsocialtransitionasfundamentalastheshift
fromruralagriculturetourbanindustry200yearsago,duringthefirstIndustrial
Revolution. Information technology is capable not only of enabling a new
economicinfrastructureforindustry,butalsooftransformingsociety–how
peoplework,shop,play,andgotoschool.Forexample,advancedinformation
andnetworkingsystemsarechangingthewaywedoresearch,communicate
knowledge, learn, publish, and manage intellectual property. Information
technologiesarecombiningtheengineeringpowerofmassproductionwiththe
intellectualcapabilitiesofthemodernlibrary,publishing,andbroadcasting
systems (Thorp, 1998).
Atthemoment,however,thereisabigpracticalproblem.Thetrackrecordof
informationtechnologytodateisunevenanditishardtofigureoutwhatmakes
forasuccessfulITinvestment.Inpracticalterms,itisdifficultforevenlarge
corporationstopredicthowmajorinvestmentsinnewinformationsystemswill
turn out, or how many months and years will go by before these investments
produce solid economic returns, if they ever do. Few of the executives
approvingthesemultimillion-dollarinvestmentshaveaclearideaoftheresults
thattheyexpecttoget,orwhethertheyactuallyachievedthebenefitswhenthe
moneyisspent.Thisisnotatechnologyproblem–itisabusinessproblem.It
isaboutrealisingthepotentialvalueofinformationtechnologytotheorganisation.
Understandinghowtodealwiththisproblemisanimperativeforallbusiness
managers,andforthosewhoareembarkingontheacquisitionandimplemen-
tationofSAPitisfundamental(Thorp,1998).
SAP is a complex system. It therefore needs a different approach for its
implementation and benefits to be realised. It brings about its own culture,
whichneedstobeadaptedwithintheexistingorganisationalculture(Krumbholz
&Maiden,2001).Attheheartoftheproblemisafundamentalchangeinhow
organisationsareusingSAPandtheinformationprovidedbythattechnology.
Unlike other IT applications, implementation of SAP needs fundamental
changeinthebusinessprocessandessentiallyinvolves“changemanagement
implementation” (Mandal & Gunasekaran, 2003). Unfortunately, it is not

always easy to achieve. Krumbholz and Maiden (2001) point out that ERP
implementation projects were, on average, 178% over budget, took two and
halftimeslongerthanintended,anddeliveredonly30%ofpromisedbenefit.
Cruxoftheproblemwasanimproperimplementation.
ThischapterpresentsacasestudyonthesuccessfulimplementationofSAPR/
three in the WATER CORPORATION of Western Australia (WA). As a
resultofamajorlong-terminformationmanagementplanning,thecorporation
adoptedaplantoimplementSAPR/3inordertointegrateitsvariousfunctional
areas. Sensing that major changes are needed in its business processes, the
corporationcameupwithabenefitrealisationstrategyandrealisationprocess
inordertoimplementSAPsuccessfully.Thethrustofthischapteristodescribe
howthisbenefitsrealisationprogramwasstructuredandimplementedinorder
tosuccessfullyimplementtheSAPR/3.
InthenextseveralsectionswefirstprovidebackgroundliteratureonERPand
SAPwithrespecttotheirimplementations.TheWATERCORPORATIONof
WA case is then presented. The benefit realisation structure and process are
thendescribedindetailwithrespecttoSAPimplementationinthecorporation.
The expected benefits, benefit realisation and its impact are next presented.
Finally,conclusionsarepresented.
Background Literature
Implementationofinformationsystemshasbeenwidelyresearchedoverthe
lasttwodecades(Cooper&Zmud,1990;Kwon&Zmud,1987;amongmany
others).Anumberofhigh-levelfactors,suchasindividual,structural,techno-
logical,task-related,andenvironmental,havebeenfoundtoaffectthesuccess-
ful implementation of information systems (Kwon & Zmud, 1987). Most of
thesestudieswere,however,conductedinthecontextoftraditionalfunctional
informationsystems.Enterpriseresourceplanning(ERP)software,ofwhich
SAP is the market leader, brings extra complexities in the implementation
process. ERP needs a deep appreciation of both operational and strategic
impactsontheorganisation,andveryoftenthatsuccessfulimplementationoften
resultsinaculturalshift.Inwhatfollowswepresentabriefreviewofsomepast
literatureontheimplementationofERP/SAP.

138 Blick & Quaddus
Nahetal.(2001)conductedacomprehensivereviewoftheliteratureandfound
11factorsthatarecriticalinthesuccessfulimplementationofERPsystems.
Theseare:ERPteamworkandcomposition;changemanagementprogramand
culture;topmanagementsupport;businessplanandvision;businessprocess
reengineeringwithminimumcustomisation;projectmanagement;monitoring
andevaluationofperformance;effectivecommunication;softwaredevelop-
ment,testingandtroubleshooting;projectchampion;andappropriatebusiness
and IT legacy systems. It is noted that monitoring and evaluation of perfor-
manceisoneofthe11criticalfactors,whichisthesubjectofthischapter.Al-
Mashari et al. (2003) developed a taxonomy of critical success factors of
successfulERPimplementation.Itisalsonotedthatperformanceevaluationof
ERPsystemsisoneofthemostimportantfactorssuggestedbytheauthors.In
another study, Umble et al. (2003) presented a list of nine critical success
factorsforERPimplementation,suchas:clearunderstandingofstrategicgoals,
commitmentbytopmanagement,excellentprojectmanagement,greatimple-
mentation team, data accuracy, extensive education and training, focused
performance measures, and multi-site issues. It is noted that these factors
overlap to a great extent with the factors presented by Nah et al. (2001). The
authors also presented a case study and discussed how the nine factors were
addressed by the company in implementing an ERP system. Hong and Kim
(2002)identifiedcriticalsuccessfactorsofERPimplementationsintermsof
“organizational fit of ERP” and “contingency variables”. Based on a cross-
sectional survey the authors concluded that ERP implementation success
significantlydependsontheorganisationalfitofERPandcertaincontingency
variables.
Mabert et al. (2003b) studied the ERP implementation process in US manu-
facturing companies. The authors stated that a typical ERP implementation
tookanywherefromonetofiveyears.Theyalsodidacomparativeanalysisof
on-timeandon/under-budgetwithlateandover-budgetERPimplementations
using logit (logistic) regression models. The results indicated a number of
factorstobesignificant,includingpre-implementationplanningandsystem
configuration. In a related study, Mabert et al. (2003a) conducted a two-
phasedstudyofERPimplementations(casestudiesfollowedbysurvey)ofUS
manufacturing companies. Key finding of this study was that companies of
different sizes approach ERP implementations differently, and the benefits
realised are also dependent on company size. The authors found that “larger
companies report improvements in financial measures, whereas the smaller
companiesreportbetterperformanceinmanufacturingandlogistics”.Abdinnour-

Helm et al. (2003) did an interesting study. The authors wanted to find out if
pre-implementationinvolvementandtraininginERPresultinacceptanceand
effectiveimplementationofERPsystems.Basedonsurveyinalargeaircraft
manufacturingorganizationintheUSA,theauthorsconcludedthat,“contrary
toconventionalwisdom,extensiveorganizationalinvestmentsinshapingpre-
implementationattitudesdonotalwaysachievethedesiredeffects”(Abdinnour-
Helm et al., 2003). However, it must be recognised that the study was
conductedonlyinoneorganisation,andatonepointintime,thuslimitingits
generalisation.Inalongitudinalstudy,Huttonetal.(2003)examinedtheimpact
ofERPadoptiononfirmperformance.Theauthorsfoundthatoverathree-year
periodERPadoptingfirmsshowedsignificantlybetterfinancialperformance
compared to the non-adopters. Also, during the same time, financial perfor-
manceofthenon-adoptersdecreased,whileitstayedsteadyfortheadopters.
Rajagopal (2002) studied the implementation of ERP taking an innovation
diffusionperspective.HeexaminedimplementationsofERPinsixmanufactur-
ingfirmsviaqualitativeresearchprocessusingthesix-stagemodelproposed
byKwonandZmud(1987).Theauthordevelopedacomprehensivemodelof
ERPimplementation,whichneedstobetestedinalargesampleoffirms.Ina
comprehensivestudy,StratmanandRoth(2002)developedeightERPcom-
petencyconstructsthatarepositedtoresultinimprovedbusinessperformance
aftertheERPsystemisoperationalinanorganisation.Theauthorsusedthehigh
levelconfirmatoryfactoranalysis(CFA)techniquetotestthereliabilityand
validity of the constructs. Their study, however, did not extend to test the
impactoftheseconstructsontheimprovedbusinessperformanceduetoERP
implementation.SarkerandLee(2002)presentedthreekeysocialenablers–
strong and committed leadership, open and honest communication, and a
balancedandempoweredimplementationteam–astheprecursorsofsuccess-
fulERPimplementation.Takingapositivistcasestudyapproach,theauthors,
however,foundthatonlystrongandcommittedleadershipcouldbeestablished
asanecessaryconditionofsuccessfulERPimplementation.Theauthorscallfor
more research in this area to establish facts.
Inacomprehensivesurveyof158Swedishmanufacturingfirms,Olhagerand
Selldin(2003)identifiedalistof10benefitsthatthefirmsexperienceddueto
ERPimplementations.Toppingthelistwere“quickenedinformationresponse
time” and “increased interaction across the enterprise”. The authors also
reportedtheimportanceofpre-implementationprocess,implementationexpe-
rience, and ERP system configuration. Mandal and Gunasekaran (2003)
reportedtheirexperiencesofERPimplementationinaWATERCORPORA-

140 Blick & Quaddus
TIONinAustralia.Theauthorsfoundthreedistinctphasesofpre-implemen-
tation,implementation,andpost-implementationstrategiestobesignificantin
thesuccessofERPimplementationinthecorporation.Theauthorsalsooffered
specificstrategiestobefollowedinanyfutureimplementationofERPsystems.
In an interesting study, O’Leary (2002) investigated the use of knowledge
management, specifically case-based reasoning, across the entire ERP life
cycle.Theauthorreportedhowcase-basedreasoningcanbeeffectivelyused
inERPsystemchoice,implementationanduse.Aprototypesystemwasalso
presented.KrumbholzandMaiden(2001)highlightedtheneedforadapting
ERP systems to fit with the organisational and national culture. Based on an
empirical study in a large pharmaceutical organization in Scandinavia, the
authorsreportedtheevidenceofastrongassociationbetweenorganisational
cultureandsuccessfulERPimplementation.
This review is not comprehensive. It is observed, however, that most of the
studiesonERPimplementationsprimarilydealwithidentifying(andsometimes
testing) various critical factors. The range of studies varied from theoretical
opinion-basedtodeepmodelbuildingandtestingquantitativelyinasampleof
firms. The notion of “benefit” came across in almost all the studies, either
directlyorindirectly.Noformalstudy,however,wasavailabletorealisethe
benefit in an effective way, nor was the benefit notion used in any study as a
meanstoimplementERPsuccessfully.
This chapter addresses this gap and presents a case study of a benefit
realisationprogramtoimplementERPsuccessfullyintheWATERCORPO-
RATIONofWesternAustralia.
The WATER CORPORATION of
Western Australia
The WATER CORPORATION of Western Australia (http://
www.watercorporation.com.au/)istheonlyorganisationinWAthatprovides
water, wastewater, drainage and irrigation services to 1.7 million people
throughout Western Australia. The Web site of the corporation describes its
servicesasfollows:

“The Water Corporation is one of Australia’s largest and most
successful water service providers with nearly A $9 billion in-
vested in water services infrastructure. The Water Corporation
enjoys an excellent performance record, benchmarked against
world standards, and we use our 100 years of commercial and
technical expertise to provide the most cost effective and suitable
business solutions for our customers.
We are one of the world’s more unique water utilities, providing
world class water and wastewater services to the burgeoning city
of Perth and hundreds of towns and communities spread over 2.5
million square kilometres. We also provide drainage and irrigation
services to thousands of households, businesses and farms across
the State.
We take pride in the leading role our organisation has played in
developing the vast and diverse State of Western Australia par-
ticularly in the areas of customer service, planning, technology,
and our corporate wide commitment to our environmental respon-
sibilities.”(http://www.watercorporation.com.au/,accessedonMay
19, 2003)
The WATER CORPORATION was increasingly facing some major chal-
lengesintheformoftighterregulationandcompetition,inoneformoranother.
InternationalutilitiesareexpectedtoactivelyseekopportunitiesintheAustra-
lianmarket,andarealreadycompetinginsomeinstances.TheCorporation’s
directionasoutlinedinitsStrategicDevelopmentPlan,anditsactivepursuitof
performanceimprovementareclearindicationsthattheCorporationseeksto
ensure its competitiveness by adopting “best practices” throughout the
organisation.ThereisoverwhelmingevidencethattheCorporationwillsimply
be unable to meet the requirements of a regulated competitive environment
whileitcontinuestorelyonthemanagementinformationprovidedtoitbyits
current systems (Water Corporation of W.A. –1997 A).
InMay1997theWATERCORPORATIONcompletedamajorinformation
managementplanninginitiative(the“CorporationInformationManagement
Strategy”)toidentifythestrategicinformationneedsoftheWATERCORPO-
RATION through 2002. In doing this, consideration was given to the
Corporation’scurrentinformationsystemsandtechnologyenvironment,to

142 Blick & Quaddus
identifyaprogramofworkaimedatpositioningtheCorporationtomakecost
effective use of information and information technology in undertaking its
business. A key finding of the plan was that the existing suite of information
systemslackedthefunctionalitytosupportbothcurrentandemergingbusiness
requirements.Inparticular:
• The current systems comprise a combination of “in house” developed
solutionsandcommercialpackages.Themajorityoftheexistingsystems
aremorethan10yearsoldandrequiresignificantongoingmaintenance
and support;
• The systems utilise individual databases with data being exchanged
throughasetofcomplexinterfaces;asaconsequencedataarefrequently
enteredseparatelyindifferentsystems,resultinginduplicationofeffort
andinconsistenciesinthedata;
• Asaresultofthelackofintegrationbetweensystems,implementationof
proceduralordatachangesinanysystemrequiressimilarmanualchanges
to be made in other relevant systems;
• No existing corporate systems are in place to support project manage-
mentorcontractmanagementactivities;thisrepresentsamajorshortcom-
inggiventhemagnitudeofCorporationexpenditureoncapitalinvestment
andservicedeliverycontracts;
• Asaresultofthesystemlimitations,accesstomanagementinformationon
many key business processes is limited, with data frequently being
unreliableandoutofdate.
Inthelightoftheabove,akeyrecommendationoftheCorporateInformation
Management System was to investigate the feasibility of replacing existing
corporateapplicationswithanintegratedcontemporarysolution(WaterCorpo-
ration of WA, 1997a – 1997d). In December 1997, a decision was therefore
made by the board of the WATER CORPORATION to implement and
integratekeybusinesssystemsusingtheSAPR/3packagedsoftwareaspart
ofthe“System2000project”.TheCorporation’simplementationofSAPR/
3wasconsideredtobemuchmorethantheupgradingofsystemstomeetYear
2000requirements.ItwasanessentialstrategicsteptoenabletheCorporation
tosucceedagainstthecompetitionthatwillemergeinthenextseveralyears.

Benefit Realisation Program
Business Case for SAP R/3
The “Systems 2000 Project” of the WATER CORPORATION prepared a
business case for SAP R/3. It included a detailed cost justification for the
implementationofallofthefunctionalitiesofSAPR/3.
TheCasewasbuiltaroundastructureidentifyingthemajorsourcesofcostsand
benefitsfromimplementingSAPastheCorporation’sinformationsystem(over
alifeofeightyears).SAPImplementationandOn-goingCosts(Costs),netof
Avoided Legacy System Costs (Avoided Costs) are subtracted from the
ProcessImprovementBenefits(Benefits)resultingfromtheSAPimplementa-
tion, to reach the Net Savings. The Costs, Avoided Costs and Benefits were
analysed using accepted WATER CORPORATION investment financial
modelstoformthebasisfordecision-making(assistancewassoughtfromthe
“CommercialDivision”oftheWATERCORPORATIONinvettingallmodels
andassumptionsused).
Therewereassumptionsbehindeachprimaryarea’sCosts,AvoidedCostsand
Benefits, which were detailed in the full report. For example, one important
assumption was the implementation timeline used in the business case. The
timelinewassubjecttoadjustmentsthatwillaffectthetimingofcosts.Tocater
forsuchuncertaintiesacontingencyhadbeenincludedintheprojectbudget.
The results from the business case indicated an after-tax Net Present Value
(NPV)ofA$22.01millionbasedoncostsofA$39.76millionoveraneight-
year period. The NPV equated to an internal rate of return of 33% and
investmentpaybackinthreeyears. Mostofthecostswouldoccurduringthe
first two years of implementation and were more than offset by the benefits
resulting from implementation of SAP in the following years. Internal and
consulting resources accounted for 66% of the one-off costs. Other ongoing
costssuchasannuallicencefeesandconfigurationandapplicationdevelop-
ment (ABAP) support were also a significant component of total costs. The
mainavoidedcostsrelatedtonothavingtorepairexistingsystems,including
financials. The two areas with the largest percentage of total benefits were
Projects (Capital Works)—44% and Finance—23%.
This report recommended that the WATER CORPORATION proceed with
theSAPimplementationbasednotonlyonthequantifiablebenefits,butalsothe

144 Blick & Quaddus
qualitativebenefitsthatwillaccrue.Suchqualitativeitemsincludedimproved
organisational decision-making; improved issue resolution through system
integrationanduser-friendliness;andenhancedservicetoexternalandinternal
customers. The initiative was in alignment with the Corporation’s strategic
informationtechnologyplan(CIMS)andwouldtightlyintegrateinformation
withinthefirm’smission-criticalandreportingfunctions.
Benefit Realisation Structure
Services of Deloitte ICS consulting were used to implement the operational
aspectsofSAPR/3.Itwasfelt,however,thattoreapmaximumbenefitthere
needed to be a culture-shift and associated behavioural changes in the
Corporation’smanagementandstaff.Itisthissupportingprogramofcultural
changethatwillultimatelyensuretherealisationandcontinuousreinforcement
of thebenefitsidentifiedforeachoftheprocessstreams.SAPR/3alonewill
deliver only a fraction of the benefits identified if the implementation is not
complementedbyvigorousexecutiveleadership.Fundamentalculturalchanges
are required to bring about a commercially aware and operationally astute
WATER CORPORATION of the future.
AprojectmanagementapproachwasthereforeundertakentoimplementSAP.
Literature reveals that in order to implement complex systems like ERP
software a project and program management approach must be undertaken
formally (Ribbers & Schoo, 2002; Weston, Jr., 2001). In WATER
CORPORATION’scaseaformalprojectwasdefinedforSAPimplementa-
tion and within this project a “Benefit Realisation Strategy and Realisation
Process”wasconsideredtobeacriticalfactorinordertodealwiththechange
managementprocessandthusmaximisetheimplementationprospectsofSAP.
Itwasalsorecognisedthatthebenefitsidentifiedforthebusinesscasewould
needrefining,anddiscussionon“Redesign”ofthebusinessprocessproceeded
andtheimpactofthenewprocessesbecamemoreclearlyunderstood.Inother
wordsbenefitrealisationforSAPisnotstatic;itisverymuchdynamic.Theend
users must be aware of the benefits of SAP in a formal and ongoing way.
Thebenefitrealisationprogramofthecorporationwasconsideredtobevital
forthesuccessfulimplementationofSAP.Itwasstructuredasfollows.

The Benefits Management Office
ABenefitsManagementOfficewasestablishedtomaintainstewardshipofthe
benefitsrealisationprocess,theresultingdocumentationandknowledgeassets
arisingacrossallprocessstreams.Theofficehadfourfull-timeandthreepart-
timeemployees.Therolesincluded:
• Supportingthecreationofbusinesscasesandfundingproposalsforout
ofscopeinitiativesandnewinitiatives,byinterpretationoftheassociated
benefitimplications,thatis,dollars,timing,resourcesandsoforth.
• Monitoringtheidentifiedintangiblebenefitsforreviewandreportingtothe
WATER CORPORATION as part of the ongoing process of cultural
change.
• Revisingthepreferredrealisationscenariotoreflectthelatestinformation
onrealisedbenefitsaswellascontinuinganyproposedinitiatives.
• Communicationtoallstakeholdersaboutbenefitsdelivered.
The Benefits Register
Abenefitregisterwascreated.Followingsign-offofthebenefitinitiatives,it
wasappropriatetoformallyregisterthebenefits.Thisrequiredthecreationof
abaserecordintheBenefitsRegisterdatabase.TheBenefitsRegisterbecame
thebasisfortheformaltrackingofthebenefitrealisationforeachoftheagreed
initiatives.TheregisterwasmaintainedbytheBenefitsManagementOffice,and
containedthefollowingsections:
• RegisterofInitiatives– contained all data related to the benefits, their
measurementandassignedaccountabilitiesforrealisation.
• BenefitsRealisationStatus–containedinformationrelatedtophysical
trackingofregisteredinitiatives.Thiswouldincludeprojectsundertaken,
progress reports, benefits generated, and costs incurred.

146 Blick & Quaddus
Benefit Realisation Process
Figure 1 shows an overview of the benefit realisation process, which was
undertaken at the WATER CORPORATION.
It consists of three phases:
• Define the Benefits Rationale – This phase established the overall
contextforthechangethatwasproposedthroughtheimplementationof
SAP R/3.
• Define the Plan – Having defined the rationale, the approved benefits
realisationinitiativeswereplannedintermsofactivities,responsibilities
andtiming.Theplanwasprimarilyoutcomefocused.Benefitsarisingwere
measured at the major initiative level. The focus was on the explicitly
identifiedsegmentsthatprovidedthegreatestmeasurablepayback.
• MonitorandRealisetheBenefits–Benefitsrealisationplanprogress
was monitored on an ongoing basis. Accountability for realising the
benefits rested with the Process Owners, supported by a Benefits
ManagementOffice.ThebenefitsachievedweremonitoredviaaBenefits
Register(asdescribedearlier).Whenunexpectedissuesarose,theimpact
wasanalysedandasaresultdownstreamplansmightchange.Thisphase
usedtobeginwiththecommencementofsign-off,andcontinuedthrough
theentirerealisationprocess.
Figure 1. The benefit realization process.
Define
Benefits
Rationale
Define
The Plan
Monitor &
Realise the
Benefits

Defining the “Realisation Plan”
Definingthe“RealisationPlan”wasconsideredtobeaninvolvedprocess.As
indicatedearlieritinvolvedfindingtheactivities,responsibilitiesandtiming,and
itwasoutcomefocused.Figure2showstheprocessthatwasfollowedinorder
todevelopthe“RealisationPlan”.
The process involved three major phases: set the current baseline (“as-is”
position),developtargetbaseline(“to-be”position),andpreparetherealisa-
tionplan(implementationframework)(seeFigure2).Thebenefitrealisation
builds on prior work undertaken for the business case and seeks, with the
benefitsofadditionalinformationandanalysis,tovalidatethefindingsofthe
business case and identify additional benefits. Finally, a realisation plan is
developed to set out how the Corporation will realise the benefits and what
initiatives must be put in place in order to achieve them. The work plan
incorporates a number of inputs, including the results of the “Visioning and
Targeting phase of Systems 2000,” the incorporation of world’s “best prac-
tices” and “benchmarking” data, the outputs of the “process redesign work-
shops”and“interviews”withWATERCORPORATIONstaff.
Figure 2. Process for realization plan.
Current
Baseline
Quantified
Improvements
Improvement
Opportunities
Realisation
Plan
Target
Baseline
Best
Practices
Workshops Interviews
Visions
Benchmarks

148 Blick & Quaddus
Expected Benefits and Impact of Benefit
Realisation
Expected Strategic Benefits with SAP
Before SAP was implemented a detailed list of “expected” benefits were
worked out. The project team along with outside consultants identified the
followingstrategicbenefits:
• Increasedcustomersatisfaction
• Fasterresponsetoregulatoryreportingdemands
• Increasedcompetitiveadvantage
• Support alliances,mergers,andacquisitions
• Improvedbusinessdecisions
• Processintegrationandimprovement
• Improvedaccesstoinformation
• Integrateculture
• Improvedflexibility/adaptability
• Benchmarkpartnerships
• Improvedemployeeflexibility
Expected Operational Benefits
The expected operational benefits were centered on the following areas:
Projects,FinanceandMaterialsmanagement.
In the area of projects, the WATER CORPORATION of WA spends
approximatelyA$275milliondollarsperannumonitscapitalprogram.Fora
numberofreasonsincludingapprovedscopechanges,landaccessproblems,
latentconstructionconditionsandresourceavailability,projectsareoftennot
completedwithintheirestimatedtimeframes.Thiscontributestoprojectcost
over runs. In addition, the current lack of systems integration, caused by the
existence of a number of disparate systems (Works, CIP, General Ledger,

PrimaveraP3),generatesinefficienciesinthemanagementandadministration
of projects and contracts. The implementation of SAP R/3 was expected to
benefittheCorporationbyprovidingtoolsthatwillenableprojectmanagers
andsupportstafftofocustheireffortsondeliveringqualityoutcomesratherthan
expending effort on the current cumbersome reporting and administration
process.Thisshouldresultin:
• Lower project management costs and/or an improved focus on quality
projectoutcomes.
• Improvedproject-reportinginformationhighlightingthecausesofesti-
matevariationsandprovidingameansfortakingcorrectiveactionanda
basisofcontinuousimprovement.
ThiswouldallowtheCorporationtorealisequantifiablebenefits(netofcosts)
thatequatetoA$24.85millioninpresentvaluetermsoveraneight-yeartime
horizon.
In the Finance area, SAP functionality would enable a significant amount of
process change to occur as a result of:
• Streamliningofprocessingeffort,
• Streamliningofdatagathering,compilation,andpresentation,
• Reductionindatavalidationanderrorcorrection,
• Eliminationofduplicatedataentrypoints,
• Consistencyofinformationenablingefficientinformationsharing,
• Consistentpracticesandbusinessrulesenforcedthroughthesystem,
• Visibilityofinformationacrossfunctionalboundaries,and
• Improveddatainterrogationcapabilities.
that equate to A$13.03 million present value terms over an eight-year time
horizon.
Inmaterialsmanagement,SAPfunctionalitywouldenabletheCorporationto
realisequantifiablebenefitsintwokeyareas:

150 Blick & Quaddus
• Discountsthroughsupplierrationalisationandstrategiccontracts.
• Improvedinventorymanagement.
In the area of supplier rationalisation and strategic contracts, the use of SAP
functionalityandtoolswouldassisttheCorporationinselectingthesuppliersit
wishestoenterintocontractswithbyprovidingvendorevaluationandflexible
reporting from summary to detailed level. The decision support capability
provided by SAP will need to be supplemented by additional resources to
negotiate and set up contracts.
Intheareaofimprovedinventorymanagement,strongintegrationwithProject
schedulesandWorksManagementscheduleswouldprovidetheopportunity
to use the integration of SAP to alter the requisition dates in the Material
ManagementModuletoreflectslippageinProjects,therebyreducingtherisk
ofunnecessarystockpilingofinventory.
thatequatetoA$11.50millioninpresentvaluetermsoveraneight-yeartime
horizon.
Besides the above quantifiable benefits the project team also came up with a
listofintangiblebenefitsforvariousfunctionalareasthatwillcomeaboutdue
toSAPimplementation.
Benefits Realisation and Its Impact
Astructuredapproachtodevelop“targetbaselines”(seeFigure2)andbenefits
for each SAP sub-system was effected, and was undertaken by external
consultants and internal business representatives. The outcomes included a
seriesofrecommendedbusinesschangestomaximisebenefitsfromSAP,such
ascentralisingHR/Payroll,LogisticsManagement,FinanceandControlling,
andtheprocessingfunctionsassociatedwithPlantMaintenance.
ProcessManagementprinciplesweredevelopedintheVisioningPhaseofthe
SAPProjectbyadoptingthe“IndustryProcessPrint”.TheprocessModelwas
furtherdevelopedandacceptedduringthecurrentBenefitsRealisationphase.
Thispavedthewayforbreakingdowncross-functionalorganizationalbarriers
thathinderedchangeandplacedresponsibilityonProcessOwnersforleading
theimplementationofchangeinitiatives.

SAP is also being used by the business as a process improvement tool. For
example, an HR Service Centre was implemented, where a new central
function was created to reduce transactional staffing numbers Corporation-
widealongwithimprovingtheprocess.Sharedbusinesssupportfunctionsmay
alsobereviewedtoimproveoperationaleffectiveness,achievesavingsforthe
business, and reduce staffing numbers, such as Logistic Services (Material
Management Process). There is potential for similar benefits in the Plant
MaintenanceProcessfromcentralisingtransactionalfunctionsassociatedwith
Work Order feedback and employee Daily Time Sheets.
Systemfunctionalityandintegrationhasprovidedthebusinesswithopportuni-
tiestocommerciallybenefitfromcentralisingsomeofitsfunctions.Thereisno
reasonwhythisshouldnotcontinue,iftherearesoundcommercialopportuni-
ties,andnonegativeimpactonbusinessperformance.
TheBenefitsRealisationprocesshasfocusedonalong-termviewincontrib-
utingtothedevelopmentofaculturalchangeinthebusiness.Ithasdonethis
bydevelopingprocessesandtools,including:
• BenefitsDeliveryImplementationProcessandTools,incorporating:
• OperatingPrinciplesForLeadingOrganisationalChange
• CommunicationandStakeholderEnrolmentStrategy
• BenefitsRealisationGroupRelationships
• HighLevelGenericImplementationPlanandTimeLine
• LowLevelGenericImplementationPlanandTimeLine
• Arequirementforastructuredmethodologytodeliverprocessimprove-
mentsandprocessre-engineeringbusinessgains.
• ABenefitsRealisationStrategyincorporatedinanychangeprocessand
businesscase.
• Anongoingemployeeeducationanddevelopmentstrategyisinplace.
• AccountabilityforthedeliveryofbenefitsbyProcessOwners,Custodi-
ansandManagersaredefinedandagreedpriortotheimplementationof
anychangeprocesstoassistthemtodrivefullrealisationofbenefitswithin
anestablishedtimeframe.
• TheBenefitsRealisationGroupprovidingthetoolsandsupporttoenable
ProcessOwnerstoleadtheimplementationofinitiatives.

152 Blick & Quaddus
• The Benefits Realisation process focusing on providing a consulting,
facilitation, and advisory service, including the provision of business
processes and tools.
• Integration,coordination,andcooperationbetweenallimpactedsectors
ofthebusinessfromcommencementofthechangeprocess.
• Businesssavingsbeingrecordedandreported.
• Process Custodians and Process Managers monitoring and reporting
regularlytotheexecutiveontangibleandnon-tangiblebusinessbenefits
asaresultofchangeinitiatives.
Survey
TomeasuretheimpactofbenefitrealisationandSAPimplementation,abenefit
survey was undertaken to get a view from the end users. Outcomes of the
surveywereintendedtoprovidethefollowing:
• Anappreciationwithindivisions,regions,andbetweenSAPprocessesof
the system’s impact on the business and work practices;
• Information to assist with the planning and implementation of a SAP
version upgrade and associated delta teams; and
• AbaselineuponwhichfutureproductivityimprovementsofSAPimple-
mentation and the upgrade could be measured.
TheBenefitsRealisationGroupdesignedtheSAPBenefitsSurvey,whichwas
administeredthroughouttheCorporation(acrossallstrategicbusinessunitsof
theWATERCORPORATION)inNovember2000.ThesurveyusedaLikert
scaleforvariousbenefitmeasures.Twelvehundredendusersweredistributed
withthequestionnaire.Theresponseratewas37.5%,withasatisfactorylevel
ofparticipationfrommostareasofthebusiness,includinganalliancepartner
Serco,Australia.
Overall Survey Outcomes
The overall findings from the SAP Benefits Survey are summarised in the
following:

• SAP technology has been embraced by the business.
• Therehasbeenasignificantpositivechangeinworkpractices.
• SAP offers greater access to information, better integration and design
thanlegacysystems.
• InfrequentusersfindSAPtobecomplexandnotveryuserfriendly,thus
havingahighdemandforsystemsupport,relianceonothers,andtraining.
• Anincreaseinproductivityandtimespentoninnovativesolutionstowork
problems.
• More time spent at work, mainly due to increased workloads and staff
reductions.
• Trainingprovidedhasbeensatisfactory.
• 86% of respondents had attended a SAP overview course.
• 73%hadattendedSAPmodule-specifictraining.
• Reporting is difficult, causes frustration and does not support business
needs. Respondentsindicatedthatthedifficultiesassociatedwithgener-
atingreportsinhibitedtheirabilitytomeetperformancetargets.
• HighdegreeofconfidenceintheaccuracyofinformationfromSAP.
• Levelofduplicationinwork.
• Employeesareconfidentintheirunderstanding,applicationandoptimisation
of SAP; however, they are not fully aware of the potential of SAP.
• Infrequent users rely on support staff to operate SAP as it is difficult to
masterifnotusedregularly;thatis,thesystemisnotveryuserfriendly.
• Quality and effectiveness of SAP have outweighed other information
technologyandbusinessrelatedproblems.
Significant Results
Considering the responses to the survey questions, and from the comments
provided,respondentshavespecificallyidentifiedopportunitiesfortheCorpo-
rationtoimproveinthefollowingareas:
• Betterreportingfacility.
• Remote access for country users.

154 Blick & Quaddus
• Advancedtraining,jobspecifictraining,tailoredtoemployeegroups,and
moretimetolearn.
• BetterinterfacebetweenSAPandothercorporatecomputersystems,for
example,Grange.
• LessduplicationbetweenSAPandmanualprocesses.
• Improve the “friendliness” of SAP – system down time, lock outs,
passwords, cheat sheets, short cuts.
• The amount of time spent on IT problems.
• Reducebureaucracy.
Conclusions and the Future
OrganisationshavestruggledovertheyearstoimplementSAPsuccessfully.
Althoughtheliteratureisfullofcasestudiesonfactorsandvariables,opera-
tional studies on successful SAP implementation is relatively scarce. This
chapter presents an operational case study on how SAP was successfully
implemented in the WATER CORPORATION of Western Australia. A
benefitrealisationprogramwasembeddedintheprojectofimplementingthe
SAP.Thisbenefitrealisationprogramwasconsideredvitalinthesuccessful
implementationofSAP.
The chapter discusses the structure and process of the benefit realisation
program.ItalsopresentshowthebusinesscaseforSAPwassuccessfullybuilt
fortheWATERCORPORATION.Finally,thechapterpresentstheexpected
and actual benefits that were realised due to the implementation of SAP via
survey on the users of SAP.
AftersuccessfullyimplementingSAPandmonitoringitsoperationsforabout
twoyearstheWATERCORPORATIONdecidedtoformallyclosethebenefit
realisation group and integrate it into the business. This was done via the
deliveryofatrainingprogramtoseniorlinemanagersonthebenefitrealisation
methodology and toolsets. The responsibility of delivery of benefits was
incorporatedinthecorporateaccountabilitymodelandreportingonbenefits
wastransferredtomanagementaccounting.Atthetimeofitsclosurethebenefit
realisationgroupachievedatotalsavingsofA$14.91millionfortheWATER
CORPORATION in about 14 months. More importantly, it also helped to

developa“benefits”culturewithinthecorporationandmaintainedaconstant
focusonbenefitsdeliveryandkeyissueresolution.
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158 Ash & Burn
ChapterIX
Thee-ERP
TransformationMatrix
Colin G. Ash
Edith Cowan University, Australia
Janice M. Burn
Edith Cowan University, Australia
Abstract
A model of e-business transformation is developed for ERP enabled
organisations, based on the findings of a longitudinal multiple case study
analysis of SAP sites. The model is represented as a matrix along three
stages of e-business growth. The theory embedded within the matrix
recommends that successful e-business transformation with ERP systems
occurs when B2B value propositions are realised through integration and
differentiation of technologies, used to support new business models for
delivering products and services online. In addition, the management
focus evolves through employee self-service and empowerment towards
extensive relationship building with e-alliances. The matrix can be used
by ERP business managers to guide their strategies for organisational
transformation but also highlights critical stages of change.

