Title

Towards a theory of management and evaluation of operational enterprise resource planning applications

Date of Award

1-1-2008

Degree Type

Thesis

Degree Name

Doctor of Philosophy

School

School of Management

Faculty

Faculty of Business and Law

Abstract

Enterprise resource planning (ERP) applications are the most ubiquitous of business information systems. They impact almost all business functions, bringing control and providing information. Some of these applications have already been operational for 20 years and this longevity has changed the way in which management of information systems is envisaged. Traditionally, information systems had a lifespan of perhaps five to 10 years and their iterative replacements, allowed them to be aligned with a changing business landscape. In contrast, enduring ERP applications, if not altered and changed to meet contemporary business requirements, may stifle and restrict organisations. To be effective they, therefore, require ongoing management and evaluation throughout their operational life. Research concerning the management and evaluation of operational ERP applications is seen in the information systems literature to be sparse, with many specific calls for studies into the phenomenon. Organisations also seem uncertain of the best approach to ensure their applications meet business objectives. This has prompted the research aim of developing a theoretical framework that details the key factors relevant to ongoing management and evaluation of ERP; the framework being designed to assist practitioners in the effective administration of ERP and to provide guidance for further academic research. To address the research aim, a qualitative study was undertaken to explore the management and evaluation of ERP in organisations. A broad literature review of the impacting factors identified the preliminary constructs for the study. An initial pilot case was used to test and support the validity of these constructs with further constructs being identified. The constructs were tested and the framework refined in four additional case studies. The organisations ranged in size from large medium to global corporations. The ERP applications studied consist of Oracle e-business suite, SAP ERP, and Microsoft Dynamics AX. In-depth, semi-structured interviews were conducted with senior management, finance and IT personnel as well as users of the application. Descriptive case analysis was used to portray the phenomenon in each of the organisations. This was followed by explanative cross case analysis that compared and examined the findings for each of the constructs. One of the key findings of the research is that the decisions that are made early in the application 's lifecycle may well impact the application, and its resultant business benefits, for the life of the application. These decisions are often made by organisational stakeholders who have inadequate knowledge of the application and who are insufficiently supported by consultants concerning macro business matters. The antecedents of poor decisions are very difficult, in terms of time, complexity and cost, to recover from and they can ultimately result in ERP abandonment. Organisations that go on to implement a subsequent ERP use the knowledge gained from the original implementation to take a more considered approach that results in much improved business outcomes. The research has found that with respect to the original implementation poor judgement by stakeholders is related to (1) a lack of understanding of the capabilities and encumberments of ERP applications (2) the misnomer of ‘best practice’ that is applied to these applications (3) poor training, in terms of both content and timing, by value added resellers and software authors (4) consultancy that is application module specific (5) a lack of knowledge of organizational business processes (6) a lack of understanding of the holistic information needs of the organisation (7) poor understanding of the long term risks associated with decisions. The major recommendation of this study is that an organisation takes ownership of the application as early as possible by establishing an ERP bureau that has the ongoing involvement of senior management. The personnel comprising the ERP bureau should have business, process and technology skills and should fundamentally understand the business drivers as well as the capabilities of the application. The major contribution of this thesis is a framework that specifies a number of factors that the bureau needs to understand to properly manage an ERP application. These include (1) an understanding of the strategic aim of the application (2) an appreciation of the impacts of business factors such as organisation type, strategy process, financial procedures, and financial status (3) an understanding of contextual environmental considerations such as supply chain influencers (4) an understanding of the consequences of the software authors' charging procedures (5) the value and potential of the ERP maintenance agreement (6) an understanding of the impact of customisations on the ability to upgrade (7) knowledge of horizontal and vertical information requirements (8) a recognition that due to the strategic nature of ERP, business drivers and imperatives tend to provide more crucial benefits indicators than traditional cost/benefit justifications. This thesis has both theoretical and practical significance. The theoretical significance of the research is the unearthing of the key factors that enable and impede the management of operational ERP applications. This unearthing has the potential to help focus future research and to act as a precursor for similar studies. Education programs concerning ERP management may also benefit from considering the various important factors identified. The research is particularly practically relevant as the framework has the potential to shape both organizational policy and practice

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