Cahier de recherche

CR-2012-01

Motivations Underlying the Adoption of ERP Systems in Healthcare

Organizations: An Analysis from “Success Stories”

Placide Poba-Nzaou

Louis Raymond Sylvestre Uwizeyemungu

Guy Paré

Février 2012

Institut de recherche sur les PME

2

Proceedings of the 45th Hawaii International

Conference on System Sciences

3

Motivations Underlying the Adoption of ERP Systems in Healthcare

Organizations: An Analysis from “Success Stories”

Placide Poba-Nzaou Université

du Québec à Montréal poba-

nzaou.placide@uqam.ca

Louis Raymond

Université du Québec à Trois-Rivières

louis.raymond@uqtr.ca

Sylvestre Uwizeyemungu Université du Québec à Trois-Rivières

sylvestre.uwizeyemungu@uqtr.ca

Guy Paré HEC-

Montréal

guy.pare@hec.ca

Abstract

In order to deal with continuous drastic increases in

healthcare spending and major demographic

changes, governments in industrialised countries are

initiating major reforms aimed at improving the

efficiency and the quality of care services provided to

their citizens. These reforms along with increasing

requirements for accountability tend to

“corporatize” these institutions by exposing them to

market-like pressures. To face their changing

environment, healthcare institutions have invested in

ERP systems as their basic technological

infrastructure, highlighting a phenomenon that

recalls the earlier popularity of the ERP movement

with private companies. Based on the analysis of 180

public “success stories,” the main objective of this

study is to identify and characterize the sets of

motivations that lead to the adoption of ERP systems

in healthcare organizations. Our findings indicate

that these motivations can be classified into six

categories, namely technological, managerial

operational, managerial strategic, clinical

operational, clinical strategic, and financial. Three

clusters of healthcare organizations were identified

with regard to these motivations, and labelled as a

Business View, a Clinical View, and an Institutional

View of ERP systems.

1. Introduction

Despite governments’ enormous financial efforts, the

gap between the demand for healthcare services from

an increasingly well-informed and expectant public,

and the capacity of healthcare organizations to meet

this demand increases regularly [1]. It is in this

context that many, if not most, governments are

initiating major reforms aimed at improving the

efficiency and the quality of care services provided to

their citizens [2]. These reforms along with

increasing autonomy and accountability tend to

“corporatize” healthcare organizations by exposing

them to market-like pressures. Consequently, these

organizations are facing the same challenges than

other modern organizations [3] and thus seek

flexibility, rapidity, integration, and innovation [4].

In order to deal with these challenges, most

scholars and experts recommended intensive use of

information technology (IT) [5]. Following these

recommendations, healthcare organizations have

increased their capital investments in IT, although

they still lag behind organizations operating in other

information intensive industries such as the financial

industry, the telecommunications industry, and the

airline sector [6]. Following Pollock and Cornford

[7], it might be argued that since the healthcare sector

shares common problems with a wide range of

sectors or industries, IT innovations such as

enterprise resource planning (ERP) systems

implemented in contemporary business corporations

would also apply in healthcare institutions. Indeed,

ERP systems were arguably the most popular IT

innovation in the 1990s [8] and even at the beginning

of the 21st

century [9, 10], so much so that the large

enterprise market for these systems became saturated,

forcing ERP vendors to look for other market

segments, particularly in the service and small

business sectors [11]. One could thus assume that

there is a convergence of interests between healthcare

organizations and ERP system vendors. On the one

hand, the former would be attracted by the benefits

purportedly obtained from ERP adoption in the

private sector, benefits such as the integration of

business processes and the greater quality of

information available for decision-making [12]. On

the other hand, ERP vendors recognize the healthcare

4

Type of motivation Specific examples of motivations References

Technological

"The majority of administrative systems are 10-25 year old [...]

While many of these systems have had major modifications to adapt

to changing requirements, the original design and intent of the

systems remain a barrier for users"

"The current Student System is unable to support core University

functions (such as the management of student information) and must

be replaced as a priority"

[19]

[19]

Operational

"In this industry, we make very fast decisions. Our old systems just

didn't have the flexibility to react to the market that quickly."

