Int J Adv Manuf Technol (2012) 61:999–1018 DOI 10.1007/s00170-011-3756-x
ORIGINAL ARTICLE
ERP: a literature survey Eslam Nazemi & Mohammad Jafar Tarokh & G. Reza Djavanshir
Received: 17 January 2011 / Accepted: 7 November 2011 / Published online: 25 February 2012 # Springer-Verlag London Limited 2012
Abstract Most of organizations have a “functional structure,” which is composed of various functional units. In some cases, each functional unit works towards their own goals and objectives, rather than the organizational goals. This is further aggravated because information flow is restricted by functions, and even when other functional units want to take a systemic view, they do not have the needed information to do so. These are the issues addressed by “Enterprise Resource Planning” (ERP) software solutions providing a common and consistent system to capture information organization-wide, with minimum redundancy. Today, many organizations acquire and implement ERP to improve their operational performance and create strategic value; however, they fail to achieve these objective due to lack of knowledge and better understanding of ERP and its lifecycle. Although, so far, hundreds of research article are published separately focusing on ERP and various issues related to its lifecycle and management, there is no survey and overview of the article published in different top-tier journals. We believe that a survey of the articles related to ERP provides better understanding of ERP and attempts to create an information bank of the published articles these in E. Nazemi Computer Engineering Faculty, Shahid Beheshti University, Tehran, Iran e-mail:
[email protected] M. J. Tarokh (*) Industrial Engineering Department, K. N. Toosi University of Technology, Tehran, Iran e-mail:
[email protected] G. R. Djavanshir Carey Business School, Johns Hopkins University, Baltimore, MD, USA e-mail:
[email protected]
turn, contribute to improving the performance of an enterprise in terms of achieving its strategic value creation goals. In this study, we attempt to summarize our survey and review of the articles related to ERP. Keywords Enterprise resource planning . ERP performance measurement . ERP success factors . Strategic value
1 Introduction Enterprise resource planning (ERP) systems are software packages composed of several modules, such as human resources, sales, finance and production, providing crossorganization integration of information through embedded business processes. These software packages can be customized to cater for the specific needs of an organization. During the 1990s, ERP systems became the de facto standard for replacement of legacy systems in large and particularly multinational companies [144, 145, 221]. Regarding the significant impact of ERP systems in a company, Chen et al. [38] state that, “the success of a company increasingly depends on timely information (internal and external) being available to the right person at the right time for crucial managerial decision-making,” ERP system integrates all business process and functions enabling organizations to improve efficiency [70, 104, 157, 159, 194]. Davenport [45] states that, “the business world’s embrace of enterprise systems may in fact be the most important development in the corporate use of information technology in the 1990s.” However, ERP’s contributions to organizations strategic value creation efforts depend on many critical factors including its right implementation and the effective management of its operational performance during its lifecycle [48].
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In the literature, there is a considerable volume of research focused on the specific issues of ERP; however, there are no consensus on the definition and the issues related to ERP. According to Jacobs and Bendoly [97], “Enterprise resource planning (ERP) has come to mean many things over last several decades. Divergent applications by practitioners and academics, as well as by researchers in alternative fields of studies, has allowed for considerable proliferation on the topic and for a considerable confusion regarding the meaning of the term.” Additionally, successful implementation and effective management of ERP’s operational performance during its life cycle is still a major problem in today’s organizations [138]. Therefore, researchers argue the need for more ERP research [63, 64, 77, 97]. We provide herein, a survey of the literature on ERP and its implementation, operational performance, and other issues related to its lifecycle. This study provides a survey of literature on ERP published in the major information systems, related journals, and conference proceedings during the period 1997–2010. It categorizes them through an ERP life cyclebased framework that is structured in phases. Originally, this bibliography started as an extension of the one developed by Gable and Rosemann [66], which focused on ERP and measurements of ERP. We extended their bibliography with a significant number of new publications in all the categories used in this paper.
2 Definition of ERP The term Enterprise Resource Planning is originally coined in 1990 by The Gartner Group to describe the next generation of MRP II software. Historically, ERP evolved from material requirement planning (MRP) and manufacturing resource planning MRP II systems of the 1970s and the 1980s, respectively [2]. MRP and MRP II systems were designed to systemically link different aspects of process information within specific business context such as manufacturing [97]. Within the literature, different authors have defined ERP in a different way, for example, according to Jacobs and Bendoly [97], ERP can be defined as a concept and as a system. Its conceptual definition involves the integration of business processes within an organization, with improved order management and control, accurate information on inventory, improved workflow, and supply chain management, and better standardization of business and best practices. And ERP as a system is about technological infrastructure designed to provide the required functional capability required to turn the ERP concept into a reality. ERP systems should not be a mere technological artifact; it is a core platform designed to support and lever the capabilities of the tools and processes
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used by an organization [97]. ERP system is the technological manifestation of the ERP concept, its benefits, capabilities, goals, and strategic value. Akkermans et al. [2] also state that ERP can be defined from different perspectives such as functional, technical, or from business perspective that provides strategic value encompassing the entire organizations. Tarantilis et al. [209] define ERP as a system that integrates traditional accounting, manufacturing, sales, management, and other management products to offer an “all-in-one” solution that deals with all business management aspects of organizations.