The e-ERP Transformation Matrix 159
Introduction
This chapter presents the results of a longitudinal analysis of e-business
implementationsthroughERP(e-ERP).Thisinvolvedastudyof11interna-
tional organisations over a four-year period using multiple interviews and
extensive secondary data collection. Three separate research models were
used to analyse different stages of e-business growth and the results of this
multi-stageanalysisconsolidatedintoamodelofe-businesstransformation.
Thisbringstogethertheantecedentsofe-businesssuccessusingthefindings
fromcaseanalysesagainstthreeseparateresearchmodels:B2Binteraction,e-
businesschange,andvirtualorganising.
Asinglemodelofe-businesstransformation(eBT)isproposedthatfocuseson
realisingthebenefitsofB2Binteractionfromvirtualorganisingbyutilisingthe
facilitators of successful e-business change. This model of eBT represents a
comprehensive view of e-ERP as the fusion of the three research models,
mappedintovariousstagesofe-businessdevelopment:integration,differentia-
tion,anddemonstrationofvaluepropositions.Theauthorsarguethatsuccess-
ful e-business transformation with ERP occurs when value propositionsare
realised through integration and differentiation of technologies used to
support new business models to deliver products and services online. The
associatedmanagementfocusevolvesthroughself-service,careandempow-
ermenttowardsextensiverelationshipbuildingwithe-alliances.
Theoretical Framework
Acomprehensivemodelofe-ERPimplementationsmaybepresentedsimply
as the fusion of three interrelated models. Figure 1 illustrates e-ERP as a
primitive composite view of the three research models: Benefits of B2B, e-
Business Change, and Virtual Organising, where:
• Benefits of B2B are illustrated by a two-dimensional model (1) where
value returns are directly proportional to the level of integration of e-
businessactivityacrossasetofB2Bmodels(Carlson,1995).B2Brefers
totheclassofbusiness-to-business(B2B)modelsthatincludebusiness-

160 Ash & Burn
to-supplier(B2BS
),business-to-employee(B2E),business-to-consumer
B2C and business-to-corporate customer (B2BC
) (Ash, 2001).
• e-BusinessChangeisillustratedbyaflatmodel(2)inwhichprogressis
across11interrelatedcomponentswithinthreebroaddimensionsbased
on relevant research in the areas of “strategic management innovation,
organisational change, and e-business evaluation” (Guha et al., 1997).
Thesemodelsovercomeapurelytechno-centricview.
• VirtualOrganisingisillustratedbyathree-dimensionalmodel(3)ofe-
businessactivitythatis“applicabletoanycompany.”Progressisalongthe
threedimensionsof“customerinteraction,assetconfiguration,andlever-
agingknowledge”(Venkatraman&Henderson,1998).
EachresearchmodelrepresentedinFigure1reflectsadifferentbusinessfocus
coveringorganisationaltheory,strategy,changemanagement,andworkprac-
tices. These models were evaluated at different stages of the study through a
composite case based method as shown in Figure 2.
Figure 1. Three views of e-ERP implementation.
1. Benefits of B2B
(B2B Models)
B2E B2BS
B2BC
Self-service
Business Environment
3. Virtual Organising
(Strategies and Tactics)
2. e-Business Change
(Management)
Outcomes & Performance
Gains
Management practice
Customer Interaction
Asset Configuration
Leveraging Knowledge
B2BC
+ B2BS
Corporate
Knowledge
Cultural
Readiness

Methodology: Triangulation of Research
Models
ApilotcasestudyoffiveAustralianSAPsiteshelpedgroundthetheoryforthe
studyofe-ERP.Thiswasfollowedbyathree-stagestudyof11international
SAPsiteswithinadiverseindustrycontext.Thefinalconceptualframeworkis
describedintermsofe-businesstransformation(eBT),atermpreviouslyused
by Lehmann (2001) and Soni (2001).
Data Collection and Analysis
Dataweregatheredfromthreesources;primary,secondaryandtertiary:
Figure 2. Stages of composite case-based research method.
1. Pilot Study of e-ERP
Structured-case studies
(5 Australian cases)
Researcher’s
experiences iteration
2.1 Research of Q.1
Benefits of B2B
(Model 1: 11 cases)
grounding
2.3 Research of Q.2
Virtual Organising
(Model 3: 11 cases)
2.2 Research of Q.2
e-Business Change
(Model 2: 11 cases)
eBT theory & knowledge
3. Hermeneutic Cycle
Theory building
techniques
(Model of eBT)
feedback
feedback

162 Ash & Burn
• Primary data– from semi-structured interviews conducted November
1999, June 2000, and June 2001 in 11 international SAP organisations.
• Secondary data – from company documents collected or sent via e-
mails.
• Tertiary data – from case research papers written by third party
consultants.
In all cases the focal point for contact was a SAP project manager in the
companywhowasdirectlyresponsibleorintegrallyinvolvedwiththeproject
Table 1. Data collection and analysis matrix.
Table 2. Business-to-business cases.
Key Questions Data Collection Instrument Data Analysis
1. How do organisations
maximise benefits from
e-ERP implementations?
1st
Interview instrument -
semi-structured Questionnaire.
Content analysis of interview
data within CF1 model developed
from the Pilot Study.
2. What factors facilitate
and/or inhibit the success
of e-ERP
implementations?
2nd
Interview instrument -
semi-structured Questionnaire
constructs of components of
e-ERP projects.
Cross-case analysis of constructs
to determine the components that
contribute to success or failure;
using exemplar cases.
3. Do e-ERP projects fit
the strategy of virtual
organising?
1st
and 3rd Interview
instrument - semi-structured
Questionnaire and industry
presentations.
Map content of all cases to
demonstrate the vector
interdependence maximum
benefits from VOing
Case Organisation Industry B2E Interaction e-Business Project Title No. of Users
1. Halliburton Engineering Intranet access to “Employee Tracking Intranet” ~1100 staff
2. UBS Banking SAP data “Employee Networking” ~40,000 emps
B2C Interaction
3. Wine Society Retailing Internet access to
SAP data
Online Ordering by Members ~60 staff
4. UNICEF Aust. National
Charity
Internet access to
SAP by ASP
1st
Australian Charity Web site ~35 employees
+30 volunteers
B2B Interaction (B2BS
and B2BC
)
5. Biotech
6. Novartis
Biotechnology
Chemical
SAP to supplier
catalogues and
Staff research procurement
Sales Order and Rapid Delivery
~240 staff
~22,000
7. Bertelsmann Media Intranet access Simple Ordering e-catalogue ~28,000
8. Statoil Oil and Gas to SAP data Staff travel procurement ~18,000
9. Employee-Nat Employment Simple Ordering e-catalogue ~14,000
10. FSC - Fujitsu
Siemens computer
Computer Corp. customer
access to SAP data
Order Request System extended
to an e-Mall of 3 companies
~11,000
11. Dell corp
with
LSI Logic corp
Computer
------------------
Electronics
non-ERP
with
SAP
Customised online sales
integrated with corporate
customers MRO procurement
~27,000
~14,000

frombeginningtoend.Toeliminateanybiasbyasinglerespondent,attempts
were made to ensure triangulation of data from multiple sources in the
organisation. Most of the interviewees were either sponsors of the e-ERP or
majorteammemberswhohadagood,objective,andknowledgeableviewof
theproject.ThequestionsandcollectioninstrumentsaresummarisedinTable
1.InTable2theprofilesofthecaseSAP-basedorganisationsthatparticipated
in the study are shown.
ThefindingsarepresentedbycategoriesofthethreeinteractiveB2Bmodels
summarisedas:
• Business-to-employee (B2E), to harness the flow/sharing of corporate
information,viaintranets.
• Business-to-consumer (B2C), to access a 24x7 global consumer base,
via the Web.
• Business-to-Business (B2BS
and B2BC
), to support supply chain man-
agementbetweenpartnerorganisations.
Withineachclassificationthecasefindingsarepresentedinorderofincreasing
e-businessapplicationsophistication(Perezetal.,1999).
Thecasematerialcollectedwasusedtoverifyalltheessentialcharacteristics
ofane-businesstransformation.Thecasefindingsweredistilledintoasingle
comprehensive“3x3”matrixastheessentialpartofanewtheoryormodelof
e-Business Transformation (eBT), developed to guide managers through
differentstagesofe-businessimplementation.
Model of E-Business Transformation
TheconceptofeBTisdefinedasrealisingthebenefitsfromvirtualorganising
withincomplexB2Binteractionsbyutilisingthefacilitatorsofsuccessfule-
business change. To develop a precisely defined theory of eBT, we begin by
identifyingthebasicresearchthemes,displayedasamodelinFigure3.
Figure3representseBTasacomprehensivebusinessarchitecturethatfocuses
on three interdependent dimensions of online business: ICT technologies,
Products and Services, Business Models(Osterwalder et al., 2002), where:

164 Ash & Burn
• ICT Technologies – refers to the convergence of technologies for
informationflowwithinandbetweenorganisations,forexamplee-ERP
implementations;
• Products and Services – refers to asset and competency sourcing for
providingcheaper,faster,andimprovedqualityofproductsandservices;
• Business Models – refers to the architecture of the firm and its network
ofpartnersforcreating,marketinganddeliveringvalue.
Figure 3. e-Business transformation model.
Stage 3: Value propositions
Products & Services
ICT Technologies
Business Models
Stage 2: Differentiation
Stage 1: Integration
Stages of e-Business Transformation
EachdimensionoftheeBTmodelisfurtherdetailedatthreestagesofgreater
e-businesscommitmenttointegration,differentiation,anddemonstrationof
value propositions. Progress in the first stage focuses on integration for
achievingefficiencygainsintaskunitssuchascustomerservice,purchasing,
and new product development. In stage 2 the focus is on differentiation
throughselectingthemosteffectiveresourcingandmarketingactivities.The
third stage focuses on demonstration of value propositions within an inter-
organisationalnetworktodesignandleveragemultipleinterdependentcommu-
nitiestocreatesuperioreconomicandvirtualvalue(Singh&Thomson,2002;
Venkatraman & Henderson, 1998).
ThemodelofeBTshowsbusinessfocusedatthreestagesofdevelopmentwith
outcomesandperformancegainsofgreatervirtualprogression:
Figure4illustratestheinterrelatednessofthethreestagesofeBTas:

e-ERP Transformation Matrix
Table 3 represents a map of the issues distilled from the findings of this
longitudinalthree-stagestudy.Thistableisreferredtoasthee-ERPtransfor-
mation matrix and forms the next level of abstraction in the eBT model. It
identifiestheessentialsofeBTandisconstructedtoillustratetheinterdepen-
dence of the dimensions of eBT and the stages of progression. The results of
theanalysisweremappedalongthee-businessstagesofgrowth:integrationof
e-business technologies for e-malls and B2B commerce, differentiation of
productsandservicesfore-businesspositioning,andtherealisationofvalue
propositionsofthee-partnerships.
Figure 4. Three stages of e-Business transformation.
Stage 1.
INTEGRATION
Stage 3.
DEMONSTRATION OF
VALUE PROPOSITIONS
&
Stage 2.
DIFFERENTATION
Table 3. e-ERP transformation matrix.
* The arrows represent real organisational transformation with e-business
Stages of e-Business Transformation
( 1999 - ) ( 2000 - ) ( 2001 - )
Business
Dimensions
Stage 1:
Integration
Stage 2:
Differentiation
Stage 3: Demonstration
of Value Propositions
Technology
(virtual
infrastructure)
* ICT
ERP with e-Sales & e-
Procurement applns.
Differential Resourcing
ASP versus cost of
ownership on the
outsourcing spectrum
Innovative Technologies
ERP and non-ERP
networks for e-
marketplaces
Products &
Services
(virtual experience)
e-Malls
e-Mall integration and
information exchange
* e-Branding
Customisation versus
standardisation;
Brand identity &
integrity
e-Communities
Foster customer, supplier,
and employee expertise;
Emerging collaborative
online communities
Business Models
(virtual B2B
interactions)
e-Commerce Integration
B2B Integration of e-
Sales & e-Procurement
systems B2BC
+ B2BS
e-Positioning
B2B positioning within a
range open to private e-
marketplaces
* e-Enterprise
One2Many versus
One2One;
Distinct focus of
One2One partnerships
Examples Remote experience of e-
catalogues. More tasks,
“group ware” skills for
online communication.
Assemble and coordinate
assets through effective
use of online services
Business network to design
and leverage interdependent
e-communities. Dependent
on relationships

166 Ash & Burn
In Table 3 the three diagonal cells* in the e-ERP matrix (3x3) indicate the
‘critical’elementsthatinvolveaculturalshiftforarealorganisationaltransfor-
mation.Theothercellsidentifytheelementsthatcontributetotheorganisation’s
competitiveadvantage.Transitionalongthediagonalorcriticalelementsofthe
matrix,representsrealorganisationaltransformationwithe-business.Thiswas
observedtooccurwithinacultureofe-businessreadinessoftheorganisation
andpartnerorganisations.
Case Analysis for
e-ERP Transformation Matrix
Thecasefindingswereanalysedtoidentifyandcodetheelementswithinthe
stagesofthee-ERPtransformationandbythebusinessdimensions.
Stage 1: Integration
Technologies: e-ERP (Essential to Stage 1)
The findings show that “back-end” to “front-end” enterprise application
integrationisessentialtoachievesavingsandcostreduction.Integrationofthe
system architecture is made possible through a variety of “back-end,” “sell-
side”and“buy-side”systems;all11casesdemonstratedthis,butspecifically
Statoil and Siemens with their standardised ERP platform and e-business
applications.
Products and Services: e-Malls
In a study of Australian e-malls, Singh and Thompson (2002, p.308) con-
cluded:“itisapparentthatforeffectiveB2BexchangeinAustralia,standards
forinteroperabilitybetweenbusinesspartners,andtechnologyintegrationfor
informationexchangeongoodsandservicesisessential”.Forexample,Fujitsu
SiemensComputers(FSC)achievedintegrationoftheonlinesalessystemsfor
threecompanies.

Business Models: e-Commerce B2B Integration
Theintegrationofe-businessmodels,B2BC
withB2BS
isessentialtomaximise
efficiencygainsfromsupportingtechnologyinfrastructure,sothatpeoplecan
get the job done efficiently. Two cases of B2B e-business integration with a
global computer supplier and its largest corporate customer demonstrate a
more complex model. These exemplar cases demonstrate the integration of
ERP and non-ERP systems with other ERP systems, using Web-based
technologiestoprovidetheinfrastructurerequiredtooptimisetheoverallB2B
valuechain.Also,thestudyemphasisesthesynergisticbenefitstreamfromB2B
integrationandtheinteractionofinter-organisatione-businesssolutions,for
exampleDellandFSC.
Stage 2: Differentiation
Technologies: Differential Outsourcing
SegevandGebauer(2001,p.249)arguethat“themidpointsoftheoutsourcing
continuumarethemostchallenging.”Fromcaseobservationstheydescribethe
continuumasawiderangefrom“doityourself”tocompleteoutsourcing,with
anincreasingnumberofpossibilities.Theonecasestudywherethecomplete
managementofane-ERPprojectwasoutsourcedtoanASPdemonstratesthe
challengeforUNICEFAustraliatobalancethelossofcontrolagainstthecost
ofownership,whereasFSCpartiallyoutsourcedtheironlinesalessystemsto
SiemensBusinessSystemsquitesuccessfully.
Products and Services: e-Branding (Essential to Stage 2)
Thee-businesstacticsforpositioninginthevirtualspacewereto:
• Differentiate between corporate customers and end consumers; for
example,UNICEFandDell,
• Deliver customised products and services using standard components;
for example, Dell and FSC,

168 Ash & Burn
• Differentiatebetweenbrandidentityandbrandintegrity,where“e-branding
becomes a critical issue” (Venkatraman & Henderson, 1998, p. 34); for
exampleBertlesmann,UNICEF,WineSociety,DellandFSC.
Business Models: e-Positioning
Biotech and Novartis repositioned themselves with their largest corporate
suppliers.FSCrepositioneditselfintothecomputerindustrythroughe-sales.
The tendency of these pioneers was to start with development of public
relationshipbuildingandthenshifttoprivaterelationshipbuildingbetween
suppliers and buyers. This is observed to be more than a passing phase.
Further,hadtheproductlinesbeenhightechnology-based,forexampleDell
andFSC,thenitislikelythelevelofe-businessreadinesswouldhavebeentoo
lowtorealiseandsustainavalueproposition.
Stage 3: Demonstration of Value Propositions
Technologies: Innovative Technologies
Halliburton’sHRIntranetERPsystemdemonstratedaB2Evalueproposition.
Theirtechnologyinnovationwasbottom-updrivenandfrombothsidesofB2E
andB2Gofthevaluechain.Thisbottom-upapproachprovidedamodelforthe
company’sglobale-ERPinfrastructure.
Employee-Nat demonstrated the integration of ERP and non-ERP systems
withWebtechnologies(Fanetal.,2000).WineSocietyfoundproblemswith
alackofinternalexpertisewithimplementingWeb-basedinnovationswiththeir
ERPsystem.
Products and Services: e-Communities
StatoilandUBSusedIntranetemployeeself-serviceapplicationstodevelop
a practice of industry-based e-communities. Dell has competence centres
wherecustomerscanvalidatesystemdesignandconfigurationwithoutdisrupt-
ingtheirlivecomputingnetwork.Thesefacilitiesactascollaborativeonline
network to provide customers with systems design and application tuning

support,allowingthemtotestvarioushardwareandsoftwareconfigurations
before making a purchase decision; for example Dell and FSC.
Business Models: e-Enterprise Model (Essential to Stage 3)
ApilotapproachdemonstratingavaluepropositionisshownintheOne2One
relationshipformedbyDellandLSI.Also,thecaseemphasisesthesynergistic
benefitstreamfromB2Bintegrationandtheinteractionofinter-organisatione-
business solutions. In the short term, it may be better to adopt e-commerce
implementations(e-salesande-procurement)withnewcustomersandsuppli-
ers.Thishasthecapabilityofpersuadingexistingcustomersandsuppliersthat
aremoreresistanttoe-businesschangeofthewin-winvaluepropositions;for
example FSC with SAP, Dell and LSI. In these two “twin” case studies the
focuswasonbuildinga“One2One”relationship.Thecreationofa“win-win”
value proposition was observed to be a model for other B2B partnering.
In Table 4 complementary benefits are identified with FSC’s online B2B
partners.
Table 4. Complementary benefits from B2B integration.
Partner Benefits
FSC Benefits
Ordering times optimised through online
connection
Shorter and therefore faster ordering times
Incorrect orders reduced to minimum
Presentation of configurable products on
the Internet
Information management for CRM
Available 24 hours a day, 7 days/wk.
Simpler ordering, resulting in savings in
cost and time
Automatic online information on order
changes and delivery notifications
Tracking of orders at any time
Pre-testing of products
Customised service
Changing Management Objectives in
E-Business Transformation
Thechangingmanagementobjectivesacrossthestagesinthee-ERPtransfor-
mationmatrixareclassifiedinTable5andareviewedasinterdependentand

170 Ash & Burn
supportive of each other. This is especially so in the area of outcomes and
performancesobjectiveswhereefficiencythroughemployeeself-serviceand
effectivenessthroughempowermentincustomercareisusedtosupportvalue
addingactivitiesforsustainedcompetitiveadvantage.
Managementfocusisontheexploitationofemployeeself-service,theempow-
erment of individuals, and the extensive relationship building with multiple
alliances.
Outcomes and performance gains were identified as: efficient operations,
effectiveresourcing,andvirtualvalueadding.
Management Focus in e-Business Transformation
TheconceptualmodelinFigure5bringstogetherkeymanagementissuesand
theirrelationshipsintoe-businesstransformation.Thismodelillustrateshow
changeinindustrypracticesande-ERPdevelopmentsrelatetoB2E,B2Cand
theB2BS
,andB2BC
models(Ash&Burn,2002).Itidentifiestheaccelerated
symbioticrelationshipbetweene-businesstechnologiesandbusinessimprove-
mentcausedbyashiftincustomerdemand.Thearrowsconnectingcustomers,
employees, and suppliers indicate the business interactions through self-
service,careandempowermenttowardsextensiverelationshipbuildingwith
multiplealliances.
Torealisethebenefitsfromthesymbiosisofe-ERPdevelopmentsandbusiness
practice,organisationsareoptimisingB2Bmodels:
Table 5. Changing management objectives in the e-ERP transformation
matrix.
Key: Return on investment (ROI), Quality of working life (QWL), Economic value added
(EVA)
Stage 1 Stage 2 Stage 3
Management focus Self-service Empowerment Relationship building
Change Management
focus
Top-down
Training
Internal
Bottom-up
Self-learning
External
Visionary
Value enhancement
Community
Outcomes and
Performance Gains
Improved operating
efficiency (ROI)
Effective resourcing
(QWL)
Virtual and economic
value added (EVA)

• Stage 1 – To offer cheaper products with efficient service by utilising
customerself-servicein B2BC
,andconsumer self-servicein B2C, and
toprocurestandardmaterialsfasterthroughe-procurementagreements
byutilisingemployeeself-service inB2BS
.
• Stage2–ToprovidecustomisedserviceinB2BC
,byutilisingemployee
andsupplierempowermentinB2EandB2BS
.
• Stage3–TogeneratevalueenhancedalliancesthroughB2E,B2BC
and
B2BS
, with all players in an e-ERP network.
Inaddition,Figure5representsacompleteviewofthefoundationsofthisstudy:
e-ERPtechnology,e-businesspractice,andmultiplerelationshipsbuilding.
Oneindicatorofasuccessfulcomprehensivee-businessimplementationisthe
widespread acceptance by employees of using B2B e-procurement for their
ownofficeequipmentandsupplies.
Figure 5. Relationships building cycle model from staged growth of e-
business.
B2BS
Suppliers
e-Bus & ERP
technologies
Enables
change in
Business
practice and
improvement
Stimulates
development
in
B2E
Employee
s
B2BC
, B2C
Customers
&
Stage 2: care through empowerment
Stage 3:relationship building
Stage 2:
care
Stage 1:
self-service
Stage 1:
self-service
Stage 2:
care

172 Ash & Burn
Change Management Focus in e-ERP Transformation
Themodelfore-businesschangemanagementrepresentsacomprehensivetool
for assisting managers in diagnosing the key facilitators and inhibitors of
successful e-ERP projects for B2B interaction. The results confirm that the
moresuccessfulprojectswerefoundtohavefacilitatorsinallcomponentsof
theeBCframework.Theframeworkspecificallyexplorestheareasrelatedto
the successful learning organisation where the key issues remain as people
orientedorganisationalissues.
The nature of change was reported to be participative change resulting in an
evolutionary change tactic. This was viewed as a “waterfall” progression of
change,startingwithanalleviationofdissatisfactionbyemployeesandeven-
tuallyworkingtowardsawell-managede-businessimplementation:
• Stage1–Top-downdirectedlearningofself-serviceforefficiencygains
tooffercheaperproductswithefficientservicebyutilisingcustomerself-
service in B2BC
, and customer self-service in B2C, and to procure
materials cheaper through e-procurement agreements by utilising em-
ployeeself-serviceinB2BS
.
• Stage 2–Bottom-up self-directed learning focuses on external partner
effectiveness. e-Readiness and emergent change management are two
keyfactorsforinfluencingpeopleworkingeffectivelywithnewe-business
environments.Baruaetal.(2001)foundthatthesuccessofacompany’s
e-businessinitiativescomesinpartfromthereadinessofcustomersand
supplierstoengageinelectronicinteractions;forexampleDellhadtowait
for LSI to be “e-business ready” for the B2B integration project to be
implemented.Toaddresscomplexitiesofchange,eachcomponentmust
bealigned,alongwiththeenablingtechnology,tothestrategicinitiatives
(Statoil’sDataQualityManager;Hesterbrink,1999,p.5).Animportant
ingredientintherightculturalmixforsuccessfuleBCisleadershipfromthe
topandinitiativesfromemployees,togetherwithanatmosphereofopen
communication,participation,committedcross-functional.Inthenew
businessenvironment,organisationalchangeisbecomingmorecomplex,
andtrainingisshiftingtoself-directedlearning.
• Stage3–Visionarysenseofvalueenhancementutilisinge-communityto
generateeffectivealliancesthroughB2E,B2C,B2BC
andB2BS
withall

playersinthee-ERPenvironment;forexampleDellwithLSI.Organisations
attemptingtochangeperformanceradicallyseemtorequiresome“sense
ofurgency”intheirbusinessactivitiesandsituation,translating,inturn,into
acompellingvisionthatisespousedthroughouttheorganisation.
To overcome pockets of reluctance to change, an organisation’s vision for
changemustprovideanatmosphereofcommunicationwhereconcernsabout
eBCarenotseennegativelybutratherwelcomed:
(i) Achievingthisrequirescontinuousarticulationandcommunicationofthe
valueofreportingresultsandmonitoringeachindividual’scontribution
andaccountabilitytotheoverallcompany’schangeeffort.Atthisindi-
vidual level, concern should be placed on how the eBC will improve
employeesatisfactionandthequalityofworklife.
(ii) Measurementisameanstosuccess.Awell-definedtransparentmanage-
mentapproachshouldincludeadocumentedmethodologyofchange;use
objectiveandquantifiedmetricsshowingthevalueofchange;continu-
ouslycommunicateprocessmetricstoseniormanagement;andpossess
awell-documentedrolloutofthenewe-businessdesign.
(iii) Furthertothefindings,thereisacasetobearguedonhowandwhychange
management is changing. For the issue of change management, we
observeashifttowardsalearningorganisation(Vering&Matthias,2002,
p.159).Insupportoftheclaimthat“changemanagement”ischanging,
theyarguethereis:
• anewgenerationofsystemusers,
• aconstantorcontinuousnatureofchange,
• a demand for both top-down and bottom-up change.
(iv) However,changestillrequiresthatresourcesbematchedtothebusiness
objectsandtasks.WhatisnewisthattheWorkplacenowofferstoolsand
opportunitiesforimplementingchange.Anorganisationthatdesignsits
systems in terms of roles for end users can drive organisational change
throughworkplaceimplementation.Theworkplacenotonlydeliversbest
practices,“asERPsystemsdo,”itprovidesanunderstandingofrolesand
organisationalresponsibilitiesthatgoalongwiththem,“asERPsystems
do not” (Vering & Matthias, 2002, p. 164).

174 Ash & Burn
Outcomes and Performance Gains in
e-ERP Transformation
The stages of eBT, identified in Table 5, are viewed as interdependent and
supportiveofeachother,asinFigure3.Thisisespeciallysowithrespecttothe
business focus and the performances objectives where efficiency through
employee self-service andeffectiveness throughempowermentincustomer
care is used to support value adding activities for sustained competitive
advantage.
InTable5thee-ERPmatrixclassifiesthegenericoutcomesandperformance
objectivesas:
• improved efficiency in decreased order times, automatic approvals to
reduce costs,
• greatereffectivenessmeansimproveddecisionmaking,greaterresponsi-
bilities,
• value adding refers to complementary benefits realised for all network
partnersalongthevaluechainswhendoingbusinessonline(Figure6).
Toachievetheoutcomesfrome-ERPprojects,organisationsareutilisingthree
B2Bmodels.Theyoffercustomerscheaperproductswithefficientserviceby
exploitingself-serviceinB2BC
andB2C.Theysourcematerialscheaperand
moreefficientlythroughprocurementagreementsinB2BS
andutilisationof
employeeself-serviceinB2E.TheynowoptimiseprocessesinB2BS
withB2BC
forcustomisedservicebyutilisingemployeeself-serviceinB2E.
Figure 6 illustrates the generic outcomes and performance gains and the
relationshipsbetweenthem.Theperformancegainsfore-procurementwere
Figure 6. Outcomes and performance gains criteria for e-ERP matrix.
Efficiency
reduced costs,
decrease order
times, automatic
approvals
Effectiveness
fewer errors,
improved decision
making, greater
responsibilities
Value Added Benefits
new revenues
information rich
customised products &
services
&

achieved from two sources: cost savings, and reduced cycle time from
customer access (24x7) to supplier data. These projects enabled efficiency
gainsfromminimisingofdelaysincustomerorders,andeffectivenessgainsfrom
optimisingemployee/stafftime.Thecostsavingsthroughoperationalefficien-
cies of all equipment resourcing compare favourably to those cost savings
(efficiencies)inothere-procurementcasestudies.However,theimprovement
in staff QWL appears to be from learning of new skills, understanding of
processes,andacceptanceofnewresponsibilitieswithgreaterflexibility.
By taking a more holistic approach, executives can turn these facets of a
company’soperationsintothedriversofe-businessexcellence.Sothecentral
taskforseniormanagersliesinunderstandingwhatdrivesoperationalexcel-
lence in the e-ERP realm, and then committing the necessary resources
(structures,training,responsibilities)tothedevelopmentofthedrivers.
Tothisend,managersshouldassessthecompany’soperationsbylookingat
both the traditional and e-business measures. For example, Dell and some
Siemenscompaniesusedthesameinternalperformancemeasuresinbothe-
businessandtraditionalbusinessoperations.
VirtualorganisingproposedbyVenkatramanandHenderson(1998)extends
thefindingsfromthecasestudiestoameasureforinter-organisationorB2B
activity.Thissuggestsameasureforsuccessfulrelationshipsbuilding.
Figure7identifiesthemeasuresforoutcomesandperformancegainsandthe
relationships between them within the e-business change research model.
Thesemeasuresintersectthemeasuresoftheproposede-ERPtransformation
matrixdescribedinTable3.Theycanvassthemeasuresatthelevelofemployee
performance.
Figure 7. Measures for outcomes and performance gains.
Improved
Resourcing
Lower costs &
Reduced order times
Choice of
information
Quality of Work Life
Less errors
Automatic approvals
Choice of services
Customer Success
Response time
Larger customer base
Choice of products

176 Ash & Burn
Anindicatorofasuccessfulcomprehensivee-businessimplementationisthe
widespread acceptance by employees of using B2B e-procurement for their
ownofficeequipmentandsupplies.
Torealisethesuperiorbenefits,thefollowingessentialfactorswerefoundto
apply:
(i) continuousimprovementofthequalityoftheWebinterfacefortheend
user,
(ii) formalisingagreementswithpartnersonacommonITplatform,
(iii) standardisingpurchasingagreementswithsuppliers,and
(iv) communicatingthebusinessstrategytoemployees.
Strengths and Limitations of the Model
The proposed model of e-business transformation can be used as a detailed
criteriontodirectandevaluatetheprogressinthevirtualspacefortraditional
organisations or new entrants. The nature and value of the model is based on
a set of exemplar SAP-based organisations (innovators) that pioneered e-
businessimplementationsthroughtheirERPsystemsforsustainedcompetitive
advantage.
Although limited to discrete snapshots of each organisation’s e-business
transformation,theproposedmodelofeBTneverthelessservesthepurposeof
demonstrating the transition rather well; that is, a model that represents a
documentedcomprehensiveandlong-termplanthatshouldassistmanagersof
ERP-basedorganisationsinmigratingtheircompanytowardsasuccessfule-
business organisation. Similar to virtual organising, the eBT model offers a
foundationalperspectiveofstrategies,tacticsandperformanceobjectivesfor
e-ERPimplementations.Asatheory,itsstrengthisbasedonthesynthesisof
case snapshots. It is seen as evolutionary in nature and content driven. The
triangulation of the research frameworks provides a method for study at
appropriatelevelsofcomplexity.
Claimsofexternalvaliditymustawaitfurtherexaminationwithawidersample
of projects with different contexts and motives. Extra case material was

gatheredtovalidatethefinalresearchframeworkandtoconfirmthefactorsfor
successofane-businessimplementation.
Conclusion
The conceptual framework of e-business transformation (eBT) captures the
stagesofgrowthinwhichimprovementisalongthethreedimensionsofbusiness
activity: integration is tempered by differentiation for realising B2B value
propositions.Itidentifiestheantecedentsofsuccessfule-businessimplemen-
tationswithinERPenvironments(e-ERP).Asafinalresearchmodelofe-ERP
phenomena, it represents a triangulation of three interdependent research
models: virtual organising through e-ERP, e-business change with critical
successfactorsandfacilitators,andcomplementarybenefitsfromB2Binter-
action.Eachmodelexhibitsattributesthathavevaryinginfluencesatdifferent
stagesofe-businessimplementation.
Thee-ERPmatrixrepresentsthestagesofgrowthdevelopmentofacompre-
hensiveanditerativeplanthatshouldassistmanagersofERP-basedorganisations
inmigratingtheircompanytowardsasuccessfule-businessorganisation.The
modeloffersafoundationalperspectiveofstrategies,tacticsandperformance
objectives for e-ERP implementations. The strength of the theory lies in the
synthesis of multiple case analyses using three different lenses over three
separate time periods. The triangulation of the three research frameworks
providesamethodforstudyatappropriatelevelsofcomplexityfore-business
implementationwithSAPsystems.
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112-114.

ERP II & Change Management 179
Chapter X
ERP II &
ChangeManagement:
The Real Struggle for ERP
Systems Practices
Paul Hawking
Susan Foster
Monash University, Australia
Andrew Stein
Abstract
Enterprise Resource Planning (ERP) systems have become an essential
information systems infrastructure for large organisations. Organisations
are now looking for ways to leverage their ERP investment by introducing
new functionality; however, no matter how many implementations these
companies have undertaken the same people issues still provide barriers.
This research looks at the change management practices of Australian
companies and identifies the main success factors and barriers associated
with implementing change management strategies. The chapter presents

180 Hawking, Foster & Stein
the results of a survey of 35 major Australian organisations that have
implemented an ERP system. Many of these organisations have long
histories of ERP usage and multiple ERP implementations and upgrades.
The main findings indicate that the respondents considered change
management crucial to successful ERP implementations, yet their
organisations did not perform change management very well. The main
successfactortochangemanagementwasprovisionofadequateresources,
with the main barrier being lack of communication up and down the
organisation.
Introduction
ERPsaleshaverepresentedasignificantproportionoftotaloutlaysbybusiness
oninformationtechnologyinfrastructure.TheglobalmarketforERPsoftware,
whichwas$16.6billionin1998,isestimatedtohavehad300billionspentover
the last decade (Carlino, 2000). The level of their sales and penetration
reinforces the importance of these types of systems. A survey of 800 U.S.
companiesconfirmedthatalmosthalfofthesecompanieshadinstalledanERP
system and that these systems were commanding 43% of the company’s
applicationbudget(Carlino,2000).ThemarketpenetrationofERPsystems
variesconsiderablyfromindustrytoindustry.AreportbyComputerEconom-
ics Inc. stated that 76% of manufacturers, 35% of insurance and health care
companies, and 24% of federal government agencies already have an ERP
system or are in the process of installing one (Stedman, 1999). The major
vendor of ERP systems is SAP with approximately 50% of the market
(McBride, 2003).
AlthoughERPsystemshavethepotentialtodeliveranumberofbenefits(Table1),
initially many companies implemented an ERP system as a technological
solutiontotheY2Kissue(Deloitte,1999).Companieswereforcedtoinitiate
businessprocessengineeringforthepurposeof“gapanalysis”todetermine
whateitherhadtochangeintheircompanyorintheERPtofacilitateaneffective
implementation.SomecompaniesinitiallystruggledwiththeirERPimplemen-
tationformanyreasons,including:inexperiencewithprojectsofthisscope,
underestimatingtheimpactthesystemwouldhaveontheirorganisation,and
lacking skilled resources. For some companies these barriers have been
insurmountable(Calegero,2000).

InaworldwideCSC(2001)study,1009ISmanagersidentifiedastheirmain
priority“optimisingenterprisewidesystems”.Companiesarerevisitingtheir
ERPimplementationsinanattempttoleveragetheirinvestmentbyattainingthe
purportedbenefits.InthelandmarkDeliotte’sstudy(1999),49%ofthesample
considered that an ERP implementation is a continuous process, as they
continue to gain value propositions from their system. This is a reasonable
expectationascompaniesattempttorealisepreviouslyunattainedbenefits,and
additionally, as companies evolve, their ERP system must also evolve to
supportnewbusinessprocessesandinformationneeds.
TheprocessofachievingadditionalbenefitsfromanERPimplementationis
referred to as “second wave” implementations (Deloitte, 1999). Deloitte
Consulting(1999)describeanumberofpostimplementationphasesorganisations
adopt(Figure1).IntheStabilisephasecompaniesfamiliarisethemselveswith
the implementation and master the changes that occurred. The Synthesise
phase is where companies seek improvements by implementing improved
business processes, add complimentary solutions, and motivate people to
supportthechanges.Inthefinalstage,Synergise,processoptimizationoccurs,
resultinginbusinesstransformation.
Table 1. Top 10 ERP benefits (Davenport et al., 2002).
Benefit
Improved management decision making
Improved financial management
Improved customer service and retention
Ease of expansion/growth and increased flexibility
Faster, more accurate transactions
Headcount reduction
Cycle time reduction
Improved inventory/asset management
Fewer physical resources/better logistics
Increased revenue

Barriers to Benefit Realisation
Recent research by Hawking and Stein (2002) identified the expected ERP
benefitsandlevelofrealisationofthesebenefitsin48Australiancompanies.
Their research indicated that although the companies gained a number of
benefitsfromtheirERPimplementationtheydidnotattaintheexpectedlevel
of benefits. The sample was asked to rate on a seven-point likert scale the
barrierstobenefitrealisationoftheircurrentERPimplementation.Eachbarrier
wascategorisedaspertheDeloitteConsulting(1999)study:People,Process
orTechnology(Table2).
Therespondentsindicatedobstaclesthatlimitedbenefitattainmentfortheir
ERPimplementationhadlittletodowithlackofsoftwarefunctionalityormajor
technicalissues,butwerepredominatelypeoplerelatedissues.Fiveofthetop
sevenobstaclescouldbeclassifiedaspeopleissues.Itisinterestingthattwo
ofthetopthreeissuesarerelatedtochangemanagement.Itisimportanttonote
that Australian companies have been working with their ERP systems for a
numberofyears,resultinginalevelofmaturity;however,eventhoughtheyhave
been through a number of implementations they still consider the change
managementissues’impactonimplementationsuccessandbenefitattainment.
Nah et al. (2001) documented 11 critical success factors (CSFs) that have
provedtobevitaltoasuccessfulERPimplementation.Otherresearchershave
Figure 1. Deloitte (1999) implementation phases.

identifiedsimilarcriticalsuccessfactorsandhavestressedtheimportanceof
changemanagement(Somer&Nelson,2001).
Change Management
Change management strategies vary from company to company. Change
managementcanbedefinedas:
“the effort to manage people through the emotional ups and down
that inevitably occur when an organisation is undergoing massive
change” (Nah & Sieber, 2001).
Table 2. Barriers to benefit realisation (N=48).
Current R/3 Barrier/Obstacle Mean Deloitte
Category
Lack of Discipline 4.4 P
Lack of Change Management 4.3 P
Inadequate Training 4.2 P
Poor Reporting Procedures 4.2 T
Inadequate Process Engineering 3.9 PR
Misplaced Benefit Ownership 3.8 P
Inadequate Internal Staff 3.3 P
Poor Prioritisation of Resources 3.0 T
Poor Software Functionality 2.9 T
Inadequate Ongoing Support 2.7 T
Poor Business Performance 2.4 PR
Under Performed Project Team 2.3 P
Poor Application Management 2.2 T
Upgrades Performed poorly 1.6 T

Inthecontextoftheorganization,Goff(2000)defineschangemanagementas
“ a planned approach to integrating technological change. This
includes formal processes for assessing the impact of the change
on both the people it affects and the way they do their jobs. It also
uses techniques to get users to accept a change caused by technol-
ogy and to change their behaviour to take advantage of the new
IT functionality”.
This statement implies that information technology projects require change
managementpracticesinordertofundamentallychangethewaypeoplework
andbehavewithinanorganisationandacrossorganisationalboundaries.Other
authors refer to the concept of resistance: an expression of reservation that
invariably results as a response or reaction to change (Block, 1989, cited in
Sohal & Waddell, 1998). Turbit (2002) goes further by describing change
management in terms of setting expectations to alleviate the resistance to
changebypeoplewithinorganisations.
CurrentresearchpointstothefailureofmostERPimplementationsasbeingdue
toresistancetochangebyusersintheorganisations(Aladwani,2001).Afairly
simplisticframeworkthatclassifiesthetypesofuserresistancetoinnovations
likeERPimplementationbysourceofresistanceisthatofSheth(1981)cited
in Aladwani (2001). The framework demonstrates that there are two funda-
mental sources of resistance to innovations: perceived risk and habit. Per-
ceivedriskreferstoone’sperceptionoftheriskassociatedwiththedecision
to adopt the innovation; that is, the decision to accept the ERP system, while
habitreferstocurrentpracticesthatoneisroutinelydoing.Sheth(1981)argues
that in order to reduce employees’ resistance to ERP implementation, top
managementoftheorganisationmustanalysethesesourcesofresistanceand
employ the appropriate set of strategies to counteract them. This argument
implies that resistance is a negative influence on and in conflict with the
organisationalstrategy.Thereforeitisseenassomethingtobemanagedand
ultimately eliminated. Others argue, however, that resistance should be
recognisedassomethingtobeutilisedtosupportasuccessfulchangemanage-
mentinitiative(Mabin,Foreson&Green,2001).
Therearenumerousprerequisitesforchangetobesuccessful.Thelistincludes
aclearvisionforchange,communicatingthatvisionarticulatelyandclearlyfrom
atop-downperspective,preparingacultureforchange,settingstrongleader-

ship and providing an environment for participation. Developing a vision,
describingapictureofthefutureshapeofanorganisation,gainingcommitment
to that vision and synchronisation of purpose and effort are clearly seen as
importantleadershipqualities.Thisdevelopmentofvisionandmissionclearly
sets the scene for organisational change (Hamel & Prahalad, 1994; Senge &
Roberts,1994,citedinMabinetal.,2001).Oncethedirectionfororganisational
changehasbeenestablished,thenextimportantstepinthechangeprocessis
influencingthecultureoftheorganisation.Organisationalcultureistheshared
understanding of how an organisation works, and has a major impact and
influence on successful change initiatives (Handy, 1996; Schein, 1988;
McAdams, 1996). A culture that has shared values and common aims is
conducivetosuccess.
Organisationsshouldaimtohaveastrongcorporateidentitythatisopenand
willingtochange(Nahetal.,2001).Communicationandstrongleadershipplay
a vital role in preparing any organisation for change and in guiding the
organisation through the upheavals that result from changes. The ability to
createtrustbydevelopinganenvironmentwherethepeoplewhomakeupan
organisationfeelchangeisrequiredandthencommittothatchangeprocessare
twoofleadership’smostimportantqualities(Carlzon,1989;Schermerhorn,
1989; Zand, 1997). Creating trust can be achieved through the sharing and
discussionofissuesandideas.
Althoughmuchhasbeenwritteninregardstochangemanagementuptothis
date,limitedresearchhasoccurredinregardtochangemanagementpractices
inAustralianERPimplementations.Recommendationsfrompreviousresearch
(Hawking et al., 2003), which identified change management as one of the
major barriers to benefit realisation, indicated that further research was
requiredtoidentifysuccessfulchangemanagementpractices.TheSAPAus-
tralianUserGroupcommissionedthisresearch,whichreflectsrelevanceofthe
findingstoAustraliancompanies.
Research Method
Theprimaryobjectiveofthestudywastosurveyarangeofinformationsystems
professionalstoseekresponsesregardingcurrentandhistoricalERPimple-
mentation details and change management success factors and practices
originatingfromtheseimplementations.Morespecifically,theresearchposed
thefollowingquestions:

• WhatisimportanceofchangemanagementprogramstoERPimplemen-
tations?
• Whatarethechangemanagementsuccessfactorsandbarriersthatexist
inERPsystemsimplementations?
• Whatchangemanagementpracticesdocompaniesemploy?
Research Design and Methodology
Inordertoidentifychangemanagementpracticesasurveyinstrumentinvolving
30questionscoveringfourareas:demographics,changemanagementmetrics,
success factors and change management practices was developed. Closed
questions were used with Yes/No and seven-point Likert scale responses.
Open-endedquestionssoughtresponsesfromthecohortallowingforqualita-
tive data to be collected.
Thesurveywasdistributedthroughtheuseofane-maildirectingtherespondent
toaWebsitethatincorporatedaWebbasedsurveydeliveryplatform.Several
studies (Comley, 1996; & Sivadas, 1995; Stanton & Rogelberg, 2000) have
compared e-mail and Web based survey methods versus mail information
collectionmethodsandhaveproposedthate-mailsurveyscomparefavourably
with postal methods in the areas of cost, speed, quality and response rate. It
wasnecessarytopreenthee-mailaddressbooktoremoveandamende-mail
that had bounced back.
Sample
ThesamplewasmadeupofkeycontactsfrommembercompaniesoftheSAP
AustralianUserGroup.SAPistheleadingvendorofERPsystemsinAustralia
withapproximately70%ofthemarket(McBride,2003)andtheUserGroup
isrepresentativeofapproximately65%oftheSAPcustomerbase.Theoriginal
e-maillistingcontained166potentialrespondents.Anumberofe-mailswere
undeliverableduetomembersofthecohortmovingpositions,havingincorrect
e-mail addresses, changing e-mail addresses or automatic out-of-office re-
sponses. There were two unusable replies, leaving a total of 35 usable
responses. The overall response rate once removing the undeliverable ad-
dresses was 24%.

