Two Key ERP Principles Standardisation – Industry level – Firm level Centralisation – Cost saving – eg computing – Control over resources – Organisational transformation – eg: shared services

Impact of ERP Impact on processes – how to identify it? – How to measure it? Impact on ability of the firm – Autonomy – Decision making – Collaboration – Etc…

Impact on Processes As is / to Be analysis – Current processes – Would be process Template processes Data collection routines Workarounds “devil is in the details” – Business process steps – authorisations

Impact on decision making Research on the impact of IT – Particularly on middle management Number of middle managers Role and contribution to the firm – Contingency framework Research on ERP – very little!

Pre-ERP observations “One reason, then, that we expect top acceptance of information technology is its implicit promise to allow the top to control the middle just as Taylorism allowed the middle to control the bottom.” Leavitt and Whisler (1958) The computer and the new decision-making techniques associated with it are bringing changes to white-collar, executive and professional work as momentous as those that the introduction of machinery has brought to manual jobs. Simon (1977)

Principles of Scientific management describe and bread down a task to its smallest unit; science for each element of work restrict behavioral alternatives facing worker remove worker discretion in planning, organizing, controlling use time and motion studies to find one best way to do work provide incentives to perform job one best way-tie pay to performance use experts (industrial engineers) to establish various conditions of work

Impacts and problems new departments- – industrial engineering, personnel, quality control growth in middle management separation of planning from operations rational rules and procedures increase in efficiency formalized management, mass production human problems – dehumanization of work; sabotage, group resistance, hated by workers

Analogy with ERP New departments – ERP team / data integrity team – Shared services New roles and responsibilities – Middle manager group split two ways – Winners and losers Increase in efficiency in the general case Problems with exceptions Dysfunctional uses of the application

Key problem ERP are designed for the operational level Even at that level, virtualisation is imperfect Management decisions are not all mechanistic Main job is to deal with exceptions Current environment = exceptions are the norm Winter (1985) the case for mechanistic decision making But need organisational routines for deciding when to automate responses.

Some conclusions Implementing ERP is non-trivial Visibility on post ERP impact is low – Business processes – Managerial decision making ERP is an imperfect tool (eg: virtualisation) Commitment to spending means implementations rarely done properly (“Mindlessly” Swanson and Ramilier) And never reversed…just taken to next stages with more implementations

Business processes Sales order processing Purchasing Production planning Describe in terms of inputs, process steps, output and actors involved Specify what data must be collected at the various stages Identify some generic impacts of ERP