3 Contribution of ERP to strategic value creation Firms are spending large sums of money on information systems, but the benefits of spending on information systems are expected to have strategic values [77]. In today’s dynamic economy, continuously generating new knowledge, combined with operational efficiency and effective delivery mechanisms increase the strategic value of a firm [17, 73, 153, 168, 170, 202]. As shown in Fig. 1, a firm must first have the three fundamental value generators (drivers) in place that are critical to a firm to create sustainable strategic value. The combination of new knowledge creation with at least one of the two other value generators is fundamental to a firm’s sustainable competitiveness. These matches the two-stage value creation model that is suggested and described by Gobeli et al. [73] to create sustainable firm value. Figure 1 also shows that ERP system, if planned, deployed, and implemented properly, acts as a value enhancer that empowers all these three value generators (process and operational efficiencies, information delivery, and new knowledge creation activities) that in turn contribute to the strategic value creation in a firm [57, 61]. The proper planning and implementation of ERP is necessary to enhance the strategic values of an organization [13, 15, 18, 73]; otherwise, it may create unintended consequences. The proper planning, implementation, and deployment of ERP systems are among the critical factors that many scholar point out about the success of ERP [68, 97, 193, 217]. Jacobs and Bendoly [97] points out that ERP should not simply be viewed as a technological artifact that assists organizations in fulfilling their tasks or as a productivity tool with a fixed output, rather it should be considered as a critical technological infrastructure that enhances the capabilities of all other tools and processes. Similar to planning of any information systems, in planning to acquire ERP systems, a firm should address many questions, including the following basic questions: Why does it need an ERP system? How do the ERP systems contribute to organizational efficiency? How long
Int J Adv Manuf Technol (2012) 61:999–1018 Fig. 1 The contributions of ERP system to strategic value creation
Strategic Value of Organization:
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New Products, Services, and Process Innovations, Differentiations, Cost Advantages, Sustainable Competitive Advantage- Unique outcomes that clients
Efficient Processes & Organizational Operations
Value Generators (Drivers):
New Knowledge generation Improved capabilities
Effective Transaction Processing & Information Delivery
Extending Services
Value Enhancer (s):
will its implementation take and when is the break-event point? How much does it really cost and what are its hidden costs? How do a firm’s emerging business activities, such as e-commerce, benefit from the ERP system? And other questions that a firm deem them to be critical to their business. We will try to provide some basic answers to some of these questions in the following paragraphs. Why does a firm need an ERP system? There are five major reasons why companies undertake ERP project: 1. 2. 3. 4. 5.
Standardize and speed up processes Standardize HR information Integrate financial information Integrate customer order information Reduce inventory
It is obvious that an ERP system contribution should be aligned with their ways of conducting business, before its acquisition, implementation, and deployment begin. The most common reason that companies abandon multimilliondollar ERP projects is that they discover that the system does not support one of their important business processes, or they see no linkages between the benefits of an ERP system and their ways of doing business [21, 23]. At that point, they may make two decisions: They can customize the system to fit the process and accommodate it; this may introduce excruciating bugs into the system. Because the customizations may need to torn apart and rewrite the system to fit it with the business process, they can change the business process to accommodate the system, which may mean deep changes in long-established ways of doing business and reorganize important people’s roles and responsibilities [26]. However, according to Jacobs and Bendoly [97], any redesign and changes of a business process that the
Infrastructure Technology: ERP System
system planned to support should not be carried out with the intent of supporting the planned system. Rather, any process redesign should involve the implementation of best practices that are supported by the planned system so that they provide systemic improvement for the firm’s performance as a while [28, 29]. How does an ERP system contribute to organizational efficiency? ERP systems’ contribute to operational and delivery efficiency in many ways including its critical role in improving the way a firm takes customer orders and processes them into invoices; this process is also known as the order fulfilment. How does ERP fit with e-commerce? ERP offers a tremendous value to e-commerce firms’ performance [224]. However, vendors were not prepared for the onslaught of e-commerce. ERP is a complex system and not intended for public consumption. It assumes that the only people handling order information will be trained employees and are comfortable with the technical complexities of the system. However, customers and suppliers are demanding access to the same information such as order status, inventory levels and invoice reconciliation—except if they want to get all this information simply, without all the ERP software jargon, through the firm’s website. How long will an ERP project take? To do an ERP project right, its deployment, implementation and use should fit the way that the organization conduct its business. According to Akkermans et al. [2] and Prahalad and Krishnan [155], depending on the size of a firm implementation of an ERP project, ERP takes anywhere between 12 and 30 months. However, ERP provides a critical technological infrastructure
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to firms; therefore, a more important issue is not how long it will take; rather, firms need to understand why it needs ERP, what are its costs, particularly hidden costs and its benefits, and how it will be used to create strategic values. What does ERP really cost and when is the break-even point? Meta Group did a study looking at the total cost of ownership (TCO) of ERP, including hardware, software, professional services, training, and internal staff costs. The TCO numbers include getting the software installed and the two years afterward, which is when the real costs of maintaining, upgrading and optimizing the system for the firm’s business are felt. Among the 63 companies surveyed— including small, medium and large companies in a range of industries—the average TCO was $15 million (the highest was $300 million and lowest was $400,000). While it’s hard to draw a solid number from that kind of range of companies and ERP efforts, Meta came up with one statistic that proves that ERP is expensive no matter what kind of firm is using it. The TCO for a "heads-down" user over that period was a staggering $53,320. A Meta Group study of 63 companies found that it took eight months after the new system was in (31 months total) to see any benefits. However, the median annual savings from the new ERP system were $1.6 million. What are the hidden costs of ERP? Although different firms will find different issues in the budgeting process, those that have implemented ERP packages agree that certain costs are more commonly overlooked or underestimated than others. Armed with insights from across the business, ERP pros vote the following areas as most likely to result in budget overrun. & & & & & & & & & & & &
Training Integration and testing Customization Change Management Transaction Cost Economics Data conversion Data analysis Consultants ad infinitum Replacing your best and brightest Implementation teams can never stop Waiting for ROI Post-ERP depression
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on articles published in major scholarly journals and conferences’ proceedings over that past 11 years (1997– 2010). The journals surveyed were: ACM CAIS DSS EJIS EJOR HBR IJIM ISJ ISR JGIM JIT MISQ
Association for Computing Machinery Communications of the Association for Information systems Decision Support Systems Journal European Journal of Information Systems European Journal of Operational Research Harvard Business Review International Journal of Information Management Information Systems Journal Information Systems Research Journal of Global Information Management Journal of Information Technology Management Information Systems Quarterly
The academic conferences and events surveyed were: ACIS AMCIS ECIS EMRPS HICSS ICIS IRIS PACIS IIEC
Australasian Conference on Information Systems Americas Conference on Information Systems European Conference on Information Systems Enterprise Management and Resource Planning: Methods, Tools and Architectures Hawaii International Conference on Systems Science International Conference on Information Systems Information Systems Research Seminar In Scandinavia Pacific Asia Conference on Information Systems Iran Industrial Engineering Conference
The search was made using keywords such as enterprise resource planning, enterprise resource planning performance measurement, enterprise wide systems, enterprise systems or software packages and the main ERP vendors such as SAP, Oracle, Baan, Peoplesoft, and JD Edwards. Publications during the period 1997–December 2010 were analyzed. Table 1 lists the number of publications identified from IS journals and conference proceedings. We also included relevant articles from other scientific publications we found during the collection process. During 1997 and December 2010, nearly all the information systems conferences mentioned in Table 1 dedicated panels to the subject, AMCIS [140], ECIS [141], ACIS [139] as well as the ICIS [137].
