A Framework for Evaluating ERP Implementation Choices – Luo & Strong

Question 1

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

Intro and aim of paper?

Answer 1

• ERP software is fast growing  promises integrating computing solution while improving firm’s ability to compete in marketplace
• ERP implementation is often accompanied by large-scale organisational changes
  -> packaged software solution does not match with orgas existing processes
• aim of paper: introduce framework for supporting management decision-making about customisation choices and capabilities required to accomplish them

Question 2

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

Benefits ERP system?

Answer 2

integration of data & apps; replacement of old and fragmented systems; cost advantages; quicker development of packaged systems; best practices in organisational process

Question 3

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

Benefits ERP system?

Answer 3

integration of data & apps; replacement of old and fragmented systems; cost advantages; quicker development of packaged systems; best practices in organisational process

Question 4

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

Drawback ERP systems?

Answer 4

implementation in individual companies – extremely expensive; oftentimes not compatible with strategic partner; conflicting with management style; overwhelming required organisational changes to system

Question 5

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

ERP implementation issues: What is packaged software?

Answer 5

• ERP software developed for market not for an organisation
• user participation is limited during development + implementation of ERP software

Question 6

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

ERP implementation issues: What is Complexity?

Answer 6

• ERP projects are larger in scope = more risk associated as they affect more users with conflicting needs & requirements
• ERP implementation requires integration of data, processes, operations throughout enterprise

Question 7

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

ERP implementation issues: What its System Adaptation?

Answer 7

• ERP systems need to be changed to fit existing or reengineered business processes

Question 8

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

ERP implementation issues: What its Organisation Adaptation?

Answer 8

• organisations need to be changed to fit the ERP system  analysis phase activities (understanding critical processes) + design phase activities (knowledge of ERP software)

Question 9

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

What is the Resource-based view regarding ERP implementation?

Answer 9

success of ERP implementation depends on IT-resources possessed by an organisation and how they are assembled, coordinated, deployed (IT-capability)

Question 10

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

What is classification of IT-based resources?

Answer 10

tangible (IT infrastructure); intangible (knowledge bases); human (technical & managerial IT skills)

Question 11

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

What are IT capabilities?

Answer 11

IT leadership, business system thinking, architecture planning, informed buying etc
* organisations have different IT resources + thus different IT capabilities  divergence in how orgas use IT = explanation for why orgas choose different ERP customisation options

Question 12

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

What is the primary goal of customisation in ERP implementation?

Answer 12

achieve fit between ERP system & the process that the system supports
-> either customise system(tech), customise process(process) or both

Question 13

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

What are the 3 types of technical customisation options?

Answer 13

module selection, table configuration, code modification

-> moving from module customisation to code customisation, costs & risks increase
* ERP vendors consider technical customisation as evolving process: adding modules, extending tables, improve tools for code modification = goal to reduce degree, costs, risks of customisation

Question 14

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

Technical customisation options: What is Module selection?

Answer 14

companies choose to implement one or more modules with the set configurations; customisation only achieved through firm decision as to which module to implement  minimum alterations to system; + low risk, low cost; - rarely sufficient in implementation

Question 15

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

Technical customisation options: What is Table configuration?

Answer 15

configuration options are selected in tables so that system fits organisational needs (for that meaning of options must be understood); + ability to tailor system without coding, full support of vendor & ease of future updates; - very complex & time-consuming

Question 16

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

Technical customisation options: What is Code customisation?

Answer 16

Code customisation: source code of ERP system is changed, functionality is augmented or new interface is developed; + greatest flexibility in adapting system to needs and existing production systems; - expensive, risks of failure & overrunning budget, integration benefits of ERP system may be lost

Question 16

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

Technical customisation options: What is Code customisation?

Answer 16

Code customisation: source code of ERP system is changed, functionality is augmented or new interface is developed; + greatest flexibility in adapting system to needs and existing production systems; - expensive, risks of failure & overrunning budget, integration benefits of ERP system may be lost

Question 17

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

What is Processs customisation?

Answer 17

degree to which business process changed to fit the system

Question 18

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

What is a Business process?

