Organisational perspectives on ERP systems selection and use TDEI 13 Özgün Imre EIS-IE Linköping University

Agenda Some formalities Recap of Jeeves Labs AHP method Wei, C.-C., Chien, C.-F. & Wang, M.-J.J., An AHP-based approach to ERP system selection. International Journal of Production Economics, 96(1), pp.47–62. Isomorphic pressures Benders, J., Batenburg, R. & van der Blonk, H., Sticking to standards; technical and other isomorphic pressures in deploying ERP-systems. Information & Management, 43(2), pp.194–203. 2

Some formal issues Group work – begin if you haven’t already done!!! 18 th Sept, guest lecture from Qlikview 2 nd Qlickview lab date (?) No news on study visit Pictures 3

Jeeves Labs Enterprise systems as an artifact – what are the conceptual characteristics of an enterprise system? Enterprise systems – does it work for any kind of organization? First impressions of an Enterprise system – how does it enable/impede the organization? Enterprise systems as a management tool – how does it affect the governance of an organization? Enterprise systems and business processes – supplier or customer in control? 4

ERP selection 5

Formula of success Business process change Right system (flexible) Right vendor (co-operative) Implementation of the system Examining practicality of the system 6

Some common problems Vendor hype (brand management) No focus on BPR (just an IT implementation) To hasty actions IT as an experience product 7

Selection of an ERP 8 There are various methods available for an organisation Intuitive models (scoring, ranking) Mathematical models (0-1 programming, optimisation) Non-linear models (DEA) Fuzzy models Some are too simplistic, some are too complicated They work under scientific assumptions, but we face “real world” problems

Analytical Hierarchy Process Developed in 1970s-1980s Related to Analytical Network Process, and Neural Network Process It assumes a clear goal and asks for the decision makers to compare various options pairwise in a hierarchy Goal: to buy a flat Criteria:distance; price; monthly fee; aesthetic distance to city, to school, to shopping center, to recreation etc. or proximity to main road, proximity to public transport 9

A general flowchart 10 Wei et al. 2005

A Hierarchy of objectives 11 Wei et al. 2005

Means objectives 12

A word of caution AHP can be a tiresome process If something changes – an addition of an attribute – all might need to be re-calculated Sampling bias might be present: who will decide to rank these attributes?

Why an ERP? AHP, and similar models argue that we have a strategic goal To achieve this goal, we apply AHP, create the hierarchy, create objectives, compare them, and decide on an ERP system Some questions remain: Are we that rational? Do we have complete information? What can we control within the? 14

Isomorphic pressures As he story goes, people adopt ERP systems to gain competitive advantage Efficiency, flexibility, standardisation etc. However, there are forces that might play a role that is not that easy to identify, or rationalise Productivity paradox! 15

Some reasons for ERP Some reasons found in literature: “integration of business processes through integration across modules (applications) by using one ERP architecture; integration of key business and management processes to provide a central overview of organizational affairs access to enterprise-wide data on a controlled basis and thus providing information sharing across business processes; coordinating” (Benders et al. 2006, 195) “integration of process and/or information (91%); following the trend (77%); pressure from the IT function (41%); pressure from the head office (41%)” (Caldas & Wood, 1999, cited in Benders et al. 2006, 196) 16

The Iron Cage 17 Dimaggio and Powell (1983) Neo-institutional theory Organisations aim to survive, for that legitimacy is a necessity! Instituitons are taken for granted, not questioned by the individual actor Humans have a preference to stability, thus institutions are created (routines) Organisations survival is based on the compliance of the actors to other actors in the institutional environment

3 Coercive pressures originate from those other institutions that you are dependent upon, and when there is a cultural expectation in the society Walmart can “dictate” their way of doing to their supply chain Mimetic pressures are used to overcome uncertainty. There is a belief that the solution is adopted elsewhere. The market leader is using this system, so it must work. Normative pressures usually result as professional groups create homogenity Licenses are needed for professions, which means similar education, thus similar world-views 18

Some issues around ERP implementation Intra-org standardisation Inter-org homogenisation Default Best of practice Risk of non-conformance Individuals Cost Methods 19

+1 ? Technical isomorphism Embedding the organisational procedures and notions of working to the technology Inscription If the system has these inscriptions, when it is adopted they may surface and result in homogenisation of the work environment Most of the ERP systems have the centralisation in mind when developed, so they de facto force the organisations to centralise 20

21

23

Some implications Social worlds/arena/negotiated order can provide a situated, dynamic analysis of issues Can complement the static view adopted in stakeholder analysis IS can play the role of the boundary object in such situations, and trigger the negotiations and learning Using such lens can help iron out differences to find a workable situation, and help out wider IS implementation problems 24

Venue 1 Lots of combinations: would social worlds add to the stakeholder theory? Would saying it will add dynamism just be a buzz word? Are they the same? Or how can we identify the difference from a bunch of interviews? 25

Venue 2 Negotiated order with stakeholder theory Focus on temporality of the order, which is what dynamism is Adds non-executives to the system Would we see any difference between stakeholders and social worlds? Would we feel different if we talked to editor x, who is also the dean? 26