5 ERP bbiliography analysis 4 Research methodology and survey approach The research methodology used in this study is the review of literature on ERP. The focus of the literature review was
After we collected all the publications, they were analyzed and categorized using a simplified version of the ERP lifecycle framework proposed by Esteves and Pastor [51]. One of the ways to analyze qualitative data is to use a
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Table 1 ERP publications at selected international IS Conferences 1997-2011 Is/It source
1997
ACIS ACM
1
AMCIS
1
ECIS
1998
1999
2000
2
2
1
2
30
28
3
1
5
4
HBR
23
3
3
3
2 1
4
IS/IT Journals
2 7
MIS Q
1
2005
2007
2008
2
3
2009
2010
2011
Total
2
1
1
10
2
1
4
3
1
75
2
1
11
3
1
47
1
1
1
1 4
3
1 1
6
6
1
1
1
1
1
1
2
3
1 1 1
1
OTHER SOURCES
4
10
10
15
1
1
3
1
1
TOTAL
13
24
80
81
2
1
13
8
2
1
Main topics researched ERP systems overview, their expectations and motivations are well-covered subjects in the publications found. Recently, some researchers focused on knowledge management concerns and applied knowledge theories in the ERP context. Few issues are addressed in terms of performance measurements and business modeling and how modeling can be improved [48, 52, 70, 78]. Our review of the literature shows that development of ERP products centered mainly in technological issues. We also categorized the publications on ERP issues not related to ERP lifecycle phases into six main topics (Fig. 2): research issues, organizational knowledge, business modeling, ERP product development issues and ERP and business intelligence ERP performance modeling
4
8
1
1
21
3
1
1
9
5
2
2
15
4
1
3
2
3
5.1 General directions
8 1
1
classification system that includes a quest for regularity and standards, as well as topics encompassed by the data. The classifications must then be summarized by words or phrases [27]. We used this process to analyze and categorize the publications found. The ERP lifecycle (Section, Esteves and Pastor [51]) represents the various phases through which an ERP system project passes in an organization. The ERP lifecycle is structured in dimensions and phases, generic enough to permit the classification of publications and comprehensive enough to give a general vision of the whole ERP lifecycle.
11
1
7
2
11
2 3
PACIS
& & & & & &
2006
1
ISR 1
2004 1
1
Journal of IT
2003
1
1
HICSS ICIC
2002
6
EJOR EMPRS
2001
18 7
1
1
1
2
10
5
5
69
6
8
10
42
22
16
326
We discuss each of these topics in the next section. &
Research Issues This topic is concerned with ERP research issues and trends. It covers such aspects as research agendas; ERP overview, motivations and expectations; proposals on how to analyze the strategic value of ERP systems; and how to deal with ERP research projects (Fig. 3).
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Liang et al. [109] suggest that research and studies could be carried out based on comprehensive data collected globally from a large sample of vendors in “difficult” parts of the globe to study the assimilation of ERP systems, the article effects of institutional pressures, and role of top management during the assimilation process.
Fig. 2 Number of publications by category
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Int J Adv Manuf Technol (2012) 61:999–1018
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Fig. 3 No of articles not related to lifecycle issues
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They are commends that future research can be conducted to study the way institutional pressures interact with top managements’ learning related constructs to affect ERP assimilation processes. Jacob and Bendoly [97] argue that ERP means different things to different researchers, and practitioners in terms of its applications. They also discuss the current research steams on ERP, its operations management and provide some suggestions on for related future research. Finally, in their paper, they discuss the fundamental corporate capabilities required for successful implementation of ERP systems. Allen [4] provides his observations on current research and studies carried out on ERP and information economics, ERP development and he provides “researchable” directions for ERP systems development and its impacts on organizations. The research issues and overviews of ERP systems are analyzed and research agendas proposed in Esteves and Pastor [51] and Mini-Panel [127]. David et al. [46] argue that research in the ERP area must not proceed haphazardly; rather we must develop a systematic means for identifying the patterns underlying these systems and for comparing the symbolic abstractions to find differences in functions, processes, information architecture, and organization. Holsapple and Sena [93] identified the integration of ERP and decision support systems for further research and development. Sor [195] suggests that a better understanding of issues surrounding ERP systems could be achieved by moving the discourse towards management theory and dealing with ERP systems as special cases of theoretical premises that were developed in the 1960’s. Oliver and Romm [135] discuss the behavioral subjects related to ERP systems deployment, operations, and its use. Specifically, they discuss in issues such as the motivations and expectations about ERP systems.
