Background

The deployment and use of ERP software is quite different from traditional software development. ERP software is a single program that serves the needs of all the different functions in the organization. It is bought off the shelf and then configured to include the specific characteristics of processes of individual companies. Parts of the software have also to be customized such that it can correctly represent the workflow and processes of the particular company. Although similar packaged software, like Supply Chain Management and Customer Relationship Management packages is now available, ERP systems were the first of such software to be developed, sold, implemented and used. The study of ERP implementation experiences in Indian companies is an interesting case of new technology adoption because many Indian companies go from very rudimentary IT based systems to sophisticated ERP systems in one quantum jump (Sharma, 2001). This gives rise to some crucial issues that need to be addressed during ERP implementation, and the subsequent use of the software (Markus et al., 1999). The documentation of the ERP experience in India has been mostly in the nature of journalistic articles in professional/business publications, which either describe the current state of affairs in the ERP industry or report on implementation strategies of individual companies (Connor, 1999; Sadagopan, 1999; Dasgupta, 2001; Sharma, 2001). There is an absence of systematic research, which analyzes and generalizes the characteristics and problems of the ERP implementation experience, on the basis of a systematic empirical study.

Existing research on ERP adoption is based on studies conducted on organizations in the developed countries. The literature can be divided into three tracks. The first track has developed some descriptions of the phenomenon of the adoption of ERP. These studies suggest that the ERP implementation process consists of distinct stages. The first stage comprises review and selection of the right package, selection of consultants and clarifying the business related factors that make ERP a necessity. This stage has been variously referred to as the Chartering phase (Markus et al., 1999) and Design phase (Ross et al., 1999). The second stage describes different aspects of the actual implementation process and consists of project management, software customization and process re-engineering. This is the Project phase (Markus et al., 1999) or Implementation phase (Ross et al., 1999). During the third phase, managers familiarize themselves with the software. System bugs are reported and fixed and the operational effects on the business are felt. This is referred to as the Shakeout (Markus et al., 1999 et al) or the Stabilization Phase (Ross et al., 2000). Finally, an organization enters a fourth phase, referred to as the Upward and Onward phase (Markus et al., 1999) or Transformation phase (Ross et al., 2000). In this phase, strategic business benefits from ERP occur, additional technical skills are built and upgrades are planned for.

The second literature track analyses the ERP implementation process in terms of changes that take place in the organization. One such study conducted by Scott et al. (2000) suggests that ERP adoption results in four distinct change components. Technical Change Processes imply changes in the IS architecture (hardware and software). Business Process Changes result in process re-engineering. The Organizational Learning Process incorporates increased competence with new technology and acceptance of technology in business processes. The ERP Use Process helps managers learn from the successes and failures of working with the ERP software and carry out related incremental technical and process improvements.

A third category of studies analyzes and points out a number of factors that influence the ERP adoption process. First, leadership support has been an important factor in facilitating the adoption process (Mousseau, 1998; Bingi et al. 1999; Markus, 1999; Parret et al., 1999; Baskerville et al., 2000; Sarkar et al., 2000). These studies report that strong leadership support is important for ensuring the availability of resources and manpower. It is also important for signaling to the employees the importance and criticality of the application. Second, open and honest communication on the part of the leaders of the ERP initiative helps employees to understand the rationale for ERP implementation and enables them to appreciate problems in existing systems. It has been found that communication with employees, results in greater understanding of the organizational needs and hence quicker acceptance of the software (Davenport, 1993; Hammer et al., 1995; Mendel, 1999; Holland et al., 1999). A third influencing factor is the skills and competencies of the implementation team. It has been suggested that implementation teams which have good technical knowledge, are empowered to take decisions, are politically close to important people in the organization and have a good understanding of end user needs, enable the organization to minimize implementation difficulties and time and cost overruns (Mumford, 1995; Ferranti, 1998; Baskerville et al., 2000; Askenas et al., 2000). Although most organizations expect that ERP would lead to a reduction in internal and external co-ordination costs (Gurbaxani et al., 1991), they have been primarily concerned about issues relating to data conversion, organizational politics, and the extent of fit of the software with the existing processes (Chang et al., 2000). Existing studies about ERP have been summarized in Figure 1.


Figure 1: Literature on enterprise resource planning-conceptual foundations



Managing Globally with Information Technology
Managing Globally with Information Technology
ISBN: 193177742X
EAN: 2147483647
Year: 2002
Pages: 224

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