Proceedings of the 39th Hawaii International Conference on System Sciences - 2006




   Supporting the Module Sequencing ...
Proceedings of the 39th Hawaii International Conference on System Sciences - 2006




benefits of the ERP investment are a...
Proceedings of the 39th Hawaii International Conference on System Sciences - 2006




organizations, or enable it to respo...
Proceedings of the 39th Hawaii International Conference on System Sciences - 2006




covers building networks, installing...
Proceedings of the 39th Hawaii International Conference on System Sciences - 2006




include the decision alternatives. W...
Proceedings of the 39th Hawaii International Conference on System Sciences - 2006




the software perspective may be limi...
Proceedings of the 39th Hawaii International Conference on System Sciences - 2006




module for implementation, and finan...
Proceedings of the 39th Hawaii International Conference on System Sciences - 2006




currently evaluated cluster. The “Mo...
Proceedings of the 39th Hawaii International Conference on System Sciences - 2006




awareness of the complexity of the w...
Proceedings of the 39th Hawaii International Conference on System Sciences - 2006




possible services, companies must ma...
Upcoming SlideShare
Loading in …5
×

Supporting the Module Sequencing Decision in the ERP ...

1,476 views

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
1,476
On SlideShare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
41
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Supporting the Module Sequencing Decision in the ERP ...

