ERP Implementation: An Exploratory Study of Customization Levels Marcus Rothenberger University of...
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Transcript of ERP Implementation: An Exploratory Study of Customization Levels Marcus Rothenberger University of...
ERP Implementation:
An Exploratory Study of Customization Levels
Marcus RothenbergerUniversity of Nevada, Las Vegas
Mark SriteUniversity of Wisconsin-Milwaukee
Objective
ERP System is an integrated information system that coordinates key internal processes of a firm across multiple functional areas
Adoption is a major challenge Appropriate versus excessive levels of
customization Study investigates underlying customization
factors
Problem
High customization has been associated with– High adoption cost– High maintenance cost– High upgrade cost– Higher adoption risk– Lower perceived organizational risk– Lower organizational benefit (lost opportunity for BPR)
Companies pursue different customization strategies1. “Vanilla” and BPR (modifications limited to configuration)2. Modifications only through add-ons3. Modifications only through ERP code changes4. Both 1 & 2 (often associated with little BPR)
Research Questions
Why do some organizations highly customize their ERP implementation?– What are the project factors that promote high
customization? – What are the environmental factors that promote
high customization?
How do the factors cause high customization?
Qualitative Research Approach
ComparativeCase Studies
ConsultantInterviews
Literature
Multiple Sources of Evidence
(Construct Validity)
AnalyticalGeneralization
(External Validity)
ExplanationBuilding
(Internal Validity)
ExplanationBuilding
(Internal Validity)
•Theory Building from Case Studies (Eisenhardt, 1989)
Data Collection
Structured Interview Questions Pre-Tested with an SAP Expert and Refined
Case Studies– 2 interviews, 50-70 minutes each
A technical project lead at each ERP adopter A functional project lead at each ERP adopter
Consultants– 3 Consultants, 50-70 minute interview with each consultant
North America Central Europe Southern Europe
Continuous Analysis and Refinement of Questions during Early Stages of Data Collection
All Interviews Taped and Transcribed
Case Variations
Customization Level / Type– “Vanilla”, Add-ons, Code Modifications
Role of Consultants– Educating internal staff, selected for specific tasks, leading project
Culture– Dimensions of culture including Power Distance
Internal ERP Knowledge– Up-front knowledge, benchmarking, learning from consultants
Role of Operational Departments– Project lead, team members, low involvement
Motivation for Adoption– Organizational (merger, process improvements)– Technical (Y2K, “need for new system”)
“Success”– Schedule, Budget, User Satisfaction, Maintainability
Customization Model
ERP Knowledge at Beginning of the Project
Extent of Organizational Project Motivation
(+) A
Organizational Culture:Top-Down Decision Making
Experience of Implementation Team
(Consultants and Employees)
Reliance on Consultants
Involvement of Operational Departments
Perceived Organizational Importance of ERP
Adoption / Project Acceptance
(-) G
(+) F
(-) C
(+) B
(+) H
(+) D
(+) E
Duplicate Implementation of Existing System
Functionality
Ability to Counter Resistance to Change
Profit Maximization (“give customerswhat they want”)
Resistance to Change
(-) I
(+) J
(+) K
(-) N
Organizational Culture:Risk Taking
Fear of Personal Disadvantage from Change
(-) O
(+) P
Implementation Team’s Understanding of Business
(-) L
(+) M
Ext
en
t o
f E
RP
Sys
tem
Cu
sto
miz
atio
n
(+)
(+)
(+)
(-)
(-)
Causal R
elationship
Southern E
uropeanU
tility Com
pany
Southern E
uropeanF
ood and Beverage M
anufacturing C
o
Central E
uropeanF
inancial Institution 1
Central E
uropeanF
inancial Institution 2
North A
merican
Business P
roduct Manufacturing C
o
North A
merican
Engineering C
ompany
North A
merican
Utility C
ompany
North A
merican
Consum
er Products M
anufacturing C
o
Southern E
uropeanC
onsultant
Central E
uropeanC
onsultant
North A
merican
Consultant
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Empirical Support
Generalizability
Study investigates SAP adopters in various industries Results developed to broaden theory by consolidating
them with existing theories (analytic generalization supports external validity)
May apply to other ERP systems or even other COTS Software as adoption issues are similar
May apply to other industries as adoption issues are not industry specific
Future Research: Testing of the Model through Larger Scale Survey
Questions?