Results
Demographics
Responseswerereceivedfrom35ISprofessionalsandthedatawereanalysed
topresentposition,organisationtype,sizeandprocurementspend.Asummary
of responses are presented in Tables 3, 4 and 5. Respondents were predomi-
nantly high in the organisational structure, being either an IS or business
manager.Askeycontactsfortheusergroup,theirstatuswithintheircompanies
wouldindicatetheirinvolvementinthedecisionmakingprocesswithregards
toanyERPimplementations.Accordingly,theyshouldhaveanunderstanding
as to the type of information required by the survey. The companies repre-
sented most industry sectors and were large in size from both a revenue and
employeeperspective.
Table 3. Position of respondents. Table 4. Companies by industry
sector.
Table 5. Size of companies.
Position %
IT Manager 33
CIO 16
IT Development 14
Support & Services Man’er 12
SAP Manager 10
Business Manager 5
Industry Sector %
Public Service 26
Mining Oil & Gas 16
Energy 15
Utility 15
Manufacturing 14
IT Services 14
Number FTEs No. Revenue ($millions) No
>1001 33 Large(>1000) 21
502-1000 3 Large-Med(750-1000) 8
101-500 8 Med-Large(500-749) 3
<100 1 Medium(250-499) 10
Small(<250) 6

ERP Profile
Respondentswereaskedtoidentify:whenthefirstimplementationoccurred,
providinginformationabouttheircompany’sexperiencewithanERPsystem
(Table6),numberofERPusers(Table7)andthenumberofimplementations
and upgrades which the company had been involved in (Table 8).
Nolan and Norton (2000) argue that it is important to consider a company’s
historywithERPsystemswhenmakinganycomparisons.Theybelievethat
companiescanlearnfromtheirimplementationexperiences.Accordingly,they
proposeamaturitymodelofERPimplementationsbyclassificationtype:
• Beginning–implementedSAPinthepast12months,
• Consolidating–implementedSAPbetweenoneandthreeyears,
• Mature – implemented SAP for more than three years.
Table 6. Year of implementation. Table 7. SAP user numbers.
Table 8. No. of implementations.
Year No
<=1995 1
1996 6
1997 5
1998 10
1999 6
2000 4
2001 2
2002 3
SAP Users No
21-100 7
101-250 7
251-500 10
Greater 501 13
Upgrade/Implementations No
0 1
1 8
2 10
3 8
4 4
5 1

Applying this model to the data indicates that 76% of the sample can be
classifiedintheMaturephase,while16%areintheconsolidatingphaseand8%
in the beginning phase. This would indicate that the sample should have
extensiveexperiencewiththeirERPimplementations.Thisisreinforcedbythe
factthatthemajorityofthecompaniesareinvolvedwithatleasttwoupgrades
orimplementations.
Change Management Defined
Respondentswereaskedtoprovideashortdescriptionordefinitionofchange
management in order to assess their understanding of this concept. From an
analysisofthedefinitions,thefollowingkeywordswereobtained:
Manage/coordinate 42% Training 16%
Communication 29% Planning 11%
Transition 29% Monitoring/Assessment 11%
Processes 18%
Basedontheresponsesanaggregateddefinitionwasdeveloped:
Change management is defined as the process of assisting the
organisation in the smooth transition from one defined state to
another, by managing and coordinating changes to business pro-
cesses and systems. It involves the effective communication with
stakeholders regarding the scope and impact of the expected
changes, to assist them to cope and adapt to the transition.
Change Management Budget Metrics
Respondentswereaskedtoindicatewhatleveloftheirtotalimplementation
budgetwasallocatedtochangemanagementandtoindicatewhatpercentage
of their change management budget was allocated to training (Table 9). The
majorityofrespondentsindicatedthatorganisationsspendlessthan10%on
changemanagementpracticesandasignificantnumberoforganisationsspend

lessthan20%ofthechangemanagementbudgetontraining.Attheotherend
ofthespectrum,fivecompaniescommitnearlytheirentirechangemanagement
budgettotraining.
Respondents were required to indicate the size and makeup of their change
management team (Table 10). The majority of companies used external
personneltoassistwiththeirchangemanagementstrategy,althoughonlytwo
companiesreliedsolelyonthisresource.Thechangemanagementteamwas
usually representative of a number of stakeholders supported by external
personnel. The size of the change team tends to indicate that the team was
responsibleformanagingchangeandutilisedotherstoimplementthechange
program.Thereappearedtobenorelationshipbetweenthesizeofthechange
team and the number of SAP users.
Table 9.
Table 10. Change management team.
Change Management Budget
(% of implementation budget)
No. Training Budget
(% of change budget)
No.
<5% 2 <20% 13
5-10% 19 21-40% 4
11-15% 5 41-60% 6
>15% 7 61-80% 6
81-100% 5
Team Resource No. Size No.
Hired external consultants as experts or advisors 23 <5 16
Cross-functional team 20 6-10 12
Senior executive steering committee or team 20 >10 5
Department-based team 13
Involved employees at many levels in the change team 12
Our company did not designate such a team to manage any of the change 4

Change Management Importance and Success
Respondents were asked to rate on a five-point Likert scale the degree of
importancetheorganisationplacedonthechangemanagementstrategy(see
Table 11) and how successful they considered their change management
program(seeTable12).Thisprovidedaninsightintohowrespondentsviewed
the importance of change management and how successful they considered
theirorganisationswereinimplementingchangemanagementstrategies.
Therespondentsgaveanoverwhelming“yes”whenaskedifchangemanage-
ment was important to their ERP implementation, yet indicated that their
organizationswerenowherenearworldclassinchangemanagementopera-
tions.
Table 11. Importance of change management.
Table 12. Company’s success with change management.
Importance of Change Management
Not Important Very Important
1 2 3 4 5
1 10 24
Company’s Ability to Implement Change
Poor World Class
1 2 3 4 5
1 8 22 4 0
Change Management Success Factors and Barriers
Respondentswereaskedtorank(from1to5)thetopfivechangemanagement
successfactorsandbarriersfortheirorganisationalERPimplementations.The
resultsaredisplayedinTables13and14.Whilstadequateresourceswasrated

as the top success factor, communication based factors were ranked in three
ofthenextsixfactors.
Lack of communication was considered the main barrier, with employee
resistance,managementsupportandresourcesthenextthreebarriers.
Table 13. Change management critical success factors.
Table 14. Barriers for change management.
Critical Success Factor Rating
Adequate resources given for the change 2.3
A well-communicated, shared understanding of this need for change 2.2
Open and consistent communications at all levels of the organisation 2.1
Participation and support by all management levels within the organisation 1.7
Visible and continuous executive sponsorship 1.4
Being in touch with those affected by the change 1.4
Sufficient pre-implementation training of those who will deliver the change 1.1
Structured approach to managing change 1.1
Recognizing employees for contributions to the change initiative 0.9
A compelling need for change that is critical for the organisation’s success 0.8
Clear channels of safe feedback 0.5
Training to prepare change team members 0.3
Personnel changes to support the new organisation 0.2
Offering small gifts to employees for contributions to the change initiative 0.0
Offering salary bonuses or promotions to employees at key milestones 0.0
Offering some savings to employees for success in cost-saving changes 0.0
Barrier Rating
Lack of communication and channels for feedback 2.7
Employee resistance to change 2.3
Not all management levels were engaged in the change 2.1
Inadequate resources or budget 2.0
Shifting focus or changing priorities too soon 1.6
Executives out of touch with those affected by the change 1.6
Executives sending out inconsistent signals 1.5
Management behaviours are not supportive of the change 1.3
Executives not directly involved with project 1.2

Employee Resistance
As employee resistance was identified as being an important factor for the
successfulimplementationofanERPsystem(Aladwani,2001),respondents
wereaskedtoidentifypracticesusedtohelplessenthisresistance.Theresults
(Table 15) reinforce the importance of communication and a personalised
approach.
Discussion
Change Management Success Factors and Barriers
The respondents, in many cases decision makers in their organisations,
considered change management to be important yet signaled that overall
performanceinimplementingachangemanagementprogramwasnotworld
class.Therewaslittleevidenceofalinkbetweenthesuccessinimplementing
change and the level of budget allocation, yet the number one success factor
was adequate resources. It is also interesting to note that many of the
companiesinvolvedinthesurveywereontotheirfourthorfifthERPimplemen-
tationorupgradebutwerestillstrugglingwiththechangeprocess.
Therespondentstoalargeextentindicatedthatthesuccessfactorsandbarriers
weremirrorimagesofeachother.Communicationsandmanagementsupport
Table 15. Practices to lessen employee resistance.
Practice No.
Direct face to face communications about the behaviour 25
Question and answer sessions and open discussions at meetings 23
Team communication meetings and performance reviews 20
Re-communication of goals and needs for change 19
Immediate team or sponsor intervention 18
Open, safe communications channels for feedback 18
Focus on goals and what needs to happen to meet the goals 18
Coaching for performance 10
Development of personal progress plans 6

dominatedthesuccessfactors.Two-waycommunicationsandaneedto“bein
touch” with those affected by change all signal the feedback nature of
implementations.ObstaclestotheirERPimplementationhadlittletodowith
lackofsoftwarefunctionalityormajortechnicalissues,butwererelatedtolack
ofmanagementsupportforchangemanagementstrategiesandpoorcommu-
nication practices. A number of the respondents commented on the lack of
managementsupportandunderstanding:
“….Insufficient management awareness of SAP capability, lead-
ing to sub-optimal use of SAP in the business.”
“A big part of our issue was lack of management support for
implementation due to changes in management team and direction
mid-stream.”
“… additionally the culture was not geared for Employee Self
Service when it was rolled out. Change Management was poorly
handled and this showed in user acceptance of the system.”
The practices, which were identified as strategies to address employee
resistance, specify many of the successful communication practices. It is
interesting to note that the offering of various rewards or incentives was not
perceivedtobeimportantforimplementingchange.
Even though Australian companies have been working through a number of
majorimplementationswiththeirERPsystemsforanumberofyears,resulting
inalevelofmaturity,theystillconsiderchangemanagementissues’impacton
thesuccessandbenefitattainment.
Researchershaveidentifiedthatprogramswhichestablishpositiveattitudes
towardstheintroductionofinformationsystemsarecriticalsuccessfactorsto
theirsuccessfulimplementation(Aladwani,2001).Thishasledtocompanies
placingincreasingemphasisonchangemanagementstrategies.Hammer(1999)
refers to this process as “organisational reengineering” and argues that an
essential precedent to any change management strategy is the fostering of a
cultureforchange.SAP’sASAPimplementationmethodologyplacesconsid-
erableemphasisonchangemanagementstrategiesandincludesanumberof
resourcestoassistthisprocess.However,eventhoughcompanieshaveaccess

tothismethodologythequestionremains:whyarecompaniesstillsignalling
change problems? It may be that the very maturity of the organisation may
impact on change strategies. Further research is required into the complex
issuesinvolvedinchangemanagementandtheevaluationofresourcesandtools
provided to assist in the change process.
Conclusion
ManycompaniesimplementedanEnterpriseResourcePlanning(ERP)system
toaddressanumberofimmediateproblemssuchasY2Kanddisparateorpoor
systems.Thesesamecompanieshavenowmovedbeyondthisinitialimplemen-
tation and are looking for ways to optimise their investment. This includes
extendingtheimplementedfunctionalityoftheirERPsystemandorimplement-
ingnewcomponentssuchasdatawarehousing,customerrelationshipmanage-
mentoradvancedplanningandoptimisation.Thepurposeofthisresearchwas
to explore factors and barriers of ERP implementations from a change
management perspective. The results indicated that although respondent
organisationshadbeenthroughatleastoneERPimplementation,theycontinue
toencounterproblemswithchangemanagement.Onepossibleexplanationlies
in the culture of Australian organisations. Do they accommodate outside
expertiseinconductingimplementation?DotheyacknowledgethattheAustra-
lian character is one of self-reliance almost to the exclusion of the “outside”
expert? Are change management practices ignored? Are they given a token
treatment or are they considered soft and therefore unnecessary? Is the
Australian business culture one that is becoming risk averse, and fearful of
change? Further research into the nexus of organisations, culture, change
managementandglobalsoftwareimplementationswouldhelpusexplorethe
answerstothesequestions.
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198 Zwicker & de Souza
ChapterXI
SAPR/3
Implementation
Approaches:
A Study in
Brazilian Companies
Ronaldo Zwicker
University of São Paulo (USP), Brazil
Cesar Alexandre de Souza
Abstract
The approach used to implement an ERP system is an important decision
in its implementation project as it greatly affects the configuration of the
system, the allocation of resources and the management of the project and
its risks. It will also play a decisive role at all the stages of the ERP
system’s life cycle. This chapter discusses the different ways of “going-
live”ofERPsystems:big-bang,small-bangsandimplementationin phases,

SAP R/3 Implementation Approaches 199
and describes their advantages and disadvantages. The chapter also
presents results of an exploratory study made in 53 Brazilian companies,
which implemented SAP R/3. Based on these results, influences of the
companies’ characteristics and of the project on the selected method are
discussed. The relation of the implementation approach and project time
is also presented.
Introduction
TheimplementationofERPsystemsisconsideredadifficulttaskthatinvolves
manyorganizationalandtechnicalissues.Forexample,theneedforchangesin
the processes and in the culture of the organization are problems that are
frequentlydiscussedintheliterature(Bancroftetal.,1998;Bingietal.,1999;
Davenport, 1998). Less attention has been paid to other equally important
questions, such as one of the most critical decisions in the implementation
project: the selection of the implementation approach (big-bang, small-
bangs or implementation in phases). This decision depends on a number of
factorssuchaslimitationsofresourcesandtime,characteristicsoftheproject
team, the number of modules which will be implemented, the number of
localities where the implementation will take place, and the risks which the
companyiswillingtotake.
Thischapterpresentsananalysisoftheelementsinvolvedinthechoiceofthe
implementationapproachofERPsystems.First,thechapterdescribesthelife
cycleofERPsystemsandanalyzesthedifferentimplementationapproaches
related to the life-cycle stages. In this first part of the chapter are identified
advantages,disadvantagesandotherfactorsthatshouldbetakenintoaccount
whenthechoiceismade.AbriefdescriptionoftheR/3evolutionintheBrazilian
market is also presented. Results of an exploratory survey made in 53
companiesthatimplementedSAPR/3arethenshown.Basedontheseresults,
influencesofthecompanies’characteristicsandoftheprojectontheapproach
selectedforimplementationarediscussed,andanattemptismadetoestablish
the relationships between relevant factors and the choice made. Finally, the
study analyzes the consequences of the choice in terms of the time taken to
implementandstabilizethesystem.

Life Cycle of ERP Systems
ERPsystemsareintegratedinformationsystemsthatareacquiredintheform
of commercial software packages. Markus and Tanis (2000) define them as
commercial software packages that enable the integration of transactions-
orienteddataandbusinessprocessesthroughoutanorganization.Theimple-
mentation of an ERP system is carried out in well-defined stages. Souza and
Zwicker (2001b) present a model for the life cycle of ERP systems, which
includesthestagesofdecisionandselection,implementation,stabilizationand
utilization.Thesemajorstagesandtheirtemporalrelationshipcanbeseenin
Figure1,whichrepresentsthelifecycleofERPsystems.
AtthedecisionandselectionstagethecompanydecidestointroduceanERP
systemasthesolutionforitsinformationsystemsrequirementsandselectsthe
supplier.Theplanningoftheimplementationfollowsthischoiceandisalsopart
of this stage. The planning should include the establishment of the project’s
scope,goalstobeachievedandmeasuringmethodsfortheverificationofthese
goals,definitionoftheprojectteamandresponsibilities,andtheimplementation
strategy. This will involve the choice of the implementation approach (big-
bang, small-bangs or in phases), definition of the activities which will be
carried out and the project’s schedule, which should take time and resource
limitationsintoconsideration.
package selected
implementation plan
defined
customized modules
converted data
trained users
new requirements
configuration already defined by modules in use
Figure 1 - ERP systems lyfe-cycle
DECISION and
SELECTION
IMPLEMEN
TATION
STABILIZA
TION
UTILIZATION
stable system
Figure 1. ERP systems life cycle.

Theimplementationisthesecondstageoftheproposedlifecyclemodeland
may be defined as the process by which the system’s modules are put into
operation within a company. This stage will involve the adjustment of the
businessprocessestothesystem,theconfigurationandcustomizationofthe
system,theconversionandloadingoftheinitialdata,hardwareandsoftware
configurationandusertraining.Thisstageincludesallthetasksthatarecarried
outfromtheendoftheimplementationplanningtothebeginningofthesystem’s
operation,whentheERPsystembecomesthecompany’sofficialinformation
system.
InthefirstmomentsafterthebeginningoftheERPsystemoperationthereisa
criticalstagefortheproject’ssuccess:thestabilization.AtthisstagetheERP
systembecomesaconcreteobjectandpartofthedailylifeofthecompanyand
ofitsemployees.Thisistheperiodwhenmostmanagerialandtechnicalenergy
must be devoted to the system. At the beginning of the system operation
(similarly to any information system) all kinds of problems arise, such as
operationalproblems,trainingdeficiencies,andbugsinthesoftware,which
were not perceived at the implementation stage. At this time the company
already depends upon the system for its operations, and thus there is consid-
erablepressuretorapidlysolveanyproblem.Thelengthofthisperioddepends
on the company and normally takes about eight weeks (Souza & Zwicker,
2001a).
Finally, at the utilization stage the system becomes an intrinsic part of all
companyoperations.Thisdoesnotmeanthatallofitspossibilitieshavebeen
recognizedandhavebeenimplemented.Thisknowledgewillonlybeascer-
tainedafteracertainperiodandthroughtheideasthatwillemergeindailyuse.
Thus the utilization stage feeds back the implementation stage with new
possibilitiesandneeds,whichcanbesolvedthroughtheimplementationofnew
modules,newconfigurationsornewcustomizations.
Implementation Approaches of
ERP Systems
Bancroftetal.(1998)statethatthefirstdecisionsthecompanymustmakeafter
the choice of the ERP package are those of the modules which will be
implementedandinwhichbusinessunitsorlocationsthiswilloccur.Deciding

thesequenceformoduleimplementationdefineshowtheERPsystemwillbe
introducedintothecompany.Thischoiceisvitalfortheprojectandinfluences
aseriesoffactorssuchasdeadlines,resourcesandmanagementrequirements.
This choice configures what we are calling implementation approach.
Anumberofcompanieschoosetoinitiallyimplementonemoduleoragroupof
modules in one or more than one location in the company. Then the project
moves to the next group of modules and locations. This is called the phased
approach.Anotheralternativeisthecompleteimplementation,whereallthe
modules are implemented simultaneously in all companies’ locations, and
whereallmoduleswillbeputintooperationatthesametime.Thisisknownas
the big-bang approach. Thephased alternative is safer, as it allows the team
tolearnfromexperiencebeforeputtingimportantcompanyprocessesintothe
newsystem.However,itrequirestheconstructionofinterfacesbetweentheold
and new systems, a task that requires resources, and the products of these
interfaces are mostly discarded at the end of the project.
Ifthecompanyhasmorethanonebusinessunitorlocation,thereisalsoathird
possibilitythatisderivedfromthephasedimplementation:thepilotbig-bang
or small-bang. One business unit or smaller locality will be chosen for the
simultaneousstartingoftheoperationjustinthatlocality.Itisthuspossibleto
obtaintheexperienceofthesimultaneousimplementationwithoutexcessively
harming the business. What follows the small-bangcould be either simulta-
neousbig-bangtypeimplementationsintheremaininglocalitiesoraseriesof
small-bangsorphasedmoduleimplementations.
Dimensions of an ERP Implementation
OnewayofanalyzingthedifferentERPimplementationapproachesistolook
atthetwodimensionsthatdefinethesizeofeachstepintheimplementation:the
functionalandthegeographicaldimensions(alsoreferredasmoduleimplemen-
tationstrategyandphysicalscopebyParrandShanks(2000)).Thefunctional
dimensionconsistsofthenumberofmodulesthatwillbeimplementedatthe
sametime,andthegeographicaldimensionconsistsofthenumberoflocalities
orbusinessunitsthatwillbegintousethesystematthesametime(Figure2).
Forexample,theERPsystemmaybeimplementedinanumberofbigstages,
each of which involves a certain number of similar modules being adopted
simultaneouslyinvariouslocalities.Thischaracterizesasmall-bangapproach

(RegionAinFigure2).Ontheotherhand,theimplementationofeachmodule
simultaneouslyinvariouslocalitiescharacterizesaphasedimplementationat
thecompanylevel(RegionBinFigure2).
ThearrowsinthemiddleofFigure2show,foragivencompany,thedirection
oftheincreaseintheriskofthecompanyoperationsbeinginterruptedasaresult
ofthedifferentstrategiesusedtostarttheERPsystemoperation.Thisriskwill
be associated to the number of localities that the company has, and to the
numberofmodulesthatwillbeimplemented.Figure2doesnotcomparethe
riskbetweendifferentcompanies,althoughitcanbeassumedthat,foragiven
strategy, a company with a greater number of localities and implementing a
greater number of modules runs greater risks than a company with fewer
localitiesandfewermodules.
Advantages and Disadvantages of Each
Approach
TheimplementationapproachofanERPsystemhasconsiderableinfluenceon
thevariousphasesofthelifecycle,especiallythestabilizationphase.Inthecase
Figure 2 - Implementation approach dimensions and company stoppage risk
phased
(company level)
big-bang
phased
(plant level)
small-bang
B
A
geographical
dimension
functional
dimension
module by
module
all modules
simultaneously
plant by
plant
all plants
simultaneously
Figure 2. Implementation approach dimensions and company stoppage
risk.

ofthebig-bangapproachthereisacleardifferencebetweentheimplementa-
tion and the stabilization phases, differently from the phased or small-bang
implementation.Inbig-bang,thestartoftheoperationcorrespondstoinitiating
theoperationofallmodulesinalllocationssimultaneously,andthereforethe
team’sfullattentionisdirectedtowardsthestabilizationperiod.Ontheother
hand,inaphasedimplementationmodulesatdifferentstagesoftheirlifecycle
willcoexist,andthismayresultinproblemsderivedfromlackoffocusofthe
project team and of top management.
Theaimoftheimplementationstageistoadjustthesystemtothecompanyin
thebestpossibleway.Thiswillrequireflexibility,constanttests,changesin
configurationsanddevelopmentofcustomizations.Ontheotherhand,theaim
of the stabilization stage is to eliminate operational problems as soon as
possible, with minimum changes in pre-defined configurations and no new
customizations if possible. In a phased implementation this may result in
conflicts,becauseERPsystemsareintegratedsystems,andthemodification
ofamodulethatisbeingimplemented(adesiredsituationintheimplementation
stage)mayresultinmodificationsinothermodulesalreadyinuse(asituation
thatisnotdesiredinthestabilizationandutilizationstages).Theseconflictsare
Table 1. Risks and advantages of the ways to start the operation.
Disadvantages/Risks Advantages
Big-Bang
- risk of company total stoppage
- returning to the previous systems in case of
problems is almost impossible
- requires considerable effort in the stabilization
phase
- concentration of resources during the project
- smaller implementation time
- eliminates the development of interfaces
- creates a "sense of urgency" that makes defining
priorities easier
- better integration of the various modules is
obtained
Small-
Bang
- risk of total stoppage in specific business units
or locations
- returning to the previous systems in case of
failure is considerably difficult
- development of interfaces required
- creates a "sense of urgency" that makes defining
priorities easier at the business unit or location
- allows learning through experience
Phase
- requires development of interfaces
- just part of company is involved
- requirements of future modules are ignored
- modules being implemented result in changes
in modules already stabilized
- simultaneity of processes at the
implementation and stabilization stages
- possible loss of focus of the project
- smaller risk of total stoppage in company
- able to return to the old systems in case of
problems
- less concentration of resources through project
- functioning modules will increase confidence in
the development of following modules
- shorter interval between the design and
utilization of each module

clearer in the case of a phased implementation where the stabilization stage
beginswiththeentryintooperationofthefirstmodule,andonlyendswhenthe
lastmoduleimplementedinthelastlocalityofthecompanyisstabilized.
Though considered to be riskier (Bancroft et al., 1998), the big-bang option
can offer advantages. Souza and Zwicker (2001a) observed in eight case
studies that the big-bangapproach was considered an important motivating
factor for the success of the implementation. With big-bang a consensus is
established in the company that there is no possible return to the previous
system.Thepossibilityofatotalstoppageofoperationsincaseofatotalhalt
ofthesystemexertsafavorableinfluenceforchangeandthequickdetection
of problems, and leads to a joint effort towards the quick solution of the
remainingproblemsinthestabilizationstage.O’Leary(2000)presentsother
advantagesforthebig-bangimplementationsuchastheeliminationoftempo-
raryinterfacesbetweenthesystemandprevioussystems,agreaterintegration
betweentheimplementedmodules,andlesstimerequiredfortheimplementa-
tion. Table 1 summarizes the disadvantages and advantages associated with
eachimplementationapproach.
Implementation Approaches and the
Life Cycle of ERP Systems
TheERPlifecyclemodelpresentedearliercanbecomplementedtakinginto
considerationthecoexistenceofmodulesattheimplementation,stabilization
and utilization stages that occur in the phased and small-bangs approaches.
As shown in Figure 3, the different modules or groups of modules are
implementedandstabilizedindifferentphases,atdifferentmomentsintime(this
is represented by the superimposed rectangles in the implementation and
stabilizationstages).Asthemodulesorgroupsofmodulesofeachphasegointo
the utilization stage they are added to the modules already in use (this is
representedbytheexpandingrectanglesintheutilizationphase,meaningthat
as each module or group of module starts to be used the scope of the
implemented system expands). In the figure, the influence of modification
requirementsofmodulesbeingimplementedorstabilizedonmodulesalready
being used and the restrictions brought about by the modules being used on
modulesinimplementationandstabilizationarerepresentedbythedottedline
arrows.

Implementation Approaches Associated
Factors
O’Leary (2000) believes that the choice of the implementation approach
should be based upon the analysis of the costs and benefits of each option,
taking into account the associated risks. Nevertheless, as the costs and risks
aredifficulttomeasure,companiesendupbybasingtheirdecisionsonother
factors.Thuselementsrelatedtothecharacteristicsoftheorganizationandthe
sizeoftheimplementationprojectusuallyprevail.
Thecharacteristicsoftheorganizationareitssize(annualinvoicing,numberof
plantsorlocations,numberofemployeesandclients)andcomplexity(charac-
teristics of the product, the productive process and the market supplied).
Besidesthenumberofplantsorlocations,thekindofrelationshipsthatexist
betweenthemmustbeconsidered,aspointedoutbyMarkusetal.(2000).For
theseauthorsthedifferenttypesofrelationshipsamongthedifferentbusiness
units or locations (ranging from total autonomy of the business units to total
centralizationofdecisionsatheadquarters)influenceprojectcomplexityand
systemconfiguration,andmustbetakenintoaccountwhenplanninganERP
implementationandchoosingthecorrespondingapproach.
modification requirements
on non stable modules
package selected
plan ready
Figure 3 - ERP systems life-cycle model for small-bang and phased implementations
DECISION &
SELECTION
modification requirements
on stable modules
new requirements
collected knowledge
phase 1
2
IMPLEMEN
TATION 3
...
phase 1
2
STABILIZA
TION 3
...
phase 1
2
UTILIZATION
3
...
module
customized
module
stay stable
Figure 3. ERP systems life cycle model for small-bang and phased
implementation.

Inprinciple,smallerandlesscomplexorganizationsrunfewerriskswhenthey
optforabig-bangimplementationandmayachievetheadvantagesassociated
withthistypeofstrategy.Thenumberofmodulestobeimplementedandthe
levelofcustomizationthemoduleswillundergomustalsobetakenintoaccount.
Ahighernumberofmodulesandanincreasedcustomizationwillresultinamore
complexproject,andthereforeaphasedimplementationispreferable.
In the cases analyzed by Souza and Zwicker (2001a) it could be seen that the
big-bang was used in smaller companies or in companies with clear time
restrictions.Inlargercompaniesphasedimplementationwaspreferableandthe
big-bangwas,insomecases,consideredtotallyunfeasible.Table2summa-
rizes the various factors associated with the choice of the implementation
approach.
SAP R/3 in Brazil
The first implementations of SAP R/3 in Brazil begun in 1995 in large
multinationalcompanies(likePirelli,BoschandRhodia).SincethenSAPhas
gainedalargeshareoftheERPmarketamongthebigcompaniesinthecountry
(also called the “high-end market”). A recent survey shows that in 333
Table 2. Factors associated with the choice of the implementation
approach.
- Project goals
- Advantages and disadvantages of each approach
- Risks of each approach
- Company and business processes complexity
Company size
Product and process characteristics
Market characteristics
Types of relationships among business units (from total autonomy to total
centralization)
- Project complexity
Number of modules being implemented
Customization level
Number of plants or locations
- Project constraints
Project deadlines
Financial resources
Technical and human resources limitations

industrial companies of all sizes, R/3 is present in 33% of the companies
classifiedas“bigcompanies,”3.4%ofthecompaniesclassifiedas“medium
companies” and no presence in companies classified as “small companies”
(Vidal & Souza, 2003). According to the SAP site, in April 2002 there were
about380clientsinBrazil.ThesecondERPsystemamongthebigcompanies
groupissuppliedbyaBrazilianvendorandisusedby20%ofthesecompanies.
The first companies that implemented R/3 in Brazil suffered from various
problems related to the adjustment of the software to local legislation and
businesspractices(localization).Someofthefunctionalitiesneededcouldnot
bedeliveredbySAP,andthenthecompaniesusedlocalpackagesassociated
with R/3, which caused integration problems. The HR module could not be
used until very recently and most companies opted to use Brazilian Human
Resources packages. Another problem faced by the companies was the
shortageofskilledprofessionals.Thisledtoahighturnoveramongcompanies,
asthepeopleinvolvedinimplementationprojectsusuallyleftthecompaniesfor
highersalariesinconsultingcompaniesorothercompaniesthatwerebeginning
implementation. (See Souza and Zwicker (2001b) for a description of R/3
implementationcasesinBrazil.)
By 2002 most of these problems were solved and presently the software is
much more adequate to local needs. Notice that in Brazil there are many and
frequentchangesintaxes’calculation,whichputsconsiderableworkloadon
SAP to continuously adapt its software, and on the client companies, which
havetoinstallthecorrespondingpatches.
Research Methodology
Thisstudypresentsresultsofasurveymadein2001inpartnershipwithASUG-
Brasil (SAP user group in Brazil). The study involved the collection of data
throughaquestionnairesenttothe254membersoftheASUGinJanuaryand
February2001.Fifty-fivequestionnaireswerereturned(approximately21%)
of which only two were rejected. Six of the responses were from companies
that had not yet started the operation of the system and the information was
based on the forecast of the project’s end.
Thequestionnairessurveyedcharacteristicsofthecompanyandofthesystem
implemented,andincludedspecificquestionsregardingtheimplementation
approach adopted and the length of the project. Using these responses, an

exploratoryanalysiswasmade,focusingontheimplementationstrategy(big-
bang, small-bangs, or phased), attempting to check whether and how this
strategywasrelatedtothecharacteristicsofthecompaniesandtheimplemen-
tation projects. After this analysis the study attempted to verify whether the
chosenformofimplementationandthecharacteristicsofthecompanyinflu-
encedthedurationoftheproject.Thestatisticalanalysiswasconductedusing
the software SPSS for Windows 10.0.
Descriptive and Exploratory Analysis of
the Collected Data
Characteristics of the Sample
The distribution of the companies in the sample shows that 71% of them
adopted the big-bang, 15% the small-bang, 8% implementation in phases,
andtherestadoptedotherprocedures.Mostcompanieswereindustrial(78%)
andtherestwasequallydividedbetweenservices,utilitiesandcommerce.The
high number of companies using the big-bang option exceeded the initial
expectationsthatthiswouldbetheleastpopularmethod.Thepredominanceof
industrialcompaniesischaracteristicofthemarketforERPsystems.Compa-
nieswereequallydividedbetweenBrazilianandforeign.
Table3presentsthestatisticsandthenumberofcaseswithinformationoneach
variable of interest. The asymmetry coefficient was calculated using the
skewnessmeasurement supplied by SPSS divided by its standard deviation.
Distributions where this value was situated between -1.96 and 1.96 were
considered to be symmetrical (Hair et al., 1998). Only the age of the project
(AGEPRJ) could be considered to be symmetrical, as the other factors were
positivelyasymmetrical,whichshowsthatthereisaconcentrationofvaluesat
thebeginningofthedistributions.Neverthelessthemedianallowsustoanalyze
thecharacteristicsofthecompaniesandtheirprojects.Ingeneral,theyarelarge
companieswithannualinvoicingofaroundUS$300millionandwithmorethan
1,500employees.Theprojectshadgenerallysixmodules(the“heart”ofR/3
is made up of five modules) in four factories with a total of 300 users. The
median of the size of the project (MODPLAN) is 18, less than the simple
multiplicationofmodulesbyplants(6x4=24).Thisshowsthatsomemodules

are implemented in a centralized form (in fewer plants) and others in a
decentralizedform(inmoreplants).
Graph1givesanideaofthedispersionoftheprojects,dividedintobig-bang
projects and others, according to the number of users and size of the project
(axes are on a logarithmic scale). The four largest projects on the graph are
thoseofanauto-partsmanufacturer(case19,3000users,12modules,seven
plants),achemicalcompany(case50,2600users,eightmodules,32plants),
afoodproducingcompany(case51,1450users,fivemodules,29plants)and
acigarettecompany(case25,1200users,eightmodules,27plants).Ofthese
cases,justthechemicalcompanyusedthebig-bangapproachand,intheentire
sample,thiswasthecompanythattookthelongesttimetointroducethesystem
Table 3. Characteristics of interest variables.
Table 4. Description of the variables.
Variable Description Mean
Std.
Dev.
Median Min Max
Asymm.
Coef.
Nr.
Cases
TIMPLANT Length of project in months (*) 16.3 11.2 12 3 48 4.4 53
TESTABLZ Period of stabilization in weeks (*) 10.5 9.0 8 1 48 3.9 53
AGEPRJ “Age” of project in months (*) 33.0 14.3 33 4 71 1.3 53
INVOICING Annual invoicing in US$ million 530.0 858.0 300 20 5,000 10.1 47
NEMPLOYS Number of employees 4,817.0 8,082.0 1,725 60 40,000 8.6 50
NUSERS Number of R/3 users 487.0 610.0 300 15 3,000 7.8 53
NPLANTS Factories with implementation 6.1 7.3 4 1 32 7.5 50
NMODULES Number of modules implemented 6.8 2.2 6 3 13 2.3 53
MODPLAN Size of project (*) 32.0 41.4 18 4 256 11.3 50
TOTPROGS Customized programs develpd. (*) 364.0 428.0 253 31 2,131 7.9 45
ITEMPLS Number of IT employees 33.4 49.2 17 2 283 9.9 42
(*) see detailed description in Table 4
Variable Detailed description
TIMPLANT
Length of the project in months from its beginning to the initial operation of the final
module. In the uncompleted projects the forecast of the end of the project was used.
TESTABLZ
Stabilization time of the system in weeks after entering into operation. Applied only to
big-bang situations.
AGEPRJ
Measurement of the “age” of the project. The number of months from the beginning of the
project to the time the survey was made (Jan 2001).
TOTPROGS
Total number of external programs (including those in ABAP language) and reports
(including those generated by the generator) that the company developed up to the date of
the survey.
MODPLAN
Measurement of the “size” of the project. For each module the companies informed the
number of plants where this module was used. The variable is the sum of these values.

withthisapproach(21months).Case24isamedium-sizedBrazilianchemical
company that implemented R/3 in small-bangs for a total of 17 users in five
plants.Graph2showsthedistributionofimplementationtimesoftheprojects
inthestudy.
TIMPLANT
months
48
44
40
36
32
28
24
20
16
12
8
4
12
10
8
6
4
2
0
number
of
cases
Graph 2 – Distribution of project implementation times
Graph 2. Distribution of project implementation times.
Graph 1. Projects by number of users and size.
MODPLAN
big-bang
others
200
100
60
40
20
10
8
6
4
4000
3000
2000
1000
500
400
300
200
100
50
40
30
20
10
51
50
25
19
24
NUSERS
Graph 1 – Projects by number of users and size

In terms of the stabilization times (TESTABLZ), four companies had much
highervaluesthantherest(40,30,28and26weeks).Twofactorsseemtohave
contributedtothisdiscrepancy:(1)theconceptofstabilizationdependsonthe
seriousness of problems that the company considers “normal,” and (2) a
numberofmodulesstabilizemorequicklythanothers.Oneofthecompanies
informed that the time needed to regain confidence in the stock control and
production costs was 48 weeks, whereas stabilization in the other modules
took place much faster (four weeks). In this case the average time was
considered to be 26 weeks. If these observations are eliminated, the average
timewasofeightweeks,similartothatfoundinthestudyofSouzaandZwicker
(2001a). It should be noted that only those companies that implemented the
systemusingthebig-bangapproachansweredthisquestion.
Relationships Involving the Implementation Approach
Inordertoverifytherelationshipbetweentheimplementationapproachandthe
remaining variables the sample was divided into two groups: big-bang and
others. This division was made because the number of cases in the other
categories(small-bangsandphases)wassmallincomparisontothenumber
of cases that used the big-bang. As can be seen later on, this division was
consistentwiththeanalysescarriedout.
Table 5. Results of the t test for the big-bang and others.
Original variable Transformed variable (ln)
variable
Signif. of
equality of
variances
t Signif.
Big-
Bang
mean
value
Others
mean
value
Signif. of
equality of
variances
t Signif.
TIMPLANT .000 -4.070 .001 11.9 27.3 .199 -4.789 <.001
INVOICING .001 -1.809 .094 330.6 1053.0 .750 -2.785 .017
NEMPLOYS .000 -2.097 .054 2500.0 10225.0 .228 -2.811 .007
NUSERS .028 -2.149 .046 353.3 824.5 .549 -2.671 .010
MODPLAN .689 -1.031 .308 28.4 42.1 -- -- --
MODULOS .544 -1.079 .286 6.5 7.3 -- -- --
AGEPRJ .366 -2.335 .024 30.2 40.0 -- -- --
Levene’s test verifies the equality of the variances of the variable in the two groups. The null hypothesis
is the equality of the variances. If the variances are not equal the corrected value of t is presented.

Forthenominalvariables(nationalityandactivitysectorofthecompany),the
chi-squaretestdisclosedwhethertherewasanydifferenceintermsofhowthe
big-bang and others groups were made up. No significant differences were
found in terms of the number of companies that used the big-bang or others
in terms of nationality or activity. Table 5 shows the results of thet test, used
tocheckdifferencesinthemetricvariablesbetweenthetwogroups.
Thettestisquiterobustbutdependsonthesymmetryofthedistributionofthe
variables and on the equality of variances between the groups. In the cases
wherethevarianceofthegroupswasdifferent(basedontheLevenetestmade
by SPSS), the results of the ttest based on the transformed variables are also
presented,usingthelntransformationtocompensatefortheasymmetry.
Thedifferenceintheimplementationtimebetweenthetwogroupsisstatistically
significant,withanaverageof11.9monthsforthecompaniesthatimplemented
the big-bang and 27.3 months for those that used other methods. The
differencesobservedinthevariablesINVOICINGandNEMPLOYS(thesize
ofthecompany)hadasignificancehigherthan0.05,althoughtheyrangedwithin
a0.1significance.Inthecaseofthesevariablesthetransformationallowedfor
thestatisticalvalidationofthedifferences.TheNUSERSvariableshoweda
significant difference while the MODPLAN and MODULOS did not. The
remainingvariables,whicharenotincludedinthetable,showednosignificant
differences.
Wecanthereforeconcludethatthebig-bangwasusedinprojectswithlower
number of users and which were implemented in a much shorter time.
Accordingtothevariablesofnumberofemployeesandannualinvoicing,the
big-bang seems to be linked to smaller companies. The difference shown in
relationtotheageoftheproject,wherethebig-banggrouphadanaverageof
30.2 months and the others group an average of 40.0 months shows that the
big- bang projects in the sample are more recent than the rest.
Relationships Involving the Nature of the Companies
Table6presentstheresultsofthe ttestfortheverificationoftherelationship
between TIMPLANT and AGEPRJ to the nationality and the sector of the
companies.Ascanbeseen,TIMPLANTdidnotshowanysignificantdiffer-
encebetweentheBrazilianandforeigncompaniesorbetweenmanufacturing
companies and the rest. However, AGEPRJ was significantly greater in the
foreigncompaniesinthesample,showing,asexpected,thattheywerethefirst

toimplementR/3.Thenumberofmodulesimplementedshowedasignificant
differenceinrelationtothesectorofactivity,withahighernumberofmodules
inmanufacturingcompanies.Theremainingvariablesdidnotshowsignificant
differencesbetweenBrazilianandforeigncompaniesorbetweenthoseinthe
industrialsectorandothersectors.
Relationships Between Metric Variables
Inordertoanalyzetherelationshipsbetweenthemetricvariablesstudied,linear
Pearsoncorrelationcoefficientswerecalculated.Thevalueswithacoefficient
significancelowerthanorequalto0.5areshowninTable7.Thelogarithmic
transformation(ln)ofthevariablestocompensatefortheasymmetrydidnot
significantly alter the interpretation of the correlation coefficients, and the
originalvariablesweremaintained.TheexceptionwastheNUSERSvariable,
which when transformed received the denomination LNNUSERS and is
includedinthetable.
Thelengthoftheproject(TIMPLANT)wasstronglycorrelatedtotheageof
the project (AGEPRJ). This is interesting as it shows a reduction in the
implementation time of the more recent projects. TIMPLANT was also to a
lesser degree correlated to INVOICING and this points towards an increase
intheimplementationtimeinprojectsinlargercompanies.TIMPLANTalso
showed a correlation to the size of the project, indicated by LNNUSERS.
AGEPRJisalsocorrelatedwithMODULESandthetotalnumberofprograms
developed(TOTPROGS).Thissuggeststhataftertheinitialimplementation
project,thecompaniescontinuetoimplementothermodulesorcustomizations
inordertocomplementthesystem.Aswasexpected,thenumberofuserswas
Table 6. Results of the t test for nationality and sector of activity.
Nationality of the company Sector of activity
Variable
Value
of t
Signif.
of t
Brazilian
average
Foreign
average
Value
of t
Signif.
of t
Industrial
average
Other
average
TIMPLANT -1.585 .119 13.8 18.7 1.085 .283 17.1 13.0
AGEPRJ -2.011 .050 29.1 36.7 1.662 .108 34.2 28.2
NMODULES -0.078 .938 6.7 6.7 2.878 .006 7.2 5.2

reasonablycorrelatedtothesizeoftheproject.Alsothenumberofserversis
reasonablycorrelatedtoMODPLANandLNNUSERSduetotheprocessing
loadinvolvedinERPsystems.TOTPROGSiscorrelatedtoMODPLANand
LNNUSERSandnotdirectlytothenumberofmodules,aswouldbeexpected.
Another finding is the fact that the stabilization time (TESTABLZ) is not
correlatedwithanyotherfactor(forthebig-bangcases).Thisprobablyisdue
tothefactthatafterstartingtheoperationinbigbangthereisnoalternativefor
thecompanyotherthantostabilizethesystemintheshort-term.Ifthisdoesnot
takeplace,theoperationsofthecompanywillbeaffected.Thisagreeswiththe
“sense of urgency” and the motivation that can be attributed to the big bang
methodofimplementation.
Relationships Involving the Number of Users and the
Implementation Time
Ascouldbeseen,thenumberofuserswassignificantlydifferentinthebig-bang
and others groups. Graph 3 shows the relationship between NUSERS and
TIMPLANTandthechoiceforthemethodofstartingtheoperation.Thegraph
Table 7. Pearson correlation coefficients between the metric variables.
TIMPLANT
AGEPRJ
TESTABLZ
INVOICING
NEMPLOYS
LNNUSERS
MODULES
MODPLAN
QTSERVDR
AGEPRJ .618**
TESTABLZ
INVOICING .525**
NEMPLOYS .328* .782**
LNNUSERS .558** .437** .421* .369**
MODULES .477** .410** .484**
MODPLAN .383** .519**
QTDSVDR .421** .483** .458** .401** .649**
TOTPROGS .449** .344* .388* .469** .568**
ITEMPLS .488** .902** .742** .400** .474**
** significant correlation at the level of 0.01/ * significant correlation at the level of 0.05

showsthatallthecompanieswithlessthan150userschosetousethebig-bang
(withtheexceptionofcase24).Whentherearemoreuserstherearebothbig-
bangandothersprojects,andtheimplementationtimesoftheothersprojects
arelonger.
Graph 3 clarifies the TIMPLANT distribution presented in Graph 2 and the
compositionoftheprojectsthathavebeenstudied,permittingtorecognizethe
existence of three groups of companies: the big-bang companies with up to
200 users; the big-bang companies with more than 200 users; and the
companiesthatusedphasedimplementationorsmall-bangs.Byprojectingthe
points on the TIMPLANT axis we can see that there is a concentration of the
first group around the value of 8 months, of the second group around 20
months, and the third group, which is more disperse, between 12 and 53
months.ThisexactlyreflectsthedistributionshowninGraph2.
It is also possible to see that in the case of the big-bang companies there is a
clearercorrelationbetweenNUSERSandTIMPLANTthaninthecaseofthe
othercompanies(correlationcoefficient0.700withasignificanceof0.001).By
dividingthebig-bangprojectsintotwogroups(upto200usersandabove200
users),theresultsobtainedforthettestsofthevariablesarepresentedinTable
8 (with significant differences). As can be seen, this division of big-bang
projectswasquiteconsistent,withgroupsdistinguishedbyINVOICINGand
AGEPRJ.Thegroupof“upto200users”comprisessmallercompanieswhich
implementedthesystemsmorerecently.
Graph 3. Number of users and implementation time.
NUSERS
3000
1000
400
200
100
50
30
10
40
20
10
8
6
4
2
others
24
big bang
TIMPLANT
Graph 3 – Number of users and implementation time

Thedifferenceinthenumberofprogramsdevelopedandmodulesimplemented
may be related to the fact that the projects in the first group are simpler or to
theadoptionofmorestandardizedsolutionsbythesmallercompanies.
The “Market Learning”
Graph4showstherelationshipbetweenageoftheprojectandimplementation
timeforbig-bangand othersprojects.Thelineinsertedinthegraphhelpsthe
analysisandshowsadevelopmentthroughtimefromrighttoleftandaneffect
Table 8. Comparison of variables between the big-bang < 200 and big-
bang > 200 user groups.
variables t Significance
Means for group
“big-bang < 200 users”
Means for group
“big-bang > 200 users”
TIMPLANT 4.568 < .001 8.9 15.6
AGEPRJ 2.997 .005 25.3 36.3
INVOICING 3.751 .002 139.4 603.6
TOTPROGS 3.111 .003 135.1 490.0
MODULOS 3.585 .001 5.8 7.7
Graph 4. Implementation time and project age.
80
70
60
50
40
30
20
10
0
50
40
30
20
10
0 AGEPRJ
others
big bang
TIMPLANT
Graph 4 – Implementation time and project age

of the reduction of time from above top to bottom. It can be seen that more
recentprojectstendtoadoptabig-bangstrategyand,simultaneously,thereis
atrendforareductionoftheimplementationtime.
Thismayhappenbecausetheprojectsareactuallybeingcarriedoutquickeror
becausethelargercompanieswithlargerprojectsimplementedR/3beforethe
others.ForacleareranalysisofthistrendTable9presentsthetotalandpartial
correlations between TIMPLANT, AGEPRJ and LNNUSERS, the latter
chosen as an indicator of the project’s size. The partial correlation is the
correlation between two variables when the effects of other variables are
removed (Hair et al., 1998).
As has already been mentioned, the correlation between AGEPRJ and
LNNUSERSshowsthatthemorerecentprojectsaresmaller,whichwasalso
shown in the previous item in relation to the big-bang projects. The partial
correlationbetweenTIMPLANTandAGEPRJremainedsignificant,which
shows that the most recent projects are implemented quicker even when the
effect of the reduction of the number of users in the newer projects is
discounted.Thiseffectisgreaterifalltheprojectsareconsidered,notjustthe
big-bangones.ThepartialcorrelationbetweenTIMPLANTandLNNUSERS
alsoshows,whentheageoftheprojectisdiscounted,thatprojectswithfewer
users take less time to implement. In the case of this correlation the effect is
greater in the big-bang projects. Time reduction of the more recent projects
isthuspartiallyassociatedtoareductioninthesizeoftheprojectsandpartially
toareductioninthetimerequiredforimplementation.
Onepossibleexplanationforthereductionintheimplementationtimewhichis
notexplainedbythereductioninthesizeoftheprojectsisthelearningofthe
Table 9. Correlations between AGEPRJ, LNNUSERS and TIMPLANT.
All projects only big-bang
LNNUSERS AGEPRJ LNNUSERS AGEPRJ
AGEPRJ
Total correlation .4373** .4300**
TIMPLANT
Total correlation
Partial correlation
.5583**
.4075**
.6180**
.5010**
.7000**
.6126**
.5740**
.4233**

consulting companies which implemented the R/3, the professionals on the
market, and the vendor itself in relation to the Brazilian implementation
projects. This time reduction may also be attributed to improvements in the
package,especiallyintermsoflocalization(adaptationofR/3totheBrazilian
legislation),whichreducedtheneedforcustomization.Theexistenceofmore
informationoncompanieswhichalreadyimplementedaswellastheexistence
of mechanisms of exchanging experiences, such as user groups, may also
explainthereduction.Allthesefactorsmaybeinterpretedasa“marketlearning
effect”inrelationtoR/3.However,itisnotpossibletodetecttheinfluenceor
eventheexistenceofthislearningeffectonlybaseduponthesurveydata.
Conclusion
The exploratory survey permitted to observe a number of factors of the
implementation of R/3 projects in Brazil. It was initially shown that many
projectsusedthebig-bangimplementationapproach,andthattheseprojects
are connected to companies with fewer users. It was also observed that the
implementationtimeoftheseprojectswassmaller.Itwasalsoshownthatover
time there was an increase in the use of the big-bang and a decrease in the
implementationtimeoftheprojects.Thisisassociatedwithbothareductionin
thesizeofthemorerecentprojectsandapossibleeffectof“marketlearning”
in relation to the package.
ThesampleiscomprisedbypartofthecompaniesmembersofASUG-Brasil
(21%). Although the sample was not random it probably represents this
populationwhich,inprinciple,allowsustogeneralizetheresults.Accordingto
theApril2002dataoftheSAPsitetherearemorethan380R/3usersinBrazil,
of whom 14% are represented in the sample.
As already mentioned, the choice of the method of starting the operation
requires many considerations, such as: the risk the company believes to be
appropriate,deadlines,budgetrestrictions,thecomplexityoftheproject,the
contextofthecompany,andsoforth.Therearealargenumberoffactorsthat
mayinterfereandwhichshouldbeconsidered.Thisstudydidnotattempttoset
upanormativeorexplicativemodelforthechoicesmadeduringtheprojectand
merely attempted to indicate possible relationships between a number of
variableswhichmaybedirectlyorindirectlyinvolvedintheprojectsandwhich
may help to improve models to be set up or future studies on the subject.

