Tutorial 5 Flashcards
Davenport (1998)
The promise of enterprise systems:
-ES integrate data across functions (finance, supply, HR, customer information) into a
single database
-They eliminate redundant data, improve real-time access to information, and
streamline processes
-Successful implementations can lead to significant productivity and efficiency gains
Davenport (1998)
The risks and challenges of implementation of ES
- ES often fail or cause business disruptions
- The biggest problem isn’t technical but business-related - enterprise systems impose
a rigid structure that may not align with a company’s competitive strategy
Davenport (1998)
How enterprise systems can weaken competitive advantage
-ES force companies into standardizing processes, reducing differentiation
-If companies compete of customer service, speed, or flexibility, an ES may limit their
ability to outperform rivals
Davenport (1998)
The strategic trade-offs of an enterprise system:
-Companies must decode between adopting the system’s standard processes or
customize it
-Customization is expensive and complex, but standardization may weaken
differentiation
⇒ proprietary applications may be needed for business processes
Davenport (1998)
Organizational and cultural implications of ES:
-ES can flatten management structures by providing universal data access
-ES centralizes decision-making and reduces local autonomy
ERP system
Integrated software that helps organizations streamline and manage core business
processes such as finance, supply chain, human resources, and customer relationship
management.
Nine types of ERP Adoption
- Configuration: Adjusting system settings and parameters without modifying the core
software - Bolt-ons: Adding third-party applications to extend ERP functionality
- Screen Masks: Modifying the user interface for better usability
- Extended Reporting: Enhancing built-in reports and analytics
- Workflow Programming: Automating business processes throughERP workflows
- User Exits: Allowing custom scripts to execute alongside ERP operations
- ERP Programming: Writing custom scripts within the ERP system using
vendor-provided tools - Interface Development: Connecting ERP to external applications and database
- Package Code Modification: Changing the core ERP source code, which is costly
and risky
Five stages of ERP implementation:
- Design: Planning the system requirements and mapping them to business processes
- Implementation: Configuring, testing, and deploying the ERP system
- Stabilization: Addressing post-go-live issues and optimizing the system
- Continuous Improvement: Enhancing and customizing the ERP based on user
feedback - Transformation: Using ERP for strategic advantage and innovation
Four phases of ERP implementation:
- Chartering Phase: Senior management aligns ERP goals with business strategy
- Project Phase: Teams implement and configure ERP modules
- Shakedown Phase: The system is fine-tuned after the initial launch
- Onward and Upward Phase: ERP is continuously improved and integrated into
business strategy
Core It capabilities for ERP success:
-IS/IT Leadership: Strategic alignment of IT with business goals
-Business System Thinking: Understanding how IT drives value
-Relationship Building: Collaboration between IT and business units
-Architecture Planning: Ensuring scalability and integration
-Technology Implementation: Making IT systems operational
-Informed Buying: Selecting the right ERP vendor and tools
-Contract Facilitation & Monitoring: Managing IT service agreements
-Vendor Development: Partnering with technology providers
Technical customization in ERP:
⇒ System modification to fit business needs
●Module Selection: Choosing specific ERP modules
●Table Configuration: Adjusting database parameters for business-specific settings
●Code Modification: Changing the ERP software’s source code
Process customization in ERP:
⇒ Adjust business workflows to align with the ERP system
●No Change: Business adapts to the ERP’s standard process
●Incremental Change: Minor modifications to business processes
●Radical Change: Complete reengineering of processes to align with ERP
functionality
Technical Change Capabilities:
⇒ organizations need strong technical capabilities to modify and optimize ERP:
●Understanding ERP Defaults: Knowing built-in ERP processes and configurations.
●Software Development Skills: Ability to modify and customize ERP code
●Projekt Management: Managing large-scale IT projects effectively
Process Change Capabilities:
⇒ develop process change capabilities to integrate ERP into operations
●Business Process Understanding: Awareness of existing workflows and industry
best practices
●Change Management: Managing employee adoption and resistance
●Process Design & Optimization: Redesigning workflows for efficiency and
innovation
Capability Assessment (Luo & Strong (2004))
Novice
Technical Change Capability: LOW
Process ChangeCapability: LOW
Capability Assessment (Luo & Strong (2004))
Organizer
Technical Change Capability: LOW
Process ChangeCapability: HIGH
Capability Assessment (Luo & Strong (2004))
Technician
Technical Change Capability: HIGH
Process ChangeCapability: LOW
Capability Assessment (Luo & Strong (2004))
Expert
Technical Change Capability: HIGH
Process ChangeCapability: HIGH
Ugrin, Morris & Ott (2016)
Main findings:
⇒ Underperforming firms tend to adapt ERP systems later than industry leaders, due to
institutional pressure ⇒ however, late-stage adopters benefit more from ERP adoption than
early-stage adopters
Early vs. Late ERP Adopters:
-Early adopters are high-performing firms that implement ERP as part of their strategy
to maintain or gain competitive advantage
-Late adopters are underperforming firms that adopt ERP due to institutional pressure such as market expectations, competitor actions, or industry trends
Institutional Pressures Drive ERP Adoption:
⇒ Three types of institutional pressure:
- Coercive Pressure: Government regulations, customer demands, or mandatory
compliance - Normative Pressure: Industry best practices encouraging firms to standardize
processes - Mimetic Pressure: Underperforming firms copying successful competitors to
legitimize decisions
Financial Performance Before ERP Adoption:
-Early-stage outperform the market before ERP implementation
-Late-stage adopters underperform before adoption, supporting the idea that
struggling firms turn to ERP to catch up
Financial Performance After ERP Adoption:
-Post-adoption, late-stage adopters improve more than early-stage adopters
-While early adopters experience moderate gains, late adopters see a greater
performance boost, likely due to efficiency improvements of ERP replacing inefficient
legacy systems
-This contradicts the belief that late adopters simply follow trends without benefit -
ERP helps them close performance gaps
Ugrin, Morris & Ott (2016
Industry-Specific Observations:
-Manufacturing firms are more prone to mimetic pressures because of close industry
tes and shared information
-The performance gap between early and late adopters is more pronounced in
manufacturing industries