"These current systems, built originally to support an organizational

view, should be systematically replaced with systems supporting a

process view"

[32]

[33]

Strategic

"Enhance the view that the university is an information

technologically advanced and open institution"

"increased student support and enhanced teaching activities"

[33]

[33]

Financial

"To deal with the projected decline in state funding support and to

reduce the pressure to increase tuition, costs need to be contained or

reduced. Of particular importance is the need to focus on personnel

costs, which are the largest component of the expenditure base, and

the need to streamline processes and procedures which add to

administrative costs."

"We needs to increase the use of electronic documents internally and

the exchange of information electronically with external

organizations through the use of industry standards [...] will simplify

business processing, reduce costs"

[19]

[19]

sector to have the greatest potential for growth in the

ERP systems market [13]. Indeed, the global

healthcare systems market is estimated to be worth

$53.8 billion by 2014, growing at an annual rate of

16% [14].

As more and more healthcare organizations are

adopting ERP systems, analyzing the motivations for

which they undertake an ERP system project has

become important for at least three reasons. Firstly,

these motivations affect the project’s scope, design

and implementation [15, 16]. It has also been

confirmed empirically that the influence of

motivations to adopt a health information system

influence the project’s implementation outcome [17,

18]. Secondly, most studies on motivations to

adopting ERP systems have been conducted in the

context of large, private sector [19-21] and public

sector organizations [22-24]. Thirdly, ERP system

adoption in the healthcare industry is a relatively

recent phenomenon, less than 20 percent of hospitals

having implemented an ERP by the year 2006 [6].

To our knowledge, no prior research has

examined the motivations for adopting ERP systems

in the healthcare sector. This paper attempts to fill

this gap by first aiming to identify and characterize

the actual motivations that lead to the adoption of

these systems by healthcare organizations. Another research objective is to characterize these

organizations with regard to ERP by uncovering

typical profiles or patterns of motivations among

them. And following previous work done in public

sector institutions [25], our final aim is to ascertain

whether these motivations are influenced by certain

aspects of the organizational context.

2. Conceptual and Empirical Background

What can motivate an organization to adopt an ERP

system, knowing the high cost and high risk

associated with such an undertaking? In prior

research, the motivations underlying an

organization’s decision to adopt an ERP system have

been examined mostly in an incidental manner [e.g.

16, 26-28], whereas few empirical studies have

focused on these motivations per se.

In the private sector, Oliver and Romm [19]

found that there are three categories of motivations

that lead an organization to search for an ERP

solution: 1) the need to improve the performance of

current operations, 2) the need to integrate data and

systems, and 3) the need to prevent a competitive

disadvantage or a business risk from becoming

critical. In the same setting, Ross and Vitale [20]

identified six reasons generally cited by enterprises,

classifying them into three categories (infrastructure,

capacity, and performance). These authors underlined

the sequential character of these categories as the

firm’s new common systems platform (infrastructure)

makes it possible to develop new capabilities

(process improvement, data visibility), which in turn

are meant to improve organizational performance

(cost reduction, strategic decision making, customer

responsiveness). Essentially the same three types of

motivations can also be found in Parr and Shanks

[15], under different names, that is, technological

(common platform, obsolescence of legacy systems),

operational (process improvement, data visibility,

operating cost reductions), and strategic motivations

(Y2K compliance, multi-site standardization,

customer responsiveness, decision-making

improvement, need for efficiencies and integration,

business restructuring).

In the public sector, the only empirical study on

ERP motivations that could be found was that of

Raymond et al. [22]. Based on their analysis of data

from 46 stories of public organizations, these authors

found that the motivations that lead public sector

organizations to adopt an ERP system are related to

four types of performance, namely, technological,

operational, strategic, and financial performance. In

the healthcare sector, while four ERP implementation

studies could be found [29-32], none focused on the

motivations that underlie the adoption of these

systems. Hence to our knowledge, no prior research

has specifically examined such ERP adoption

motivations in healthcare organizations.

As shown in Table 1, for the purpose of the

present study, an initial taxonomy of ERP adoption

motivations was elaborated by integrating the

previously cited categorizations.

Table 1. Taxonomic framework

5

This produced the following four generic categories:

1) technological performance, 2) operational

performance, 3) strategic performance, and 4)

financial performance motivations. Technological

performance motivations have mainly to do with the

IT infrastructure. Operational performance

motivations concern the improvement of processes.

Strategic performance motivations are related to a

change in orientation, in the design or delivery of

services, or in the image of the organization.