Finally,itshouldbenotedthatERPsystemsareaveryinterestingopportunity
for studies in the area of information systems. In studies on the use of
informationtechnologyingeneral,theeffectsofaveryimportantandcomplex
variablearepresent:theactualinformationsystemunderstudy.Inthecaseof
ERPsystemstheseeffectsmaybeminimizedduetothestandardizationwhich
isincorporatedintothesesystemsandwhichispossiblyreplicatedamongthe
firmsstudied.Thisalsocouldhelptoimprovecomparisonsbetweencompa-
nies.
References
Bancroft, N.H., Seip, H., & Sprengel, A. (1998). Implementing SAP R/3:
How to introduce a large system into a large organization. Manning.
Bingi, P.,Sharma,M.K.,&Godla,J.(1999).CriticalissuesaffectinganERP
implementation. Information Systems Management, 16(3), 7-44.
Davenport,T.H.(1998,July/August).Puttingtheenterpriseintotheenterprise
Hair, J.F. et al. (1998). Multivariate data analysis. Prentice Hall.
Markus, M.L., & Tanis, C. (2000) The enterprise system experience – from
adoption to success. In R. Zmud (Ed.), Framing the domains of IT
research:Glimpsingthefuturethroughthepast.Cincinnati:Pinnaflex.
Markus, M.L., Tanis, C., & Fenema, P.C. (2000). Multisite ERP implemen-
tations. Communications of the ACM, 43(4), 42-46.
O’Leary, D.E. (2000). Enterprise resource planning systems: Systems, life
cycle, electronic commerce and risk. Cambridge University Press.
Parr, A.N., & Shanks, G. (2000). A taxonomy of ERP implementation
approaches. Proceedings of the 33rd
Hawaii International Confer-
ence on System Sciences.
Souza,C.,&Zwicker,R.(2001a).Enterprisesystems:Amultiple-casestudy
ineightBraziliancompaniesadoptingERPsystems.Proceedingsofthe
2nd
Annual Global Information Technology Management World Con-
ference, Dallas.

Souza, C., & Zwicker, R. (2001b). ERP systems’ life cycle: Findings and
recommendations from a multiple-case study in Brazilian companies.
Proceedings of BALAS 2001, San Diego.
Vidal,A.G.R.,&Souza,C.(2003).Perfildaempresadigital2000.Working
Paper, University of São Paulo (FEA).

222 de Souza & Zwicker
ChapterXII
ERPSystems
Management:
A Comparison of Large
Sized Brazilian Companies
Cesar Alexandre de Souza
Ronaldo Zwicker
Abstract
This chapter investigates the aspects involved in ERP systems management
to understand how such artifacts transform the role of Information
Technology (IT) areas within the organizations. ERP systems are currently
the main component of the information architecture of most large and
medium sized companies and the management of these systems has
become a critical part of IT teams’ every day. Initially is proposed a
management model for ERP systems based upon a survey of the literature.
Next is presented, based upon the model, the analysis of two ERP systems
management cases of large sized Brazilian companies. At the end the cases
are compared and important observed differences set up the conclusions
of this chapter.

ERP Systems Management 223
ERP Systems Role in Organizations
DuringthesecondhalfoftheninetiestheimplementationofERPsystemswas,
onaglobalscale,oneofthecentralpointsofattentionregardingITutilization
in companies. History shows that implementation of ERP systems is not a
simple matter; even some failures were reported. Research on the subject
developed as from the end of the decade, which studied mainly the factors
governingsuccessfulimplementation,showedthataprocessofculturalchange
is involved. One critical factor for success is to avoid that the endeavor be
handledasa“computing”project.Dedicationandinvolvementoftopmanage-
ment, strong participation of users and change management were aspects
consideredessentialforthesuccessoftheseimplementationprojects.
The issue of benefits achieved with the use of these systems was also
researched;however,therearefewevaluationsofaquantitativenature.ERP
systems brought benefits with regard to the integration of the company’s
internaloperationsbyreducing:raw-materialstocks,ordertakingtime,pro-
duction time and delivery time. Gains in efficiency due to elimination of
operationscarriedoutbyhand,especiallythoseassociatedtomanualintegra-
tionbetweenpreviouslyisolateddepartmentalsystems,werealsoperceived.
Furthermore,thesesystemsuseasingledatabase,whichaddstothequalityof
theinformationavailable.Theavailabilityofreal-timeinformationmayalso
contributetoimprovethecompany’sdecision-makingprocedures.
Inmostcases,afterimplementation,theERPsystembecomesthebasisupon
which the company begins to develop other initiatives, such as: customer
relationshipmanagement(CRM),supplychainmanagement(SCM)andbusi-
ness intelligence (BI). Also at this stage, called the “ERPs second wave,”
companiesbegintoconsolidatetheirprocessreviewsandeffectivelyemploy
amodelofintegratedprocessmanagement.
IT Management: New Challenges
NotwithstandingtheERPphenomenon,thecurrentdynamicsoftheorganiza-
tionalITusemustalsobetakenintoaccount.AccordingtoAndressen(2002),
business units are demanding from the IT area increasingly higher levels of
service and IT managers are being forced to review how they carry out their

operations, spend their money and plan for tomorrow. To make IT services
available“asiftheywereutilities,”whichisthecaseoftelephoneservices,is
anapproachthatisgatheringmomentumwhenthediscussionisabouttheform
inwhichITdepartmentsmustservicethecompanybusinesses.Recently,Carr
(2003),baseduponthisapproach,causedanintenseandpolemicdiscussion
when he suggested the decrease of IT importance to the organizations.
ForKayworth(2002),ITdepartmentsthattraditionallyoperateasmanagerial
units, focused on the development of transactional systems to enhance the
efficiencyoftheorganization,arenewlyplayingamuchmorestrategicrole.
Furthermore,ITdepartmentshavebeenrecastbyseeminglyendlessorganiza-
tional trends related to how companies interact with their clients, with their
suppliers and with their outside partners. Such transformations have taken
placeinanenvironmentcharacterizedbytherapidevolutionandtransformation
oftechnology.Accordingtotheauthoritcanbearguedthat,inviewoftheses
changes,thescopeandthenatureofITdepartments’managementhasradically
changed.
AnothersignificantaspectisthegrowingconcernwithITareacosts.Thiscan
beperceivedthroughtheshrinkageofITinvestmentsandtheincreasinguseof
valuationmethodstoassesscostsandresultsofITuse.Thesenowarecommon
in IT context approaches, such as: total cost of ownership (TCO), return on
investment(ROI),servicelevelagreement(SLA)andtheservicelevelmanage-
ment(SLM).Initiallyaresponseofthecompaniestotheeconomicslow-down
which took place as from the year 2000, the tendency to reduce and control
investmentsoftheITareaseemstobeconsolidatingandthisfactshouldprevail
in the long term. Faced with this scenario, IT departments are compelled to
reduce and control their costs; however, on the other hand they are also
pressed to offer more extensive, stable and adaptable services in an ongoing
adjustmenttobusinessshifts.
Management of ERP Systems
Quickly ERP systems developed into the main component of corporate
information systems of most large and medium sized companies. This takes
place at a time when companies and IT teams are obliged to assure response
capability and adjustment capability of their systems to the requirements of

business and its relentless changes. In general, the ERP system is a critical
resourcefortheintegratedmanagementofthecompany’sdiverseareasandfor
itssupplychain.Thisimpliesthefulfillmentofextremerequisitesofavailability
andperformance.
This in principle outlines the meaning of management of ERP systems: it
comprisesthegroupofactionscarriedouttoensurethefulfillmentofbusiness
requirements,theperformance,theavailabilityandthecontrolofmaintenance
andoperationactivities.Currently,theseactivitieshavebecomeacriticalpart
of the every day of IT teams within the companies.
Experience proves that ERP systems management may be problematic. For
instance,Chew(2001)mentionsthat,afteroperationstart-upofERPsystems,
users face high costs of maintenance, poor technical support and “painful”
upgrades.AfourthofthecompaniesinterviewedintheChewsurveyadmitted
they suffered interruptions in their business due to upgrades of their ERP
systems.One-thirdprotestedagainstwaitingtimeslongerthanthosepredicted
forsupportservicesbytheirsuppliers.Accordingtothesurvey,inreplytosuch
difficulties, the companies must be capable of giving their applications own
support.Healsosuggeststhatdiscontentusersmusttakeadvantageofthenext
upgradetoconsiderchangingtheERPsupplier.
Performance,availabilityandcostsrequirementsaswellasconstantadjust-
ment to business needs are also applicable to the other company systems,
internallydevelopedornot.However,inthecaseofERPsystemssomeofthe
knowledgeneededtomeetsuchrequisitesisnotfoundinthecompany.Such
knowledgeisstronglyintegratedwiththesoftwareitselfandscatteredamong
the other agents (suppliers and consultants). This entails challenges to the
managementofERPsystemsthatdifferfromthoserelatedtothemanagement
of systems developed internally. According to Brooks (1995), insofar that a
commercialsoftwarepackagesellsbythousandsthequality,delayfordelivery,
productperformanceandsupportcostsbecomecontrollingissuesinsteadof
thedevelopmentcosts,socrucialinthecaseofsystemsdevelopedinternally.
According to Kern (2002), when the company choose the use of a package
thentheymustunderstandthatthesuppliernowcontrolstheintroductionofnew
functionalitiesintheproduct.Iftheinternalusersaskforfunctionalitychanges
then it may be possible that they only must wait; however, if the requests are
not part of the supplier plans then they possibly do not have any alternative.
Inclusively the resolution of performance related problems may demand
knowledgenotavailableinthecompany,sinceitdependsuponthestructureof

databasesandcomputerprograms.Pui-Ng,ChanandGable(2001)statethat
because of these aspects, the ERP systems maintenance differs profoundly
fromthemaintenanceofsystemsthataredevelopedinternally.
Research Methodology
For O’Brien (2001), IT management encompasses the aspects of strategic
management, operations management, resources management, technology
managementanddistributedmanagement.Strategicmanagementmustensure
thatITsignificantlycontributestoprofitabilityandthegreaterobjectivesofthe
company. Operations management, which the author divides into develop-
ment, operations and technical support, includes the activities that must be
performed to ensure systems availability and suitable use. Resources and
technologymanagementencompassactivitiesrelatedtoinformationresources,
hardware,software,networksandIThumanresources.Distributedmanage-
mentmustdealwiththepartitionofresponsibilitiespertinenttotheinformation
systemsamongendusersandmanagers.
Thistaxonomyrecommendstakingintoaccountaspectsofoperationalman-
agement as part of the model that will be used in this work. In this way the
development,operationandtechnicalsupportactivitiesspecificallyrelatedto
Figure 1. ERP systems management model.
ERP
supplier
services
relationship
consultants
services
relationship OPERATION
DEVELOP
MENT
SUPPORT
ERP SYSTEM
MANAGEMENT
users
services
relationship
ERP
supplier
services
relationship
ERP
supplier
services
relationship
consultants
services
relationship
consultants
services
relationship OPERATION
DEVELOP
MENT
SUPPORT
ERP SYSTEM
MANAGEMENT
OPERATION
DEVELOP
MENT
SUPPORT
ERP SYSTEM
MANAGEMENT
users
services
relationship
users
services
relationship

ERPsystemswillbeanalyzed.Themodeliscompletedwiththeaspectsrelated
to the actors involved, who may be internal (analysts and programmers) and
external (suppliers, consultants and users) to the IT area. Figure 1 shows the
schematicformofthemanagementmodel.
Regardingdevelopmentactivities,thelifecycleofERPsystemsisquitedistinct
fromthelifecycleofinternallydevelopedsystems.Forinstance,inrelationto
the process of maintenance, Pui-Ng, Chan and Gable (2001) point out that
ERPsystemsundergomaintenancerequestedbytheusers(justasthesystems
developedinternally)aswellasthatrequestedbythesuppliersthemselvesin
the form of patches (corrections of problems, small sized improvements or
modificationsrequiredbylaw)andupgrades(newversionsofthesoftware).
With regard to the operational activities of the system, noteworthy are those
relatedtoitsperformanceandavailability.Theknowledgeneededtoaccom-
plish these activities, mainly in the case of performance tuning, may not be
internallyaccessible.Withrespecttoavailability,thestrongintegrationofERP
systemsmayleadtodifficultiesin“stoppingthesystem”forthecarryingoutof
maintenanceandinstallationofcorrections.Eventhemaintenanceofspecific
modules may be troublesome because modifications in one module may
demandsimultaneousmodificationsinothermodules.
Finally, the support activities entail training of users and response to their
doubts related to use of the system. According to Pui-Ng, Chan and Gable
(2001), such activities are more intense and difficult in the case of the ERP
systemsthaninsystemsdevelopedinternally,mainlybecauseofthelimited
knowledgeontheinternalfunctioningofthesystem.
ThesurveywasexploratoryanditsobjectivewastoexaminehowERPsystems
transform the role of IT areas and expand the knowledge about key issues
relatedtothemanagementofsuchartifacts.Forthispurposetwocasesoflarge
sizedBraziliancompaniesthatimplementedERPsystemsmorethantwoyears
agowereanalyzed.Thistimeintervalwasconsiderednecessaryforacompany
toovercomethestageofstabilizationofthesystemandforthesettlementofthe
functionsconnectedtoERPmanagement.Thecasestudyapproachisjustified
because cases are useful in surveys whose purpose is to contextualize and
deepenthestudyofasubject.AccordingtoYin(1989),theutilizationofmore
than onecaseinsuchstudyassuresmoresubstancetotheresults,inaddition
topermittingcomparisonsbetweentwodistinctsituations.
A guide-list with open questions that sought to identify the more important
management aspects of each company’s ERP system was utilized for the

interviews(seeAppendix1).InterviewswerecarriedoutinMarchandApril
of 2003. In the WMS company case, the IT manager, a system analyst and a
key-user were interviewed. In the M&M company case one of the coordina-
tors of the IT area was interviewed. Names of both surveyed companies are
disguised.Thereportsofthecasesstudiedaresummarizedbelow.
WMS Company Case
WMSisamultinationalcompanythatproduceswritingmaterials.InBrazilithas
variousplantsandinvoicesUS$100millionyearly,withsome3,000employ-
ees.
Implementation History
WMS implemented the SAP R/3 system at 1998, in a big-bang mode, as the
outcomeofanimplementationprojectbegunin1996,whichlasted18months.
The R/3 was implemented as a replacement for a complex of 26 systems
developed internally. One of the main reasons was the need to reduce
maintenance costs of the mainframes owned by the company and that also
restrictedthetechnologicalmodernizationofitssystems.Thecompanynow
has 180 users of the ERP system.
SoonafterlaunchthesystemoperationWMSenduredastabilizationperiod,
whichlasted30months.Thiswasbecauseofsettlement(adjustment)difficul-
tiesoftheproducttotheBraziliancontextandwhichwasinitsearlystagesof
useinBrazil.Thislongperiodofstabilizationhinderedconstantevolutionofthe
systemthroughnewversionsthatSAPwasmakingavailable.Whenthisfinally
becamepossible,migrationtoanewandupdatedversionresultedinasizable
“newproject”thatconsumedsome10%ofthevalueoftheinitialimplementa-
tionproject.Thisnewprojectwasconcludedin2002,closinganalmostfive-
yearlonggapwithoutupdating.
Currently, the IT area has 31 persons, 13 dedicated to the development and
configurationoffunctionalitiesoftheR/3(thisincludestwoprogrammersofthe
ABAP R/3 language), 16 dedicated to support tasks, the IT manager and a
secretary.FunctionalanalystsarespecializedpermoduleoftheR/3system.
The support area is responsible for the technical R/3 support and help-desk.

Itisalsoresponsibleforthedevelopmentandmaintenanceofthedepartmental
systems developed in Access or Excel that meet the highly specific local
functionalitiesnotavailableorfeasibleintheR/3system.Theareaissubordi-
natedtotheadministrativeandfinancialdirection.
IT Management Change
Intheformersituationtheconcernwastomanagethetechnicalpersonnelfor
the development of programs and sometimes not integrated systems. In
summary,theareasystematicallysolvedtechnicalandlocalizeddepartmental
problems. The focus on IT professionals’ training was mainly technical and
directed towards the programming activities. There was no concern for the
teachingofpersonneldedicatedtoprocessanalysisordevelopment.Program-
mingactivitywasfirstpriorityandtookupallthestaff’stime,andthereforea
focusonbusinessprocedureswasimpossible.AccordingtotheITmanager,
“I intensely dedicated myself to the every day of programmers and analysts
managing what each one did on a level of computer programs and not of
organizationalprocesses”.
TheR/3introductionimposedachangeoffocus.Itbecamenecessarytotrain
ITpersonnelto“thinkaboutcompanybusinessprocessesandnolongerabout
computerprograms”andto“trytomaximizetheERPsystemuseincarryingout
theseprocesses”.Themostdifficultpartwasthechangerequiredintheculture
oftheITprofessionals.Itwasnolongerimportanttoprogrambuttounderstand
how to use the available functionality of the system to support business.
However, this change “is still underway” since it is a slow transition from a
cultureof“systemprogrammers”to“businessanalysts”.Inadditiontotraining
theprofessionalstochangetheirwayofthinkingandacting,furtherchanges
wererequiredintheprofileoftheITareasupervisors.Itisinterestingtonote
thattheintroductionofthenewsystemdidnotcauseITpersonnelreduction.
Theprofessionalswereassignedtootherfunctions,possiblyfurthercontribut-
ingtothereporteddifficulties.
Anotherchangewascausedbytheneedtoestablishproceduresformanaging
theoutsourcedtasksandresources.Intheprevioussituationmanagementwas
inchargeofsystemswhosetechnology,architectureanddevelopmentmethod-
ologywasfullymasteredbythecompany.Thesystemswereindependentand
all people involved with it were part of the company. In this novel situation
relationswiththesupplierandwithconsultantsfromwhom“onemustacquire

knowledge not available in the company” must be managed. The company
begins to rely on a series of conditions imposed by the supplier and which
includespecificationsadherenceandsystematicintroductionofcorrections
andupgrades.ThisrequiresanumberofnewqualificationsfromITmanagers.
Accordingtonterviewsthenewfocusonbusinessproceduresdefinitelytook
place, but did not attain a satisfactory level. To some extent this is due to the
delay in the stabilization of the system, which exhausted efforts of the IT
professional in operational issues and corrective maintenances. It was also
mentionedthatthischangeoffocusshouldnotonlytakeplaceintheITarea,
but in the entire company. In some areas concern with the new system is
restrictedtothepreparationofnewreportsortothesearchforalternativesof
implementationofveryspecificfunctionalities.Theprocessandbusinessvision
isputaside.Tosummarize,notwithstandingthatthenewsystemhaschanged
thefocusoftheITareaandoftheusers,itisonlyapassiveagentoftheprocess.
Other actions are needed to complete the task.
ERP System Management
AtWMSfouractivitiescarriedoutbytheITareaaredirectlylinkedtotheERP
system:(1)configuration,standardizationandcustomization;(2)keepingthe
system in permanent operation; (3) management of the commercial and
technicalrelationswithsuppliersandpartnersand;(4)researchandimprove-
ment.
Configuration,standardizationandcustomizationofthesystemarecarriedout
takingintoaccountoptimizationoftheprocesses,legislationchangesandnew
requirementsofthecompany.Asarule,changesareservicedbyconfiguration
and standardization. Customizing the system through development of new
programswascutbackaftertheimplementationofthenewversion.Tokeep
the system in permanent operation entails the monitoring of software, hard-
ware,networks,communicationresourcesanddatabases.Theseactivitiesare
themostimportantandtheyconsumemostoftheITarearesources.Manage-
mentoftherelationswithoutsourcedpartiesencompassesnegotiationof:new
acquisitionmodalities,licensegrants,maintenancecontractsandconsultants
hiring.TheseactivitiesarecarriedoutbytheITareamanagerandsupervisors.
Finallytheresearchandimprovementactivityinvolvessearchingandstudying
thefunctionalitiesalreadyavailableintheR/3andnotyetusedbythecompany.
Thisactivityiscarriedoutbythedevelopmentteamitself.

Managementofthesystemalsoincludesahelp-deskprocedureandaservice
toanswerusers’questionsrelatedtoR/3andwhichishandledbythefunctional
analysts.Alongtheinterviewswasnotedthatusersmustberecycledsometime
afterimplementationend.Thisisduetotheturnoverofemployeesinthediverse
areas,whichreducesthequalityofusers’knowledge,insofarasitistransmitted
frompersontoperson.ManydoubtssubmittedtotheITareaaretheoutcome
of the deterioration of knowledge in the user areas.
Asarulethereisaconsiderablebacklogofrequeststobemetbystandardiza-
tionoreventuallybycustomization.Intheopinionoftheinterviewees,tomake
changesintheoldinternalsystemswasmuchsimplerandfaster.Notwithstand-
ing the backlog, actually user requests are understood as more addressed to
processes and to business and not to details of screens or reports. Users also
request and demand more, as a result of the new information requirements
spurredbythecurrentbusinessdynamicsofthecompany.
Relationship with Users
TheERPsystemchangedtherelationshipbetweentheITareaandusers,who
begantohaveabetterinteractionwiththedepartment.Intheformersituation
usersclungonlytodetailssuchasformattingofscreensandreports,because
therewasfullfreedomofdevelopment.Inthecurrentsituationthesedetailsare
ingeneralpre-determinedandthediscussionbecomescenteredonprocesses
and procedures. However, to make this possible, in addition to the great
involvementoftheusersintheprocessofimplementation,intenseworkwas
required with the users regarding behavior aspects. Thereby, the user’s
responsibilityincreasesgreatlywithregardtothesystemsandinthecurrent
situationtheco-responsibilitybetweentheITdepartmentsandtheusersnow
prevails.Neverthelessthisbehaviorisnothomogeneousamongusersandis
dependentontheprofileofthoseinvolved.
There is not yet a committee of users to establish priorities of the IT area
activities. Priorityisassignedbythemanagementitselfasanoutcomeofthe
longperiodofstabilizationwhentheuser’scommitteewasnotrelevant.Yearly,
theITareaasksforaprogramoftheusers’requestsandtheirpriorities,which
itendeavorstoconciliatewiththeresourcesavailable.Whenthereareconflicts,
thesystemareameetswiththedepartmentstonegotiatepriorities.AfterR/3
implementation, the company kept the figure of the key users who act as
centralizersofcallstotheITarea,helpintheclarificationofdoubtsandsolve
smallsystemproblems.Evidentlytheyplayaroleofmultipliersofknowledge.

ThedifficultyofkeepingabreasttothecontinuedevolutionoftheERPsystem
inthecomputingareawasalsoperceivedduetothelackofuserinterestortime.
Asreported,peoplegetaccustomedtoonewayofdoingthingsandareafraid
to look for new different ways. When the IT area requests participation for
some improvement activity the user may eventually not cooperate and the
evolutiondoesnottakeplace.Itwasmentionedthatimprovementconstitutes
priorityonlyintheITareaandthatarecyclingorretrainingperiodfortheusers
mightcontributetomotivatepeopletoseeknewalternativesfortheirwork.
As a rule, in the case of the old internal systems it was easier to ascertain if a
givenuserwasorwasnotsatisfied.Itwasalsoeasiertoidentifythecausesof
dissatisfactionbecausethesystemhadonlyoneorfew“owners”.Inthecase
of the ERP system, identification of satisfaction is no longer so direct, as the
systemisintegratedandsatisfactionofoneusermaybethedissatisfactionof
another. Furthermore, it may be necessary to consider the satisfaction of the
supplierandconsultants.Anintegratedsystemisacomplexsystemwhereitis
difficult to impose the needs and preferences of one single person without
takingthewholeintoaccount.
Thecompanystilldoesnotuseindicatorsofusersatisfaction.Asfortechnical
indicators, such as access speed and amount of transactions handled, the
companyissurveyingsoftwarealternatives.Theavailabilityofthesystemisnot
measured and for the time being this is not a problem. Programmed mainte-
nance is also easily accommodated since there is no invoicing on Sundays
duringmostoftheyear.
M&M Company Case
M&MisaBrazilianholdingcompanyoftheminingandmetallurgyareas.M&M
hasthreebusinessunitsinthebranchofminingandprocessingofminerals.The
company is comprised of various industrial plants in addition to the central
office,hasabout4,000employeesandinvoicessomeUS$300millionperyear.
Implementation History
M&M implemented the Baan IV system in a project that started in 1998 and
extendedforover10months.M&Mstartedoperationofthesystembymeans

ofthebig-bangmodeintwoofthecompany’sthreebusinessunits.Thechief
difficultyfacedbytheseunitswasrelatedtothesettlementofthepackagefor
the Brazilian context. A series of system problems related to the issuance of
fiscalledgersandtotheremittanceofinformationoncollectiontothebanks
madethelaunchingoftheoperationrathercomplicated.Theextentofsettle-
mentproblemscompelledthepostponementoflaunchingoftheoperationinthe
thirdunitandthatiswhyproblemsinthisunitwerenotablysmaller.
TheITareaiscorporateandcaterstothethreebusinessunitsofthecompany.
Theareaiscomprisedoftwoteams:theinfrastructureteam,comprisedofthe
coordinator and two more persons, and the Baan competence center team,
comprised of the coordinator, four functional analysts (one for each imple-
mentedmodule)andaprogramminganalyst.Coordinatorsaresubordinateto
thestrategicplanningandITmanagerandtheareahasatotalof10employees.
Prior to implementation of the Baan system, IT had 39 persons who worked
atthethreebusinessunits;22wereemployeesand17wereoutsourced.After
thechangethemajorityofthesystemanalystsleftthecompany,theoperational
employees were transferred to the help-desk outsourcing company and
employeesfromuserareaswereutilizedtosetuptheBaancompetencecenter.
ThefiveparticipantsoftheBaancompetencecenter,includingthecoordinator,
came from the company’s user areas.
The Baan competence center receives from the users requests related to the
ERPsystem,performstheanalysisofthesolutionalternativesand,whenever
necessary, forwards the problems to Baan or consulting companies for the
developmentofasolution.Thecompany’sproposalistooutsourcetheentire
systemsdevelopmentthatcomprisesprogrammingandcustomizingoftheBaan
system.Theobjectiveistokeepthecomputingteamfocusedonunderstanding
thecompany’sbusinessandnotontechnology.
Thecompanyalsooutsourcedthehelp-deskservicesandthedatacenter.Inthe
caseofthehelp-desk,inadditiontotelephonesupport,thecompanykeeps12
peoplethatbelongtothesupplieroftheservices,distributedinthemanufac-
turingunits.Thecompanythatsuppliesthedatacenterservicesisacompany
belongingtothecorporation.TheserversofM&Marelocatedinthiscompany.
Theinterviewedcoordinatorbelievesthatthechangeindeedshiftedthefocus
ofthearea,“somuchsothatnowthedepartmentiscalledStrategicPlanning

andInformationTechnologyDepartment”.Thefactthatallemployeesofthe
competencecentercomefromuserareasis,inprinciple,additionalevidence
thatthisshiftoffocus(fromtechnologytoprocessesandbusiness)mustreally
have taken place.
Thereportstatesthatsome40%ofthesystemiscustomized.Whenthereare
legalmodificationsthesupplieraddsthemtothestandardpackage.Because
thesystemismuchcustomized,thesemodificationsmustbecheckedandoften
implementedagaininthecustomizedcode.Ifthesizeofthemodificationsis
smallthenimplementationiscarriedoutbytheteam’sprogramminganalysthim
orherself;otherwiseaconsultingcompanyishired.
Apparently,managementofthesemodificationsinthecustomizedcodedoes
not present a problem because the changes sent by the supplier are few.
However,thecompanyelectedtoonlyinstallandkeepupdatedthemodifica-
tionsrelatedtolegalchanges.Fortheremainder,whichisnon-obligatory,the
company maintains the system not “updated” with respect to the supplier.
Occasionally,thishasbroughtaboutconflictswiththesupplierandtriggered
moreintensenegotiationsbytheITarea.Thereisalsoademandformigration
to a new version of the system that should require considerable effort in a
project assigned a duration of two years. Various other problems with the
supplierwerealsoreported,evidencingtheimportanceofrelationshipmanage-
mentwiththesupplier.
TheroleoftheBaancompetencecenteristoreceiveandforwardtherequests
forsupportandsystemimprovements(callsalwaysgothroughthehelp-desk
and are referred from there to the center). Requests for support are of three
kinds:functionalsupport(suchashowtocarryoutagivenoperation);support
for operation faults (correction of operations incorrectly carried out by the
users);andidentificationofsystemfaults(bugs).Requestsmaybesolvedbythe
analysts themselves or forwarded to Baan. Contacts with Baan are only
formulated by the IT area.
For the improvement requests a screening is performed to ensure that the
request is not in conflict with the system’s process models and to assess the
possibilityofimplementation.Atthisstagetheuserisrequiredtospecifythe
benefits that will be achieved by the improvement. If approved, the request
generatesadetailedprojectanditscostisdetermined.IftheITbudgetforthe

yearincludedthisprovision,thentherequestiscompliedwith,baseduponthe
ITbudget.Ifitwasnotprovisionedtheuserareamaythenhavetowaitforthe
followingyeartoincludetheprojectintheITbudget;otherwisetheuserarea
mayexecuteitimmediatelywiththeownbudget.
Allrequestsaretreatedasprojectsandtheyaredevelopedwiththesupportof
consultants.Thereisintenseuserparticipationintheprocessduringthestages
of: approval of the functional design, approval of the technical design, tests,
acceptance of the project and initial operation. The complete process is
documented. The interviewee says that the backlog is not large because
requests are not restrained. Once the need is detected and approved the
developmentisimmediatelyundertaken.Ifnotapproveditisreturnedtothe
user with a justification about the decision. It was also mentioned that the
requirementofjustificationandspecificationoftheexpectedbenefitscontrib-
utestolimitthenumberofrequests.
Maintenance tasks of the ERP system related to infrastructure (such as
backupsandperformance-tuning)arecarriedoutbytheoutsourceddatacenter
company.Therefore,asignificantpartoftheactivityofERPmanagementends
up by being eliminated from the Baan competence center list of immediate
concerns. This may contribute to the apparent success of the management
model adopted by the M&M for its ERP system.
ToallowthatthereducedITteammaygivesupporttoalargenumberofusers,
therearekeyusersintheindustrialplantsresponsibleforagivenmoduleand
thatareinchargeoffilteringandcentralizingproblems.Asarule,theseusers
contact the Baan competence center to report problems or doubts that they
wereunabletodealwith.Thecompanyhasatotalof32keyusers,distributed
inthethreebusinessareasandalongthevariousmodulesofthesystem.These
usersactivelyparticipateintheimplementationprocess.
In case of employee turnover, the key users themselves do the training. The
problemisaggravatedwhenakeyuserleavesthecompany.Thenindividual
newtrainingisgivenbytheITarea.
According to the report, the company has system use indicators geared to
goals. There are service and user satisfaction goals, which are rated by
questionnaires. There are also financial goals linked to the IT area budget.
Monthly,thehelp-deskissuesareportofsatisfactionandservicetimesupplied

bytheoutsourcedcompany,whichhasaservicelevelagreement(SLA)with
M&M.
Conclusion
A change of focus of the IT area becomes evident. In the two cases the area
migratedfromatechnicalapproachofinformationsystemstoanapproachof
business processes supported by information systems. In the first case the
companyseeksagradualtransitiontothenewmodel,whileinthesecondcase
thechangewasplannedandcarriedoutinamuchmoreincisivemanner.Inboth
casesthedifferencesareobvious:whileinthefirsttheconventionalITteamis
maintained, in the second a new team is elected, formed by professionals
comingfromtheuserarea.Thisstrategicdifferenceishighlightedbytheuseof
outsourcinginamuchmoreassertivewayinthesecondcompany.
Inthetwocasesitisalsoapparentthattheroleoftheusersinthemanagement
ofanERPsystemismuchmoreimportantandfundamentalthaninthecaseof
internallydevelopedsystems.Inthesecondcompanythereisamajorconcern
withtheinvolvementoftheseusersintheprocessand,apparentlythisreally
takes place. In the first one the change process took place in a more gradual
manner and the IT area must continue to seek a greater involvement and
participation.
Bothcompaniesfacedseveresettlementproblemsduringtheimplementation
of the ERP system, but they have certainly been overcome. In both cases
currently, there are relationship problems with the supplier that demand the
attentionoftheITmanager.Someofthedifficultiesapparentlystemfromthe
continuedneedofsystemupdatingthatcannotalwaysbestrictlyaccomplished
bythecompanies.Indeed,thetwocompaniesadoptalternativeproceduresto
keeptheirupdatingeffortsatlevelsconsistentwiththeirpossibilities.Appar-
ently companies that possess ERP systems also continue to be subject to the
need of carrying out substantial upgrades requiring time and significant re-
sources.ThosearecertainlyimportantaspectsofITmanagementthatpresum-
ablywerelesssignificantatthetimeofinternallydevelopedsystems.
Othernoteworthyaspectsare:theimportanceofusertraining,thefigureofthe
key users, maintenance and development outsourcing, the adherence to the
system’sstandardsofavailabilityandperformance,thefigureofthebacklog,

and so forth. These are aspects that usually can also be associated to
conventionalsystemsbutthatassumepeculiarcharacteristicsinthecontextof
anintegratedsystem.Forinstancethefigureofthekeyuserisnowmuchmore
significantandmustbeexplicitlytakenintoaccountinthesystemmanagement.
Furthermore,companiesadoptdifferentstrategiesindealingwitheachaspect,
yielding implications that possibly merit identification, understanding and
dissemination. A more detailed contextual analysis of this myriad of details
opensaninterestingpossibilityforfutureresearchintheambitofmanagement
ofERPsystems.
References
Andressen, M. (2002). The new IT crisis. Retrieved December 11, 2002,
fromhttp://techupdate.zdnet.com.
Brooks, F.P. (1995). The mythical man month (20th
Anniversary ed.).
AddisonWesley.
Carr,N.G.(2003).ATIjánãoimporta.HarvardBusinessReview(Brazilian
ed.).
Chew, J. (2001). Living with your enterprise apps. Forrester Research
Report.
Kayworth, T.R. (2002). Managing the corporate IS organization in the 21st
century. Proceedings of the AMCIS Minitrack Papers.
Kern,H.(2002).Scrutinizeshrink-wrappedsoftware.RetrievedOctober22,
2002,fromhttp://techupdate.zdnet.com.
O’Brien, J.A. (2001). Sistemas de informação e as decisões gerenciais na
era da Internet. São Paulo: Editora Saraiva.
Pui-Ng, C.S., Chan, T., & Gable, G. (2001). A client-benefits oriented
taxonomyofERPmaintenance.ProceedingsoftheIEEEInternational
Conference on Software Maintenance.
Yin, R.K. (1989). Case study research: Design and methods. London:
Sage.

Appendix – Questionnaires for the Case
Studies
IT Area
What is the makeup of the IT team?
Whicharetheactivitiescarriedoutbytheareawithinthecompany?
TowhatareaisITmanagementsubordinated?
What isthemeaningofERPsystemmanagementfortheITarea?
Whicharetheactivitiesrelatedtothismanagement?
Whoperformsthem?
WhicharethemoreimportantactivitiesfortheERPsystemmanagement?
Whicharethemorecomplex?
Whicharethemostburdensome?
Which are the main activities related to the evolution, maintenance and
operationofthesystem?
HowdidtheERPsystemuseaffectcompany’sITmanagement?
Which were the benefits “promised” by the ERP system with regard to IT
management?
Weretheyachieved?
Did the ERP system really expand the IT area focus in business?

Did the ERP system increase users’ involvement in the definition of their
informationsystems?
HowdidtheERPsystemusemodifytheframeworkofresponsibilitiesbetween
the IT area and users?
HowdidtheERPsystemchangetherelationsoftheITareawiththeuserareas?
Doesthefigureofthekey-usersstillexist?
Whicharetheactivitiestheyperform?
Howarethesystem’smodificationscarriedoutthatmayrequiretheinvolve-
ment of more than one area?
Relations with the Suppliers
Which are the motivating factors for the supplier in the evolution of ERP
systems?
Do the interests of the suppliers clash with those of the company?
Howaretheseconflictsresolved?
Which new types of services have been outsourced due to ERP system use?
Use of Indicators
DoesthecompanyusesometypeofindicatortoassessERPsystemmanage-
ment?
Whichones?
Whichmightorshouldbeutilized?