Answer 18

set of logically related tasks that use the resources of an organisation to achieve a defined business outcome

Question 19

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

What are the three types of process customisation?

Answer 19

no change, incremental change, radical change

-> how much change is needed depends on how well new technology fits with existing process

Question 20

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

Process customisation: What is no change?

Answer 20

process customisation only involves change in tasks and resources but no changes in relationships among tasks and configurations of resources

Question 21

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

Process customisation: What is Incremental change?

Answer 21

improvements are made in tasks and resources & relationships among these; focus lies on solving problems found in process; eg total quality management

Question 22

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

Process customisation: What is radical change?

Answer 22

fundamental rethinking and radical redesign of elements in process (including measures of performance

Question 23

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

Process customisation: What is radical change?

Answer 23

fundamental rethinking and radical redesign of elements in process (including measures of performance

Question 24

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

ERP CUSTOMISATION CHOICES?

Answer 24

Table with costumazation choices and technical costumization choices (siehe article)

-> risk increases but depend on the company and its capabilities
-> no option in above table is better than others  depends on organisation’s capability to make necessary system & process changes

Question 25

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

What is a technical change capability ?

Answer 25

organisation’s overall ability to customise ERP systems; consists of
1) scope & depth of its ability to understand ERP system
2) ability to make changes to software
3) ability to manage large-scale ERP implementation projects

Question 26

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

What is a High/low technical change capability ?

Answer 26

High technical change capability: broad scope and depth in all 3 abilities
Low technical change capability: narrow scope & limited depth in all 3 abilities

Question 27

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

What is a Process change capability ?

Answer 27

overall ability to customise business processes; consists of
1) ability to understand existing business processes
2) ability to design and implement business process changes
3) ability to manage large scale organisational changes

Question 28

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

What is a High/Low Process change capability ?

Answer 28

High process change capability: broad scope and depth in all 3 abilities
Low process change capability: narrow scope & limited depth in all 3 abilities

Question 29

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

What is a High/Low Process change capability ?

Answer 29

High process change capability: broad scope and depth in all 3 abilities
Low process change capability: narrow scope & limited depth in all 3 abilities

Question 30

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

Overall capability? Look at table in article

Answer 30

-> combination of technical change capability & process change capability determine type of organisation: novice, technician, organiser, expert

Question 31

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

FRAMEWORK FOR EVALUATING ERP CUSTOMISATION CHOICES

Answer 31

• expert has more options in choosing customisation combi than novice
• customisation options requiring more process changes  rather organisers than technicians
• customisation options requiring more ERP system changes  rather technicians than organisers
  (siehe article)

Question 32

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

FRAMEWORK APPLICATION – CASE STUDY & ITS FINDINGS ?

Answer 32

• the implementation of each ERP module & sometimes its submodule is an implementation process of itself
• choices must be made in context of organisational capabilities  change over time
• sequencing of implementation projects is important so that each project is feasible from perspective of organisational capabilities at the time it is initiated

Question 33

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

Conclusion? What is the contribution to practice?

Answer 33

• framework allows ERP implementers to examine many implementation possibilities rather than simply following ‘conventional wisdom’ of fitting the processes to the system
  ERP IMPLEMENTATION AS SERIOUS OF IMPLEMENTATION PROJECTS
• firms have capabilities with regard to individual projects
• capabilities can change over time as firms learn from previous projects
• important to plan path of implementation projects so that more difficult projects become feasible through learning

-> result: view ERP implementation as portfolio of projects

Question 34

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

Conclusion? What is the contribution to research?

Answer 34

• proposed framework gives better advice than to just fit processes to system  can be used to generate testable hypotheses of relationships between customisation choices and organisational capabilities for specific ERP implementation project

Question 35

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

Conclusion? What are the limitations?

Answer 35

• illustrated case study is not full validation of framework
• ERP customisation is only one important issue in ERP implementation (others: planning, management support etc)
• framework does not determine decisions for managers  rather provides possibilities for customisation

Question 36

A Framework for Evaluating ERP Implementation Choices – Luo & Strong

Conclusion? What future research?

Answer 36

• further validation needed by testing both in experiments & organisations
• comparing decisions of managers using the framework with those not using it
• testing framework in multiple differing organisations