Financial performance motivations apply to

profitability, cost reduction, and revenue growth.

This classification initially appears to have sufficient

face validity and discriminating power for the

purposes of this research.

3. Methodology

3.1 Selection and description of the cases

In identifying success stories of ERP system

adoption and implementation in the healthcare sector,

we followed Shang and Seddon’s [32] approach in

using case studies published by ERP vendors on their

websites. The main reasons for using such data were

that they provide a broad view of the ERP adoption

and implementation experience, they contain

verifiable facts, including the disclosure of the

adopting organization’s identity as well as that of the

main project actors, and they are reported from the

perspective of the adopting organization. All stories

are considered successful from the adopting

organization’s and vendor’s perspective.

Now, stories related by vendors evidently tend to

oversell their products and services and the business

benefits they provide. Our study’s main purpose

however was not to evaluate the degree of attainment

of these benefits but rather to identify and analyze the

primary motivations that led healthcare organizations

to adopt ERP systems. Hence the main data

collection task was centered on the various

experiences described in each story rather than on the

conclusions of their authors [34].

As an initial step, we consulted the websites of

SAP, Oracle, and Microsoft which together represent

more than 50% of the ERP world market. We then

consulted the websites of McKesson, Cerner, and

HLTH who represent the leaders of the health IT

sector with 30% of the market. Thereafter, we

performed general web searches with the following keywords: “ERP,” “healthcare,” and “hospital.” The

web sites were accessed between November 15, 2010

and January 20, 2011. Altogether, we identified 225

“success stories” qualified as healthcare sector

implementations by ERP vendors.

We disqualified 45 of these stories for different

reasons. After preliminary analysis, some stories did

not pertain at all to the healthcare sector even though

they were presented as such on the ERP vendors’

websites. We also disqualified other stories after

concluding that the system implemented could not be

truly considered as an ERP product. Other stories

were written in languages other than English or

French, the two languages spoken and understood by

the researchers. Last, other stories were eliminated

because not enough explicit or implicit information

about the ERP adoption motivations could be found.

As shown in Table 2, altogether, 180 stories from

a variety of healthcare ERP vendors were recorded:

100 from Oracle, 38 from SAP, 37 from Cerner and 5

from other vendors such as McKesson, Siemens and

Compiere. These stories emanate from 31 different

countries on five continents, the majority being North

American (92) and European (68), including the

United States with 89, and the United Kingdom, Germany and The Netherlands with 17, 15 and 8

stories, respectively. One may note here that while

Oracle’s and SAP’s success stories are equally found

in North America and Europe, Cerner’s stories are

almost exclusively found in North America.

Table 2. Number of ERP adoption stories

North

America Europe Asia South

America Oceania Total

Oracle 40 44 10 3 3 100 SAP 16 18 2 2 0 38 Cerner 35 2 0 0 0 37 Other 1 4 0 0 0 5 Total 92 68 12 5 3 180

As ERP vendors structure their offer in a modular

fashion, the various modules described in the stories

include the following functions: administrative

systems (145 stories), clinical information systems

(38 stories), clinical support systems (36 stories), and

patient management systems (22 stories). Table 3

presents the breakdown by vendor of the ERP

modules implemented. One may note here Cerner’s

under-representation in the “administrative systems”

category, and conversely its over-representation in

the other three categories versus Oracle and SAP.

3.2 Coding and analysis

To collect the story data, we elaborated an initial

coding sheet with two main categories of data: case

attributes and ERP adoption motivations. The case

attributes refer to institutional attributes and ERP

system attributes. The institutional attributes

6

Rank Technological performance Managerial -

operational Clinical - operational Managerial -

strategic Clinical - strategic Financial

performance

1

Search for IT integration

(51)

Improve

effectiveness of

administrative processes

(88)

Improve

effectiveness and efficiency of patient care

(44)

Improve

administrative performance

management capabilities

(30)

Strengthen

clinical strategic

positioning (8)

Monitor cost

trends (40)

2

Improve IT

infrastructure

capabilities (44)

Improve administrative

data availability

and accessibility

(29)

Improve

effectiveness

of clinical processes (29)

Enhance compliance

with laws and regulations

(30)

Transform care delivery and respond to

changing needs

(5)

Increase profitability or return on investment

(17)