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Chang et al. [35] summarize a set of research issues about public sector ERP implementations and developed by using the Delphi method. Ross and Vitale [162] present the preliminary findings from a research project that examined how firms are generating business value from their investments in ERP systems. Kumar and Hillergersberg [106] present a general overview of ERP systems, some ERP experiences, and issues and their evolution. The article is very helpful in providing not only a general overview of the ERP systems, but also how the firms’ application areas, expectations, experience change during ERP systems functional operations in the firms. Everdingen et al. [53] analyze ERP adoption by European midsize companies. Markus and Tanis [119] provide a theoretical framework for analyzing, both retrospectively and prospectively, the business value of enterprise systems. Esteves and Pastor [52], Muscatello et al. [129], Holland et al. [88], Holland and Light [90], Panel [141], Parr et al. [143], Scheer and Habermann [177], Shanks et al. [183], Sumner [206, 207, 208] and Vikram et al. [216] provide some case studies and offers that most of the information about the failures and successes and risks are based on reports on implementations in large manufacturing and service organizations. However, enterprise resource planning vendors are now steadily turning their marketing sights on small and mediumsized manufacturers. The research focuses on implementation activities that foster successful installations and are developed. Articles related to this topic include:
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Organizational Knowledge Organizational knowledge focuses on issues of people skills, know-how, organizational processes, and culture; that is, issues that change an organization so that it can face a new ERP context. It covers aspects of learning and managing competencies from a people perspective and the identification and management of knowledgeable artifacts from an information management perspective. Articles related to this topic include:
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Liang et al. [109] studied a model that facilitates the diffusion and assimilation process of ERP within organizations. Their model explains the role of top managements in mediating the impacts of external institutional pressures on the effective use of ERP within organizations [214]. Gattiker and Goodhue [68] present a model that demonstrates a better fit between ERP systems and its organizational context. They suggest that, according to organizational information process theory the performance is, “influenced by the level of fit between
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Int J Adv Manuf Technol (2012) 61:999–1018
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information processing mechanisms and organizational context. Two important elements of this context are interdependence and integration among subunits of organizations. Because ERP systems include data and process integration, the theory suggests that ERP will be relatively better fit when interdependence is high and differentiation is low”. Sirkka et al. [188] in a seminal article examine the critical role of trust in information technology-enabled relationships. ERP is a member of information technology; therefore, their paper also provides an insight on migrating the cultural resistance to organizational learning, trust, and assimilation process of ERP within organization. Ronca [160] considers the need of investing in organizational knowledge and change management for an enterprise to be successful in adopting ERP. Taxen [212] proposes a strategy for organizational knowledge evolution and describes how it can be applied in the ERP system context. Eliciting information about organizational culture via laddering in ERP environments is discussed by Rugg et al. [171]. This is article provides useful insights in minimizing the cultural inertias that may prevent the better alignment of ERP within organizations. Gable et al. [65] develop a research project about the means to understand the extent of the ERP knowledge among the key players- (vendors, implementers, partners, and clients) and to understand better what these three key players can do with ERP knowledge. Al-Mashari [5] explores the ERP phenomenon from a business process and change management perspectives. The article provides the relationship between ERP systems and business process redesign. Finally, the author provides useful recommendations along with several ideas for future research. Rosemann and Chan [166, 167] propose a framework which structures the knowledge required to manage enterprise systems. They suggest how knowledge can be modeled in the enterprise systems context to identify what is relevant during different stages of an enterprise systems project. Hedman [82] presents a competing value approach enterprise systems (CES) framework to discuss enterprise systems from an organizational effectiveness perspective. Finally, Klaus and Gable [100] and Scott and Gable [179], attempt to relate the deployment and use of ERP systems to knowledge management. The article also explores the knowledge of knowledge management held by senior managers who are ‘immersed’ in ERP systems. Business Modeling The objective of the business modeling process is to help an organization to define an effective business
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vision and strategies that will reduce the effort involved in adopting the ERP business model. It helps organizations to understand, manage, and communicate their business processes. It covers aspects such as usage of modeling tools applied in ERP contexts, new business modeling approaches, and comparisons between processes [63, 64, 77, 97, 112, 114, 196]. Articles related to this topic include: &
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McAfee and Brynjolfsson [122] discuss the roles of modern technologies such as ERP on creating strategic values for their firms and competitive advantage in the market. They provide an insight into creating effective business models by making ERP and other technologies as an integral part of their organizational model. Konstantas et al. [103] propose the active business objects (ABOs) as a new paradigm to build information systems for businesses. The ABO project aims at the design and development of an agent platform where mobile agents represent business processes. The agents encapsulate the policies, business practices and models of different business activities. Stirna [205] analyzes the acquisition of Enterprise Modeling tools. He also outlines a number of situational factors to be considered by organizations when choosing among enterprise modeling tool acquisition strategies. Formica and Pizzicannella [58] discuss a new approach for high-level enterprise modeling referred to as reification. The approach is based on the reification of the business processes of an enterprise, that is, their representation as static entities by using the object-oriented paradigm. Wagner [219] shows that enterprise and business process modeling could greatly benefit from agentoriented approach, called Agent-Object-Relationship (AOR) modeling.
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ERP Product Development Issues This topic is related with the first-hand development and manufacturing of ERP products. It covers aspects such as: new modules, interfaces, componentization, increased flexibility, and introduction of new emerging technologies and platforms [62, 67, 71, 75, 81, 92, 117]. Articles related to this topic include:
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Chen et al. [38] provide heuristics for selecting robust database structures with dynamic query patterns. They suggest the usefulness of creating database of the core component of ERP that integrates and supports all business processes. Hagel and Brown [79] and Caglio and Newman [33] discuss the potential problems in ERP architecture that may lock companies into rigid and inflexible business processes. Therefore, they recommend a new approach based on the Web service architecture.