240 Esteves & Pastor
ChapterXIII
ACriticalSuccess
Factor’sRelevance
ModelforSAP
ImplementationProjects
José Esteves
Universidad Politécnica Catalunya, Spain
Joan Pastor
Universidad Internacional de Catalunya, Spain
Abstract
This chapter presents a unified model of Critical Success Factors (CSFs)
for ERP implementation projects and the analysis of the relevance of
these CSFs along the typical phases of a SAP implementation project. The
Accelerated SAP implementation methodology (ASAP) is used as the SAP
implementation reference method. Using Process Quality Management
method, we derived a matrix of CSFs versus ASAP processes. Then, we
evaluated the CSFs relevance along the five ASAP phases, specifically of

A Critical Success Factor’s Relevance Model for SAP Implementation Projects 241
thoseonesrelatedwiththeorganizationalperspective.Themainadvantage
of our approach is that we unified previous lists of CSFs for ERP
implementation projects and we establish the CSFs relevance according
to the implementation processes that should be made in a typical SAP
implementation project. These findings will help managers to develop
better strategies for supervising and controlling SAP or other similar ERP
implementation projects.
Introduction
Despite the benefits that can be achieved from a successful Enterprise Re-
sourcePlanning(ERP)systemsimplementation,thereisalreadyevidenceof
failureinERPimplementationprojects(Davenport,1998).Toooften,project
managersfocusonthetechnicalandfinancialaspectsofaprojectandneglect
to take into account the non-technical issues. To solve this problem, some
researchers are using a Critical Success Factors (CSFs) approach to study
ERP implementations. According to Rockart (1979), CSFs are “the limited
numberofareasinwhichresults,iftheyaresatisfactory,willensuresuccessful
competitiveperformancefortheorganization”.CSFsarebasedontheassump-
tion that a limited amount of criteria, critical of the outcome of a project, can
be identified, and that these criteria can be manipulated by managers (Wit,
1998). Thereby, they are a tool for forecasting and managing projects. The
managementofCSFsinERPimplementationsisathornyissueinERPresearch.
ThereisthepracticalandacademicevidencethatCSFsdonothavethesame
importance along the various phases of an ERP implementation project
(Esteves & Pastor, 2001). Markus and Tanis (2000) advert for the need to
definesuccessalongthedifferentphasesoftheERPlifecycle.Theyarguethat
nosinglemeasureofERPsystemssuccessissufficientforalltheconcernsthat
organizations’executivesmighthaveabouttheERPsystemexperience,and
thatdifferentmeasuresareneededatdifferentstagesinthesystemslifecycle.
Thus, we attempt to develop a theoretical framework that describes this
distributionalongtheERPimplementationphases.Severalacademicstudies
havebeenpublishedrelatedtoCSFsidentificationbutthereisnoevidenceof
studiesrelatedwithoperationalizationandmanagementoftheseCSFs.
We agree with Ward (1990) in that CSFs are not, in themselves, directly
manageable. Rather than the CSFs, it is the processes that define what a

management team “does,” processes that can be owned, defined, measured
and managed. Therefore, it is necessary to relate the CSFs to the SAP
implementationprojectprocessestoprovideanoverallviewoftheimportance
of each process to the management of the CSFs in SAP implementation
projects. These SAP implementation project processes are described in the
implementationmethodologiesused.Broadly,aSAPimplementationmethod-
ologycoversthefollowing:modelingbusinessprocesses,mappingbusiness
processes onto the processes supported by the SAP system, perform the gap
analysis,customizingtheSAPsystemandfinally,testingthecustomizedSAP
system before going live. Some SAP implementation methodologies have
specificmodulesforknowledgemanagementandchangemanagement.
This chapter is organized as follows. First, we present our unified model of
CSFs that we used in our research and a brief description of the ASAP
methodology. Then, we briefly describe the research framework followed.
Next, we describe the findings, presenting the schema of CSFs relevance.
Then,implicationsforpractitionersandfutureresearchareoutlined.Finally,
someconclusionsandfurtherworkareincluded.
Background
In order to study the relevance of CSFs along an ERP lifecycle, we made a
literaturereviewandwefoundfourstudies(Bergamaschi&Reinhard,2000;
Nah et al., 2001; Parr & Shanks, 2000; Somers & Nelson, 2001). Parr and
Shanks(2000)studiedCSFsrelevancebasedintwoERPimplementationcase
studies. However, only one of the case studies was considered a successful
ERP implementation. Somers and Nelson (2001) described the impact of
CSFs across the stages of a typical ERP implementation project based in a
survey to 86 organizations. Bergamaschi and Reinhard (2000) analyzed the
relevance of CSFs along the ERP lifecycle phases based in a survey to 43
organizationsinBrazil.ThestudyofNahetal.(2001)definesinwhichphase
of the ERP lifecycle each CSF may come into play, but authors include
implementationstagesinauniquephasedenominatedprojectphase.Ourstudy
extends the analysis of Nah et al. (2001) for the ERP lifecycle phases by
focusingonimplementationphase.
Wefoundthreemaindiscrepanciesinthesestudies:thefirstisrelatedwiththe
ERP lifecycle used, the second is related with the CSFs considered and the

thirdisrelatedwiththeresearchperspective.WithregardtotheERPlifecycle,
inallresearchstudies,itisbasedintheparticularresearcher’sdefinitionand
none of the studies tried to directly analyze the lifecycle of the branded
implementationmethodologiesusedinERPimplementationprojects.Allthe
implementationmethodologieshaveasbasisanERPlifecycle.Theadoptionof
anERPimplementationmethodologyisconsideredaCSF(Esteves&Pastor,
2000).
Second, the expression “implementation” is used in one case (Somers &
Nelson, 2001) as referred to the whole process of adopting, selecting,
implementing and using the ERP system. For us, the implementation phase
consistsof“thecustomizationorparameterizationandadaptationoftheERP
package acquired according to the needs of the organization” (Esteves &
Pastor,2000).InrelationtothedefinitionofCSFs,eachstudyusedadifferent
list of CSFs; some CSFs are the same but with different names, or different
definitionsencompassthesameCSF.Inordertosolvetheseproblemsinour
previousresearchwecreatedaunifiedmodelofCSFsforERPimplementation
projects (Esteves & Pastor, 2000). Later, we present this unified model.
Finally, all the studies used project managers and/or project team members
perspective. In our case we opted to analyze CSFs relevance taking into
accounttheERPimplementationprocessesunderlyinganERPimplementation
project,whicharedetailedinalltheERPimplementationmethodologies.Since
thefocusofourresearchwasatypicalSAPimplementationproject,weopted
forusingtheAcceleratedSAPimplementation(ASAP)methodology.Therest
of the studies did not mention what type of ERP system they studied.
Unified Model of CSFs for ERP Implementation Projects
TheCSFapproachhasbeenappliedtomanyaspectsandtasksofinformation
systems,andmorerecentlytoERPsystemsimplementations,(e.g.,Bancroftet
al., 1998; Brown & Vessey, 1999; Clemons, 1998; Dolmetsch et al., 1998;
Gibson&Mann,1997,Hollandetal.,1999;Nahetal.,2001;Parretal.,1999;
Somers & Nelson, 2001; Stefanou, 1999; Sumner, 1999). Based in a set of
studiespublishedbyseveralauthors,containingcommentedlistsofCSFsin
ERPimplementations,weunifiedtheselistsandcreatedaCSFsunifiedmodel
forERPimplementationprojects(Esteves&Pastor,2000).Theunifiedmodel
isrepresentedinFigure1.Theadvantageofthismodelisthatitunifiesasetof
studies related with lists of CSFs identified by other authors; the CSFs are
categorizedindifferentperspectivesandeachCSFisidentifiedanddefined.

In our view, the nature of the ERP implementation issues includes strategic,
tactical,organizationalandtechnologicalperspectives.Therefore,wepropose
thattheCSFsmodelshouldhavethesefourperspectives.Theorganizational
perspectiveisrelatedwithconcernslikeorganizationalstructureandculture
and business processes. The technological perspective focuses on aspects
related to the particular ERP product in consideration and on other related
technical aspects, such as hardware and base software needs. The strategic
perspectiveisrelatedwithcorecompetenciesaccomplishingtheorganization’s
missionandlong-termgoals,whilethetacticalperspectiveaffectsthebusiness
activitieswithshort-termobjectives.
Organizational Perspective
Strategic Factors
Sustainedmanagementsupport.Sustainedmanagementcommitment,both
attopandmiddlelevelsduringtheimplementation,intermsoftheirown
involvementandthewillingnesstoallocatevaluableorganizationalre-
sources (Holland et al., 1999). Management support is important for
accomplishing project goals and objectives and aligning these with
strategicbusinessgoals(Sumner,1999).
Figure 1. Unified critical success factors model.
Strategic Tactical
Organizational
Sustained management support
Effective organizational change management
Adequate project team composition
Good project scope management
Comprehensive business process redesign
Adequate project champion role
Trust between partners
User involvement and participation
Dedicated staff and consultants
Appropriate usage of consultants
Empowered decision makers
Adequate training program
Strong communication inwards and outwards
Formalized project plan/schedule
Preventive trouble shooting
Technological
Avoid customization
Adequate ERP implementation strategy
Adequate ERP version
Adequate infrastructure and interfaces
Adequate legacy systems knowledge

Effectiveorganizationalchangemanagement.Organizationalchangere-
fers to the body of knowledge that is used to ensure that a complex
change,likethatassociatedwithanewbiginformationsystem,getsthe
right results, in the right timeframe, at the right costs. The change
managementapproachwilltrytoensuretheacceptanceandreadinessof
thenewsystem,allowingtheorganizationtogetthebenefitsofitsuse.A
successfulorganizationalchangeapproachreliesinaproperintegrationof
people, process and technology.
Good project scope management. This factor is related with concerns of
projectgoalsclarificationandtheircongruencewiththeorganizational
mission and strategic goals. This includes both scope definition and
subsequentscopecontrol.Somecomponentsofthisfactorare:scopeof
businessprocessesandbusinessunitsinvolved,ERPfunctionalityimple-
mented,technologytobereplaced/upgraded/integrated,andexchangeof
data.
Adequateprojectteamcomposition.ERPprojectstypicallyrequiresome
combinationofbusiness,informationtechnology,vendor,andconsulting
support. The structure of the project team has a strong impact in the
implementation process. Two important factors are the integration of
third-party consultants within the team and the retention within the
organizationoftherelevantERPknowledge.
Comprehensive business process reengineering. This is related with the
alignmentbetweenbusinessprocessesandtheERPbusinessmodeland
related best practices. This process will allow the improvement of the
software functionality according to the organization needs. Managers
havetodecideiftheydobusinessprocessreengineeringbefore,duringor
afterERPimplementation.
Adequate project champion role. The main reason why this person is
considered to be central to successful implementations is that s/he has
boththepositionandtheskillsthatarecriticalforhandlingorganizational
change (Parr et al., 1999). The role of the project champion is very
importantformarketingtheprojectthroughouttheorganization(Sumner,
1999).
Userinvolvementandparticipation.Userparticipationreferstothebehav-
iors and activities that users perform in the system implementation
process.Userinvolvementreferstoapsychologicalstateoftheindividual,
andisdefinedastheimportanceandpersonalrelevanceofasystemtoa

user(Hartwick&Barki,1994).Userinvolvementandparticipationwill
resultinabetterfitofuserrequirementsachievingbettersystemquality,
use and acceptance.
Trustbetweenpartners.Duringtheimplementationphasetherearedifferent
partners involved, such as consultants and software and hardware ven-
dors.Anadequatepartnershipbetweenthemwilleaseachievementofthe
goalsdefined.
Tactical Factors
Dedicatedstaffandconsultants.Usually,inmanycasesthetimededicated
to the implementation project is shared with other activities. It is also
importanttoensurethatthestaffbelievesintheprojectsuccess.Consult-
ants should be involved in a way that helps the implementation process
whilealsosharingtheirexpertisewiththeinternalstaffinvolved.Thisis
relatedwiththerecruitmentandmotivationofstaffandconsultants.
Strongcommunicationinwardsandoutwards.Communicationshouldbeof
two kinds: “inwards” to the project team and “outwards” to the whole
organization.Thismeansnotonlysharinginformationbetweentheproject
teambutalsocommunicatingtothewholeorganizationtheresultsandthe
goalsineachimplementationstage.Thecommunicationeffortshouldbe
doneinaregularbasisduringtheimplementationphase.
Formalizedprojectplan/schedule.Thismeanstohaveawell-definedplan/
scheduleforalltheactivitiesinvolvedintheERPimplementation,withan
appropriate allocation of budget and resources for these activities.
Evidenceshowsthatthemajorityofprojectsfailtofinishtheactivitieson
timeandwithinbudget.Toensuretheprojectcompletionaccordingwith
the plan/schedule, close monitoring and controlling of time and costs
should be done, as well as implementation project scope and plan/
schedulereview,wheneverjustified.
Adequatetrainingprogram.Thetrainingplanshouldtakeintoconsideration
both technical staff and end users, and its scope will depend on the type
of implementationapproachselected(seebelow).Someorganizations
use an in-house training approach while others prefer using training
consultants.
Preventivetroubleshooting.Thisfactorisrelatedwiththeproblemandrisk
areasthatexistineveryimplementation.Trouble-shootingmechanisms

shouldbeincludedintheimplementationplan.Twoimportantaspectsare
theadaptationandtransferofolddataandthe“golive”moment.Thetime
andeffortinvolvedinthetransferofdatafromprevioussystemsshouldnot
beunderestimated.
Appropriateusageofconsultants.Determiningthenumber,howandwhen
touseexternalconsultantsappropriatetotheERPimplementationneeds.
Theusageofexternalconsultantswilldependontheinternalknow-how
thattheorganizationhasatthemoment.
Empowereddecision-makers.Projectteammembersmustbeempowered
tomakequickdecisionstoreducedelaysinimplementationrelatedwith
slowdecision-making(Parretal.,1999).Organizationsshouldattemptto
make decisions as rapidly as possible, as even small delays can have an
impact on such a long-term project (De Bruin, 1997).
Technological Perspective
Strategic Factors
AdequateERPimplementationstrategy.Thisincludesmanagementdeci-
sionsconcerninghowthesoftwarepackageistobeimplemented(Holland
et al., 1999). There are different approaches to ERP implementation
strategy,rangingfrom“skeleton”to“big-bang”implementations(Gibson
etal.,1997).While“skeleton”implementationsarephasedandprovide
usablefunctionalityincrementally,“big-bang”onesofferfullfunctionality
allatonceatimplementationend.Theadvantagesanddisadvantagesof
theseextremeapproachesshouldbemeasured,especiallyatafunction-
alitylevel.
Avoid customization. Wherever and as far as possible, the ERP-hosting
organizationshouldtrytoadopttheprocessesandoptionsbuiltintothe
ERP, rather than seek to modify the ERP to fit the particular business
practices(Parretal.,1999).Thus,itisrecommendedthatcustomization
adheres to the standardized specifications that the software supports
(Sumner,1999).Inthissense,agoodbusinessvisionishelpfulbecause
it reduces the effort of capturing the functionality of the ERP business
modelandthereforeminimizesthecustomizationeffort.
Adequate ERP version. An organization needs to determine which ERP
versionitwillimplement.Frequentupgradescancauseproblems.Thisis

particularlyrelevantwhentheorganizationhastowaitforafuturerelease
thatincludesthefunctionalityrequired(DeBruin,1997).
Tactical Factors
Adequate infrastructure and interfaces. Usually, ERP systems do not
provideallthefunctionalrequirementsofanorganization.ThereforeERP
vendorshaveacompleteprogramofinterfacingwiththird-partyproducts
to leverage organizations with special expertise and products (Kale,
2000).Thereistheneedtoconfiguretheinterfacesaccordingtotheuser’s
needs.Nowadays,therearesomemodelingtoolsthatcanhelpinallthese
tasks.Interfacingthedifferentsystemsshouldbescheduledinsuchaway
thattheinterfacesareoperationalwhentheERPgoeslive.Beforegoing
live,validationtestsshouldbeapplied.
Adequatelegacysystemsknowledge.Legacysystemsarethebusinessand
IT systems prior to the ERP that encapsulate the existing business
processes, organization structure, culture and information technology
(Holland et al., 1999). They are a good source of information for ERP
implementationsandthepossibleproblemsthatcanbefoundduringthe
implementation.Anotheraspectistodecidewhichlegacysystemswillbe
replacedandtheneedtointerfacewiththoselegacysystemsforwhichthe
ERPdoesnotprovideanadequatereplacement.Thereisalsotheneedto
analyzethedifferenttransitionstrategiesfromlegacysystemstothenew
ERPsystem.
The ASAP Implementation Methodology
In 1996, SAP introduced the Accelerated SAP (ASAP) implementation
methodology with the goal of speeding up SAP implementation projects.
ASAP was advocated to enable new customers to utilize the experience and
expertise gleaned from thousands of implementations worldwide. This is
specificallytargetedforsmallandmediumenterprisesadoptingSAP.Thekey
phases of the ASAP methodology, also known as the ASAP roadmap, are:
• Project preparation. The purpose of this phase is to provide initial
planning and preparation of SAP project. The steps of this phase help

identify and plan the primary focus areas to be considered, such as:
objectives,scope,plananddefinitionofprojectteam.
• Business blueprint.The purpose of this phase is to create the business
blueprint,whichisadetaileddocumentationoftheresultsgatheredduring
requirementsworkshops/meetings.Itwillallowtheimplementationproject
team to clearly define their scope, and only focus on the SAP processes
neededtoruntheorganizationbusiness.
• Realization. The purpose of this phase is to implement business and
processesrequirementsonthebusinessblueprint.Theobjectivesarefinal
implementationinthesystem,anoveralltest,andthereleaseofthesystem
forproduction(live)operation.
• Final preparation. The purpose of this phase is to complete the final
preparation,includingtesting,endusertraining,systemmanagementand
cutoveractivities,tofinalizethereadinesstogolive.Thefinalpreparation
phase also serves to resolve all open issues.
• Go live & support. The purpose of this phase is to move from a pre-
productionenvironmenttoliveproductionoperation.Asupportorgani-
zation must be set up for end users to provide long-term support. This
phaseisalsousedtomonitorsystemtransactionsandtoimproveoverall
systemperformance.Finallythecompletedprojectisclosed.
Thestructureofeachphaseisthefollowing:eachphaseiscomposedofagroup
ofworkpackages.Theseworkpackagesarestructuredinactivities,andeach
activity is composed of a group of tasks. An example of two work packages
ofASAP,projectkickoffandqualitycheck,isdescribedinFigure4.Foreach
task, a definition, a set of procedures, results and roles are provided in the
ASAP roadmap documentation. According to a survey of Input company
(Input, 1999), organizations have been more satisfied with SAP tools and
methodologiesthanwiththoseofimplementationpartners.Implementations
where ASAP or Powered by SAP methodologies were used averaged only 8
months,comparedto15monthsforstandardimplementations.InDolmetsch
etal.(1998),fourcasestudiesconductedinsmalltomediumcompaniescame
totheeventualresultthattheimplementationmethodologyASAPsupported
the criteria for a successful SAP implementation by providing a transparent
implementation process which allows the organization to make the most
efficientuseofconsultingtime.

Our Proposed CSF Relevance Model
CSFscaneitherbeongoing,ortheycanbetemporal(Khandewal&Ferguson,
1999). Khandewal and Ferguson (1999) assert, notwithstanding the earlier
statement that the CSFs can either be ongoing or temporal, that all CSFs can
be defined in a way that they are temporal. For example, formal plan and
schedule for the ERP implementation project can be defined as a temporal
CSF. This CSF will then be considered having been achieved as soon as a
project plan is developed. The assumption is that once the project plan is
developed the ongoing updating of this plan would be an integral part of the
projectplan.AllCSFswouldthusbelongtoapointintime,althoughtheymay
differintheirdegreeoftemporality.Therefore,itisimportanttoknowthese
pointsintimewhereCSFsaremorerelevant.Next,wedescribeourresearch
frameworkforevaluatingCSFsrelevancealongSAPimplementationphases
andtherelevancemodelobtained.
Research Framework for Evaluating CSFs Relevance
WehaveusedtheProcessQualityManagement(PQM)method(Ward,1990)
torelatetheCSFswiththeASAPprocesses.ThePQMmethoddevelopedby
IBMis“designedtoassistthemanagementteamreachconsensusonthemost
criticalbusinessactivities,i.e.,thosewhoseperformancewillhavethebiggest
impactonthesuccessorfailureoftheenterprise”(Ward,1990,p.105).PQM
usestheconceptofCSFs(Rockart,1979)toencouragemanagementteamsto
focustheirattentiononthecriticalissuesofthebusiness,andthentobasethe
IT strategy on these. Next, we describe the following steps of the PQM
method, as we have applied them in our research case (see Figure 2):
• First step: Define the mission. We define the following mission: “To
implementtheERPsystem,accordingtotheorganization’sbusinessand
organizationalneeds”andthen“toshowthattheERPimplementationwill
addvaluethroughthesatisfactionoftheorganizationrequirementsprevi-
ouslydefined”.Thismissionreflectstheintentionofthewholegroupof
peopleinvolvedinanERPimplementationproject;
• Second step: Define CSFs. We will use the CSFs unified model
proposed by Esteves and Pastor (2000);

• Third step: Define the processes. In our case, the processes are those
definedintheASAPmethodology;
• Fourth step: Establish the relationship of CSFs versus ASAP
processes. This is done through the creation of the matrix presented in
Figure2andTable1.ForeachoneofthefiveSAPimplementationphases
a matrix was created. Next, we describe how the matrix of CSFs versus
ASAP processes was created.
According to Hardaker and Ward (1987), “the object is to single out the
processes that have a primary impact on this particular CSF”. What we are
lookingforarethoseessentialactivitiesandnotallofthem.ThematrixinTable
1hasbeenbuiltinthefollowingway.WefocusedoneachCSFandaskedthis
question:WhichASAPprocessesmustbeperformedespeciallywellforusto
beconfidentofachievingthisCSF?Then,welookedatalltheprocessesand
decidedwhichoneswereimportantforthatCSF.Eachtimeweestablisheda
relationshipbetweenaCSFandaprocess,wemarkeda“1”inthecorrespond-
ingcellofthematrix(seeTable1).Asecondprocesswasusedtovalidateand
togetmorereliabilityintheresearch.Weusedacodingproceduretoanalyze
theASAPdocumentation.Thecodingprocedureconsistedincodingline-by-
linealltheASAPprocessesusingapredefinedlistofcodes,inthiscasethelist
Figure 2. Research framework.
Phase 5
Phase 4
Phase 3
Phase 2
Phase 1 Phase 5
Phase 4
Phase 3
Phase 2
Phase 1
CSFsinERPProjects
ASAP
Methodology
Processes
CSFsinERPProjects
ASAP
Methodology
Processes
C
SFsRelevance
ProcessQualityM
anagement
(PQM
)
+
CodingProcedure
CSFs in ERP Projects
ASAP
Methodology
Processes
CSFs in ERP Projects
ASAP
Methodology
Processes
CSFs Relevance
Process Quality Management
(PQM)
+
Coding Procedure
CSFsinERPProjects
ASAP
Methodology
Processes
CSFsinERPProjects
ASAP
Methodology
Processes
C
SFsRelevance
ProcessQ
ualityM
anagement
(PQM
)
+
CodingProcedure
CSFsinERPProjects
ASAP
M
ethodology
Processes
CSFsinERPProjects
ASAP
M
ethodology
Processes
CSFsRelevance
ProcessQ
ualityManagement
(PQM
)
+
CodingProcedure
CSFsinERPProjects
ASAP
M
ethodology
Processes
CSFsinERPProjects
ASAP
M
ethodology
Processes
CSFsRelevance
ProcessQualityM
anagement
(PQ
M)
+
CodingProcedure
CSFsinERPProjects
ASAP
M
ethodology
Processes
CSFsinERPProjects
ASAP
M
ethodology
Processes
CSFsRelevance
ProcessQualityM
anagement
(PQ
M)
+
CodingProcedure

of CSFs. Next, we present part of the full matrix of CSFs versus ASAP
processes built for the first phase of ASAP, the project preparation phase.
CSFs Relevance
Table2representstheCSFsrelevanceforeachCSFineachphase.Thevalues
werecalculatedinthefollowingway.WehavebuiltamatrixofCSFsversus
ASAPprocessessuchastheoneinTable1foreachimplementationphase,and
foreachCSFwesumthenumberofoccurrencesofthatCSF.Forinstance,the
sumof2intheCSFSustainedManagementSupportmeansthatwedefinedtwo
relationshipsbetweenthisCSFandtwoASAPtasks.Then,weconvertedthe
Table 1. Example of the matrix CSFs versus ASAP processes for project
preparation phase.
CSFs in
ERP implementations
ASAP
Processes
Sustained
management
support
Effective
organizational
change
Good
project
scope
management
Adequate
project
team
composition
Comprehensive
business
process
redesign
User
involvement
and
participation
Adequate
project
champion
role
Trust
between
partners
Dedicated
staff
and
consultants
Strong
communication
Formalize
project
plan/schedule
Adequate
training
program
Preventive
trouble
shooting
Usage
of
appropriate
consultants
Empower
decision
makers
Adequate
ERP
implementation
strategy
Avoid
customization
Adequate
ERP
version
Adequate
infrastructure
and
interfaces
Adequate
legacy
systems
knowledge
W Project Kickoff
A Kickoff Meeting
T Prepare for kickoff meeting 1 1
T Conduct kickoff meeting 1 1 1 1
T Company wide project introduction 1 1 1
A Project team standards meeting
T Prepare for standard meeting 1 1
T Conduct standard meeting 1 1 1
W Quality Check
A Perform quality check and approval
T Conduct quality check 1
T Signoff project preparation phase 1 1
Number of CSFs occurrences 2 0 0 0 0 1 7 0 1 3 3 0 0 0 0 0 0 0 0 0

number of occurrences (raw scores) into a normative scale of 10 scores. In a
scaleofthiskind,resultsfrom1-3areconsideredirrelevant,from4-7normal
relevance,and8-10theyareconsideredofhighrelevance.Inourcase,wesee
thatalmostallthefactorsarehigherthan4.Thus,theirrelevanceisnormalor
highinmostcases.WedonotpretendtosaythataCSFwithalowsummation
it is not important; what we say is that it is less relevant in that period of the
project.CSFshaveallthesameimportance,;therefore,allofthemshouldbe
carefullyrespectedandanalyzed.Theanalysisofthetableshowsthat:
• Inphase1(projectpreparation),themostrelevantCSFsaresustained
managementsupport,projectchampionroleandformalizedprojectplan/
schedule.Weareatthebeginningoftheimplementationprojectanditis
very important to identify and plan the primary focus areas to be
considered.
• In phase 2 (business blueprint), the most relevant CSFs are project
champion role, effective organizational change management and user
involvement.Thegoalofthismodelistocreatethebusinessblueprintthat
is a visual model of the business’ future state after which organizations
havecrossedtheSAPfinishline.Itwillallowtheimplementationproject
team to clearly define their scope, and only focus on the SAP processes
neededtoruntheorganizationbusiness.
• Inphase3(realization),themostrelevantCSFsareadequatesoftware
configuration,projectchampionrole,anduserinvolvement.Inthisphase
the configuration of SAP system begins; that is why the adequate ERP
configurationfactorissoimportantaswellastheinvolvementofusers.
Theyhelpinthesystemparameterization.
• In phase 4 (final preparation), the most relevant CSFs are project
champion role and preventive troubleshooting and it is time to convert
data and to test the system.
• In phase 5 (go live & support), the most relevant CSFs are project
championrole,sustainedmanagementsupportandstrongcommunication
inwardsandoutwards.
OneofthemainresultsfromTable2isthatorganizationalfactorshavemore
relevancealongtheSAPphasesthantechnologicalones.Onceagain,thereis
the need to focus more on people and process than on technology itself. This
isnotnew,andotherstudieshaveprovedthesameaspectinothertypesofIS

implementation projects. This aspect is very important since as Felix and
Harrison (1984) quoted, “technical problems can usually be detected and
repairedbeforethesystemisputinjeopardy.Thecostmaybehighintermsof
either budget or schedule, but the repair can be made. Organizational and
personnelproblemsoftencannotberedressed,andcontinuetojeopardizethe
success of the system itself.” Next, we describe each CSF along the ASAP
phases,classifiedbyorganizationalandtechnologicalperspectives.
Organizational Perspective
Sustainedmanagementsupportismorerelevantatthebeginningandatthe
endoftheimplementation.Thereasonisthatatthebeginning,seniormanage-
ment should help in the rollout of the project, analyze the business benefits,
definethemissionandscopeoftheprojectandprovidetheresourcesneeded
fortheproject.Attheend,thereistheneedtoencouragethesystemusageand
helpinthecommitmentofuserinvolvement.
Effective organizational change management and business process
redesign are more relevant in the second phase. In this phase the business
Table 2. CSFs relevance along the ASAP implementation phases.
SAP Implementation phases
Perspectives Critical Success Factors
1 2 3 4 5
Sustained management support 8 5 5 5 8
Effective organizational change 6 8 5 5 6
Good project scope management 5 4 4 4 5
Adequate project team composition 4 4 4 4 4
Comprehensive business process redesign 4 7 4 4 5
User involvement and participation 5 8 10 8 6
Project champion role 10 10 9 10 10
Strategic
Trust between partners 6 4 4 4 5
Dedicated staff and consultants 4 4 4 4 5
Strong communication inwards and outwards 7 7 6 8 8
Formalized project plan/schedule 8 7 7 7 5
Adequate training program 5 5 5 7 5
Preventive trouble shooting 4 4 8 8 7
Usage of appropriate consultants 6 8 9 6 5
Organizational
Perspective
Tactical
Empowered decision makers 4 4 4 5 4
Adequate ERP implementation strategy 5 4 4 4 4
Strategic
Avoid customization 4 4 5 4 4
Adequate ERP version 4 4 4 4 4
Adequate infrastructure and interfaces 6 6 7 7 4
Technological
Perspective
Tactical
Adequate legacy systems knowledge 4 4 4 4 4

blueprint is defined, and the business processes are analyzed, redesigned
(some)anddocumented.Thereistheneedtounderstandhowtheorganization
intends to run its business within the SAP system and the changes in the
organization.
Adequate project team composition has the same relevance along all the
phasessincetheyplayanimportantpartinthewholeproject.ASAPmethod-
ologydoesnotfocustoomuchonthisCSFsinceitassumesthattherightpeople
were chosen.
Goodprojectscopemanagementisrelevantatthebeginningwhenmanagers
definethescopeandinthelastphasebecausethescopeisusuallyrevisedand
changed according to the results of the go live system tests.
Projectchampionroleisrelevantinallphases.Itislessrelevantinthethird
phasethanintheothersbecausethisphaseisdedicatedtoconfigurationtasks
andheretheroleofthechampionistoguaranteethateverythinggoesaccording
to the plan.
Trustbetweenpartnersisrelevantatthebeginningwhenallthestakeholders
involvedintheprojectshouldsharetheirgoalsandknowledgeandattheend
whentheyhavetoanalyzeandagainsharetheirknowledgetofinishtheproject
withsuccess.
User involvement and participation is relevant in the phases where their
know-how is important to achieve a good customization of the system to
organizational needs. They participate in the definition of business require-
ments,helpintheanalysisoftheERPconfigurationandinconversionofdata
andthetestingofthesystem.
Dedicated staff and consultants is more relevant in the last phase where
there is the need to dedicate more effort in order for the system to go live and
alsobeavailabletohelpusersbyansweringtheirquestionsandreducingtheir
doubts about the new system.
Appropriate usage of consultants is relevant especially in the second and
thirdphases.Onthesecondphasetheknowledgeofconsultantsisimportant
toimprovethebusinessprocesses,andonthethirdphaseconsultantsproduce
knowledgeontheERPsystemparameterization.
Empowered decision makers is more relevant in the second and fourth
phases because there is the need to quickly make decisions related with the
businessprocessesredesign(secondphase)andtheadequatecustomizationof
ERP system (fourth phase) in order to accomplish project plan/schedule on
time.

Adequatetrainingprogramismorerelevantinphase4becauseitiswhenthe
trainingprogramofendusersstarts,butinthepreviousphasestherearealso
training concerns related with project team training and to prepare end-user
training.
Strongcommunicationinwardsandoutwardsismorerelevantatthefirst
two phases where there is strong need of communication between senior
managementandtheprojectteaminthedefinitionofprojectplanandscope,
andinthelastphasewherethereistheneedofastrongcommunicationwiththe
wholeorganizationtostartthegoing liveoftheSAPsystem.
Formalizedplanandschedulerelevancedecreasesduringtheimplementa-
tionproject.Thereasonisthatatthebeginningitisimportantstartingplanning
asearlyaspossible.However,alongtheproject,modificationstoaccomplish
the results are expected.
Preventive troubleshooting is more relevant in the last three phases, espe-
ciallyinthefourthphaseduringwhichissuesarisewhentheproductionsystem
is being tested and old data converted to the new system.
Technological Perspective
Avoid customization is more relevant in phase 3, when the SAP system is
configuredandmorethan8,000tablesmustbeparameterized.Thesoftware
configurationshouldfollowthebusinessrequirementsdefinedintheprevious
phase.
AdequateERPimplementationstrategyismorerelevantatthefirstphase
because it is in this phase that the SAP implementation strategy should be
decided.
AdequateERPversionhasthesamerelevancealongallthephases.Fromthe
beginninguntiltheendoftheprojectimplementation,SAPrecommendsthatthe
project team follow the upgrade of SAP releases and should consider the
adoption of new ones.
Adequateinfrastructureandinterfacesismorerelevantinphases3and4,
when there is the need to configure the infrastructure for the production
operation(golive).Inthesephasesarealsoconfiguredtheinterfaceswithother
systems, and the creation of reports and forms.
Adequate legacy systems knowledge is less relevant at the first phase
becausethisphaseisrelatedwiththepreparationofprojectimplementation.In

phase3theneedofknowledgeoflegacysystemsismorerelevantinorderto
minimize the effort of configuration, to help in conversion of data and the
creationofinterfaces.
RegardingthedefinitionofthemostrelevantCSFs,weoptedforacceptingas
the most relevant CSFs in each phase all the CSFs with a score up to 7 (see
Figure2).ThisCSFsrelevancemodelsuggeststhatorganizationalandproject
management factors have more relevance along the SAP implementation
project phases. Once again, there is the need to focus more on people and
processthantechnologyitself.Ifweanalyzethestrategicandtacticalperspec-
tives,weevidencethatstrategicfactorsarethemostrelevantintheinitialphases
whilethetacticalfactorsgainrelevanceinthemiddleandfinalphases.
Figure 2. Most relevant CSFs model proposal for a typical SAP
implementation project.
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Implications for Practitioners
We think the CSFs relevance schema (Table 2) and the most relevant CSFs
model (Figure 2) will be valuable documents for the management of CSFs
becausemanagerswillknowthevarietyoffactorsaffectingaSAPimplemen-
tationprojectsuccessandtheirrelativeimportanceacrossSAPimplementa-
tionstages.TheseCSFsrelevancemodelsprovideguidancetopractitionersin
planningandmonitoringaSAPimplementationprojectwithmoreemphasisin
SAPsystem.TheSAPimplementationmethodologyisanimportantcompo-
nent of the SAP implementation strategy, and therefore it is necessary that
CSFs should not only be identified, there is also the need to establish the
relationshipbetweentheseCSFsandtheimplementationprojectprocessesin
ordertoverifyiftheseprocessessupporttheaccomplishmentofCSFs.Finally,
thisknowledgemayhelpintheallocationandmanagementofprojectresources
ineachSAPimplementationstage.
Implications for Further Research
Wethinkthefindingsshowtheadequacyofourresearchapproachinorderto
studyCSFsrelevancealongSAPimplementationphases.TheCSFsrelevance
schema and the most CSFs relevant model proposal can help researchers
focusingonwhytheseCSFsaresorelevant,andhowmanagersandconsultants
dealwiththem.Itwouldbealsousefultoknowwhicharethedeterminantsand
precedents to achieve satisfactory results in these CSFs. Regarding the SAP
implementationmethodologies,theresearchapproachusedandtherelevance
model can be useful as tools to assess the adequacy of those SAP implemen-
tation methodologies. For instance, in the case of ASAP, we evidence that
sustainedmanagementsupportisnotsorelevantduringthemiddlephases.We
think that ASAP should give more focus to this topic. The same happens to
balanced team, which is a topic only referenced in the task of project team
composition.FurtherresearchshouldalsofocusonhowtheASAPprocesses
supportCSFsaccomplishment.
In terms of our research design to study CSFs relevance, we think that our
approachisusefulsinceithelpstounderstandifimplementationprocesseshelp
to achieve CSFs and how to put them in practice.

Conclusions and Further Work
ThischapterprovidesaCSFsunifiedmodelforERPimplementationprojects,
aschemaoftheseCSFsrelevancealongthephasesoftheASAPmethodology
andamostrelevantCSFsmodelproposal.TheCSFsunifiedmodelwasbuilt
throughaliteraturereviewandusingopencodingprocedurefromGrounded
Theory method. The CSFs relevance schema was developed through the
application of Process Quality Management method, based on the CSFs
unifiedmodelforERPimplementationprojectsandtheASAPdocumentation.
Itisimportanttopointoutthatorganizationalfactorshavemorerelevancealong
theSAPimplementationprojectphases.Onceagain,thereistheneedtofocus
more on people and process than technology itself. In our opinion, the
proposedrelevancefindingsareusefulbecause:
• WehaveaclearerorientationoftherelevanceofeachCSFalongtheSAP
implementationproject;
• Withthisknowledge,wecanbettercontrolandmonitorSAPimplemen-
tationprojectsanddrivethemtowardssuccessorhighlevelsofsatisfac-
tion.
Wearenowtryingtovalidatethesepreliminaryfindingsusingthecasestudy
methodandinterviewswithpeopleofvariousrolesinvolvedinSAPimplemen-
tationprojects.Wealsowanttoanalyzetheimplicationsofstudyingspecific
typessuchashighereducationSAPimplementationprojects.Finally,wealso
willcompareourfindingswithotherstudiesofERPimplementationprojectsin
generalinordertoidentifysimilaritiesasdiscrepanciesthatmayhelpimprove
our work.
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262 Chang & Gable
ChapterXIV
AComparativeAnalysis
of Major ERP Life Cycle
Implementation,
Managementand
Support Issues in
QueenslandGovernment
She-I Chang
Queensland University of Technology, Australia
Guy G. Gable
Queensland University of Technology, Australia
Abstract
This chapter reports on a study of issues across the ERP life cycle from the
perspectives of individuals with substantial and diverse involvement with
SAP Financials in Queensland Government. A survey was conducted of
117ERPsystemprojectparticipantsinfivecloselyrelatedstategovernment
agencies. Through a modified Delphi technique, the study inventoried,
synthesized, then weighted perceived major-issues in ongoing ERP life

Major ERP Life Cycle Implementation, Management and Support Issues 263
cycle implementation, management, and support. The five agencies each
implemented SAP Financials simultaneously using a common
implementation partner. The three Delphi survey rounds, together with a
series of interviews and domain experts’ workshops, resulted in a set of
10 major-issue categories with 38 sub-issues. Sub-issue weights are
compared between strategic and operational personnel within the agencies
inordertounderstandwheretheorganizationsshouldfocustheirresources
in order to avoid, minimise, or eliminate these issues. Study findings
confirm the importance of this finer partitioning of the data, and
distinctions identified reflect the unique circumstances across the
stakeholder groups. The study findings should be of interest to stakeholders
who seek to better understand the issues surrounding ERP systems and to
better realize the benefits of ERP.
Introduction
Organizationsworldwide,whetherpublicorprivate,aremovingawayfrom
developingInformationSystems(IS)in-houseandareinsteadimplementing
Enterprise Resource Planning (ERP) systems and other packaged software
(AMR Research, 1998; IDC Software Research, 2000; Price Waterhouse,
1995). ERP has been referred to as a business operating system that enables
betterresourceplanningandimproveddeliveryofvalue-addedproductsand
servicestocustomers.ERPsystemshave,inrecentyears,beguntorevolutionise
bestpracticebusinessprocessesandfunctions.Theyautomatecorecorporate
activitiessuchasmanufacturingandthemanagementoffinancialandhuman
resources and the supply chain, while eliminating complex, expensive links
between systems and business functions that were performed across legacy
systems (Bingi et al., 1999; Gable et al., 1998; Klaus et al., 2000; Rosemann
and Wiese, 1999).
Despitewarningsintheliterature,manyorganizationsapparentlycontinueto
underestimatetheissuesandproblemsoftenencounteredthroughouttheERP
life cycle, as evidenced by suggestions that: (1) more than 40% of large
software projects fail; (2) 90% of ERP implementations end up late or over
budget;and(3)67%ofenterpriseapplicationinitiativescouldbeconsidered
negative or unsuccessful (e.g., Martin, 1998; Davenport, 1998; Boston
ConsultingGroup,2000).