3

Modernize IT systems (43)

Improve HR management

performance (19)

Facilitate access to

clinical information

(21)

Support organizational

growth and expansion (26)

Improve clinical

performance management

capabilities (4)

Improve financial

transparency (5)

4

Improve IT productivity

(20)

Improve administrative data accuracy and relevance

(15)

Improve

patient safety (21)

Facilitate connectivity with majors stakeholders

(19)

Implement a patient safety

culture (3)

Monitor asset value (1)

5

Build a knowledge

management infrastructure

(2)

Search for business

process integration

(14)

Enhance the preservation of patients’

privacy (16)

Improve decision- making

processes (14)

considered here include tax status (for-profit vs not-

for-profit), organization status (hospital or clinic vs

other type of organization), location (urban vs rural),

organizational size (number of employees and

number of beds when applicable), network affiliation

(yes or no), and university affiliation (yes or no). For

their part, the ERP system attributes considered here

refer to ERP vendor, functional coverage of the ERP

system, and modules implemented.

Table 3. Breakdown of healthcare ERP modules and stories by ERP vendor

Oracle

freq. (%) SAP freq. (%) Cerner

freq. (%) Other freq. (%) χ

2 Administrative systems (145) 94 (65) 36 (25) 10 (7) 5 (3) 85.3*** Clinical information systems (38) 9 (24) 3 (8) 26 (68) 0 (0) 67.8*** Clinical support systems (36) 3 (8) 5 (14) 28 (78) 0 (0) 92.1*** Patient management systems (22) 1 (5) 6 (27) 15 (68) 0 (0) 40.5*** Total number of ERP stories 100 (56) 38 (21) 37 (20) 5 (3) *** p < 0.001

Administrative modules: accounting, HR, disease costing, material management, etc.

Clinical modules: emergency room system, operating room system, nursing system, CPOE, etc.

Clinical support modules: pharmacy information system, LIS, RIS, etc.

Patient management modules: patient admission, transfer and discharge system

As for ERP motivations, four main categories

were created based on the initial research framework:

technological, operational, strategic, and financial

performance (see Table 1). In the coding process,

however, two of these categories were refined. As

cases were analyzed to identify actual motivations

leading to ERP adoption, a further breakdown of the

operational and strategic categories into both a

“managerial” and a “clinical” category was deemed

necessary. The success stories retrieved from the

ERP vendors’ websites were loaded as source

documents in the NVivo 9 software.

3.3 Methodological rigor

This study used public secondary data, noting that

this method has proven to be a valid source of

insights in previous information systems research

[e.g. 22, 32, 35]. Being publicly available and

accessible, these data are deemed to provide

confirmability to qualitative research [36, 37].

Although the study cannot claim to be a case survey,

our approach was guided by basic techniques of this

method, namely, selecting relevant cases from

inclusion criteria, developing a coding scheme to

convert qualitative case description into quantified

variables, and using multiple coders and assessing

inter-rater reliability [34].

The coding process was performed by two of the

four researchers. The cases recorded were randomly

subdivided into two equivalent parts, and each part

were independently analyzed and coded by one

coder. Certain measures were taken to ensure the

relative concordance of the coding process between

the two coders. First of all, the two coders used the

same previously described coding scheme. Second, a

pre-coding test was conducted by randomly selecting

ten stories. These were analyzed and coded

independently by the two coders, who then compared

and discussed their coding. This step allowed them to

harmonize their understanding of the different codes.

Third, at the end of the process, the two coders

worked together to harmonize the phrasing of

different codes and to group similar codes. Fourth, to

ascertain the validity of the coding process, each of

the two other researchers not involved in the

preceding steps independently coded 50 transcript

segments from the cases. Cohen’s kappa inter-coder

reliability coefficient was equal to 0.61 in the first

case and 0.74 in the second case, indicating

substantial agreement [38].

4. Results

As determinants of ERP adoption, motivations refer

to the initial reasons that led to the ERP adoption

decision. Table 4 presents the most frequent

motivations found in the stories analyzed. Given the

limited richness of the information provided in the

stories by the ERP vendors, the various motivations

for the adoption of ERP systems identified within

each story were coded as 46 binary variables (1:

present, 0: absent). These include 7 technological

motivations, 9 managerial-operational, 12 managerial

-strategic, 10 clinical-operational, 4 clinical-strategic,

and 4 financial.