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Sutcliffe [211] proposes a framework for engineering reusable components that serves two purposes. First, it can help designers think by making design trade-off explicit. Second, it proposes a cost driven evaluation of reusable components that can inform decision making during reuse oriented development. Frank [59] uses research within extended transaction models, replication methods, and countermeasures against the missing isolation property in order to illustrate how to design distributed ERP systems with high performance and availability. [34, 101] propose architecture for e-Business that extends ERP-centric architectures to address the new challenges of business networking. Platner [149] and Avital and Vandenbosch [13] describes the SAP R/3 software development process and the possibilities R/3 offers for "configuration to order". Sprott [197] describes how the componentization of ERP packages is likely to evolve. Fan et al. [55] discuss the design methodologies for component-based enterprise systems architectures development. Huang [94] analyzes the influence of customer requirements in the ERP software development process. Loos [116] focuses on future development of ERP systems, emphasizing technical aspects of information technology application as enabler. Sato [176] introduces quick iterative process prototyping methodology for the analysis and design of business process dynamic properties. Chellappa and Saraf [37] adopt a framework called network theory to represent the complexity of the ERP market. With this framework, authors relate alliances formation by business application software firms and compatibility issues. Kobryn [102] analyzes the requirements of enterprise software architectures and examines the UML constructs and techniques to specify them. A historical perspective has been taken by Chung and Synder [39] and Kelly et al. [99] who, from different contexts, emphasize the maturing of IS towards an unambiguous business focus, as attributed to ERP systems. Other traditional approaches in systems development proved to be less beneficial in the long-term than ERP systems [32, 87].
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ERP and Business Intelligence
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David C. Chou and Hima Bindu Tripuramallu [47], introduce BI and ERP integration. They believe BI tools can be used to generate various aspects of business views through manipulating existing data captured by company’s information systems. BI can be used for any
Int J Adv Manuf Technol (2012) 61:999–1018
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organization to structure its ERP information and other data repositories, for fast and effective decision-making. Turban E., and et al. [210], describe the road map of access to Business Intelligence with Managerial Approach.
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ERP performance modeling This topic is concerned with ERP performance measurements and some modeling approaches for measuring the performance of ERP and Total Systems [78, 105]. It covers such aspects as customer satisfaction, performance measurement and models of productivity and introduction of new approach to develop a model for performance measuring from single view.
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Gunasekaran et al. [77] have identified a set of performance metrics that are helpful to ERP projects. They suggest that particular considerations should be given to how an organization at strategic, tactical, and operational performance levels can benefit from a critical information system such as ERP. Cotteleer and Bendoly [42] present an empirical study that investigates the influence of enterprise systems’ implementation on operational performance. Their study suggests that performance along a key metric motivating the ERP project improve significantly after system’s deployment. Michael Rosemann and Jens Wiese [164, 169] suggest that the Balanced Scorecard (BSC), a framework originally developed in order to structure the performance measurement of an enterprise can be used for the evaluation of these tasks. Adapting the approach of the Balanced Scorecard and adding a new fifth project perspective increases the completeness and the quality of ERP implementation reports. At least it raises the awareness for relevant factors. Controlling the ERP usage can be based on a "classical" BSC (top down) and utilize the aggregation of ERP monitoring data (bottom up). It should be stressed that this approach is not a typical Balanced Scorecard application. More often, the Balanced Scorecard evaluates the performance of an enterprise or a department. Jen-Her Wu Yuh-Min Wang Mien-Chih Chang-Chien Wei-Chun Tai [222, 223] focus on User satisfaction is one evaluation mechanism for determining system success. In his study, they concentrate on satisfaction results; examine factors related to satisfaction, and compare satisfaction differences between firms implementing foreign and domestic ERP systems. Measuring ERP impact directly from costs and benefits, productivity improvements, competitive advantage and impact on decision-making would be ideal. In view of the difficulty such measurement entails, user satisfaction has received widespread acceptance as a surrogate measure, and was used in their study.
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To focus on enterprise sizes and industry sectors to compare their difference on enterprise resource planning (ERP) implementation development, package selection, and user satisfaction in Taiwan [Jen-Her Wu Yuh-Min Wang and Hsi-Tze Wan [222, 223]]. They show a survey, using the measurement instrument, of two representative samples of “large size enterprise vs. medium size enterprise” and “electronics & science industry vs. traditional industry” is conducted to investigate different ERP implementation patterns and outcomes. A comparative analysis of ERP implementation rate, package selection, and user satisfaction based on business-related factors is performed. As performance is a multidimensional construct (Eccles 1991, Grant/Higgins 1996, Kitchenham 1996), a performance measurement system (PMS) has to manage both financial and non-financial performance indicators (PIs). Depending on the performance measurement systems (PMS) framework being applied (e.g. Bititci/ Carrie (1998), Kaplan/Norton (1996), Kueng (2000), McNair et al. (1990), Neely/Adams (2000)), different dimensions and PIs are relevant. Therefore, it is necessary that PIs can be defined freely depending upon the context in which an ERP system is planned to be deployed and used. Most ERP systems are ill equipped to deal with the demand of slow moving items such as spare parts. Based on data from a Fortune 500 company, presents the development and evaluation of a spare parts inventory control model. Compares the proposed model with the results achieved using the forecasting and inventory management modules of a popular ERP system [156].
5.2 ERP systems along their lifecycle The ERP lifecycle In this section we use the ERP lifecycle framework proposed by Esteves and Pastor [52]. This framework is structured in phases, which consist of the several stages that an ERP system goes through during its whole life within the hosting organization. The stages are: & & & & & &
adoption decision, acquisition, implementation, use and maintenance, evolution, retirement phase.