264 Chang & Gable
ERPlifecycle-widemanagementandsupportareongoingconcernsratherthan
adestination.Thepre-implementation,implementation,andpost-implementa-
tionstagescontinuethroughoutthelifetimeoftheERPasitevolveswiththe
organization(Dailey,1998).UnlikethetraditionalviewofoperationalISthat
describes a system life cycle in terms of development, implementation, and
maintenance,examinationofERPimplementationsisrevealingthattheirlife
cycle involves major iterations. Following initial implementation there are
subsequentrevisions,re-implementations,andupgradesthattranscendwhatis
normally considered system maintenance. As the number of organizations
implementingERPincreasesandERPapplicationswithinorganizationsprolif-
erate (Bancroft, 1998; Davenport, 1996; Hiquet et al., 1998; Shtub, 1999),
improvedunderstandingofERPlifecycleimplementation,management,and
support issues is required so that development, management, and training
resources can be allocated effectively (Gable et al., 1998). A better under-
standingofERPlifecycleissueswillalsohelpdirecttheERPresearchagenda.
AlthoughERPsalesin2000declinedforthemainvendors(e.g.,SAP,Baan,
ORACLE, JD Edwards, Peoplesoft) due to post-Y2K curtailment in IT/IS
activityandtosaturationoflargeorganizations,theoutlookthroughto2004is
forcompoundannualgrowthof11.4%forlicense,maintenance,andrelated
servicerevenueassociatedwithenterpriseresourcemanagementapplications
(IDCSoftwareResearch,2000).Thissustainedinterestinimplementingand
realising the benefits of ERP systems, and the consequent life cycle issues,
providetherationaleforthisstudy(thisneedisfurtheroutlinedinGableetal.,
1997a, 1997b; Gable, 1998; Gable et al., 1998).
The paper proceeds as follows. First, the study background is described.
Second, the research methodology is related. Third, study results are pre-
sented.Fourth,implicationsofthestudyfindingsareexplored.Lastly,several
broad conclusions are drawn.
Background of the Study
The Study Context
In1983,theQueenslandGovernmentFinancialManagementSystem(QGFMS)
was successfully implemented to provide a common financial management

systemtoallQueenslandgovernmentagencies.Overtheyears,theGovern-
mentreaffirmedstrongsupportforcentralcoordinationoffinancialinformation
systemsasafundamentalstrategyunderpinningsoundfinancialmanagementin
thegovernmentbudgetsector.Theseactivitiescreatedbenefitsassociatedwith
improvedcoordinationandeconomiesofscale.Theyincludetheprovisionof
timely, current information on a government- or sector-wide basis and cost
savingsintheareasoftraining,relocationofstaff,single-pointmarketinvesti-
gation, development, and support (Financial Management Strategy, 1994).
Nevertheless, QGFMS must continually evolve to support new initiatives
aimedatimprovingthebudgetsector’seffectiveness.Threerelatedinitiatives
thatcontinuetoshapetheQueenslandGovernmentbudgetsectorenvironment
are:programmanagement,accrualaccounting,andaccrualoutputbudgeting.
Theseinitiativesarebeingimplementedacrossthedepartmentsunderguide-
linesof ManagingforOutcomes(MFO)–anintegratedplanning,budgeting,
andperformancemanagementframework(FinancialManagementStrategy,
1998).
In 1995 an ERP system, SAP Financials, was chosen to become the “new
generation”ofQGFMS.TheSAPsystemwasselectedbasedonthefollowing
requirements:theabilitytoquicklyandeasilyadapttochangesinorganizational
structuresandbusinessenvironments;andtheneedforcash,accrualaccount-
ing, and year 2000 compliance. By the end of 1999 most Queensland
GovernmentagencieshadcompletedtheirinitialSAPFinancialsimplementa-
tion.
Motivation for the Study
Although SAP Financials have now been established in some agencies for a
considerableperiod,newissuesassociatedwiththesystem’songoingsupport
andevolutioncontinuetoarise.Astandardaccountingenvironmentdrivenby
centralgovernment(Treasury)regulation,combinedwithothercentrallydriven
reportingrequirements,aswellasthesamesoftware(SAP)existingacrossall
agencies,providedanexcellentopportunitytostudyERP-relatedissues.All
keyplayers(softwarevendors,implementationpartners,anduserorganiza-
tions)involvedinERPlifecycleimplementation,management,andsupportcan
potentiallybenefitfromabetterunderstandingoftheseissues.ERPsoftware
vendorsseektoredressnegativeperceptionsthatERPimplementationdura-
tionandcostsaredifficulttomanage,andtoimproveongoingcustomersupport

266 Chang & Gable
andsatisfaction.Consultingfirmsseektostreamlineimplementationandshare
in the savings with clients. Both software vendors and consultants seek to
increase the size of the ERP market through reduced costs and increased
benefits to clients. Also, when software vendors and their implementation
partners are more attuned to the issues identified, they will be well placed to
furthersupportclientsthroughouttheERPlifecycle.Potentialbenefitstoclients
fromidentifyingandanalyzingERPlifecycle-relatedissuesinclude:rationalised
andmoreeffectivesupportfromboththesoftwarevendorandimplementation
partner;improvedabilitytoreacttoachangingenvironment;lowercosts;and
ERPsystemsthatmoreaccuratelyreflectbusinessneeds.
Information systems management community members (e.g., professional
societies,educators,trainers,researchers),whoseektoeffectivelyservetheir
community,mustalsobeawareofmajorERPlifecycleissues.Professional
societies serve the community by arranging conferences, sponsoring guest
lectures,anddisseminatinginformationthroughtheirpublications.Educators
and trainers need information on key issues to develop graduates with the
necessary skills to address these concerns. Furthermore, researchers will be
more successful in attracting sponsorship if they undertake studies that are
closelyalignedtotheconcernsofthemarketplace.
Clearly there is a need for research aimed at identifying and explicating the
specificclient-centerdERPlifecycleimplementation,management,andsup-
port issues experienced by different individuals in organizations in order to
understandwheretheorganizationshouldfocustheirresourcessothattheywill
abletoavoid,minimise,oreliminatetheseissues.Theextensivedeploymentof
ERPinprivateandpublicsectorandtherapidlygrowingandchangingportfolio
ofsoftwareapplicationsonwhichtheQueenslandGovernmentisdependent,
magnifytheimperative.
Methodology
Data Collection and Analysis
A three-round, non-anonymous Delphi-type open survey was conducted,
usingpersonalizede-mailwithattachedsurveyinstruments.ChangandGable
(2000) critique the Delphi method in the context of IS key issues studies and
itsapplicationwithinthecontextofthecurrentstudy.Thestudyinvolvedthree

survey rounds: (1) “inventory” round, (2) “confirmation” round, and (3)
“weights” round. Round-One sought to inventory the morass of issues per-
ceived by the contacts. Subsequent to Round-One a “tentative set” of issue
categorieswassynthesized.InRound-Two,a“preliminaryset”wasconfirmed
withrespondents.Havingestablisheda“masterset,”inRound-Threerespon-
dentswereaskedtoscoreorweighttheissuesinthemasterset,indicatingtheir
perceivedrelativeimportance.
In coding and synthesizing the survey responses from Round-One, several
potentialcodingschemeswereexaminedandtested.Attemptstomapthedata
onto existing models (e.g., MIT90s framework, ERP life cycle) failed to
provideasatisfactorylevelofdiscriminationbetweensubstantiveissues.The
strengths and weaknesses of potential coding methods and synthesis proce-
duresarediscussedinChangetal.(2000).Qualitativedataanalysistechniques
(Gadamer, 1977, 1985; Husserl, 1985; Lacity and Janson, 1994; Ramm,
1970; Tesch, 1991; Winograd and Flores, 1986) also served as a guide to
codingandsynthesis(e.g.,howtodealwithalargeamountofnon-numerical,
unstructured,andrichdata;howtoensurethatwhensynthesized,thoseissues
accurately reflect the respondents’ concerns) that confront Delphi method
researchers.Ultimately,anopencodingapproachwasadoptedtostructurethe
issues identified in Round-One. The major strength of the open coding
approachisthatitisdatadriven–thecategoriessoformedreflecttherangeof
issuesthatwerecollected,ratherthansomepre-definedscheme.Becausethe
categories are determined from the data themselves, respondents should
comprehendthemmorereadilyinsubsequentsurveyrounds.
To support the interpretation of study findings, an understanding of the
contextualbackgroundoftheQueenslandbudgetsectorandthestudyorgani-
zationsinrelationtotheirSAPFinancialsprojectwasessential(i.e.,organiza-
tionalnature/background,majorservices/roles/responsibilitiesoftheagency,
history/initiativesofthefinancialmanagementsystem,overviewofagencies’
SAPproject).Thus,aseriesofinterviewsanddomainexperts’workshopsthat
involved senior staff members from the respondent groups were conducted
before,during,andaftertheDelphisurveyrounds.
Study Population
During 1998 and early 1999, the study case (a group of five government
agencies)proactivelymovedasateamandimplementedtheSAPFinancials.

268 Chang & Gable
Individualsfromtheimplementationpartner(IP),a“big5”ConsultingFirm,
andthesefivecloselyrelatedgovernmentclientagencies(agencyAtoE)were
pre-identified and contacted for study participation. To qualify for study
participation,theywererequiredtopossesssubstantialinvolvementwithSAP
Financials:atanylevel,inanyrole,inanyphaseofthelifecycle,withanyofthe
modulesimplemented.Employingformal“SurveyParticipants’SelectionGuide-
lines,”andthroughinterviewsofseniorsponsorsineachagency,117individu-
als were identified and included in the contact database. Note that the term
“client”hereinreferstoemployeesoftheagencies,whoare“clients”ofboththe
ERPvendorandtheimplementationpartner.Owingtothefullsupportofthe
QueenslandGovernmentinthisstudyandtotheassistanceofkeycontactsin
eachorganization,the117contactsselectedapproximatethe‘population’of
knowledgeableindividuals(ratherthana“sample”).
Study Findings
Round 1–Inventory Round
In October 1999, a total of 117 “inventory” round questionnaires were
distributed to individuals who had been substantially involved in the five
governmentagencies’SAPFinancialsProject.Beforethee-mailout,thesurvey
questionnaire (Word attachment) and covering email were pre-tested for
clarityandeaseofunderstandingbyseveralseniorpersonnelinthegovernment
agencies. Minor cosmetic changes resulted. In all, 78 questionnaires were
returned,yieldinga67%responserate.Atotalof61validquestionnaireswere
eventually obtained from the first-round survey (Table 1), providing a net
response rate of 52%. More than two-fifths (44%) of the respondents were
from Agency A, the lead agency on the implementation and a corporate
services provider to the other agencies. Other agencies had comparatively
fewerparticipants.
Respondentsfromthefiveagencieswerefurtherdifferentiatedbyorganiza-
tionallevelofinvolvement,where(1)strategic=steeringcommitteemembers,
project sponsors, project managers, and (2) operational = business process
teammembers,powerusers,help-deskteammembers,change-management
team members. Approximately four-fifths (78%) of the respondents were
involvedattheoperationallevel,therest(22%)representingthestrategiclevel.

Respondentswereaskedtoidentifyanyissuesregardingimplementing,man-
aging, and supporting the SAP Financials throughout their life cycle in their
‘home’agency.The61respondentsidentified274issues,oranaverageof4.5
issues per respondent. Approximately 41% or 115 of the issues identified
originatedwithinAgencyA.Thisisnotsurprisinggiventheleadroleplayedby
this agency and given that 44% or 27 of the total respondents are from this
agency. Approximately one-tenth of the issues identified were from the
implementationpartner.Fromwithintheagencies,approximately28%ofthe
issuesidentifiedwerefromthestrategicleveland72%fromvariousoperational
levels. In general, the number of issues identified by the various respondent
groupswasinproportiontothenumberofrespondentsinthesegroups.Table
2 shows responses by stakeholder groups.
Havingidentified274issuesfrom61surveyrespondents,thestudythensought
todistilltheseissuesintoasummarysetofmajor-issuecategoriesandrelated
sub-issues.Thisresultedina“tentativeset”of12major-issuecategories,with
40sub-issuespendingfurthervalidityandreliabilitytestinginRound-Two.
As a validity test, and in order to establish a summary set of major-issues
representing the respondents’ main concerns, a domain experts’ workshop
Table 1: Inventory round survey responses.
Table 2: Cross-tabulation of responses by stakeholder groups.
Organization # % Role # % Level # %
IP 7 11 IP 7 11 Strategic 12 22
Agency A 27 44 Agency 54 89 Operational 42 78
B 12 20
C 7 11
D 2 3
E 6 10
Total 61 100 Total 61 100 Total 54 100
Issue Response I/R Issue Response I/R Response Issue I/R
Organization # % # % Role # % # % Level # %
IP 26 10 7 11 3.7 IP 26 10 7 11 3.7 Strategic 75 28 12 22 6.3
Agency A 115 41 27 44 4.3 Agency 248 90 54 89 4.6 Operational 173 72 42 78 4.1
B 48 18 12 20 4.0
C 34 12 7 11 4.9
D 14 5 2 3 7.0
E 37 14 6 10 6.2
Total 274 100 61 100 4.5 Total 274 100 61 100 4.5 Total 248 100 54 100 4.6

270 Chang & Gable
was conducted soon after the “tentative set” of major-issues was derived
during July 2000. Four out of five representatives from the government
agenciesandfiveresearchteammembersagreedtoparticipateinthis“synthe-
sis” workshop. The workshop was organised to allow time for information
sharinganddiscussionwiththeparticipants.Theworkshopyieldedvaluable
insights and a greater level of understanding of SAP Financials issues in the
agencies and resulted in a “preliminary set” of major-issues that were more
relevantandmeaningfultothestudystakeholdergroups,pendingconfirmation
fromallsurveyrespondents.
Round 2–Confirmation Round
Havingrationallysynthesizedandlogicallyrestructuredthe“preliminaryset”of
issue categories and related sub-issues through the coding and synthesis
exercises and domain experts’ workshop, in the second “confirmation” or
interimsurveyround,thestudysoughtrespondents’commentsonandconfir-
mation of the “preliminary set” of major-issues. For each respondent from
Round-One,acustomreportwasprepared.Thereportincludedthehierarchy
ofmajor-andrelatedsub-issuesinthe“preliminaryset.”Thereportalsoclearly
indicatedthelinkbetweeneachoftherespondent’soriginalround-oneissues
andtherelatedsub-issueswithwhichtheyhadbeenassociated.Atotalof61
Round-Tworeportsweredistributedtoindividualswhohadrespondedinthe
Round-One survey. Although participants were instructed that there was no
needtoformallyrespondiftheyagreedinprinciplewiththe“preliminaryset”
of major-issues, about one quarter of questionnaires were returned showing
theirfurthercommentsandagreement.
The comments on and confirmation of the issue categories from the domain
experts’ workshop and the Round-Two survey respondents, resulted in a
minimallyrevised“masterset”of10major-issuecategoriesfromM-1toM-
10 with 38 sub-issues from S-1 to S-38 (Appendix A). Figure 1 shows the
incidenceoftheinitial274issuesfromthe61respondentsacrossthe10major-
issuecategories.
Usingtheincidenceofoverallcitationasanearlycrudeindicatorofseverity,it
is noted that 63% (172) of all 274 initial issues cited pertain to: OPERA-
TIONAL-DEFICIENCIES (67 issues); KNOWLEDGE-MANAGEMENT
(55 issues); and SYSTEM-DEVELOPMENT (50 issues). We recognise that
thenumberofsub-issuesinothermajor-issuecategorieswererelativelyfewer,

accountingtosomeextentforthelessercitations,andthatnotallissueslisted
areissuesforallrespondents(afurtherfallibilityofcitationsasanindicatorof
issue severity). Nonetheless, the aim of the study was to be as inclusive as
possibleinthismastersetofissues,withfurtherrelativeevaluationinthenext
“weights”roundofthesurvey.
Round 3–Weights Round
During September-October of 2000, a total of 100 Round-Three question-
naires were sent to Round-One contacts, excluding those who had indicated
theywouldbeunabletoparticipatebutincludingthosewhohadnotresponded
inthepreviousrounds.Respondentswereaskedtoratetheimportanceofeach
ofthe38sub-issuesonascalefrom1to10where1means“notimportant”and
10means“veryimportant.”Priortoitse-mailing,thesurveywaspre-testedfor
clarityandeaseofunderstandingbyseveralseniorpersonnelinthegovernment
agencies.Slightchangesweremade.
Approximatelyoneweekaftertheduedate,inanefforttoboosttheresponse
rate,follow-upe-mailmessagesandphonecallsweremadetothosewhohad
notyetresponded.Whennecessary,anothercopyofthequestionnairewase-
mailedtothoserespondentswhohad“misplaced”thesurvey.Thefollow-up
phonecallsresultedin15additionalreturns.Atotalof58questionnaireswere
returned,yieldinga58%responserate.Atotalof42validquestionnaireswere
0 20 40 60 80
Number of Issues
System-performance
System-development
Support
Intransigence
Organizational-context
Operational-deficiencies
Lack-consultation
Knowledge-management
Data-conversion
Cost-benefit
Figure 1. Distribution of issues across the 10 major issue categories.

272 Chang & Gable
eventuallyobtainedfromthefinalroundsurvey,providinganetresponserate
of 42%. Known reasons for non-response were: some respondents had
discontinuedtheirSAPresponsibilities;othershadlefttheirorganization;some
were on holiday or maternity leave; several respondents did not wish to
participate because of the time required to complete the questionnaires. The
distributionofthesurveyrespondentsinthisfinal-roundsurveybyagency,role,
andorganizationallevelisshowninTable3.
Table 4 shows the overall mean scores and rankings of the 10 major-issue
categories from the “weights” round survey (where the mean for the major-
issueissimplytheaverageofthemeanscoresforitsconstituentsub-issues).A
total of 1,134 valid scores for the 38 sub-issues were received from the 42
respondents (71% = 1,134 / (42*38)). The number of respondents varies
between 29 and 34 across the sub-issues from which major-issue scores are
derived.
ThoughOPERATIONAL-DEFICIENCIESrankedhighestbasedonnumber
ofcitationsinthesurveyRound-One(seeFigure1),theyhavemovedtofifth
placebasedonRound-Threeweights.ThismaysuggestthatthoughOPERA-
Table 3: Third-round survey responses.
Table 4: Overall ranking of major issue.
Organization # % Role # % Level # %
IP 6 14 IP 6 14 Strategic 11 26
Agency A 15 36 Agency 36 86 Operational 25 74
B 7 17
C 3 7
D 3 7
E 8 19
Total 42 100 Total 42 100 Total 36 100
M-# Mean Std Dev Rank Major Issue Categories
3 6.19 2.53 1 Knowledge-management
9 6.00 2.34 2 System-development
8 5.79 2.68 3 Support
2 5.69 2.97 4 Data-conversion
5 5.62 2.73 5 Operational-deficiencies
4 5.58 2.53 6 Lack-consultation
1 5.25 2.86 7 Cost-benefit
6 5.06 2.70 8 Organizational-context
7 4.79 2.84 9 Intransigence
10 4.28 2.82 10 System-performance
Overall 5.57 2.67

TIONAL-DEFICIENCIESwereprominentinmanyrespondents’conscious-
nessduringRound-One,subsequentlywhenlistedalongsideothersub-issues
in Round-Three, they were felt by respondents to be somewhat lower in
importancethantheearlierrelativeincidenceofcitationsimplied.Notethat
frequencyofcitationwasknownfromtheoutsettobeamuchcruderindicator
of issue importance than weights. Many may feel that something is an issue,
while at the same time universally believing it to be a relatively lesser issue.
Regardless, with a mean score of 5.62, OPERATIONAL-DEFICIENCIES
are yet marginally above the scale mid-point (5.5), suggesting that these at a
minimum, are perceived to be moderately important issues. Even SYSTEM-
PERFORMANCE issues with a mean score of 4.28, more than a full point
belowthescalemid-point,andrankedlast(10th
)basedonweights,shouldnot
be overly discounted. These too are issues cited by multiple respondents in
Round-One, and here in Round-Three scored as moderately important.
KNOWLEDGE-MANAGEMENT major-issues have moved from second
placebasedoncitationstofirstplacebasedonweights.SYSTEM-DEVELOP-
MENT, SUPPORT, and DATA-CONVERSION are ranked second through
fourthrespectivelybasedonweights.
Thedetailedmeanscoresandranksofthe38relatedsub-issues(AppendixA)
and comparisons between the strategic and operational personnel within
agenciesarediscussedinthefollowingsection.
Analysis
Inanattempttounderstandareasofconsensusanddisagreementbetweenthe
stakeholdergroups,inadditiontoreviewingranksofthesub-issuesbasedon
overall-agency mean scores, this section presents a comparison between
strategic vs. operational personnel across the agencies. The number of IP
(consultant)respondentswastoofewtoyieldmeaningfulcomparisonbetween
the IP and the agencies, and the agencies were not surprisingly interested in
agency perspectives. (Note that IP versus agency perspectives are being
compared in a follow-up study of all agencies of Queensland Government
nearingcompletionasofthiswriting.Thislargerstudywillalsofacilitatecross-
agency comparisons.) The results of the “weights” round survey for these
demographic groupings are presented in Appendix A. The sub-issues are
numberedS-1toS-38inrank-orderbasedonoverallagencies’meanscores.

274 Chang & Gable
Arankof1isascribedtothesub-issuewiththehighestcomputedmeanscore,
and a rank of 38 is ascribed to the sub-issue with the lowest mean score.
A total of 36 valid agency responses were eventually obtained from the
“weights”round–30%(11)strategicrespondentsand70%(25)operational
respondents.Figure2isaline-chartofstrategicandoperationalmeanscores
onthe38sub-issues.Analysisofvariance(independentsamplet-test)identi-
fied only one significant difference: S27 – organization appears unable or
unwilling to be responsive to requests for changes in the system to resolve
operational problems. Operational personnel rated this sub issue higher
(mean=5.60 yielding a rank of 24) than strategic personnel (mean=3.17,
rank=37). Regardless, for neither group was this sub-issue ranked in the top
10 of the sub-issues. Furthermore, although strategic personnel may be
expected to be more concerned about management-related issues while
operational personnel focus on operations-related issues, it is observed that
there is broad consensus between these two groups, with only the one
significantdifferenceidentified.
It is noted that six sub-issues are ranked in the top-10 (S30, S13, S12, S21,
S7, S9) based on both strategic and operational respondent weights (again
suggesting broad concurrence of views – see Appendix A). These areas of
agreementbetweenstrategicandoperationalrespondentsarediscussednext,
followedbybriefdiscussiononissuesofrelativelygreaterconcerntostrategic
! = 1 !
@ = 6 @ @ @ @ @ @
# = 5 # # # # #
! - significantly different at .05 level in analysis of variance
@ - some concurrence that these are more important (both groups scored in the top 10)
# - some concurrence that these are less important (both groups scored in the bottom 10)
1
2
3
4
5
6
7
8
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
Sub-Issues
Mean
Scores
Strategic Operational
Mid = 5.5
Figure 2. Strategic and operational personnel mean scores on 38 sub
issues.

respondents,thoseofrelativelygreaterimportancetooperationalrespondents,
andthoseofrelativelylesserimportancetobothrespondentgroups.
Issues of Relatively Greater Importance to Both
Respondent Groups
The SYSTEM-DEVELOPMENT – related issue, complexity of SAP means
few, if any, people understand SAP beyond a single module, making
overall design decisions very difficult (S30) was the number one issue
overall. Survey respondents suggested that complexity and the integrated
natureofSAPmakeitdifficulttoconfigurewithoutbeingawareofpotential
consequences for other modules. Furthermore, they indicated that in-depth
understandingofSAPisdifficulttoobtainwithinashortperiodoftimeandthat
thelackofsufficientunderstandinghasanenormousimpactonabilitytousethe
system efficiently and effectively. Recent research too suggests that lack of
ERP product knowledge has been a major concern in the late 1990s (Daven-
port,1998;Markusetal.,2000)formanyorganizations.Mostorganizations
useconsultantstofacilitatetheimplementationprocess.Consultantsmayhave
experience in specific industries, comprehensive knowledge about certain
modules,andmaybebetterabletodeterminewhichsuitewillworkbestfora
given organization (Davenport, 2000; Piturro, 1999; Thong et al., 1994).
Evidence from workshop participants, however, suggested that although
severalknowledgeableexpertsinparticularmodulesofSAPwereinvolved,no
one seemed to have a broad knowledge and expertise across SAP. This
resulted in significant concerns for decision makers who had to decide on a
completebusinessdesignratherthanamodulebymoduledesign.Otherissues
identifiedalsoreflectconsequencesofinsufficientknowledgeofSAP.
TwoOPERATIONAL-DEFICIENCIES–relatedissues, developingreports
is difficult in SAP (S12) and not all required reports were available at
implementation time (S13) were ranked second and third based on overall
agencyscores(rankedseventhandfifthforstrategicrespondentsandranked
thirdandfourthforoperationalrespondents).SAPwasvastlydifferent,inboth
presentationandfunctionality,tothepreviousQGFMSofwhichtheagencies
haddeepexperience,extendingovertheperiod1983to1998.Duringthis15-
yearperiod,theagenciesundertooksignificantcustomisation,particularlyin
reportingandinenhancingtheirbusinessprocesses.WiththeadventofSAP,
theagencieswerefacedwithabandoningasystemtheyhadbeenusingfor15

276 Chang & Gable
yearsandforfeitingtheknowledge,development,andsophisticationofreport-
ing that had developed over that period. They were unprepared for SAP
standardreports.Furthermore,surveyrespondentsindicatedthatitwaseasier
to develop reports on the old system (e.g., because the table names and field
nameswereinEnglishratherthanGerman,aswasthecasewiththethenSAP
standardreportsystem).Differencesinsystemoperationwerealsoperceived
to impact on the accuracy and efficiency of operations and ease of use of the
system. Some agencies found that the standard ERP reports do not offer the
presentationandflexibilitytowhichusersareaccustomed.Thishasresultedin
someclientsbuyingseparatetoolsordevelopingtheirownin-housereporting
system. It must be noted that views expressed at the workshops on reporting
were sometimes diametrically opposed, with those who were more intimate
withSAPreportingtoutingitsadvantages.Thisagainsuggestsproblemswith
knowledge of the product, rather than with the product itself.
TheORGANIZATIONAL-CONTEXT–relatedissue,implementationacross
multiple agencies led to sub-optimisation of the system configuration
(S21),wasrankedmostimportantbystrategicrespondents(5th
overalland7th
byoperationalrespondents).Whengovernmentisconsideringtheadoptionof
an ERP package, management may have opportunity to choose between a
single system across all of government, versus allowing each department to
chooseitsownsystemandtobearresponsibilityforchangingtheirprocesses
tofitthesystemorthesystemtofittheirprocesses.Amainguidingmanagement
principleontheSAPFinancialsimplementationinQueenslandGovernment
was to maximize commonality across the agencies. Workshop participants
believedthat,tohaveallowedgreaterlatitudetotheindividualagencieswould
havesignificantlyaddedtothecostanddurationofimplementation,andthat
unique agency systems would constrain their ability to benefit from vendor
softwaremaintenanceandupgrades.Researchersalsosuggestthat“configu-
ration” should only be requested when essential, or when the competitive
advantagederivedfromusingnon-standardprocessingcanbeclearlydemon-
strated(Appleton,1997;HollandandLight,1999;JansonandSubramanian,
1996; Parr and Shanks, 2000; Escalle and Cotteleer, 1999). Nonetheless,
differencesinbusinessorientation,organizationsize,andrelatedrequirements
mayargueforuniqueprocesses.Itisclearfromtherankascribedtothissub-
issuethatmanyfeltimportantcompromiseshadbeenmadetoachievethelevel
ofstandardisationsought.
Two KNOWLEDGE-MANAGEMENT – related issues, insufficient re-
sources and effort put into developing in-house knowledge (S7) and

shared knowledge among project team members was a problem – agency
staff did not understand SAP and implementation personnel did not cover
the diversity of circumstances encountered in normal daily operations
(S9),rankfourthandfifthforthestrategicrespondentsandsixthandfifthbased
ontheoperationalrespondentscores.Surveyrespondentsfeltthatinsufficient
long-termplanninghadbeenundertakenformaintainingaknowledgeableand
skilledin-houseSAPteam.Theacquisitionandmaintenanceofskilledperson-
nelprovedbothdifficultandexpensive.Workshopparticipantsfurthersug-
gestedthatwhenSAPisimplemented,itisimportanttoretaintheknowledge
andskillsgainedbystaffinvolvedontheprojectandtoensurethatsufficient
ongoingtrainingisprovidedwithintheagenciessothatthisisthenconvertedto
organizationalknowledge.Groveretal.(1995)foundthatfailuretocommit
requiredfinancial,human,andotherresourcesiscommonplaceinreengineering
projectsandhighlylikelytobeaproblemwithotherrelatedprojects,likeERP
implementation.AccordingtotheSAPFinancialsProjectBusinessCase,skill
transferfromcontractors/consultantstopermanentstaffwasaprimeobjective
of the project. However, the ability to share knowledge among project team
members was found to be a problem.
Severalimplementationconcernsaroseduringtheprojectwhenagencystaff
hadinsufficientknowledgeoftheworkingsofSAP,andtheimplementation
partner had too little knowledge of the agency requirements. Workshop
participantsbelievedthatcontinuingdevelopmentofinternalskillsinSAP,and
ensuringthatappropriateprimaryandsecondaryfunctionalsupportisinplace
for each SAP module, is key to addressing the KNOWLEDGE-MANAGE-
MENT – related issues raised by the workshop participants. Thus, it is
suggested that dedicated resources for sharing experiences and knowledge
gained are critical to realize the benefits associated with ERP (Davenport,
2000; Gable et al., 1998; Robinson and Dilts, 1999).
Thoughnotamongsttheoveralltop-10sub-issues,broadconsensusisnoted
on the OPERATIONAL-DEFICIENCIES – related issue S18 – security is
difficult to maintain in SAP resulting in some users being granted too
much access and others not having access to data they need (ranked eighth
and11th
bystrategicandoperationalrespondents).SAPsecurityisconsidered
complexandresource-intensivetomaintain.Surveyrespondentssuggested
that there is a requirement for better definition of security management.
Furthermoretheyindicatedthatwithsomanydifferentsecurityprofilesinthe
new system, it is difficult for smaller agencies to comply with segregation
requirementswhenimplementingERP.Itisveryimportantfortheprojectteam

278 Chang & Gable
to consider how to handle security. The system must have proper access
controlsandpartitioningsothatunauthoriseduserscannotaccessinformation.
Inadditiontogeneralsystemsecurity,otheractivities(e.g.,datawarehousing
ande-commerceadd-ons,andoutsourcingoftheERPmaintenance)require
extra security controls (Riet et al., 1998).
Issues of Relatively Greater Importance to Strategic
Personnel
The SYSTEM-DEVELOPMENT – related issue S35, requested system
functionality was sacrificed in order to meet implementation deadlines,
was ranked third most important by strategic respondents, but only 19th
by
operationalrespondents.Whilesacrificeswereundoubtedlymadetokeepthe
project on track, workshop participants indicated that the weekly cost of
continuing the implementation project was very high, and that this was not
widely understood across the agencies. The feeling was that tradeoffs are
unavoidable,andthatthosemadewerewellinformedandwellconsidered.
A further KNOWLEDGE-MANAGEMENT – related issue S6, difficult to
retain people with SAP skills due to market pressure to leave, is ranked
amongthetop-10(10th
)bystrategicrespondents(ranked20th
byoperational
respondents). A stable team of SAP skilled personnel is necessary for the
smoothimplementationandrunningoftheSAPsystem.Nonetheless,person-
nelwithSAPexperienceweremuchsoughtafterinthemarketplace,particu-
larlyinthelate1990s,therebyfurthercomplicatingthetaskofbuildingastrong
baseofSAPknowledgewithintheagencies.Thestudyfoundlittleevidenceof
special incentives for SAP skilled personnel in agencies, at a time when
employee turnover was relatively high. These difficulties with finding and
retainingskilledERPpeople,staffingtheprojectteam,andmaintainingstaffing
post-implementation have been recognised in prior studies (Bryan, 1998;
Markus et al., 2000; Niehus et al., 1998; Somers and Nelson, 2001).
The COST-BENEFIT – related issue, SAP implementation benefits do not
justify costs (S4), is ranked ninth by strategic respondents, yet 29th
by
operationalrespondents.Surveyrespondentsclaimedwithhindsightthatthe
value for money obtained from any SAP implementation has to be carefully
evaluated.Theysuggestedthattheimplementationcostsincreaseasthedegree
of customisationincreases,andthecostofhiringconsultantscanconsumea
substantial proportion of the implementation budget. A recent survey of

Fortune1000companiesregardingERPcustomisationpoliciesindicatesthat
41%ofcompaniesre-engineertheirbusinesstofittheapplication,37%choose
applicationsthatfittheirbusinessandcustomiseonlymarginally,andonly5%
customise the application to fit their business (Davis, 1998). As suggested
earlier,becausecustomisationisusuallyassociatedwithincreasedinformation
systems costs, longer implementation time, and the inability to benefit from
vendorsoftwaremaintenanceandupgrades(JansonandSubramanian,1996),
itshouldonlyberequestedwhenessential.
ManyresearcherssuggestthatakeybenefitofERPistheseamlessintegration
of information flowing through the organization (Bryan, 1998; Shang and
Seddon, 2000; Somers and Nelson, 2001; Sumner, 2000). To successfully
achievethisbenefit,thebusinessprocessesandfunctionsmustbeintegrated
(Davenport,2000).Althoughitislikelythatmanybenefitswillnotberealized
forsometimepost-implementation,workshopparticipantsindicatedthatthe
agencies have been able to accomplish tasks with SAP that would not have
beenpossiblewiththeprevioussystem.Withtheaimofincreasingbenefitsfrom
theSAPinvestment,acontinuousimprovementprocessandbenefitsrealisation
programwasestablishedacrossthegovernmentagenciesafter“golive”ofthe
system.
Though not among the top-10, it is noteworthy that the four “costs”-related
sub-issues (S1, S2, S3, S4) are all ranked relatively higher by strategic
respondents(12th
,18th
,14th
,ninth)thanbyoperationalrespondents(23rd
,27th
,
31st
, 29th
). Clearly, and understandably, strategic respondents are more
attuned to costs of the new system than are operational respondents. Having
saidthis,theoverallrankingsofthesefoursub-issues(19th
,25th
,28th
,22nd
)puts
themallinthebottomhalfofthesubissues(moderatelyimportant).
Issues of Relatively Greater Importance to Operational
Personnel
Operational personnel viewed the KNOWLEDGE-MANAGEMENT – re-
lated issue, training provided was inadequate and did not cover the
diversity of circumstances encountered in normal daily operations (S8), as
most important overall (ranked 16th
by strategic respondents). This concern
wouldbeclosetotheconsciousnessofstaffwhoareresponsiblefortheday-
to-day running of the system or handling month- and year-end processes.
Surveyrespondentssuggestedthatsignificantproblemswereencounteredwith

280 Chang & Gable
interfaces,business-areabalancing,legalconsolidations,andcontrolledand
administeredreporting,whichwerenotwell-documented,norwasadequate
trainingprovided.Severalstudieshavesuggestedthatwhenimplementingan
ERPpackage,trainingisanimportantcomponentandshouldbeahighpriority
(Bryan, 1998; Crowley, 1999; Ross, 1999; Wilder and Davis, 1998). Orga-
nizationsinthecurrentstudyarerealisingtheneedforimprovedtraining,not
onlyinthesoftware,butalsointhenewjobfunction.Workshopparticipants
suggestedthatthegovernmentagencieshavealreadytakenaction,soonafter
“golive”(e.g.,makingalargeinvestmentinstafftrainingandongoingsupport
oftheSAPsystem),tominimiserelianceonexternalcontractorsandtobuild
in-houseexpertise.Aperformanceplanninganddevelopmentprogramwithin
the agencies (which looks at staff training over time) was implemented to
manage this issue with in-house skills development, and to ensure all staff
receive appropriated SAP training prior to the pending upgrade project.
The DATA-CONVERSION – related issue S5, errors were found in data
converted from former QGFMS, is ranked 8th
mostimportantbyoperational
respondents (ranked 24th
by strategic respondents). A fundamental require-
mentfortheeffectivenessoftheERPsystemistheavailabilityandtimelinessof
accurate data. Somers and Nelson (2001) suggest that management of data
enteringtheERPsystemrepresentsacriticalissuethroughouttheimplementa-
tion process. Data conversion problems can cause serious implementation
delays and cost overruns (Neihus et al., 1998; Holland and Light, 1999).
Survey respondents stated that the new fields did not always encompass the
old-field data during data conversion testing. They further indicated that a
substantial number of transactions were posted to a “blank business area”
before anyone realized the extent of the problem. Data adopted from prior
systemsmustbemappedintothecorrectfieldsandsubsequentlymaintained.
DATA-CONVERSIONcanbeanoverwhelmingprocess,especiallyiforgani-
zationsdonotunderstandwhatshouldbeincludedinthenewsystemsandwhat
needstobeomitted.Workshopparticipantsindicatedthatthisissuehasbeen
addressedbutneedstobeconsideredmorecarefullyinanyfutureconversion
exercise.
Two SYSTEM-DEVELOPMENT – related issues, too little effort put into
redesigning the underlying business processes, resulting in a system that
represented a “technology swap” that failed to capture many of the
benefits of SAP (S37) and inadequate system testing left many errors in the
implemented system (S33) are ranked ninth and 10th
most important by

operationalrespondents(24th
and21st
respectivelybystrategicrespondents).
ImplementinganERPsysteminvolvesre-engineeringexistingbusinesspro-
cessestomeetthebestbusinessprocessstandard(Davenport,2000;Markus
et al., 2000). One major benefit of ERP comes from re-engineering the
organization’swayofconductingbusiness.However,workshopparticipants
indicatedthatthecostsandbenefitsofaligningwithanERPmodelcanbevery
highbecauseitisdifficulttogainagreementtothenewprocessfromallwhoare
affected.Furthermore,theysuggestedthatsomeexistingbusinessprocesses
aresospecifictotheagency(ies)thattheyneedtobepreservedorappropriate
steps taken to customise them.
CleargoalsandobjectivesarecriticalinanyERPimplementation.Owingtothe
Y2K deadline, the then looming GST and the uncertain costs/benefits of
businessre-engineering,managementchosetopursuea“technologyswap”for
the five agencies. Workshop participants too felt that it was easier and
appropriate to first complete the project, secure the system, and resolve
problems, and then seek to realize the benefits. Nonetheless, a surprising
numberoftransactionsfailedonimplementationduetoinsufficienttestingand
lackoftime.Ageneralfindingisthattoomuchwasrelegatedto“beingfixed
later”inanefforttomeet“golive”deadlines.Workshopparticipantssuggested
thattheareasexperiencingthemostproblemstendedtorelatetofunctionality
that was added to SAP to meet a specific business requirement. It is clearly
necessarytoensurecomprehensivetestingduringuseracceptancetestingand
toensuresign-offoftestresults.
Issues of Relatively Lesser Importance to Both
Respondent Groups
Strategicandoperationalpersonnelconcurontherelativelylesserimportance
of the five sub-issuesORGANIZATIONAL-CONTEXT: S19 – differences in
work ethic among project personnel, S24 – political issues had negative
impact on the project, and S26 – timing of implementation was inappro-
priate because of change underway in the public sector; OPERATIONAL-
DEFICIENCIES: S17 – SAP lacks some functionality of QGFMS; SYS-
TEM-PERFORMANCE: S38 – system performance is inadequate to meet
operational requirements. The fact that only one of the eight sub-issues
associated with the ORGANIZATIONAL-CONTEXT major-issue was rated

282 Chang & Gable
in the top-half of the rankings (S7), and five of these eight are rated in the
bottom-10bybothoperationalandstrategicrespondents,isstrongevidence
that agencies did not perceive organizational context as a primary concern
overall.
Conclusion
This research began with the proposition that for those who implement,
manage,andsupportERPsystems,thereisbenefitinknowingthemajorERP
lifecycleissuesandtherelativeimportanceoftheseissuesastheyaffectvarious
stakeholdergroups.ItwasnotedthatnumerousstudiesofISissueshavebeen
conductedforthebenefitofprivatesectororganizations,butthattherehasbeen
littlestudyofpublicsectororganizations.Accordingly,amodifiedDelphi-type
survey,togetherwithaseriesofinterviewsanddomainexperts’workshops,
were conducted to establish a set of major-issues and related sub-issues that
wereconfirmedasrelevanttothestudystakeholdergroups.Ultimately,while
findingsareexpectedtobeparticularlyvaluabletoorganizationsimplementing
ERP,animprovedunderstandingofERPlifecycleimplementation,manage-
mentandsupportissuesisexpectedalsotobenefitothertypesofsystemsand
thecompleterangeofconsultingfirms’andsoftwarevendors’services,aswell
as broader IS research.
Acknowledgments
ThisstudywasconductedbytheInformationSystemsManagementResearch
Center(ISMRC),QueenslandUniversityofTechnology(QUT),incollabora-
tionwithSAPAustraliaandwiththefullsupportoftheQueenslandGovern-
ment. The study is funded by an Australian Research Council “Strategic
PartnershipwithIndustryforResearchandDevelopment”(SPIRT)collabora-
tive grant between ISMRC and SAP Australia titled “Cooperative ERP
LifecycleKnowledgeManagement.”