Table 4. Most Frequent Motivations (number of stories)

The hierarchy of the motivation categories stems

from the logic found in many of the stories, that is,

from the way ERP adoption motivations were

formulated. Consider the following transcripts from

case #29:

“We believed that rationalizing technology and

standardizing processes would enforce the

sharing of best practices across all therapy areas

and enable [our organization] to reduce

7

Number of ERP motivations

Business View

(n= 54) Clinical

View (n=34)

Institutional View

(n=92) F Technological motivations

Managerial operational motivations

Managerial strategic motivations

Clinical operational motivations

Clinical strategic motivations

Financial motivations

1.0

1.4

1.4

0.7

0.0

1.0

0.4

0.6

0.9

2.5

0.6

0.3

0.5

0.8

0.7

0.3

0.0

0.0

5.4**

8.9***

11.4***

62.6***

82.5***

115.2***

Total number of motivations 5.5 5.3 2.3 41.3***

operating costs through automation and shared

service centers.”

“We also wanted to build a scalable, flexible IT

environment that would allow [our organization]

to leverage its market-leading position and

continue generating strong cash flow and

profitable growth.”

It appears from these two transcripts that

technological motivations such as “rationalizing

technology” and “building a scalable, flexible IT

environment” were not the ultimate trigger of the

organization’s decision, but were deemed a necessary

condition for managerial performance (“automation

and shared service centers,” “leverage market-leading

position”), clinical performance (“sharing of best

practices across all therapy areas”), and financial

performance (“reduce operating costs,” “continue

generating strong cash flow and profitable growth”).

Another notable result lies in the frequency with

which certain types of ERP motivations are present in

the 180 stories examined. The most frequently

mentioned motivations pertain to managerial-

operational performance (in 84% of the cases). For

instance, “improving the effectiveness of managerial

processes” and “leveraging the ERP system to

improve performance management capabilities,”

mentioned in 88 and 30 cases respectively, are the

most frequently mentioned individual motivations in

this regard. Next in order of appearance are

motivations that pertain to clinical performance (in

44% of the cases) and to technological performance

(in 41%). Here, one finds “improving the

effectiveness and efficiency of the care provided to

patients” (in 44 cases) and “searching for IT

integration” (in 51 cases) as being the motivations

most often cited. The least frequent motivations are

the ones that pertain to financial performance (in

29% of the cases). Being present in 44 cases,

“monitoring cost trends” is the most prevalent

motivation of this last category.

To obtain further descriptive insights from the

stories, cluster analysis was used to group the

healthcare organizations on the basis of their

motivations for adopting ERP systems. This approach

aims to group organizations into clusters such that

each cluster’s membership is highly homogeneous

with respect to certain characteristics. A second aim

is that each group differs from other groups with

respect to these same characteristics. The number of

motivations of each type present in a story was

chosen here as clustering variables. The SPSS

TwoStep algorithm was used to identify clusters as it

can handle a large number of cases and has the ability

to determine the optimal number of clusters [39]. A

three-cluster solution was found to be optimal in

identifying groups of stories that could be clearly

distinguished from one another, based on an

interpretable and meaningful pattern of relationships

among the clustering variables.

As shown in Table 5, the three clusters of

healthcare organizations were labelled as having a

Business View (30% of the stories), a Clinical View

(19%), and an Institutional View of ERP systems

(51%). Significant differences between cluster means

for all clustering variables and for the organization’s

total number of motivations demonstrate the unique

character of each cluster.

Table 5. Cluster analysis of healthcare ERP stories by type of motivations

**: p < 0.01 ***: p < 0.001

The first group is comprised of healthcare

organizations whose motivations pertain more

significantly to managerial-operational as well as

managerial-strategic performance, technological

performance and financial performance than the other

two groups. As such, they are seen as taking a purely

“business” view of ERP system, i.e. the dominant

view propounded by the large ERP system vendors

such as Oracle, SAP and Microsoft, and adopted by

most firms in the manufacturing sector from which

ERP originated and where its market penetration is

the greatest. In contrast, the second group is made up

of organizations that look at ERP system offerings

from a more “clinical” perspective, that is, whose

motivations to adopt such a system pertain

significantly more to their core business, i.e. clinical

processes than the other two groups.