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selecting the information system’s justification approach [77] approach that will best address their critical business challenges and improve the organizational strategy. This decision phase includes the definition of system requirements, its relevance, goals, costs, and benefits, and an analysis of the impact of adoption at a business and organizational level. Acquisition phase This phase involves selecting the product that best fits the requirements of the organization to minimize the need for customization. A consulting company is also selected to help in the phases of the ERP lifecycle that follow, especially in the implementation phase. Factors such as functionality, price, training and maintenance services are analyzed, the contract is structured, and the contractual agreement is defined. In this phase it is also important to analyze the return on investment of the product selected. Implementation phase This phase deals with the customization or parameterization and adaptation of the ERP package acquired, to meet the needs of the organization. Usually this task is performed with the help of consultants who provide implementation methodologies, know-how, and training. Although training is present in all the phases, the largest training investment is made during the implementation phase. Use and maintenance phase This phase consists of the use of the product in a way that returns expected benefits and minimizes disruption. During this phase, functionality, usability, and adequacy to the organizational and business processes are important. Once a system is implemented, it must be maintained, because malfunctions have to be corrected, special optimization requests must be met, and general systems improvements have to be implemented. Evolution phase In this phase, the system is upgraded by new technology insertion and additional capabilities are integrated into the ERP system to obtain improved benefits. The extensions can be classified in two types: 1. Evolution "upwards". Functionality is oriented to decision making with applications such as advanced planning and scheduling, data warehouses, and business intelligence systems; 2. Evolution "outward" to the system’s environment, with applications such as customer relationship management, supply-chain management, inter-organizational workflow, and electronic commerce.
In the following, we describe briefly each phases. Adoption decision phase In this phase, decision makers in a firm must question the need for a new ERP system while
Retirement phase When new technologies appear or the ERP system or approach becomes inadequate to the
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business’ needs, managers decide if they will substitute another information system approach that is more adequate to the organizational needs of the moment. Some organizations already passed through this phase for reasons such as strategic changes, lack of trust in the ERP vendor or the implementation partner, or bad implementation experiences.
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Main topics researched The research in this phase focused on how some types of organizations adopted ERP systems and the associated requirements, risks, costs and benefits. One study is centered in the modeling of organizational culture before selecting and installing an ERP system. Some insights for researchers that want to research in this phase are proposed by Oliver and Romm [135].
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Fichman [56] in his seminal research provide a model based on real options that can be used in making decision on ERP adoption. He states that making decisions when uncertainty about the taking full benefit of the system and irreversibility in the cost and the risk of its implementation are high and complicated. Therefore, he has developed a model using concepts from real options to make decisions about the investment and adoption of in a new system. Iansiti and Levien [96] state that ERP’s success in an organization depends on understanding its eco-system and the organization’s role in it. They suggest that an ERP’s success depends on understanding of the importance and the benefits of a company’s ERP systems with its business partners’ enterprise systems. Therefore, companies’ ERP adoption process is influenced by the complex interdependencies among them. Porter [150] warns against the cases in which IT works against business strategy. He describes some cases in that: “Package software applications were hard to customize, the companies were often forced to change the way they conducted activities in order to conform to “best practices” embedded in the software. It was also extremely difficult to connect discrete applications to one another. Enterprise Resource Planning (ERP) systems linked activities, but again companies were forced to adapt their ways of doing things to the software.” Ross and Weill [170] emphasize the fact that making decisions on adopting new technologies such as ERP is a “business-not just technological challenge”. They suggest the importance of senior manager’s active involvements in making key technology decisions.
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Otherwise, when the IT department in an organization is left alone in making decisions on ERP and other technologies adoptions disasters may occur. Oliver and Romm [135] discusses the need of further research into the planning phase of the adoption process and outline some of the principles that should form the basis of empirical research in this area. Rugg and Krumbholz [172] stress the importance of correctly modeling the organizational culture before selecting and installing a system. They describe a model of culture, which can be applied to the ERP context and describes a framework to select an elicitation technique for modeling organizational culture. Fulford and Solanki [60] describe the requirements, risks and rewards of an ERP adoption in a manufacturing organization. Hirt and Swanson [83, 84] develop a case study where an ERP system’s adoption process is analyzed. This article provides good insights about some issues and factors that are critical to an ERP system’s successful adoption in a firm. Monday [128] examines the potential scope of ERP for supply chain management in the wine industry and the extent to which ERPs can be considered as a potential solution. Oliver and Romm [136] outline the significance of ERP systems and analyze the factors that lead to ERP adoption within universities.
5.3.2 ERP acquisition Main topics researched The research in this area focuses on ERP selection methods and criteria affecting ERP selection, specially the ERP selection process for SMEs. One of the studies analyzed the differences in characteristics of the ERP system selection process between SMEs and large organizations. One of the studies proposes a novel way to help vendors specify their products. Articles related to this topic include: &
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Abdinnour-Helm et al. [1] discuss the pre-implementation tasks and requirements that encourage acceptance, successful acquisition, and effective implementation of ERP systems within organizations. Sistach et al. [189] and Sistach and Pastor [190] propose a method for the acquisition of an ERP system in small and medium enterprises (SMEs). McQueen and Teh [123] present an acquisition process model that shows a progression from an organization-oriented acquisition process to a marketoriented acquisition process and describe influence factors in the process.
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Stefanou [201] provides a framework for the selection process of ERP Systems, which can be useful for both identifying critical issues for further research and assisting managers considering ERP projects. Brown et al. [30] identify a long set of business and IT factors that are related to the purchase and acquisition of ERP systems. O’Leary [134] investigates the game-playing behavior that can manifest itself in the requirements analysis process, evaluation, and choice of ERP software. This study is based on three cases and two sets of requirements analysis software. Stafyla and Stefanou [198] report the findings from empirical research about managers’ cognition about key factors affecting the selection of ERP software. A cognitive mapping approach is used to investigate project leaders’ perceptions engaging in SAP R/3 projects in Greece. Shakir [181] maps six models of decision-making for the evaluation, selection, and implementation phases of an ERP system and uses a case study to conceptualize the models. Bernroider and Koch [22] detail the results from an empirical study concerning differences in characteristics of the ERP system selection process among small, medium, and large sized organizations. Leist and Winter [110] developed a cost-based model of information systems optimization to derive an optimal allocation of business packages. Sammon and Adam [174] present a literature-based model of ERP software selection that claims to be the foundation for a model of managerial decision making in ERP projects. Maiden et al. [118] propose the use case studies and scenarios to help vendors specify their products’ needs and requirements.