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Major
ERP
Life
Cycle
Implementation,
Management
and
Support
Issues
287
Copyright
©
2005,
Idea
Group
Inc.
Copying
or
distributing
in
print
or
electronic
forms
without
written
permission
of
Idea
Group
Inc.
is
prohibited.
S-# M -# M ean R ank M ean R ank M ean R ank
30 9 7.21 1 6.8 8 2
@ 7.38 2
@ C om plexity of SA P m eans few, if any, people understand SA P beyond a single m odule, m aking overall design decisions very difficult
13 5 7.10 2 6.7 0 5
@ 7.29 4
@ Not all required reports were available at im plem entation tim e
12 5 7.09 3 6.6 3 7
@ 7.30 3
@ Developing rep orts is difficult in SAP
8 3 7.07 4 6.0 0 16 7.44 1 T raining provided was inadequate and did not cover the diversity of circum stances encountered in norm al daily op erations
21 6 6.80 5 7.0 7 1@ 6.65 7@ Im plem entation across m ultiple agencies led to sub-op tim isation of the system configuration
7 3 6.75 6 6.7 5 4
@ 6.75 6
@ Insufficient resources and effort put into developing in-house knowledge
9 3 6.74 7 6.7 0 5@ 6.77 5@ Shared knowledge am ong p roject team m em bers was a p roblem - agency staff did not understand SA P and im plem entation p ersonnel did not understand age
18 5 6.44 8 6.5 9 8 6.36 11 Security is difficult to m aintain in SA P resulting in som e users being granted too m uch access and others not having access to data they need
31 9 6.34 9 6.4 7 11 6.25 15 Freq uency of SA P upgrades places a large burden on system m aintenance
35 9 6.33 10 6.8 2 3 6.04 19 R equested system functionality was sacrificed in order to m eet im plem entation deadlines
36 9 6.20 11 6.0 2 15 6.29 14 T he p roject team was disbanded when the system was handed over desp ite m any issues rem aining unresolved
37 9 6.19 12 5.6 3 21 6.43 9 T oo little effort p ut into redesigning the underlying business processes, resulting in a system that represented a 'technology swap' that failed to capture m any
6 3 6.18 13 6.4 8 10 6.02 20 Difficult to retain p eop le with SA P skills due to m arket p ressure to leave
33 9 6.17 14 5.6 5 20 6.42 10 Inadequate system testing left m any errors in the im p lem ented system
5 2 6.15 15 5.2 9 24 6.47 8 Errors were found in data converted from form er Q G FM S
14 5 6.05 16 5.4 6 23 6.31 13 O p erational deficiencies that im p act the accuracy and efficiency of operations and the ease of use of the system
29 8 6.04 17 5.2 7 25 6.35 12 Support personnel are inadequately trained
10 3 6.04 18 5.8 5 19 6.12 18 System docum entation is inadequate, particularly with resp ect to system design and controls
1 1 5.99 19 6.3 7 12 5.79 23 C om plexity (and therefore cost) of SA P far exceeds the requirem ents of som e agencies
11 4 5.91 20 4.9 5 30 6.22 16 Lack of consultation with operational level users m eant that operation requirem ents were not m et
28 8 5.76 21 4.6 9 32 6.17 17 O ngoing sup port for the SA P system is inadequate
4 1 5.65 22 6.5 7 9 5.22 29 SA P im plem entation benefits do not justify costs
20 6 5.65 23 5.0 3 28 5.97 21 Diversity of governm ent system s m akes integration difficult
15 5 5.58 24 5.0 0 29 5.79 22 Persistent m inor errors and operational issues have not b een rectified
2 1 5.51 25 5.9 0 18 5.33 27 C om plexity of SA P drives costs beyond reasonable lim its
34 9 5.47 26 5.5 8 22 5.42 26 Issues that arose during, or result from , the developm ent phase of the SA P system
23 6 5.38 27 5.2 4 26 5.44 25 Lack of ownership/resp onsib ility by agency personnel at the project level
3 1 5.38 28 6.1 7 14 4.96 31 C osts of SA P exceed those of Q G FM S without com m ensurate benefit
32 9 5.27 29 6.2 5 13 4.66 32 Freq uency with w hich requirem ents changed caused problem s for develop ers
25 6 5.16 30 4.8 1 31 5.30 28 Poor com m unication between agencies
22 6 5.07 31 5.0 7 27 5.07 30 Lack of leadership at senior levels
27 7 4.99 32 3.17
! 37 5.6 0
! 24 O rganisation app ears unable or unwilling to be responsive to requests for changes in the system to resolve operational problem s
16 5 4.97 33 5.9 0 17 4.53 35 SA P is not sufficiently integrated with other system s
19 6 4.59 34 4.6 9 32
# 4.55 34
# Differences in work ethic am ong project personnel
38 10 4.49 35 3.9 3 36
# 4.66 33
# System p erform ance is inadeq uate to m eet operational req uirem ents
17 5 4.14 36 4.0 8 35
# 4.16 36
# SA P lacks som e functionality of Q G FM S
24 6 4.00 37 4.1 9 34
# 3.93 38
# Political issues had a negative im pact on the project
26 6 3.76 38 3.1 3 38
# 4.03 37
# T im ing of im plem ention was inappropriate because of change underway in the public sector
! - significant difference at .0 5 level in analysis of variance. @ - som e concurrence that these are m ore im p ortant (scored in the top 1 0). # - som e concurrence that these are less im portant (scored in the
A gency
(N =36)
Strategic
(N =11 )
O p erational
(N =25)
B
o
tto
m
1
0
T
o
p
1
0 C ategory
Appendix A. Sub-issue mean scores and ranks by major issue, by stakeholder group

288 Jones & Price
ChapterXV
Organizational
KnowledgeSharingin
ERPImplementation:
Lessons from Industry
Mary C. Jones
University of North Texas, USA
R. Leon Price
University of Oklahoma, USA
Abstract
This study examines organizational knowledge sharing in enterprise
resource planning (ERP) implementation. Knowledge sharing in ERP
implementation is somewhat unique because ERP requires end users to
have more divergent knowledge than is required in the use of traditional
systems. Because of the length of time and commitment that ERP
implementation requires, end users are also often more involved in ERP
implementations than they are in more traditional ERP implementations.
They must understand how their tasks fit into the overall process, and they
mustunderstandhowtheirprocessfitswithotherorganizationalprocesses.
Knowledge sharing among organizational members is one critical piece of
ERP implementation, yet it is challenging to achieve. There is often a large
gap in knowledge among ERP implementation personnel, and people do

Organizational Knowledge Sharing in ERP Implementation 289
not easily share what they know. This study presents findings about
organizational knowledge sharing during ERP implementation in three
firms. Data were collected through interviews using a multi-site case
study methodology. Findings are analyzed in an effort to provide a basis
on which practitioners can more effectively facilitate knowledge sharing
during ERP implementation.
Introduction
Enterpriseresourceplanning(ERP)isastrategictoolthathelpscompaniesgain
acompetitiveedgebystreamliningbusinessprocesses,integratingbusiness
units,andprovidingorganizationalmembersgreateraccesstoreal-timeinfor-
mation.ManyfirmsareusingERPsystemstocutcosts,standardizeoperations,
andleveragecommonprocessesacrosstheorganization. ERPallowsfirmsto
have a more convergent view of their information by integrating processes
across functional and divisional lines using a centralized database and inte-
gratedsetsofsoftwaremodules(ScottandKaindl,2000;Zhengetal.,2000).
However,theconvergencethatERPaffordsattheorganizationalleveloften
results in a divergence of the knowledge required at the individual level
(Baskervilleetal.,2000). ERPimposesanewframeworkontheorganization
(Robeyetal.,2002). Itrequiresenduserstohavebroaderknowledgethanis
requiredintheuseoftraditionalsystems. Theymustunderstandhowtheirtasks
fitintotheoverallprocessandhowtheirprocessfitswithotherorganizational
processes(LeeandLee,2000).Thus,knowledgesharingisonecriticalpiece
ofERPimplementation.Anorganizationbeginstobuildthefoundationduring
implementation on which end users can understand enough about the ERP
framework to realize its benefits (Robey et al., 2002). Because of the time
commitmentsandtheextensiveknowledgesharingthatmusttakeplaceduring
ERPimplementation,endusersareoftenmoreinvolvedintheimplementation
than they are in more traditional implementations. In some cases, ERP
implementationsaremanagedandledbyendusersandendusermanagers,and
ITstaffservesprimarilyastechnicaladvisors(Jones,2001).Unfortunately,
thereisusuallyasignificantgapinknowledgeamongtheseimplementation
personnel, and people do not easily share what they know (Constant et al.,
1994; Jarvenpaa and Staples, 2000; Osterloh and Frey, 2000; Soh et al.,
2000).

290 Jones & Price
This study was undertaken to examine how firms ensure that organizational
knowledgeissharedduringERPimplementations.Oneobjectiveistoidentify
facilitators of organizational knowledge sharing. Another is to synthesize
findingsintolessonsaboutknowledgesharingduringimplementationthatother
firmscanapplyintheirownERPimplementations.
Theoretical Background
KnowledgesharinginERPimplementationissomewhatuniquebecauseERP
redefinesjobsandblurstraditionalintra-organizationalboundaries(Leeand
Lee, 2000). Knowledge must be shared across functional and divisional
boundaries,andtheknowledgerequiredduringERPimplementationentailsa
widervarietyofexperiences,perspectives,andabilitiesthantraditionalinfor-
mationsystemsimplementations(Baskervilleetal.,2000;Robeyetal.,2002).
Knowledgesharingischallengingbecausemuchknowledgeisembeddedinto
organizationalprocesses(Davenport,1998).Thewaypeopleactuallydotheir
jobsisoftendifferentfromtheformalproceduresspecifiedforeventhemost
routinetasks(BrownandDuguid,2000).Itisalsochallengingbecausethere
are gaps between what people do and what they think they do (Brown and
Duguid, 2000). Some tasks are so routine, and people have done them for so
long,thatmanyofthestepsinvolvedaresubconscious(LeonardandSensiper,
1998). However, there is a variety of factors that can facilitate knowledge
sharingduringERPimplementation.
In order to present a coherent and logical view of knowledge sharing, we
identifyfactorsthatinfluenceknowledgesharingthatarelinkedbyacommon
conceptualunderpinning,whichallowsindividualstoshareobservationsand
experiencesacrosstraditionalboundaries. MostERPimplementationactivi-
ties center around the ERP implementation team (Baskerville et al., 2000).
ERPimplementationteamstypicallyconsistoforganizationalmembersfroma
variety of functionalareasandorganizationaldivisions.Eachteammember
must understand what the others do in order to effectively map processes
duringtheimplementation(Baskervilleetal.,2000).Teammembersmustwork
toachievethislevelofunderstanding.Theknowledgesharingrequireddoesnot
come automatically with team membership; it must be facilitated. Thus,
facilitationofknowledgesharingontheteamisonefactorexamined.

Theteammustalsointeractwithenduserstogatherrelevantinformationabout
processes and to keep end users and user managers informed about changes
toexpectwhentheERPisimplemented(Robey,Ross,andBoudreau,2002).
Ideally, there is an intensive exchange of knowledge between the team and
these users that they represent (Baskerville et al., 2000). Inadequate knowl-
edgesharingbetweenthesetwogroupsleadstounsuccessfulimplementation
(Soh et al., 2000). One key to a smooth ERP implementation is effective
changemanagement(Andriola,1999; Harari,1996).Becauseofthecomplex-
ity and cost of ERP, it must be visibly planned and implemented (Hammer,
1990). Onewaytocommunicateplans,shareknowledgewithendusers,and
gather knowledge from end users is through careful change management
(Clement,1994).Therefore,changemanagementisanotherknowledgeshar-
ingfactorexamined.
Alargepartofchangemanagementistraining.Thoseaffectedbytheimplemen-
tationshouldreceivetrainingtodevelopnewandimprovedskillstodealwith
newchallengesbroughtaboutbythechange(Andriola,1999). Usersmustgain
knowledge about the business rules and processes embedded in the ERP
software (Lee and Lee, 2000). They also must understand the integrative
nature of ERP in order to use it effectively. ERP requires end users to
understandthattheyarenolongerworkinginsilos,andwhatevertheydonow
impacts someone else (Welti, 1999). Entire departments must be retrained
with this in mind (Caldwell and Stein, 1998; Al-Mashari and Zairi, 2000).
TrainingontransactionsandontheintegrativenatureofERPisanotherfactor
examined.
Mostfirmshireexternalconsultants(integrationpartners)thatknowtheERP
software to help them through the implementation (Soh et al., 2000). This
involvesknowledgesharingbecausetheorganizationalimplementationteam
seekswaysfortheknow-howandskillspossessedbyintegrationpartnerstaff
(IPS)tobesharedwiththemsothattheyarenotlostwhentheIPSleaves(Al-
MashariandZairi,2000).Thisgoesbeyondwrittendocumentationandtraining
manuals. For example, consultants are assigned to work side by side with
organizationalteammemberssothatthememberscanlearnwhattheconsult-
antsknowaboutthepackagethatcannoteasilybewrittendown(Osterlohand
Frey,2000).OnesourceoffailureinERPimplementationistheIPSwhoworks
alone,andfailstoshareknowledgewithorganizationalmembers(Welti,1999).
When the IPS fails to share what they know, the firm often has trouble
supportingtheERPaftertheyleave. Thus,itisimportantthatthefirmcapture
asmuchoftheIPS’sknowledgeaspossiblebeforetheytransitionofftheteam.

292 Jones & Price
Transitionof IPSknowledgeisanotherknowledgesharingfactorexamined.
Insummary,severalfactorsthatmayinfluenceknowledgesharingareexam-
ined.Thesearefacilitationofknowledgesharingontheimplementationteam,
changemanagementactivities,typeoftrainingendusersreceive(i.e.,transac-
tionalorintegrative),anduseofformalknowledgetransferfromintegration
partnerstaffwhentheyleavetheorganization.
Finally, the extent to which a firm is beginning to alter its core knowledge
competency after SAP implementation is examined. The active sharing of
organizationalmembers’knowledgeislinkedtoafirm’sabilitytoalteritscore
knowledge competencies (Kogut and Zander, 1992; Grant, 1996; Hine and
Goul, 1998). Altering knowledge competency involves sharing knowledge
acrosstheorganizationinawaythatpreservesexistingknowledgecompeten-
ciesandatthesametimeabsorbsnewknowledgethatexpandsandstrengthens
those competencies (Stein and Vandenbosch, 1996). An innovation that
impacts the entire organization and facilitates major changes in a firm’s
processes, as ERP does, provides an opportunity for firms to do this (Brown
andVessey,1999).Evidenceofthisalterationisfoundinfundamentalchanges
in the way a firm performs its core processes. ERP benefits are the result of
ongoingeffortstocontinuouslyimproveprocesses(Ross,1999).Atthetime
of data collection, these firms were still too early in their use of ERP to have
realized extensive change. They were, however, making efforts to integrate
processesandtherebyaltercoreknowledgecompetency.Thus,changeincore
knowledge competency in this study is assessed as the extent to which
processes were being changed as a result of ERP, rather than the extent to
whichtheyhadchanged.
Methodology
Datawerecollectedaspartofalargerstudyusingamultiplecasestudyoffirms
inthepetroleumindustrythathadimplementedSAPR/3.Focusingonasingle
package helps minimize bias that might be introduced into findings across
packages.However,becausethefocusisonknowledgesharing,ratherthanon
technical aspects of the package itself, findings should be generalizable to
implementationofotherERPsoftwareinotherindustries.TheCIOortopIS
executive of 10 firms in the industry were contacted to determine if they had
implementedorwereimplementingSAP,andifso,whethertheywouldagree

to participate in the study. In some cases, a division of the firm was included
ratherthanthewholefirm.Becauseofsize,structure,orgeographicdispersion,
somefirmshaveconductedcompletelyseparateimplementationsindivisions
aroundtheworld,withlittleornocommunicationbetweentheimplementation
teams. In those cases, the division seemed to be a more appropriate case site
than the entire organization. We collected data from those that did agree to
participate, and that met two other criteria. We eliminated firms that had
implementedonlyoneortwomoduleswithnoplanstoimplementmore.We
alsoeliminatedfirmsthathadnotimplementedacrosstheorganizationorthe
specific division in which we were interested. Each firm in the study imple-
mentedthemajormodulesofSAPincludingFI/CO(financialaccountingand
controlling),AM(fixedassetsmanagement),PS(projectsystems),PM(plant
maintenance),SD(salesanddistribution),MM(materialsmanagement),and
PP (production planning). These criteria helped to ensure that the case sites
werecomparable,andthatdifferencesinfindingswerenotduetothescaleof
implementation.
Inordertominimizebiasthattheresearchersmightintroduceintotheprocess
of analyzing findings, a rigorous and structured approach to analysis was
followed(Yin,1989). Forexample,theinterviewertooknotesandtapedeach
interview.Tapesandnotesweretranscribedbyathirdparty,reviewedbythe
interviewer,andrespondentswereaskedforclarificationonpointsthatseemed
vague or missing. The transcriptions were then summarized, reviewed by
anotherresearchertohelpensurethatthetranscriptionsflowedwellandmade
sense.Finally,theprimarycontactsineachfirmreviewedsummariestohelp
ensure that what was recorded represented actual events and perceptions. A
casestudydatabaseconsistingofinterviewnotes,documentationprovidedby
respondents,tablessummarizingfindings,andanexactnarrativetranscription
ofallinterviewswereused.Thequestionsfromtheinterviewguideareprovided
in Appendix A. A within case analysis was performed where data were
extracted using the interview questions as a guide to get a clearer picture of
knowledgesharingineachfirm. Then,across-caseanalysiswasperformedin
whichknowledgesharingacrossthefirmswascompared.
Becauseofthesizeoftheprojectteams,interviewingasampleofkeymembers
wasdeemedmoremanageablethanattemptingtointervieweachmember.In
addition,manymembershadleftthefirm,ormovedoutoftheareasinwhich
they had originally worked. Thus, we asked each of the top IS executives to
identifykeymembersoftheirSAPprojectteamthatwerestillinvolvedwith
SAPinsomeway,includingsupportandpost-implementationprocessrede-

294 Jones & Price
sign. This method of identifying respondents has been demonstrated to be
acceptable because professionals in a field have been shown capable of
nominatingkeyrespondentsthathaveaconsistentsetofattributesappropriate
for a study such as this (Nelson et al., 2000). A series of semi-structured
interviewswereconductedwith8to10membersofeachfirm.Thenumberof
intervieweeswaschosenbasedontheconceptoftheoreticalsaturation,where
“incrementallearningisminimalbecausetheresearchersareobservingphe-
nomena seen before” (Eisenhardt, 1989, p. 545). In these interviews, the
researchersoftenheardthesameexamplesfrommostoftherespondentsina
siteregardlessoffunctionalbackground,whentheycameontheteam,ortheir
jobatthetimeoftheinterview.Inaddition,therespondentsoftenusedthesame
phrases to express their perceptions. This was true of respondents who were
not located at the same physical locations at a site or who were not all on the
teamatthesametime.Thus,itwasdeemedthatadditionalinterviewswouldnot
yieldsignificantlydifferentinsights.Forexample,alltherespondentsatUSWhole
usedthephrase“psychologicaleffort”whenreferringtohowtheyapproached
the project. They indicated one guiding tenant of their project was that the
implementationwasasmucha“psychologicaleffortasatechnicaleffort.”In
anotherexample,thephrase“theaccountantsalwayscleanedupafterevery-
one” came up in most interviews at each case site.
Theinterviewslastedbetweenoneandtwohourseachoveraperiodofseven
monthsbetweenJuly2000andFebruary2001.Eachpersonwasinterviewed
once in person for one to two hours, and then was contacted by e-mail or by
telephoneforadditionalinformationorclarification. Inadditiontotheface-to-
faceinterviews,theresearchersalsoprecededandfolloweduptheinterviews
withe-mailandtelephonecallsforbackgroundinformation,clarification,and
pointsnotcoveredintheinterviews.
Respondentsincludedbothinformationsystemsstaffandbusiness/functional
staff. Some had been on the team from the beginning, while others joined at
various points in the project. These people represented a variety of perspec-
tivesonSAP,includingsomewhowerepleasedwithit,somewhohatedit,and
otherswhowereindifferent.Theyalsorepresentedavarietyoflevelsinthefirm
ranging from CIO and/or project manager to lower level employees, and
includedpeoplefromsuchfunctionalareasasaccounting,purchasing,refiner-
ies,salesanddistribution,andavarietyofengineeringfunctions(Table1).

Profile of Companies
USWhole is the U.S. division of one of the world’s leading oil companies. It
includesupstream(exploration&production),downstream(marketing,refin-
ing,andtransportation),andchemicalsegments.Thefirmhasexplorationand
productioninterestsinmanycountries,withalargeconcentrationintheU.S.,
anditmarketsitsproductsworldwide.USWholeperformedfiveSAPimple-
mentationsforeachofitsmajorbusinessunits,includingasmallpilottestsite,
and corporate headquarters. It began its SAP project in early 1995, and
completeditsfirstimplementationinMarch1996.Thefinaltwoimplementa-
tionswerecompletedsimultaneouslyinJuly1998.Thereareapproximately
15,000 SAP users in USWhole.
E&PistheNorthAmericanexplorationandproductiondivisionofaninterna-
tionalpetroleumcompanythathasannualrevenuesinexcessofUS$90billion.
Thisparticulardivisionisengagedintheexplorationandproductionofcrude
oilandnaturalgasworldwide,andaccountsforapproximatelyUS$6.8billion
ofthecorporation’srevenue.AlthoughSAPhasbeenimplementedinvarious
units of the parent company throughout the world, each project has been a
separateactivityfromalltheothers.Theteams,scope,budget,andtimelines
have been managed separately, and SAP has been designed and configured
Company SAP Team Role for each respondent (1 respondent per line)
USWhole
(Multiple roles
for many
members)
Responsible for SAP configuration; reengineering processes; managed quality assurance & testing; change
management
IT team leader; applications development lead; general leadership with 3 others of Chemical & Downstream
implementations Managed configuration & upgrades throughout the company
Project manager
Project manager
E&P Service delivery manager; Managed transition plan from production to operations and oversight of the
conversion
Technical leader for FI/CO; was also on HR design team
Functional expert in project systems and asset management
Team member; worked with conversion of legacy systems & investment management data to SAP
Leader for transition from development to support
Site implementation manager
Chemicals Logistics team leader
Team leader of all financial modules of SAP
Director of the order-to-cash process. Dealt with customer service, accounts receivable, credit and some sales
accounting.
Team leader for sales and operations planning
Change management leader. Responsible for communications and training materials
Business implementation leader
Manager of the support group
Co-project manager
Co-project manager
Table 1. Profile of respondents.

296 Jones & Price
differently for each, with very little or no collaboration among the units.
Therefore,focusingonlyonE&P’sapplicationinthisfirmseemstoprovidea
unit of analysis that is comparable to that in the other sites. E&P began its
project in 1996, using a big bang implementation where all modules were
implemented at one time, and finished the implementation in mid-1998, for
approximately3,000users.
Chemicalsisthechemicaldivisionofaninternationalpetroleumcompanywith
annual revenues of approximately US$16 billion. Chemicals accounts for
approximatelyone-fourthofitsparentcompany’srevenue,withannualrev-
enuesofapproximatelyUS$4billion.Itisaleadingchemicalmanufacturerwith
interestsinbasicchemicals,vinyls,petrochemicals,andspecialtyproducts.Its
productsarelargelycommodityinnature,inthattheyareequivalenttoproducts
manufacturedbyothersandaregenerallyavailableinthemarketplace.They
areproducedandsoldinlargevolumes,primarilytoindustrialcustomersfor
use as raw materials. Chemicals began its SAP project in late 1996, with the
firstofnineimplementationsinJanuary1998.Theimplementationsoccurred
approximatelyeverytwotothreemonthsuntilallimplementationswerefinished
in December 1999. There are approximately 5,000 SAP users in Chemicals.
AsummaryofprofilesisprovidedinTable2.
Data Analysis
Inthesectionsthatfollowisadescriptionofknowledgesharingfactorsineach
firm,includingfacilitationofknowledgesharingontheteam,changemanage-
ment/training,andtransitionofIPSknowledge.Theextenttowhichfirmshad
changed or were beginning to change their core knowledge competencies
Table 2. Corporate profile.
Corporate
Identity
Revenue
(U.S. $)
Began SAP Implementation
Date
Number of Users
USWhole * 1995 1996-1998 15,000
E&P 6.8 Billion 1996 1998 3,000
Chemicals 4 Billion 1996 1998-1999 5,000
* USWhole requested that this not be revealed

through changes in processes as a result of the SAP implementation is also
discussed.AsummaryofpointscoveredisprovidedinTables3a,3b,and3c.
Table3aprovidesasummaryoffacilitationofknowledgesharingontheteam.
Table3bprovidesasummaryofchangemanagementandtrainingactivities,and
IPSknowledgetransitionactivities.Table3cprovidesasummaryofchanges
incoreknowledgecompetency.
USWhole
Facilitation of Knowledge Sharing on the Team
TeamsatUSWholehadanegativeconnotationpriortotheSAPproject.They
were often used as dumping grounds for weak employees. This was a major
obstacletoovercomeinfacilitatingknowledgesharingontheSAP implemen-
tationteam.TopmanagementstronglysupportedSAP,sotheprojectmanag-
ers were able to ask for and get the “best people in most cases” for the
implementationteam.Theysentpeoplebacktotheirunitsiftheydidnotwork
Table 3a. Summary of facilitation of knowledge sharing on the team.
Company Facilitation of knowledge sharing on the team
USWhole deemphasized titles, rank, and seniority on the team;
emphasis on codifying how things worked and comparing written descriptions
E&P lots of socialization after work;
team members got to know each other and were supportive of each other;
viewed each other as experts in their respective areas
focused on a common purpose;
some tension between IT and integration partner yet subsided as the project
required heavy time and energy commitments;
proactively sought ways to minimize the impact of the tension
Chemicals team organized by process;
deemphasized seniority and rank by providing the same bonus to all on the team
actively;
involved a variety of key users early in the process to ensure that they gathered
knowledge from the right people

298 Jones & Price
Table 3b. Summary of change management/training for end users and
transition of IPS knowledge.
Company Change Management Training Transition of IPS Knowledge
USWhole Team communicated
with end users about
how SAP would
change their jobs;
Identified end users to
be change agents
within the units,
Relied on change
agents to
communicate as well
Identified power users
among end users to
train;
Power users helped
train other users;
Focused largely on
transactions
Limited focus on
integration
Worked with IPS throughout
the project;
Documented lessons learned
at the end of each go-live;
Used no formal transfer
process at the end
E&P Team went to change
management training;
Followed a change
management strategy;
Focused on
communicating project
status to the company;
Made sure end users
who were not directly
part of the team had
input into the project
among end users to
train;
Power users helped
train other users;
Focused largely on
transactions
Limited focus on
integration
Used formal transfer process
with checklists on how to
configure and on which
things triggered what;
Transferred knowledge from
IPS to 3rd party consultant,
then from that consultant to
E&P support team
Chemicals Focused on helping
end users understand
how their jobs would
change after SAP
Focused on how end
users would use SAP
among end users to
train;
Power users helped
train other users;
Focused on integration
in addition to
transactions
Built knowledge transfer into
the contract with the IPS;
Focused on how they solved
problems & where they
looked for answers;
Team members gradually
took on more responsibility
so they could learn what the
integration partner knew
out. Thus, they put together team members that had reasonably good
knowledgeabouttheirownprocesses.USWholefacilitatedknowledgesharing
ontheteambyeliminatingseniorityandfunctionaldistinctions.Forexample,
seniorpeopleworkedalongsidehourlyworkersontheteam,andifthelower
level employees had an idea or wanted to try something, the senior people
listened to them, and in some cases took direction from them. As one person

said,beforethisproject“alowerlevelpersonwouldn’tsaywhattheythought
infrontofamoreseniorperson.Butwiththesharedgoalofgettingtheproject
donequickly,theydid.”Lowerlevelpeoplealsochallengedseniorpeopleif
they didn’t agree or thought there was a better way of doing something.
USWhole provided a structure to the team that allowed people to share
knowledge openly and freely. This helped to resolve conflicts and to map
processestoSAPeffectively.
As one person said, “the bad thing was to have an idea and not express it.”
USWholealsoreliedheavilyoncodifyingknowledge,andwritingdownhow
processesworked.Forexample,“Ifsomeonesaidwecan’tdoitthisway,we
said,‘Whycan’tyou?Isitreallyunique?’We’dgetthemtolistwhattheydo
and to look at what others have listed, and identify the commonalities.”
USWhole used several approaches to facilitating knowledge sharing on the
team,includingcodifyingknowledge,structuringtheteamtoremovebarriers
toknowledgesharing,andproactivelyseekingtoovercomethestigmaasso-
ciatedwithteams.
Table 3c. Summary of changes in core knowledge competency.
Company Changes
USWhole Gradually eliminating silo behavior;
Some units adapted better than others, thus have seen more changes than others;
Adaptation across the firm seems to be occurring; "it's not like I do a job anymore, but I perform a
step in a process"
E&P Slowly moving away from silo behavior;
People are beginning to understand the integration points better, particularly in the financials area;
Adaptation limited by corporate budget cuts unrelated to SAP;
Are still in the learning cycle, but changes are ongoing
Chemicals Majority of Chemicals units have embraced the concept of common processes, particularly in
financials and purchasing;
Have completed development of a common master file for parts, and units are designing
purchasing around families of parts;
Processes in general are now more well defined and better understood across functions within and
across divisions

300 Jones & Price
Change Management/Training
USWhole had a strong change management team from the beginning of the
projecttocommunicatewiththerestoftheorganizationaboutprojectstatus,
issues,ideas,managingexpectations,andtraining.Asonesaid,“It’sallabout
changemanagement.That’sthenameofthegame.”Anotherpersonindicated
that“wehadtobreakdownculturalbarriers(tocommonprocesses)through
communication.” TheteamsharedtheirknowledgeaboutSAPwiththeusers
inordertodoso.Theyusedseveralverbalandwrittencommunicationmeans
toreachusersatalllevelsoftheorganization. Thechangemanagementteam
helpedusersandmanagersunderstandhowSAPwouldimpactthem,gathered
feedback on user perceptions, concerns, and issues, and helped overcome
resistancetochange.
USWholeusedapoweruserconceptfortrainingusers.Theyidentifiedusers
in each of the business units that were influential in their units and that were
interested in SAP, and trained them extensively in how to do transaction
processing as well as in how processes were changing and being integrated.
However,therewasmoreemphasisonthe‘how-to’thanonprocesschanges.
Userslargelylearnedthelatteronthejobastheybegantousethesystem.As
power users shared their knowledge with other users, knowledge about how
to use SAP began to permeate the organization. However, this was more
difficult in some streams than in others. For example, one unit had old
technology,andwentfrom“1960’stechnologyto1990’stechnologyinonefell
swoop. Some had never used a mouse before, and one guy was moving his
mouseoverthescreentochooseanicon.”Thus,itwasharderforthemtolearn
how to use the new system even at the most basic level.
Transition of IPS Knowledge
Because of the sheer size of the project, USWhole had several integration
partners.TheydidnotuseaformalknowledgetransferprocesswhenIPSleft,
buttheydiddocumenthowtoconfigureandperformallmajoractivities,and
theydocumentedlessonslearnedwitheachimplementation.USWholepeople
worked with each integration partner throughout the project so that the
knowledge transfer took place over time. In addition, although integration
partners may have been different for each business unit, the core team from
USWholewasthesamethroughout.Thus,knowledgegainedinoneimplemen-
tation was not lost, but rather, was enhanced as the project progressed.

Changes in Core Knowledge Competency
TeammembersgainedknowledgeabouttheorganizationasaresultofSAPas
theylearnedaboutthe“linkagesandinefficienciesbetweenprocesses.”How-
ever, the organization has had mixed results in altering core knowledge
competenciestochangethewaytheyperformprocesses.“Differentstreams
haveadapteddifferently.”Thedownstreamoperationsarethemostcomplex
to do in SAP, and this stream had experienced the least change in the past. In
thebeginning,ithadthegreatestdifficultyinadaptingtointegrated,common
processes. “Downstream adapted very poorly early on.” The chemicals
division was used to change because it operates in an “acquisition and trade
environment.” It also was running SAP R/2, so it was more familiar with the
integrated process approach. Thus, it has had an easier time adapting.
Similarly, “upstream is primarily accounting based, so with the changing
economy they grew used to change,” and this stream has adapted to the
changes more readily. Thus, USWhole has experienced mixed results in its
efforts to alter core knowledge competencies, but is continually working
towardchange.
One explanation for this is that USWhole did not recognize early enough
differencesinthestreams’abilitiestoadapttochange.Theirchangemanage-
mentapproachwasnottailoredtoeachstream,andeventhoughtheyreceived
feedbackfromeach,ifastreamwasresistant,itmaynothavesharedenough
of what it knew so that the team could make the transition more effective.
AlthoughUSWholeworkedhard,toensureeffectiveknowledgesharingtook
placeontheteam,itseffortstoensureknowledgesharingbetweentheteamand
therestoftheorganizationmaynothavebeenstrongenoughtoimpactchange
in core processes.
E&P
E&P used informal team building activities to help solidify team member
relationships in an effort to foster knowledge sharing. Team members fre-
quentlysocializedtogetherafterwork,andattheendofmajormilestones,the
companytreatedtheentireteamatvariousdinners,parties,andotheroutings.
Theteamwasalsosolidifiedbecauseteammembers“knewthelegacysystems

302 Jones & Price
onthebusinessandtechnicalside,andtheywerehighlycapableandcredible
intheirareas.”Theyviewedeachotherasexpertsintheirareas,andthus,were
willingtolistentoandlearnfromeachother.
However, E&P had a somewhat unique obstacle to knowledge sharing to
overcomeinitsimplementation.Theinformationtechnology(IT)divisionofthe
parent company is managed as a separate company, and must contract with
E&P and in competition with other outsourcing vendors for jobs. The IT
company bid to be the integration partner on the SAP project, yet the E&P
projectleaderchoseanotherfirmtobetheprimaryintegrationpartnerbecause
it had more experience with SAP. However, the IT staff had extensive
knowledge about and experience with the E&P legacy systems that SAP
replaced. In some cases, the IT staff had as much or more knowledge about
howprocessesworkedthantheE&Pbusinessunitemployees.Thus,theywere
selected to be part of the SAP team in order not to lose their knowledge. At
first,therewassometensionbetweenITstaffandtheIPSbecausetheITstaff
felt that they should have been chosen as the primary integration partner.
However,therewasastrongcorporatecultureofworkinginteams,thusthis
tensionwasminimized,andteammembersfocusedprimarilyonthecommon
purpose of completing the project rather than on themselves. In addition, as
new people came on the team throughout the project, they were not aware of
theearliertension,whichalsohelpedtodissipateit.Asonesaid“wedidn’thave
timetodrawlinesinthesand.Wewereconcernedwithmeetingdeadlines,and
we all had the same goal —making SAP work.”
E&Phadachangemanagementteaminplacewhoseresponsibilitywastomake
surethatcurrentprojectstatuswascommunicatedtoallcompanyemployees,
and to make sure that people not directly tied to the project felt like they also
hadsomeownership. Therewasparticularemphasisonthiscommunication
because“ourexperienceontheselargeimplementationshasaverycheckered
past.”E&Phadimplemented“fairlywellconceived”largesystemsinthepast
where the change management people did not handle the change well. As a
result, organizational members did not like the systems, and sometimes the
systemswereperceivedasbecomingthe“buttofalotofjokes.” Thus,senior
managementplacedahighpriorityonmanagingchangeintheSAPproject,and
a large piece of the budget was devoted to it. The change management team
wentthroughchangemanagementtrainingclasses,andtheintegrationpartner

“broughtinaverystrongchangemanagementplan.”The“changemanagement
piece was very mature, very well thought out, very strong.” The change
managementteamhandledallcommunication,usingavarietyofwrittenand
verbalcommunicationtechniquesrangingfrome-mailtotownhallmeetings.
“Wegotsomegoodinput(throughthiscommunication)thathelpedusrestore
somethingsthatmayhavecausedtroublelateron.”
Trainingwasdoneusingthepoweruserconcept.Theemphasisintrainingwas
more on how to perform transaction processing than on the way processes
were changing or the integrative nature of processes. The project budget
providedforthelatteraspectoftrainingafterimplementationtogivetheusers
a chance to first understand how to use the system for basic transactions.
However, the budget for all training at E&P, not just SAP, was cut, and they
did not get to do as much of that as they wanted. This hurt the change
managementteam’sabilitytoshareknowledgewiththeorganization. Onesite
wasabletodomoretrainingbecausetheyhadsomeadditionalresourcesthat
theycoulduse.Eventhough“itwasn’tmuchmoretraining,youcanreallysee
thedifferenceinhowmuchbettertheyareabletotakeadvantageofSAPthan
otherlocationsare.”
When it came time to transition the IPS off the team, the original tension
regarding choice of partner began to resurface. Although most of the team
membershadeithergottenpastitorwereunawareofitthroughouttheproject,
theprojectmanagerstillhadreservationsaboutthefirm’sinternalITcapabili-
ties to support SAP after implementation. He wanted to hire the integration
partnertocontinueworkingwiththefirmindefinitelyastheSAPsupportteam,
eventhoughthiswasamoreexpensivelongrunoption.Becauseoftheexpense
andthetensionthedecisioncreated,seniormanagementoverrodetheproject
manager’s decision and hired the IT division to do long-term support. To
ensurethatthetransitionwassmooth,theyremovedtheprojectmanagerfrom
theprojectandtransferredhimlaterallytoanotherpartoftheorganizationthat
had nothing to do with SAP. They appointed an experienced, senior IT
managertooverseethetransitionofknowledgefromtheintegrationpartnerto
the team, and to manage the establishment of the support team. This was a
strong,proactiveattempttoovercomeanobstaclethatcouldhavenegatively
impacted the rest of the project.