For its part, the third group stands as the one with

the least number of ERP adoption motivations,

whatever the type. For these healthcare organizations,

there is no specific type of motivations that seems to

play a central role in the ERP adoption decision.

These organizations are seen as following an

“institutional” perspective, referring to neo- institutional theory for which technology adoption is

a result of external or environmental pressures rather

than internal rational decisions or cognizant choices

by the organization’s management [40]. An

organization’s institutional context determines to

some extent the pressures it will undergo to align

itself either to common practices, often referred to as

“best practices” (a frequent argument for justifying

8

ERP adoption), or to legal and regulatory

requirements. This context will also force the

organization to adapt itself to the power shifts within

the various stakeholder groups in its immediate

environment.

A further characterization of the three groups of

healthcare organizations can be obtained by looking

at the different modules implemented within their

ERP system. Looking at Table 6, one may note that

organizations whose view of ERP is “clinical” tend to

implement clinical IS and clinical support modules in

greater proportion than the other two groups, as

expected. Conversely, the organizations with the least

motivations, that is, those whose view is labelled as

“institutional”, tend to implement patient

management system modules in lesser proportion.

However these organizations are the ones that have

most implemented administrative system modules,

that is, modules that are the most “generic” by ERP

standards and the least specifically related to the

healthcare sector.

Table 6. Breakdown of ERP modules by cluster

Cluster

Variable

Business

view (n= 54)

freq. (%)

Clinical

View (n=34)

freq. (%)

Institutional view (n=92) freq. (%)

χ2

ERP module

Administrative systems

Patient management systems

Clinical support systems

Clinical information systems

43 (30)

10 (46)

8 (22)

10 (26)

20 (14)

8 (36)

15 (42)

18 (48)

82 (56)

4 (18)

13 (36)

10 (26)

14.6***

11.4**

15.2***

26.7*** ***: p < 0.001

The three groups of healthcare organizations can

also be characterized by the vendor selected to

provide their ERP system. Here, as indicated in Table

7, one may note that healthcare organizations whose

view of ERP is “clinical” tend to select an ERP

provided by Cerner rather than the other two groups,

again a result that was to be expected.

Table 7. Breakdown of ERP vendors by cluster

Cluster

ERP vendor

Business

View (n= 54)

freq. (%)

Clinical

View (n=34)

freq. (%)

Institutional

View (n=92) freq. (%)

χ

2

Oracle

SAP

Cerner

Other

33 (33)

13 (34)

7 (19)

1 (20)

10 (10)

4 (11)

20 (54)

0 (0)

57 (57)

21 (55)

10 (27)

4 (80)

38.8***

***: p < 0.001

Now, one may also ascertain whether the

organizational context influences the motivations for

which healthcare ERP is adopted. Initial evidence

presented in Table 8 to this effect indicates that it is

with regard to technological and clinical performance

motivations that such influence occurs.

Specifically, it was initially found that the smaller

the size of the hospital or clinic (number of beds), the

more ERP is adopted for clinical reasons. Also,

healthcare organizations located in the United States

(49% of the cases) show less technological

motivations but more clinical motivations than those

located in other countries. The majority of American

stories relate the experience of hospitals who have

implemented an ERP provided by Cerner and meant

to support clinical processes primarily.

Table 8. Influence of organizational context on ERP adoption motivations

T M/O M/S C/O C/S F

Number of employees .03

-.06

.02

-.15

-.03

.10

Number of beds .05

.10

-.04

-.29**

-.15

.00

Country (1: USA, 0: other)

-.19*

.03

-.04

.18*

.14

-.04

Location (1: rural, 0: urban)

-.09

-.02

.08

-.08

-.02

.02

Tax status

(1: for profit, 0: other)

.21*

-.05

.03

-.15

-.14

-.14 Network affiliation

(1: yes, 0: no)

-.09

.07

-.04

.08

.12

.01 University affiliation (1: yes, 0: no)

-.22*

-.00

.03

.16

.02

.13

Type of organization

(1: hospital or clinic, 0: other)

-.25***

.00

-.05

-.24***

.14

.00

*** p < 0.001; ** p < 0.01; ; * p < 0.05

T=technological; M/O=managerial operational; M/S=managerial strategic; C/O=clinical operational; C/S=clinical strategic; F=financial

In terms of tax status and affiliation, not-for-profit

and university-affiliated health organizations show

less technological motivations than for-profit and

non-affiliated ones. As to the type of organization,

hospitals or clinics (66% of the cases) also show less

technological motivations but more clinical

motivations than other types of organizations.