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Case studies constituted the largest category of publications. However, in some of them, there is no explanation of research methodology or not enough data to interpret some of the results presented. Most of them lack assumptions or hypotheses (in theoretical terms) for future studies. Therefore, more efforts should be put in the definition and subsequent validation of critical success factors. The publications related to the implementation phase were categorized into the following two main categories: (ii) implementation approaches, (ii) and implementation case studies. Implementation approaches and successes This topic focuses on how to deal with an ERP implementation project. It covers aspects such as taxonomies of ERP implementations, implementation methods and techniques, and comparisons with other software implementation projects. Implementation success deals with the issues of how to succeed through an ERP implementation. It covers aspects such as ERP project success and failure definitions, problems and outcomes, critical success factors and risk management. & & & &
& 5.3.3 Implementation phase Main topics researched Some authors studied implementation approaches and others proposed new ones. However, we found that ‘implementation’ does not mean the same thing to everyone. Each author has his own model of implementation phases, for example, Umble et al. [215] provide implementation procedures critical to ERP implementation. In our views critical success factors research are not well covered. Only a few studies provide ERP success factors’ definition [120, 121] and a limited number of them focus on ERP impacts on the organizational, technological and business level, on business process reengineering, and on organizational change management issues. The number of studies is not sufficient to create a body of knowledge in the area.
Umble et al. [215] identify success factors, software selection steps, and implementation procedures that are critical to successful implementation ERP systems. Gattiker and Goodhue [68] discuss ERP implementations requirements within organizations. They also discuss the factors to be considered in ERP implementations. Vincent et al. [2003] identify the factors that influence effective management of ERP systems implementation process. Al-Mashari et al. [6] provide taxonomy of critical success factors in ERP implementation process. The taxonomy provided in their paper is based on a comprehensive study of ERP literature. Nohria et al. [132] discuss that effective implementation depends skills in four primary management practicesstrategy, structure, execution, and culture. They also emphasize that flawless implementation of ERP requires simplified organizational structure.
Implementation case studies We found several case studies that document specific ERP implementations. They cover different perspectives in particular situations such as: ERP impacts, organizational change management, business process reengineering, people roles, and decision-making. The objectives of these case studies were: &
To study the influence of ERP implementation on operational performance. An empirical study focusing
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on changes in process dynamics as a source for organization performance improvement is also provided by Cotteleer and Bendoly [42]. To discuss the benefits of taking integrated approach in ERP implementation and other critical issues involved in efficient implementation of ERP [3, 69, 154]. Davenport [45] presents an overview of ERP systems as he called them, their main functions, their attractiveness and the problems related with their implementation. Davenport also analyzes the impact on a company’s organization and culture. To survey, study, and analyze ERP system’s implementations in manufacturing firms [133]. to analyze the ERP impacts based in a benefit/costs analysis [69]; to describe the impact of ERP on job characteristics [147] and on organizational knowledge [16]; to test the role of three key social enablers in ERP implementations: strong and committed leadership, open and honest communication, and a balanced and empowered implementation teams [175]; to make recommendations on how to maximize the benefits from ERP [131] or how to avoid ERP project failures [180]; to demonstrate how myth-making served to construct an ERP system as an ‘ideal’ system and the legacy system as a ‘dying system’ [7]; to analyze the key decisions of the development team and key success factors [40]; to decide onto an ERP adoption and implementation [83, 84]; to analyze ERP implementations from a knowledge transfer perspective [108]; to demonstrate tradeoffs between Big Bang versus slower ERP implementation approaches that allow time for organizational learning [31]; to describe the journey of Geneva pharmaceuticals through the first two of three phases of SAP R/3 implementation project [24]; to compare the best of breed strategy with the single vendor ERP alternative [113]; to identify the critical elements of business processes and ERP systems alignment [192, 218]; to define business process requirements for large-scale public sector ERP implementations [25]; to explore strategic options open to firms beyond the implementation of common business systems [89]; to describe the implementation and measurement of a SAP system in a multi-cultural organization [43, 44, 76]; to standardize ERP templates within the different ERP systems of an organization [95]; to study business process reengineering [161, 163, 191] and change management [8, 148];
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to determine the causes and nature of changing requirements in user’s requirement definition [173]; to analyze the special challenges of ERP implementations outside the business world [80, 85, 86, 186, 187]; to describe global supply chain management [36]; To examine a model that proposes various antecedents to successful e-business change management in ERP environments [9]. To focus on enterprise sizes and industry sectors to compare their difference on enterprise resource planning (ERP) implementation development, package selection, and user satisfaction in Taiwan [222, 223]. They show a survey, using the measurement instrument, of two representative samples of “large size enterprise vs. medium size enterprise” and “electronics & science industry vs. traditional industry” is conducted to investigate different ERP implementation patterns and outcomes. A comparative analysis of ERP implementation rate, package selection, and user satisfaction based on business-related factors is performed.
5.3.4 Use and maintenance Main topics researched The main issues researched on this area are ERP post-implementation benefits, limitations and factors that affect ERP usage. Some studies analyze the impact of ERP systems in organizations performance and accounting functions. Some authors analyze technological issues such as ERP upgrades, security, maintenance tasks, and databases performance. Article related to the use and maintenance of ERP systems include: & &
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Tarantilis et al. [209] recommend the benefits a Webbased and application of ERP for managing real-world distributed business processes. Ash and Burn [10] provide a strategic framework for the management of ERP enabled e- business. They also emphasize the critical role of change management in applying ERP technology to e-business. Ranganathan and Brown [155] discuss the values and benefits of investments in ERP to businesses. They argue that ERP projects with “greater functional scope (two or more value-chain) or greater physical scope (multiple sites)” result in positive, higher shareholder return. Bhargava and Choudhary [14] discuss the economic benefits of information intermediary (info-mediary) to businesses. ERP can be used in info-mediary design that facilitates establishment of a buyer-seller agreement and value-added services that provide enhanced benefits from matching services.