304 Jones & Price
AnotherchoicethathelpedminimizeeffectsofthissituationisthatE&Phired
anotherconsultingfirmwithexperienceinSAPtohelptransitiontheIPSoffthe
teamandensurethattheirknowledgewasnotlosttoE&P.Becausethesupport
team members had worked throughout the SAP project, they already under-
stoodtheprocessesquitewell,butweremissingtechnicalinformationsuchas
howtoconfigureparticularprocesses,orwheretolookforcertaintechnicalor
operationalinformation.Theintegrationpartnertransferredtheirknowledgeto
thethird-partyconsultant,andthenthethird-partyconsultanttransferredthat
knowledgetotheE&Psupportteam.Intheirknowledgetransfermodel,“itwas
transferringSAPknowledgefromoneSAPexperiencedgrouptoanotherSAP
experiencedgroup,thenthatgrouptransitionedtheknowledgetousinaway
wecouldunderstand.”Whilesomeknowledgewassurelylostbecauseofthe
varying perceptions, experiences, and communication barriers involved in
gettingsecond-handorthird-handknowledge,thismayhavebeenthebestway
E&Pcouldgainintegrationpartnerknowledge,giventhesituationinwhichthey
wereworking.Thus,E&Ptookstrongstepstominimizeknowledgelosswhen
itrecognizedapotentialproblemwithknowledgesharing.
TheextenttowhichE&Phasintegratedtheresultsofitsknowledgesharingto
altercoreknowledgeandprocessesissomewhatlackinginconsistency. One
personindicatedthatforalongtime“peopledidn’treallytrytoexploitSAP;
theyjusttriedtogettheirjobsdone.”However,severalmonthsafterimplemen-
tationthatbegantochange.Thesupportteamis“gettingmorerequestsfrom
people looking at how to use SAP to change the business.” Part of that is
because budget cuts and layoffs that occurred about the time SAP was
implemented (not SAP related), created a strain on employee’s time and
motivationtolearnsomethingnew.Thepressureonthebudgethaseased,yet
the emphasis on cost cutting remains. Thus, end users have renewed their
effortstofindopportunitiestorunthebusinessmorecosteffectively.Theyare
askingtheSAPsupportteamquestionsabouthowtoidentifyandmakeuseof
theseopportunitiesinSAP.Theyhavealsobeguntounderstandthatwhatthey
do in their process now affects someone else in another process, and are
looking for ways to take advantage of that. The SAP support team continues
toencouragepeopletoexploitSAPopportunities.E&Phascontinuedsharing
knowledge and seeking ways to exploit old certainties and exploring new
possibilitieslongafterimplementation.Thus,changestothecoreknowledge

competencyareongoing.UsersarenowtryingtouseSAPtochangetheway
they perform processes and are thus beginning to alter core knowledge
competencies.OneexplanationforthismaybetheeffortsE&Pmadethrough-
outtheimplementationtofacilitateknowledgesharingontheteamandwiththe
rest of the organization. These knowledge sharing efforts helped make the
organizationreadytofacilitatechangeinprocesses,andthatreadinesslasted
throughcorporatebudgetcuts.
Chemicals
Chemicals’projectmanagersaidthat“oneofthethingsIalwaystellmyfolks
is that SAP is a team sport. If you don’t play as a team, you can’t win.” One
ofthethingsinplacetodiscourageindividualhoardingofknowledgewasthat
eachmemberoftheteamreceivedthesamebonusattheendofanimplemen-
tation regardless of rank in the organization, and the bonus was based on the
qualityofthework,andhowwelltheimplementationdeadlinesweremet.Thus,
there was incentive for each member to work with others to accomplish a
common goal. “We had a foxhole mentality” whereby team members were
unitedaroundacommoncause.
The team was also organized by process, rather than by function or SAP
module, to facilitate knowledge sharing. Chemicals built overlap between
modulesandfunctionsintotheproject,andoftentwoormoregroupsworked
together on a particular piece. For example, logistics is in the SD (sales and
distribution)module,butChemicalsbrokeitoutandhadasubteammanagethe
logisticsprocessseparatelyfromthesalesanddistributionpeople.Muchofthat
datawasalsointheorder-to-cashprocessperformedbythecustomerservice
area. Thus, the logistics group had to work closely with the order-to-cash
grouptomakesurethatthelogisticspiecesfit.Theyalsodidcross-teamtraining
to help ensure that people working on one piece understood how their piece
impactedothers.Althoughthisapproachrequiredmoreeffortinmanycases
than a module-oriented approach they believed that “if you get too module
oriented,yougettoofocusedonthemodulesyou’reworkingon,”andlosesight
ofthebigpicture,whichistheprocesses.Thus,theSAPteamwasorganized
to focus on the transfer of knowledge across functions, processes, and units,
and to eliminate silo behavior within the team and between the team and the

306 Jones & Price
organization.Althoughtheydidnotuseformalteam-buildingactivities,“every-
oneontheteamhadtorelyoneveryoneelse,”becausenoonepersonorgroup
knew all the things it took to do the project.
The SAP team also decided to bring the key end users across plants into
implementationplanningmeetingswhereeachteamgaveabasicoverviewof
howeachprocesswouldworkinSAP,whichincludedSAPterminologyand
basic concepts. They went through an exhaustive set of detailed questions
about how processes worked and how they did their jobs. They built these
questionsovertime,basedontheintegrationpartner’sexperience,andonwhat
theylearnedwitheachimplementation.Thus,bythelastfewimplementations,
theyhaddevelopedasetofquestionsthatallowedthemtocoveralmostevery
conceivable part of the business processes. “We’d talk about the pros and
cons of each decision these plant people made. And we’d try to make people
understandwhatitactuallymeant,anddocumentthedecision. We’ddistribute
minutes of the meeting and have people either agree or not with what we’d
decided on.” This allowed the business people in multiple plants to share
knowledgeandmakedecisionsaboutcommonprocessesacrosstheplants.As
aresult,therewasmoreuniformityofprocessesacrossplants,andtherewas
abetterunderstandingofhowtohandleexceptionsorthingsthathadtradition-
allybeen‘workarounds’inthelegacysystem.“Wehadsomeconsultantswho
said our method was non-standard and shouldn’t be used, but it worked well
forus.”
Chemicals had a very strong change management process in place, and
although they had a formal team in place for this, much of the change
managementwasanoverallSAPteamresponsibilityratherthanthatofjustone
subgroup. “We had never worked so hard on cultural readiness,” one person
said. “We worked really hard on communications,” through email, memos,
‘lunchandlearns,’andtelevisionmonitorswithananimatedvideopresentation
thatrancontinuallyinthecafeteriasinplants.Theon-siteplanningmeetings
were also viewed as an important part of change management. “We had
decisionmakersfromeveryfunctionalgroupintheplantsineachdesignand
implementation,”whichwentalongwaytowardtheculturalreadinessonwhich
changemanagementwasfocused.
Althoughtherewassomeuseofthepoweruserconceptfortraining,theteam
memberswhoimplementedalsotrainedtheusersonsiteduringtheimplemen-

tationusingmaterialsthechangemanagementgrouphaddeveloped.Training
involved the transactional based skills and a “heavy focus on the integration
points”tohelppeopleunderstand“wheretheyfitinthechainofeventsandwhy
their piece was important and how it had downstream processes.” They
originally thought that the training would be more focused on the how-to,
transactionalskills,yetwhentheyrealizedthat“ifweweregoingtogetthewins
wehopedwerethere,itwaspredicatedoneverybodydoingtheirjob.”Thus,
the training role changed considerably. “We spent more time and money
aroundtrainingthanweoriginallyplanned,andwehadplannedtotrainmuch
heavierthanwehadinanyprevioussystem.”
Chemicals built knowledge sharing into their contract with the integration
partner.Teammembersfocusedbothonhowthepartnersolvedproblemsand
onwheretheylookedforanswers.Thisprovidedthemwithnotonly“how-to”
knowledge, but also with more experiential knowledge about how to solve
problems. Another way that Chemicals ensured knowledge sharing with its
integration partner is that team members took on more responsibility as the
implementation progressed so they could learn what the integration partner
knew, and so they could develop shared SAP experiences with the partner.
Chemicalshasmadesubstantialprogresstowardintegratingwhatithadlearned
throughtheknowledgesharingintheSAPprojectintoitscoreknowledge,and
its processes have begun to change. “A lot more people are aware of the
integration and dependencies among processes....Our business processes
havebecomemuchmorewell-definedandunderstood.”Theyarebeginningto
see substantial financial savings from leveraging common processes across
units.Forexample,thepurchasingprocessisnowuniformthroughoutallthe
plants,andChemicalshasnegotiatedbetterpricesonpartsbybuyingthesame
part for all plants through fewer suppliers. To do this, the plants had to work
togethertochangetheirnomenclatureforpartstocreateacommonmasterfile
of parts across plants, which was a major hurdle to cross because of the vast
numberofpartsinvolved.Chemicalshiredaconsultingfirmthathadexperience
withthistypeoftasktohelpthem.Thefirmnowhasauniformon-linecatalog

308 Jones & Price
of parts and vendors. Buyers are now called alliance owners who “negotiate
contracts,approvechangesfromvendors,andmonitorthebusinessflowwith
thevendors”acrossChemicalsforaparticularfamilyofpartsratherthanbuying
all the parts for a given plant. “We’re still not over the hump on all of these
(standards). The process works, but there’s room for improvement.”
One explanation for this is the strong knowledge sharing facilitators that
Chemicalsbuiltthroughouttheimplementation.Itbeganfromaprocessfocus
in which functional boundaries were removed, and team members from a
variety of processes had to work together and share their knowledge. This
process focus also engaged end users from across the organization to ensure
thattheirknowledgeaboutprocesseswasincorporatedintotheimplementa-
tion.Inaddition,usersthatwerenotdirectlyinvolvedintheimplementation
were trained not only on transactions, but also on the integrative nature of
performing processes in ERP. Based on this evidence, Chemicals had the
strongestknowledgesharingduringimplementationandseemstohavebeen
abletomovemorequicklythantheothertwofirmsinalteringcoreknowledge
competenciesthroughchangingthewaytheyperformprocesses.
Lessons Learned
Thefirmsthathavehadsuccesswithknowledgesharingduringtheimplemen-
tation process are making great strides toward taking advantage of ERP to
changethewaytheyperformkeyprocesses.Althoughitistooearlyforthese
companiestohaverealizedsubstantialbenefits,theyhavemechanismsinplace
thatputthemwellontheroadtodoingso.Theyhaveformedcross-functional,
cross-unit networks of employees to alter core knowledge competencies by
standardizingnomenclature,leveragingcommonprocesses,andeliminatingsilo
behavior between units. These networks have arisen out of the knowledge
sharingthattookplaceduringtheimplementationprojectamongteammem-
bers,otherorganizationalmembers,andintegrationpartners.Thus,thereare
severalvaluablelessonsfromthesefindings(seeTable4forasummary).
OnelessonlearnedisthatwhenfirmsstarttoimplementanERP,theyshould
identifyorganizationalfacilitatorsofandobstaclestoknowledgesharing,and
proactively seek to overcome the obstacles. For example, team members at
E&Precognizedapotentialprobleminthetensionbetweentwoorganizational
units,andmadeaconsciousdecisiontominimizeit,thussuccessfullyensuring

it was not passed on to new team members. One of Chemicals’ goals was to
engage a large number of the appropriate end users in the implementation to
ensurethattheycapturedtherightknowledge.ChemicalsandUSWholeboth
worked to overcome traditional barriers to knowledge sharing such as rank,
seniority,titles,andphysicalworkspace.Barriersorobstaclesthatafirmhas
had in the past on large scale projects will not disappear by themselves, and
ignoringtheminanERPprojectmaymagnifythem.Thesefirmstookactions
thatweredifferentfrom,ifnotcounterto,organizationalnormsandpatternsin
order to ensure that the ERP implementation could successfully integrate
processesandeliminatesilos.
Lessontwoisthatfirmsshouldfocusonintegrationfromthebeginningofthe
ERP project. Because ERP requires integration of processes in the end, the
transitionfromsilosiseasieriftheentireimplementationeffortisbuiltaround
thisintegration.Implementingbymodulemayfeelmorenaturalbecauseit’s
howorganizationalmembersareusedtoworking.However,itonlyprolongs
theinevitablechangetointegratedprocessesnecessarytorealizesignificant
ERPbenefits.Forexample,Chemicalssoughttoovercomethedivisionsamong
functional areas and business units from the very beginning of its project.
Chemicals’employeeswereeducatedaboutintegrationofprocessesfromthe
beginningoftheprojectbecausetheywereinvolvedinintegratedgroupsasthey
worked with the SAP team to map out processes and as they were trained to
useSAP. Furthermore,thefirmsthatprimarilyfocusedon“how-to”training
said that they regret not having realized the importance of focusing on
integrationpointswithusersearlier.
Lesson three is that firms should learn from the past and not be afraid to
acknowledgepriorprojectweaknessesorfailures.Forexample,E&Precog-
nized that it had not been good at change management in the past, and took
steps to correct this weakness. USWhole recognized that its management of
teamsinthepastwasnotgood,andtookdeliberatestepstobuildastrongSAP
team.
Lessonfouristhatfirmsshouldfocusonknowledgesharingbothontheteam
and with the rest of the organization. For example, USWhole may not have
recognized the differences in the ability of its streams to adapt to changes
brought about by SAP early enough because it did not tailor its change
managementactivitiestothedifferentstreams.Asaresult,differentstreams
adapteddifferently,andtheteamhadtoworkharderwithsomethanothersto
begin to affect change in processes. On the other hand, E&P and Chemicals
workedhardtofacilitateknowledgesharingamongallrelevantstakeholdersin

310 Jones & Price
their implementations. Both organizations have begun to change core pro-
cesses and alter core knowledge competencies.
Thus,thefindingsfromthisstudyprovideseverallessonsfirmsmayapplyin
theirownERPimplementations.Evenfirmsthatalreadyhaveimplementations
inprogressorthatarestrugglingtomakeERPworkaftertheinitialimplemen-
tation can apply these lessons to their own situations. ERP is a long term
solution,andonceimplemented,itisdifficult,ifnotimpossible,togobackto
thewaythingswerepriortoERP.Thus,itisnevertoolatetolookatotherfirms’
success stories to find what we can learn from them.
Limitations of the Study and Directions
for Future Research
One limitation of the study is that only one industry and one package was
examined. Althoughthishelpstominimizebiasthatcouldbeintroducedacross
industriesandpackages,thereisatrade-offbetweengeneralizabilityoffindings
andminimizingbias.Minimizingbiashelpseliminatemanyfactorsthatmight
confoundtheresultsandprovidesaclearerviewofthephenomenonofinterest.
Selection of appropriate case sites controls extraneous variation and helps
define the limits for generalizing findings (Eisenhardt, 1989). If consistent
resultsarefoundacrosssimilarcasesites,thenwecanbesurerthatthetheory
Table 4: Summary of lessons learned.
Identify and eliminate obstacles to success
e.g., cultural barriers such as stigma associated with teamwork or tensions between units;
structural barriers that promote silo behavior or inhibit knowledge sharing between levels
Focus on integration from the beginning of the project
e.g., implement by process rather than by module;
focus training on integration points in addition to how to process transactions
Focus on finding the best solutions to problems
e.g., don't 'sweep problems under the rug' and hope to fix them later;
resist pressures to meet deadlines simply to mark milestones
Build organizational knowledge sharing throughout the project
e.g., foster knowledge sharing among team members with formal & informal activities;
encourage knowledge sharing between team and other organizational members;
minimize knowledge lost when consultants or other team members leave through formal roll- off procedures
Learn from the past
e.g., acknowledge prior project weaknesses and look for ways to do better;
recognize prior strengths and build on those

thatledtothecasestudyoriginallywillalsohelpidentifyothercasestowhich
resultsareanalyticallygeneralizable(Eisenhardt,1989;Yin,1989). However,
usingoneindustryignoresdifficultiesorchallengesinimplementationthatmay
be unique to a given industry. One avenue for future research is to examine
these constructs in this study across industries and using different ERP
packagestodeterminewhetherindustryorpackagemediatethefindingsinthis
study.
Anotherlimitationisthenumberofrespondentsinterviewed.Althoughmanyof
the same phrases were heard from respondents, indicating that theoretical
saturationhadbeenreached,onedirectionforfutureresearchistoexaminethe
phenomenaofinterestinthisstudyusingalargersamplesizeinordertobemore
sure that the responses obtained in this study do represent the broader views
andperceptionsoftheprojectteam.Inaddition,theunitofanalysisinthisstudy
is restricted to the implementation team. Although most knowledge sharing
during the implementation revolved around this team, future research that
explorestheperceptionsofotherorganizationalmembersoroftheintegration
partnerstaffcouldbeuseful.Oneavenueforthisfutureresearchistocompare
responses to determine whether knowledge sharing is perceived differently
betweentheteam,otherorganizationalmembers,andtheintegrationpartner
staff.
Contributions of the Study
This study contributes to what is known about knowledge sharing in ERP
implementationsinseveralways.First, itidentifies,categorizes,anddiscusses
severalfactorsthatfacilitateknowledgesharingduringERPimplementation.
Second, it links knowledge sharing to attempts to change core knowledge
competencies.Third,itprovidesseverallessonsforpractitionersthattheycan
useintheirownERPimplementations.PractitionersengagedinERPimplemen-
tation can use these findings both to determine what may work best for them
andtoidentifytheirownfacilitatorsofknowledgesharing.Fourth,thisstudy
providesdirectionsforfutureresearchbyidentifyinglimitationsofthecurrent
studyandsuggestingwaysthatfutureresearchcouldexaminethoselimitations
tofurtherextendwhatweknowaboutknowledgesharinginERPimplemen-
tation.

312 Jones & Price
Author Note
This paper supported by NSF Grant SES 000-1998
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Appendix A: Semi-structured Interview
Guide
Team vs. Individual Efforts
1. Doyouusuallyworkonaprojectteamordoyouprimarilyworkaloneon
projects?
2. Doyouthinkyouaremorerewardedforindividualactivitiesorforwork
on teams? How important is project teamwork to your company?
3. Areteamsprimarilymadeupofpeoplefromthesamefunctionalareasor
fromacrossfunctions?
4. Howwouldyoudescribethecultureofthefirm?
Process vs. Product (Deadline) Orientation
1. Howmuchfocuswasthereonmeetingdeadlinesandfinishingtheproject
underbudget?
2. Howwellweredeadlinesmet?
3. When deadlines weren’t met, what was the reason?

4. Howdidyourteamdeterminewhetherthegoalswerevalidandbeingmet?
5. How did your team learn about opportunities SAP could provide your
firm?
6. Doyouthinkthislearningprocessoccurredthroughouttheimplementa-
tion?
Organizational Knowledge Sharing During the Project
1. How were the SAP project team members selected?
2. Howweredifferencesinperspectivesmeldedtogether?
3. Wasthiseasyordifficult?
4. Wasthereeveratimewhendifferencescouldn’tberesolved?(ifso,how
wasthathandled?)
5. Howdidyourteamseekinputfromothersinthecompanyonareaswhere
youwereuncertain?
6. How did your team seek to keep others in the company informed about
company goals and progress on SAP?
7. Do you think this was ever seen as simply another IT project?
8. Howmuchdidyourgrouprelyonoutsideconsultantexpertise?
9. Howdidyoumakesurethatyouhadlearnedenoughfromthemsothatyou
could carry on after they left?
10. Was there much transition off your SAP team? How was it managed?
11. How were new people coming on the team brought up to speed?
12. During SAP team meetings, were people encouraged to express their
ideas,eveniftheyweren’tfullyformedyet? Anddidtheyexpressthese
ideas?Canyougivesomeexamples?
13. Wasthereeveranythingintheimplementationprocessyoufeltjustwasn’t
right,butcouldn’texactlyexplainwhy?Ifso,didyouexpressthis? Why
or why not?
14. Was there anything you assumed to be true about SAP that you later
changedyourmindabout?

316 Jones & Price
Incorporation of New Knowledge into Core Knowledge
Competencies
1. Do you believe that the organization is different now than before SAP
implementation?Ifnot,why;ifso,how?
2. HavetheprocesseschangedoraretheybeingchangedbecauseofSAP?
3. HowhasSAPchangedthewayyouthinkaboutyourjoborthecompany?
4. Whataresomethingsthatyoulearnedaboutthebusinessprocessesatthe
companythatyoudidn’tknowbeforetheSAPimplementation?

About the Authors 317
AbouttheAuthors
LindaK.LauisanassistantprofessorofComputerInformationManagement
SystemsattheCollegeofBusinessandEconomicsofLongwoodUniversity
(USA)since1994.SheworkedbrieflyasafinancialconsultantwithSalomon
SmithBarneyfrom1999-2000.ShereceivedherPhDinManagementInfor-
mation Systems from Rensselaer Polytechnic Institute in 1993, and her
Master’s of Business Administration and Bachelor of Science in Industrial
TechnologyfromIllinoisStateUniversityin1987and1986,respectively. She
isamemberoftheEditorialBoardforSAMAdvancedManagementJournal,
andanad-hocreviewerfortheInformationResourcesManagementJournal
(IRMJ) and the Journal of Global Information Management (JGIM). Her
currentresearchareasincludeenterpriseresourceplanning,distancelearning,
and Web development. She has published several articles in journals and
conferenceproceedings,andshealsoeditedabookentitled DistanceLearn-
ing Technologies: Issues, Trends and Opportunities, with Idea Group Inc.
in 2000.
* * * * *
Colin G. Ash is the associate head of the School, Management Information
SystemsatEdithCowanUniversityinPerth,WesternAustralia.Hiscurrent
research interest relates to the virtual empowerment that organisations can
realisethroughtheeffectiveimplementationofe-businessapplicationswith
ongoing ERP enterprise resource planning systems. Colin has published
extensivelyintheareaofe-businessdevelopmentandimplementation,with
over 50 research papers.

318 About the Authors
Graham Blick has 35 years of working experience in a variety of industries
includingagriculture,education,miningandutilities.Hehasworkedandlived
in four continents. Graham is a graduate of Monash University, Melbourne,
Australia.CurrentlyheispursuingDoctorateinBusinessAdministrationatthe
Graduate School of Business, Curtin University, Australia. His research
interestsareintechnologybasedchangemanagementprocess,benefitrealiza-
tion of ERP systems, and information management. Graham is a fellow of
AustralianInstituteofManagementandAustralianHumanResourceInstitute.
JaniceM.BurnisfoundationprofessorofInformationSystemsandheadof
School,ManagementInformationSystemsatEdithCowanUniversityinPerth,
Western Australia. She previously worked in Hong Kong and the UK. Her
research interests relate to global e-business transformation, collaborative
commerce for small business, e-health and e-government. She has gained a
numberofgrantsforinternationalprojectsandshehaspublishedfivebooksand
over 150 research papers.
She-IChanghasfiveyearsexperiencelecturinginInformationManagement
intheDepartmentofBusinessAdministrationatKao-YuanInstituteofTech-
nology(Taiwan).HeiscurrentlyaPhDcandidateatISMRC/QUT(Australia),
hisresearchfocusingonERPsystems,withaparticularemphasisontheissues,
challenges,andbenefitsassociatedwithERPlifecycle-wideimplementation,
management,andsupport.HealsohasmethodologicalinterestintheDelphi
survey methodology. He has presented and published this research at ICIS,
ECIS, PACIS, and ACIS.
Sue Conger has a BS in psychology from Ohio State University, an M.B.A.
infinanceandcostaccountingfromRutgersUniversity,andaPhDincomputer
information systems from the Stern School of Management at New York
University. Her texts include Planning and Designing Effective Web Sites
(with Richard O. Mason) published in 1998, and The New Software Engi-
neering publishedin1994.Dr.Conger’srecentresearchisone-government
and e-business, particularly in the ERP area, and innovative use of IT. The
researchpresentedinthistextonSAPintheenterprisewasspawnedbyjoint
interest with Dr. Laura Meade, a University of Dallas (USA) colleague, and
access to Celanese Corporation, an SAP user where her husband worked for
over 20 years.

JoséEstevesisadoctoralstudentintheISdoctoralprogramoftheTechnical
University of Catalonia, Barcelona, Spain. He is a computer engineer, has a
masterinIS,andadiplomainbusinessadministration.Hisresearchinterests
includeERPsystems,knowledgemanagementandqualitativeresearch.Hecan
be reached by e-mail at jesteves@lsi.upc.es.
JaneFedorowicz,theRaeD.AndersonChairofAccountingandInformation
Systems,holdsajointappointmentintheAccountancyandComputerInfor-
mationSystemsdepartmentsatBentleyCollege(USA).ProfessorFedorowicz
earned MS and PhD degrees in Systems Sciences from Carnegie Mellon
University.ShecurrentlyservesasVicePresidentofChaptersandAffiliated
Organizations for the Association for Information Systems (AIS). She also
servesastheNortheastregionalrepresentativefortheEmergingTechnologies
SectionoftheAmericanAccountingAssociation,andwasco-generalchairfor
the2001AmericasConferenceforInformationSystems.ProfessorFedorowicz
haspublishedover60articlesinrefereedjournalsandconferenceproceedings.
TheAmericanAccountingAssociationrecognizedProfessorFedorowiczwith
the1997NotableContributiontotheInformationSystemsLiteratureAward,
and she was selected as Bentley College’s Scholar of the Year for 2000.
Susan Foster is a lecturer in the School of Information Systems at Monash
University,Australia.Shehasqualificationsininformationtechnology,teach-
ing,andpsychology.Shehasastronginterestinchangemanagementandhas
writtenanumberofpapersandbookschaptersrelatedtothis.Sheisanaffiliate
member of the ERP Research Group.
GuyG.GabledirectstheInformationSystemsManagementResearchCenter
(ISMRC),QueenslandUniversityofTechnology(QUT),Australia.Dr.Gable,
havingworkedinenterprisesystemspracticeandacademeinNorthAmerica,
Asia,andAustralia,championedthe‘EnterpriseSystems(ERP)incurriculum
andresearch’initiativeatQUT,whichleadsthewayintheAsiaPacificregion.
HeisChairoftheAustralasianUniversitiesApplicationHostingCenterBoard
ofManagement.HisdoctorateisfromUniversityofBradford,England,andhis
MBA from the University of Western Ontario, Canada. He is 1st
Chief
InvestigatororTeamLeaderonthreein-progressARCcollaborative(Link-
age-Projects)grantsinvolving>$1Mintotalresources.Hehaspublishedover
70refereedjournalarticlesandconferencepapersandbooks(e.g.,Manage-

ment Science, Journal of Strategic Information Systems, Information &
Management, European Journal of Information Systems) and is on the
editorial boards of eight journals–Journal of Strategic Information Systems
(since ’92), Australian Journal of Information Systems (since ’94), Com-
puters & Security (since ’94), Journal of Global Information Management
(Oct ’97), Journal of Software Maintenance (since Dec ’97), Information
Systems Frontiers (since Jul ’98), Electronic Commerce Research and
Applications (since Nov ’00), Information Systems and e-Business Man-
agement (since Nov ’00). Dr. Gable has a particular interest in Knowledge
Managementpracticesoflargeconsultingfirms.Hisdoctoralthesison“Con-
sultantEngagementSuccessFactors”wontheICIS’92doctoralthesisaward.
Other areas of research in which he is active include: life cycle-wide ERP
knowledge management, ERP maintenance management, research project
management,ERPbenefitsrealisation,andprocessmodelingsuccessfactors.
Ulric J. (Joe) Gelinas, Jr., is an associate professor of Accountancy at
Bentley College (USA). He received his MBA and PhD degrees from the
University of Massachusetts. He is co-author of Accounting Information
Systems, 5th ed., Business Processes and Information Technology, and
founding editor of the Journal of Accounting and Computers. He partici-
patedinthedevelopmentof ControlObjectivesforInformationandRelated
Technology (COBIT) by participating in the COBIT Expert Review and by
authoring portions of the Implementation Tool Set. He is a recipient of the
InnovationinAuditingandAssuranceEducationAwardfromtheAmerican
Accounting Association. Dr. Gelinas has published articles in Issues in
Accounting Education, Information Systems Audit & Control Journal,
Technical Communications Quarterly, IEEE Transactions on Profes-
sional Communication, Annals of Cases on Information Technology and
otheroutlets.
George Hachey is an associate professor of Finance at Bentley College
(USA). BS and MS, Georgetown University; MBA, University of Rhode
Island;PhD,UniversityofNewHampshire.Currentlydevelopinginterdiscipli-
narybusinesscoursesandimplementingenterprisesoftwaresuchasSAPinto
thefinancecurriculum.IscampuscoordinatorforSAP’sUniversityAlliance.
IscurrentlyteachingPerformanceMeasurementandEvaluation,thecapstone
courseintheCorporateFinanceAccountingmajorthatheco-developedwith
Dr. Catherine Usoff. Formerly academic coordinator for Bentley’s Estonia

Program,whichreceivedsubstantialfinancialsupportfromUSAIDandUSIA.
DevelopedBentley’sInternationalRelationsmajor.Authoredvariousarticles
oncapitalmarketsandinternationalfinancewithparticularemphasisonthe
Eurocurrency market and financial futures. Has published in the Journal of
Money,CreditandBanking,theJournalofInternationalMoneyandFinance,
BusinessandtheContemporaryWorld,andtheJournalofRealEstate,Finance
andEconomics.FormerlytaughtatUniversityofRhodeIsland,Universityof
NewHampshireandMerrimackCollege.
PaulHawkingisseniorlecturerinInformationSystemsatVictoriaUniversity,
Melbourne, Australia. He has contributed to the Journal of ERP Implemen-
tation and Management, Management Research News and contributed
many conference papers on IS theory and practice. He is responsible for
managingtheuniversity’sstrategicalliancewithSAPandiscoordinatorofthe
university’sERPResearchGroup.Paulisimmediatepastchairpersonofthe
SAPAustralianUserGroup.
Mary C. Jones is an associate professor of information systems at the
University of North Texas (USA). She received her doctorate from the
University of Oklahoma in 1990. Dr. Jones has published articles in such
journalsasInformationandManagement,InformationResourcesManagement
Journal, European Journal of Information Systems, Journal of Computer
InformationSystems,andBehavioralScience.Herresearchinterestsareinthe
managementandintegrationofemergingelectroniccommercetechnologies
andinorganizationalfactorsassociatedwithenterprise-widesystems.
John Loonam is a PhD candidate at Trinity College Dublin, Ireland. He
researchesinthefieldsoforganisationdevelopmentandinformationtechnol-
ogy, with particular interest in executive management, organisational, and
enterprise systems. His doctoral research marries both fields of inquiry,
focusing upon the nature of top management support for enterprise systems
initiatives.
Joe John McDonagh is the Director of Executive Education at Trinity
College,Dublin,Ireland.Heworksinthefieldsoforganizationdevelopment
andinformationtechnology,specializinginexecutiveleadershipandtheman-
agement of IT-enabled business change. He teaches Senior Management at

Trinity College Dublin and at a number of business schools in Europe and
America.Heworksonresearch,consultancyandexecutivedevelopmentwith
many European and American multinationals as well as providing advice to
government.Hepublisheswidelyonthemanagementoflarge-scaleIT-enabled
business change. Recent and forthcoming publications are to be found in
Handbook of Action Research, Issues of Human Computer Interaction,
Information Technology and e-Business in Financial Services, and Public
Administration Quarterly, among others.
JoanPastorisanassociateprofessorandDeanoftheITschoolofUniversidad
InternacionaldeCatalunya,Barcelona,Spain.Heholdsadegreeincomputer
science and a PhD in software. He is also leading the “Twist” group on IS
qualitativeresearch,addressingtopicslikeERPprocurementandimplementa-
tion. He can be reached by e-mail at jap@unica.edu.
R. Leon Price is a Conoco Teaching Fellow at the University of Oklahoma,
USA. Dr. Price has published many articles and papers, one of which the
Academy of Management Review named as one of their seven outstanding
articles of the year. Other publication outlets include Behavioral Science,
InformationResourcesManagementJournal,JournalofComputerInformation
Systems,andInformationExecutive.Hisresearchinterestsareinthemanage-
mentofinformationtechnologies.
MohammedQuaddusreceivedhisPhDfromtheUniversityofPittsburgh,MS
fromUniversityofPittsburghandAsianInstituteofTechnology.Hisresearch
interests are in information management, decision support systems, group
decisionandnegotiationsupportsystems,multiplecriteriadecisionmaking,
systemsdynamics,businessresearchmethodsandinthetheoriesandapplica-
tionsofinnovationdiffusionprocess.Dr.Quaddushaspublishedinanumber
ofjournalsandcontributedinseveralbooks/monographs.In1996hereceived
theResearcheroftheYearawardinCurtinBusinessSchool,CurtinUniversity
of Technology, Australia. Currently he is an associate professor with the
GraduateSchoolofBusiness,CurtinUniversityofTechnology,Australia.Prior
tojoiningCurtin,Dr.QuadduswaswiththeUniversityofTechnology-Sydney
and with the National University of Singapore. He also spent a year at the
InformationManagementResearchCentre,NanyangTechnologicalUniver-
sity,Singapore.

AndrewSteinisalecturerintheSchoolofInformationSystemsintheFaculty
of Business and Law at Victoria University, Melbourne, Australia. He has
contributed to the International Journal of Management, Journal of Infor-
mation Management, Journal of ERP Implementation and Management
and contributed many conference papers on IS theory and practice. His
researchinterestsincludeenterprisesystems,e-procurementapplications,e-
marketplacebusinessmodelsandreverseauctionsystems.Heisamemberof
theuniversity’sERPResearchGroup.
CesarAlexandredeSouzaisadoctoralstudentattheSchoolofEconomics
andAdministrationoftheUniversityofSãoPaulo(FEA-USP),Brazil.Hehas
previously received his Masters in Business Administration from the same
institution.Hispreviouscareerpathincludesbeinganindustrialengineerfrom
the Polytechnic School of USP, professor and researcher at the Business
AdministrationCourseoftheSãoJudasTadeuUniversity(USJT),Brazil,and
abusinessconsultantoninformationtechnologymanagementandERPsystems
implementation.
CatherineUsoffisanassociateprofessorofAccountancyatBentleyCollege
(USA). She earned her undergraduate degree in Accounting at Boston
College,andMBAandPhDdegreesfromtheOhioStateUniversity.Dr.Usoff
co-teachesayear-longbusinessprocesscourseinthecohortInformationAge
MBA program into which she has integrated SAP and a process modeling
software.Shehassupervisedseveralstudentteamsperformingcomprehensive
business process analysis projects in leading companies. Dr. Usoff has pre-
sented several research papers at national conferences and has published in
Advances in Accounting Education and the Managerial Auditing Journal.
DavidC. WyldcurrentlyservesasaprofessorofManagementatSoutheast-
ernLouisianaUniversity(USA),whereheteachesbusinessstrategyandheads
theCollegeofBusiness&Technology’sStrategice-CommerceInitiative.He
hasbeenwidelypublishedinleadingjournalsinbusinessandmanagement,and
recently, he was named editor of the Journal of the Academy of Strategic e-
Commerce. He has been awarded with the Distinguished Researcher award
forSoutheasternLouisianaUniversityandhaswonseveralbestpaperawards

at leading academic conferences. He has conducted graduate executive
education courses and consulted with a wide variety of industrial and public
sectorclients.
RonaldoZwickerreceivedhisPhDinBusinessAdministrationattheSchool
ofEconomicsandAdministrationoftheUniversityofSãoPaulo(FEA-USP),
Brazil. He earned his Masters in Applied Mathematics from the Institute for
Mathematics and Statistics of USP. He was a chemical engineer at the
PolytechnicSchoolofUSP.HeisaprofessorandresearcheroftheAdminis-
tration Department of the FEA-USP. He is also a business consultant.

Index 325
Index
A
accelerated SAP (ASAP) 33, 41
accelerated SAP implementation
methodology (ASAP) 240
accounting information systems (AIS)
49, 53
activation 69
activity based costing (ABC) 56
adaptation 69
adequate infrastructure 248
adequate legacy systems knowledge
248
adequate project champion role 245
adequate project team composition
245, 255
adequate training program 246, 256
advanced accounting information
systems 48, 53
advanced AIS 49
advanced business application program
(ABAP) 38
advanced planner and optimisation
(APO) 91
advanced topics in cost management
55
agile SAP 64
agility 66
application nature 99
appropriate usage of consultants 255
ASAP implementation methodology
248
assembly requirements 7
audit information system 51
Auscom B2E solution 100
Australian Communications
Organisation (Auscom) 101
B
B2E employee self service (ESS) 95
B2E ESS portals 100
B2E SAP portals 90
benefit realization 148, 150, 182
benefit realization program 143
benefit realization status 145
benefit realization strategy 135
benefit realization structure 135, 144
benefits management office 145
benefits of B2B 159
benefits register 145
Bentley College 44
Bentley’s SAP program 47
“best business practice” 92

326 Index
big-bang 198, 200, 212
big-bang approach 202, 204, 205
bolt-on tools 10
Brazilian companies 222
business blueprint 41, 249
business curriculum 44
business focus 174
business information warehouse (BW)
91
business intelligence (BI) 8, 223
business process redesign 254
business process reengineering (BPR)
3, 20
business processes 49, 58
business school faculty 45
business-to-business (B2B) 159, 163
business-to-consumer 163
business-to-employee (B2E) 90, 91,
94, 163
C
capabilities of the R/3 system 38
Cedar group 96
Celanese, A.G. 70, 71
Celanese agility 73, 79
centralized database 34
change management 20, 136, 138,
179, 183, 291, 292
change management focus 172
change management importance 191
change management practices 179
change management strategies 179
change management success factors
193
characteristics of enterprise systems 7
chief information officers 115
classroom computer applications 45
client desktop 39
client/server technology 33
collaborative planning 9
collaborative product development 9
competitive advantage 13
competitiveness 67
componentisation 9, 10
comprehensive business process
reengineering 245
comprehensive collaborative work
environment 95
computer based information systems
111
computer integrated manufacturing
(CIM) 4
confirmatory factor analysis (CFA) 139
constant business 1
controlling (CO) 51
controlling/profitability analysis (CO/PA)
61
coordination 50
corporate identity 185
corporate intranets 98
corporate treasury management (CTM)
57
cost management 49, 55
course-by-course descriptions 52
critical success factors (CSFs) 15,
240
CSF relevance model 250
“cultural misfits” 14
current trends of globalisation 1
curriculum development 49
customer enrichment 67
customer relationship management
(CRM) 8, 9, 91, 223
customer service representative (CSR)
93
customer service software 9
customer service usage (CSR) 93
customer-centric 6
customization 247
D
data redundancy 34
database engine 39
decision support systems (DSS) 10
dedicated staff and consultants 255
Delphi survey 263
Delphi technique 262
deployment 68
differential outsourcing 167
differentiation 164
differentiation of technologies 159

Index 327
dimensions of an ERP implementation
202
distributed management 226
E
“e” treatment 93
e-branding 167
e-business change 159
e-business growth 159
e-business readiness 166
e-business transformation (eBT) 158,
159, 163, 170
e-commerce B2B integration 167
e-communities 168
e-enterprise model 169
e-ERP 159
e-ERP transformation 166, 172
e-ERP transformation matrix 158,
165, 166
e-logistics 9
e-malls 166
e-positioning 168
e-procurement 9
economic value added (EVA) 170
effective organizational change manage-
ment 245, 254
electronic business (e-business) 8, 9,
111
electronic commerce 111
electronic data interchange (EDI) 127
electronic government 111
employee relationship management
(ERM) 94
employee resistance 193
employee self service (ESS) 90, 91,
92, 95
employee-to-employee (E2E) 99
empowered decision makers 247, 255
enterprise commerce management
(ECM) 35
“enterprise information portal” (EIP) 99
enterprise resource planning (ERP) 5,
33, 34, 65, 71, 92, 126, 127,
135, 179, 241, 263, 288, 289
enterprise system (ES) 1, 3, 5, 45,
111
enterprise system benefits 12
enterprise system limitations 13
enterprise systems applications 46
enterprise systems concepts 44
ERM strategy 99
ERP business managers 158
ERP deployment 65
ERP enabled organisations 158
ERP II 179
ERP implementation 126, 129, 138,
180, 202, 288, 289, 290
ERP implementation approaches 202
ERP implementation plan 131
ERP implementation projects 240,
241, 243
ERP implementation strategy 247
ERP investment 179
ERP life cycle 262
ERP life cycle implementation 262
ERP software deployment. 65
ERP software packages 130
ERP software systems 67
ERP system 4, 90, 126, 131, 158,
180, 198, 199, 202, 203, 222,
224, 289
ERP system management 230, 234
ERP system’s life cycle 198
ERP systems management 222
ERP systems practices 179
ERP teamwork 138
ERP usage 180
“ERPs second wave” 223
ES extensions 8
ES failures 13
ES implementation 2
ES package 7, 9, 12, 14, 17
ES project implementation 15
ES software vendors 14
ESS implementations 100
evolution of enterprise systems 4
executive management 116
expected benefits 148
expected operational benefits 148
expected strategic benefits with SAP
148
extensible mark-up language (XML) 10
external assimilations 14

328 Index
F
final preparation 41
financial accounting (FI) 50
financial accounting and controlling (FI/
CO) 293
financial costs 13
foundations 1
foundations of enterprise systems 3
full integration 13
G
global ERP industry 90
global integration 34
go live & support 249
good project scope management
245, 255
graphical user interfaces (GUI) 38
H
“hands-on” computer skills 45
Hoechst, A.G. 70
HR ESS portal 91
human resource information systems
(HRMIS) 93
human resources (HR) 91
I
implementation approach 199, 202,
206, 212
implementation partner (IP) 268
implementation time 215
information access 99
information focus 102
information systems (IS) 263
information technology (IT) 3, 45, 46,
112, 136, 222
information technology (IT) auditing
course 56
innovative technologies 168
installation 69
integrated systems 204
integration 164
integration partner 291, 292
integration perspective 7
integration problems 1
interactive voice response (IVR) 93
intermediate accounting 54
Internet gateway 99
Internet technologies 11
Internet-oriented ES packages 5
“inventory” round questionnaires 268
“islands of automation” 3
issues 1
IT auditing 49, 56
IT infrastructure benefits 12
IT management 223
IT management change 233
IT package 7
IT-enabled change initiatives 114
K
knowledge repositories 10
knowledge sharing 290, 292
knowledge transfer 292
knowledge warehouse (KW) 91
L
legacy systems 1
life cycle of ERP systems 200
logistics management 150
M
management focus 170
managerial perspective 12
manager-to-employee (M2E) 99
managing for outcomes (MFO) 265
manufacturing resource planning
(MRPII) 4
“market learning” 217
material requirements planning (MRP)
4, 34, 126
materials management (MM) 51
metric variables 214
multinational corporations (MNC)
127, 129
multiple value propositions 95
MySAP 70

Index 329
N
network infrastructure 39
O
object linking and embedding (OLE) 38
occupational communities 111
occupational quandary 115
online analytical processing (OLAP) 10
operating systems 39
operational benefits 12
operational personnel 279
operations management 226
organisation development (OD) 118
organisational benefits 12
organisational flexibility 13
organisational integration 18
organisations 2
organizational agility 65
organizational change process 129
organizational knowledge sharing 288
organization’s agility 65
P
participation 245
phased alternative 202
phased approach 202
phased implementation 203
pivotal administrative innovations 111
planning initiative 141
plant maintenance 150
preventive troubleshooting 256
principles 1
problems with SAP R/3 40
process custodians 152
process focus 103
process management 150
process managers 152
process quality management (PQM)
250
programmed computer code 3
project champion role 255
project management 138
project preparation 41, 248
Q
quality of working life (QWL) 170
Queensland Government 262
Queensland Government Financial
Management System 264
R
R/1 system 35
R/2 system 35
R/3 exercises 51
R/3 implementation tools 33
R/3 system 33, 34, 35, 37
R/3 training database (called IDES) 48
Ready to Run systems 33
real-time dynamic information delivery
95
real-time operations 35
realization 41
“realization plan” 147
realization process 135
register of initiatives 145
relational database management
system (RDBMS) 39
release 69
resource commitments 4
resource requirements 59
resources management 226
return on investment (ROI) 170, 224
S
sales and distribution (SD) 50
sales force automation 9
SAP 18, 135
SAP advanced planner & optimizer
(SAP APO) 39
SAP AG 35
SAP agility 73, 79
SAP Australian user group (SAUG) 101
SAP business information warehouse
(SAP BW) 39
SAP business one 70
SAP customer relationship manage-
ment (SAP CRM) 39
SAP implementation 135, 143
SAP implementation guide (IMG) 42

330 Index
SAP implementation project 240
SAP on-line help documentation, 38
SAP R/3 46, 47, 92, 137, 143,
199, 207, 292
SAP R/3 assignment 55
SAP R/3 implementation 198
SAP R/3 installation 39
SAP R/3 system 44
SAP Ready to Run R/3 (RRR) program
42
SAP technology 33
SAP users group 51
SAP’s educational alliance (EA)
program 45, 47
SAP’s ERP system 92
SAP’s flagship software program 33
“seamless integration” 4, 7
“second wave” implementations 181
“second wave” product 90
service level agreement (SLA) 224
service level management (SLM) 224
shared database 4
small to medium sized enterprises
(SMEs) 11, 90
small-bang approach 202
small-bang implementation 204
small-bangs 198, 200, 212
software development 138
“spaghetti integration” 3
stabilization phase 203
strategic benefits 12
strategic enterprise management (SEM)
91
strategic information systems 111
strategic management 226
strategic personnel 278
successful implementation 137
suggestions for overcoming 2
supplier relationship management
(SRM) 92
supplier-centric 6
supply chain 64, 66
supply chain activities 66
supply chain management (SCM) 8,
9, 91, 223
supply chain replenishment 9
supply network 66
supply Webs 9
sustained management support
244, 254
system maintenance 264
system outcomes 2
Systemanalyse und
Programmentwicklung (SAP) 35
T
technological changes 1
technological integration 17
technology focus 103
technology integration 46
technology management 226
three-tier client/server technology 39
total cost of ownership (TCO) 224
transportation management processes
9
treasury management 49, 57
trouble shooting 246
trust between partners 255
U
unified model of CSFs 243
user involvement 245
user involvement and participation 255
user maintenance 51
V
value propositions 159, 164, 168
“virtual enterprise” 6
virtual organisations 1, 159
W
“waterfall” progression of change 172
Web experience 67
Web portals 97
Web-based self-service (B2E) 97
Web-based technologies 9
Web-enabled technologies 9
X
X2E (external-to-employee) 99

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Information Technology Security: Advice from Experts
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IT Solutions Series – New Releases!
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Humanizing Information Technology: Advice from Experts
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Managing Data Mining: Advice from Experts
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Foreword by Dr. Jim Goodnight, SAS Inc, USA
ISBN1-59140-243-3(s/c)• US$29.95• eISBN1-59140-244-1• 278 pages • Copyright©2004
E-Commerce Security: Advice from Experts
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As the value of the information portfolio has increased, IT security has changed from a product focus to
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and systems but managing a portfolio of services including wireless networks, cyberterrorism protection
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With the alarming rate of information technology changes over the past two decades, it is not unexpected
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The e-commerce revolution has allowed many organizations around the world to become more effective and efficient
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Idea Group Publishing
Advances in Software
Maintenance Management:
Technologies and Solutions
Macario Polo, Mario Piattini and Francisco Ruiz
University of Castilla–La Mancha, Spain
Advances in Software Maintenance Management:
Technologies and Solutions is a collection of
proposals from some of the best researchers and
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Macario Polo, Mario Piattini, and Francisco Ruiz
University of Castilla—La Mancha, Spain

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• 300 pages • Copyright © 2003
IRM Press
Practicing Software
Engineering in the
21st Century
Joan Peckham and Scott J. Lloyd
University of Rhode Island, USA
“…during the past 30 years a generalized body of knowledge about design as other
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standards.”
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University of Rhode Island, USA
Over the last four decades, computer systems have
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gineering in the 21st
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software engineering practices into computer sys-
tems.

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