5. Discussion

The results presented above indicate that the

performance motivations that underlie the adoption

of ERP systems in healthcare organizations are

technological, managerial-operational, managerial-

strategic, clinical-operational, clinical-strategic, and

financial in nature. These organizations differ

however as to whether the managerial or the clinical

benefits of ERP is the one that is privileged. Scholars

have previously stressed the importance of contextual

factors in order to fully understand technology

adoption processes [e.g. 41, 42]. Therefore, it is not

surprising that motivations related to clinical

performance emerge from our analysis at both the

operational and strategic levels, clinical activities

representing the “core business” of this industry.

Furthermore, it is worth noting that it is only in

the 1990s that healthcare organizations started to use

information systems for clinical purposes to improve

care services [43]. Consistent with this trend, our

results show a clear domination of motivations

related to managerial performance over clinical

performance. Indeed, at the operational level, one

may recall that the most frequent motivation is to

“improve administrative process effectiveness”

(expressed in 88% of the stories), as compared to

“improve the effectiveness and efficiency of care

9

provided to patients” (44%). The second-most

frequently mentioned motivation is related to

technological performance, that is, the “search for IT

integration” (51%). On this matter, it is worth

reminding that integration of business operations and

processes is one benefit of ERP that is highly-valued

by all types of organizations [44]. It is also worth

noting that frequently mentioned motivations such as

“monitor cost trends” (40%), “leverage the ERP

system to improve administrative performance

management capabilities” (30%), and “leverage the

ERP system to enhance compliance with applicable

laws and regulations” (30%) denote the influence of

the environmental context of healthcare

organizations. In fact, the healthcare industry is

characterized by a high level of regulatory and legal

requirements that can both accelerate and inhibit IT

adoption [45]. In addition, due to increasing level of

governmental as well as competitive pressures,

healthcare organizations are becoming more aware of

their need to improve overall performance and to

develop their performance management capabilities

[46, 47].

The preceding results concur with Caldas and

Wood’s [48] findings in that most motivations

reported by the sampled healthcare organizations are

“substantive” in nature, i.e. based on a “rational”

organizational expression of requirements and

problems for which ERP systems appear to be an

adequate solution. These authors note however that

substantive motivations are not the only ones that

come into play. Less evident (or less acceptable)

motivations of the institutional or the political type

may also be present. The former type refers to

external pressures that may be coercive, normative or

mimetic in nature, whereas the latter refer to power

and conflict within the organization. Given that such

motivations could not be detected with the data

collection method employed here, further research

should do well to look into the institutional and

political factors that may underlie the ERP adoption

in healthcare organizations.

In comparing our results with those of similar

studies conducted in other contexts, one must keep in

mind the limitation of such an exercise due to

difference in data collection methods. That being

said, healthcare organizations globally appear to be

driven by the same substantive motivations as

organizations in the private sector [15, 19, 20] and in

the public sector [23]. However, clinical performance

motivations at both the operational and the strategic

level are specific to organizations in the healthcare

sector. In addition, healthcare sector-specific

characteristics (e.g. financing systems, legislation,

regulatory requirements) imply that certain

motivations will have a greater impact than others,

when compared with the private or the public sector.

For example, the need to comply with legislation or

regulatory requirements is of paramount importance

in this industry.

The need for greater transparency and

accountability could also have more weigh in both

the healthcare and the public sectors when compared

to private enterprises. In line with Raymond et al.’s

[23] findings, one could assert that, contrary to

healthcare or governmental organizations, private

firms can be motivated to adopt an ERP system in

part by the need to reduce a competitive disadvantage

or to prevent a business risk from becoming critical

[19]. Conversely, private sector organizations would

most often not be motivated by pressures to join with

other organizations in an ERP implementation

project, as can be the case for healthcare and public

sector organizations.