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Holland et al. [91] present a framework for understanding the process and content of the development of the maturity of ERP systems in organizations. Ming et al. [126] presented a decentralized mechanism design for supply chain management organizations using an auction market. ERP adds value by improving the coherence and integrating the needed information in decision making process. Shang [182] presents a framework that tries to classify the types of benefit that organizations can achieve by using ERP systems and provides a comprehensive foundation for planning, justifying, and managing the system. Pozzebon [152] identifies the factors affecting ERP usage, combining a structural perspective with a behavioral-based model. Kelley et al. [98] analyze the ‘individual’s’ reactions to ERP technology and subsequent behaviors through the combination of Self-Efficacy Theory and Attribution Theory. Poston and Grabski [151] present a study on the impact of ERP systems on a firm’s performance. Askenäs and Westelius [11] show how a set of roles of an ERP system (viewed as an IS) form a vocabulary for discussing the role played by the ERP system in relation to its users. Stijn and Wijnhoven [204] apply the systematic analysis method of memory mismatches (SAMMM) to ERP systems in the usage stage and identify the method’s theoretical and practical value and its limitations. Granlund and Malmi [74] and Connellan and Howard [41] analyze the effects of ERP systems on management accounting and management work, especially whether ERP systems alleviate or limit the benefit gained from management accounting systems for organizational decision-making and control. Fahy and Lynch [54] examine the impact of ERP systems on organizations and, in particular, on the management accounting functions of large organizations that implemented ERP systems. Stamper [199] points out the limitations of current ERP systems and introduces the principles on which the second generation could be built to achieve massive reductions in development, support, and maintenance costs. Glass and Vessey [72] analyze the maintenance and enhancement tasks of ERP systems, trying to determine whether ERP maintenance follows the 60/60 rule (i.e., approximately 60% of the cost of an information system is maintenance and approximately 60% of that maintenance is enhancement) and whether user-driven ERP system enhancement is treated the same way it is for traditional IS.
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Loo [115] proposes the implementation of an information technology service management capability to help in the management of information technology associated with the ERP solution implemented. Rosemann and Wiese [164] propose the evaluation of ERP software usage through a balanced scorecard approach. Eriksen et al. [50] propose exploring the advantages of competence centers to support and maintain ERP systems. Kremers and Dissel [2000] discuss the motives and inhibitors for migrating ERP to a new version of the system, considered from the provider and customer viewpoint. Doppelhammer et al. [49] study the database performance of SAP R/3 using a standard benchmark for decision support queries in business environments, named TPC-D. Riet et al. [158] study how ERP systems deal with security.
5.3.5 Evolution phase Main topics researched The evolution phase issues studied are also mainly technology-oriented, such as development of interfaces with other systems, the integration of customer relationship management modules and use of web technologies. Another important issue studied is workflow management, with new approaches and architectures being proposed. Article related to the use and maintenance of ERP systems include: & &
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Shaw [184] analyzes the use of Web technology and its relation to supply-chain management. Lenzerini et al. [111] propose a framework for providing an integrated view of data that is associated with the ERP system. The framework can deal with data used from different kinds of applications. Park [142] develops a framework for a design interface module in ERP systems that automatically extract features required for a process planning. Meier et al. [124] develop an Editorial Workbench that helps to manage knowledge spread in internal and external sources in order to distribute the right information to the responsible manager in time. Rosemann et al. [165] introduce two different approaches for possible workflow-based ERP architectures and discuss the related advantages and constraints. Bergamaschi et al. [20] propose a data replication model, called DOT (Dynamic Ownership Transition),
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to realize the integration between workflow and database technology to support data intensive workflow applications. Schönefeld and Vering [185] present a concept for integrating ERP systems and Computer Supported Cooperative Work (CSCW) and describe the benefits of the integration of both worlds. Last and Maimon [107] provide an approach to knowledge discovery in databases (KDD) applied to ERP databases. Assogna [12] presents a project to explore the possibility of "automating" the generation of a decision support and operational IS, starting from an initial "business idea" of top management. Mylopoulos [130] reviews goal-analysis research in requirements engineering and illustrates how it can facilitate the customization of a customer relationship management system. Becker and Bölsche [19] present an approach to facilitate electronic coordination in enterprise spanning business-to-business relationships. Themistocleous [19, 213] describes application integration and proposes taxonomy. He also analyzes the factors related with the impact of application integration on organizations.
Retirement phase Very few articles relating the retirement phase of ERP systems were found. However, but some publications [e.g. [45]; Scott [180]] cite cases of ERP systems retirement. Some publications in the Press [e.g. New York Times, Wall Street Journal, the Economist] describe some ERP implementation disasters. The most famous retirement case is FoxMeyer Drugs [Scott [180]]. At present, the majority of organizations are in the implementation or in the use and maintenance phases.
6 Conclusion The number of publications within the information systems community on ERP systems appears small compared to the size of the business they generated. The publications identified in this paper originate from a small number of sources and are quite recent. All major IS conferences and Journals since in 1997 dedicated at least a track or minitrack to ERP systems. This study shows that ERP researcher mainly concentrated on issues related to the in implementation phase of the ERP lifecycle. Until now, the other phases have been almost forgotten. One of the reasons is that the majority of organizations are in the implementation phase. Also, in
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some phases, namely acquisition and implementation, the strong intervention of consultants makes it difficult to access information. Although several ERP systems are in the market, the majority of case studies analyze SAP systems. Few studies and little research generalize the findings to other ERP systems. ERP systems offer many potential areas for research, several of which are discussed in this article. Due to their pervasive nature, ERP systems are of interest for a wide range of professional and scholarly communities (from software engineering to accounting), apart from the IS field. This suggests that ERP-related research could or should be interdisciplinary. In our opinion, the number of publications on ERP systems will grow exponentially in the coming years, because many universities created research areas in ERP systems and the interest of the IS community is also growing.
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