As found above, three organizational profiles

were identified with regard to ERP adoption

motivations, that is, healthcare institutions were seen

as having a Business View, a Clinical View, or an

Institutional View of ERP systems. The first two

views are consistent with a rational perspective of

innovation adoption [49]. The emergence of the third

profile is rather surprising however, as it represents

about a half of the sampled organizations. While the

rational perspective of innovation adoption does not

apply to this group, another line of reasoning may be

of interest to these organizations. Contrary to

DiMaggio and Powell [50] for whom the “first

adopters” of an innovation are the ones motivated by

a desire to improve their performance, it stems from

our results that healthcare organizations in the third

group may have adopted an ERP system as a result of

environmental pressures, be them coercive or

normative, or by imitation, possibly following a

management “fashion wave” [51].

With regard to our third research aim, our results

indicate that five characteristics of the organizational

context (hospital or clinic size, country, tax status,

university affiliation and type of organization) play a

significant role in motivating the adoption of ERP

systems in the healthcare sector. First, organizational

size is one of the most widely investigated

antecedents of IT adoption in hospitals [52]. Our

results indicate that smaller organizations are

motivated more by improving their clinical

performance. While in contradiction with two

previous studies [e.g. 53, 54], this result may be

explained by an argument analogous to the one used

to characterize the greater “proximity” of small and

medium-sized enterprises to their clients [55]. Thus,

in the case of small and medium-sized hospitals, this

10

proximity would be achieved through improvements

in patient care enabled by an ERP system.

Another result worth discussing is the greater

emphasis on technological performance and the

lesser emphasis on clinical performance of the for-

profit healthcare organizations, as opposed to the not-

for-profit ones. Here, one clearly sees the former’s

“business” orientation of ERP as opposed to the

latter’s “clinical” orientation, wherein the adoption

behaviour of for-profit healthcare institutions would

more resemble that of other business corporations in

initially seeking the IT integration and improved IT

capabilities brought by implementing an ERP system.

In a similar fashion, university-affiliated

institutions tend to adopt more of a “clinical” rather

than a “business” orientation of ERP, that is, they are

more motivated by clinical performance, and less

motivated by technological performance than non-

affiliated institutions. Given the primary mission of

teaching hospitals, this last result is not surprising.

The same can be said of hospitals and clinics versus

other types of healthcare organizations as the latter

are mostly for-profit organizations. Overall, these

results confirm the importance of the organizational

context in determining why, in the healthcare sector,

organizations differ in their motivations to adopt an

ERP system.

In concluding this discussion, an obvious

limitation must be acknowledged in relation to this

study’s use of secondary data, that is, data initially

compiled for a different purpose than that of the

research. In using “success stories” published by ERP

vendors, one may be concerned with the inherent bias

in the selection and presentation of these stories for

publicity reasons. For instance, more space is given

to the benefits derived from the system and to the

reasons for choosing the vendor and the proposed

solution. Motivations for adoption are treated

incidentally, and difficulties or problems encountered

in adopting ERP are rarely mentioned. Hence, it

could reasonably be assumed that motivations in the

selected stories are less susceptible to distortion.

Finally, the terminology used in the stories varies

substantially from vendor to vendor, rendering

comparison more difficult.

6. Conclusion

In the present article, we have explored the key

motivations that underlie the adoption of ERP

systems in healthcare organizations. The research

contributions lie in a better understanding of the

reasons why healthcare organizations decide to

implement these systems. A thorough analysis of the

motivations of healthcare organizations would help

avoid what Markus and Tanis [56] called the

“bandwagon effect”, that is, adopting ERP systems

simply because other comparable organizations have

done so. Such analysis would also allow ERP

vendors to better define their strategies in order to

meet the expectations of healthcare organizations.

The popularity of ERP systems in private sector

combined with optimistic growth forecasts in the

healthcare segment within the IT market, lead one to

believe that the adoption of these systems in

healthcare organizations will continue to increase. As

the pressure from governments continues with regard

to efficiency and effectiveness, integrated systems

will be required in order to enable and better manage

processes in healthcare organizations, both upstream

and downstream, and without loss in the quality of

care provided to citizens. Alike other information

systems, ERP systems can provide benefits to

healthcare organizations; it has also shown that

realizing these benefits is not automatic and that the

risk of partial or total failure is still very high. Thus,

ERP adoption issues must be better understood in

light of fundamental differences in the various

organizational contexts that frame these issues, be

they represent differences between public and private

organizations, small and large organizations, or

service and manufacturing organizations.

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