  1. 1. Proceedings of the 39th Hawaii International Conference on System Sciences - 2006 Supporting the Module Sequencing Decision in the ERP Implementation Process Petri Hallikainen, Harri Kimpimäki and Hannu Kivijärvi Helsinki School of Economics P.O. Box 1210, 00100 Helsinki, Finland, E-mail: Petri.Hallikainen@hkkk.fi, Harri.Kimpimaki@pp.inet.fi, Hannu.Kivijarvi@hkkk.fi Abstract assumed that the standard software package more or less fits all organizations, and all units inside one organization, An important part of the Enterprise Resource Planning which creates risks for ERP investments. This assumption (ERP) system implementation process is the decision, can be considered dangerous, since for some companies the which modules are implemented and in which order. We competitive advantage may come from their idiosyncratic posit that the decision of the module sequencing involves a business processes [3]. Thus, the business implications of myriad of issues, such as, investment costs and risks, key adopting ERP systems should be fully understood early business requirements and solution constraints. We enough in the acquisition process. ERP systems are truly develop and test an ANP (Analytic Network Process) strategic investments and their success is ultimately model to support the sequencing decision. Through the measured in their effect on the conduct of business ANP analysis a preferred module implementation sequence processes and may directly influence the business success is achieved in the case company. Moreover, the practical of a company. applicability of the method is discussed in the paper. In theory, the business processes are modified to fit the systems, since customizing the system is considered too expensive and too risky. But in practice both business 1. Introduction processes and ERP systems are suspects to be changed during the implementation process. There are, however, a Contemporary organizations operate in a global lot of problems reported in the implementation of these environment that is characterized by constant change and systems, and even the objectives of the system investments different cultural settings. Dividing the company’s may evolve during the process [6, 16, 26]. Technology and operations across the globe creates challenges for organization are in a continuous interaction with each other managing the corporate data. To avoid the fragmentation of during technology adoption and use, according to the operational data in different business units, companies Orlikowski [17]. The alignment of the needs of business implement enterprise wide information systems, such as functions with IT functions is a dynamic process, where the ERP (Enterprise Resource Planning) systems that can interactions are bi-directional: business affects IT and vice increase control and create the picture about the corporate versa. functions on the aggregate level. The alignment of the business and IT functions can be Typically, ERP-systems support Financials, Human addressed both at the strategic and tactical levels. The Resources, Operations and Logistics, and Sales and strategic decisions concerning ERP projects include, for Marketing functions [3]. Recently also small and medium example, which modules are implemented and how much sized enterprises have started adopting ERP-systems and business process re-engineering is conducted. On the the market is expected to grow in the future. tactical level, companies have to make decisions on issues, The objective of ERP systems is to conduct the such as, using internal or external resources for business processes more efficiently and effectively, in an implementation, how many and which modules are integrated manner, in organizations. They are a way to implemented in the first phase, and in which order the control functions of the organization and to make all the modules are implemented. We argue that the decision of units perform in a more uniform way. the sequence of ERP module implementation is one of the Dramatic operational improvements are possible, crucial decisions that determine whether the business through integration and redesigning of processes. It is 0-7695-2507-5/06/$20.00 (C) 2006 IEEE 1
  2. 2. Proceedings of the 39th Hawaii International Conference on System Sciences - 2006 benefits of the ERP investment are achieved. Companies transformation into evolutionary or revolutionary and must consider which modules are the most important in identified five transformation levels: terms of business value and have to be implemented first. localized exploitation (evolutionary) Additionally, they have to assess the risks involved in the internal integration (evolutionary) implementation of the different modules. There may also business process redesign (revolutionary) be organizational and environmental constraints, such as business network redesign (revolutionary) lack of resources or knowledge that may cause a need to business scope redefinition (revolutionary) postpone the implementation of some modules. Since the decision problem of the module sequence The localized exploitation means implementing involves a myriad of organizational and technical issues, standardized functional information systems with minimal which are interconnected in networked manner, we propose changes to the business process. Internal integration means the Analytic Network Process (ANP) method [21] to be developing a common IT platform to integrate corporate applied to solve the decision problem. ANP has been information systems and additionally it involves integrating applied to a variety of decision problems, including, for the interdependent business processes. On the example, evaluating componentized Enterprise Information revolutionary levels, business processes may be totally Technologies [22] and R&D project selection [13]. The ANP redesigned to be more efficient, the co-operation between methodology includes defining the decision-making criteria business partners can be tightened with the help of and their interrelationships as well as the decision information technology and it can even be considered alternatives. ANP methodology supports complex, whether information technology would play a role in networked decision-making with various intangible criteria. changing the business scope of the company. It improves the visibility of the decision-making process In the case of the ERP systems, only focusing on the and generates the priorities between the decision operational efficiency would probably not deliver the alternatives. Therefore, we consider the ANP methodology maximum value of the investment, but rather the business valuable for supporting the ERP module sequencing process development should also be considered. A clean decision. slate approach to business process development is, In the next section we review the literature on ERP however, very rarely possible and it must be considered adoption and business process development to create the carefully how much the existing processes can be changed conceptual basis for understanding ERP adoption [4]. In some situations, information technology can, processes. Moreover, we discuss the implementation however, be the actual driver for change and may make strategies for ERP implementation. Section three describes changes possible that would not be possible without the IT the principles of the ANP method and the conduct of a case focus, because of the organizational resistance of change study where the method is implemented. Section four [12]. presents the results of the case study. Finally, section five When improving companies’ business processes with discusses the results and concludes the paper. information systems, the alignment process of IT and business is a dynamic and bi-directional process. The 2. ERP adoption process alignment process can be seen as a change management process interacting with three domains: information 2.1. Business Process Development and ERP systems, organizational processes, and organizational Adoption strategy [5]. In the case of ERP systems, organizations have to consider issues along these dimensions, such as, the In this section we briefly review the literature on the technical limitations of the software, how much tailoring business process development perspective on the adoption should be made to fit the systems into the organization, and of information technology, and its implications to ERP what kind of strategic business benefits are expected from adoption processes. the system investment. Information technology can help organizations make As to the expected benefits, ERP systems may bring their current business processes more effective or it can substantial operational benefits and, at best, they can also even enable the organization to redesign the business generate various strategic level benefits. Mirani and processes. Often information systems development projects Lederer [14] identified three sub-dimensions of strategic are part of some larger strategic business development benefits of information systems: competitive advantage, programs. Different projects have a varying degree of alignment, and customer relations. They maintained that business development involved, some IS projects may be competitive advantage benefits help companies introduce rather technically oriented but others may even involve radical changes to business processes and understood new product development or going to a new business area. alignment broadly to directly support organizational goals, Venkatraman [27] classified IT-enabled business help organization to create linkages with other 2
  3. 3. Proceedings of the 39th Hawaii International Conference on System Sciences - 2006 organizations, or enable it to respond faster to receptivity of the client system to a possible change in the environmental changes. These are all relevant strategic distribution and balance of social forces. Changing, or objectives for an ERP system investment. The array of moving, alters the magnitude, direction, or number of benefits expected from ERP systems can be classified into driving and resisting forces, consequently shifting the [24]: equilibrium to a new level. Refreezing reinforces the new operational (lower costs, shorter cycle-times, distribution of forces, thereby maintaining and stabilizing increased productivity, better customer service) the new social equilibrium. Kwon and Zmud [9] elaborated managerial (improved resource management, Lewin-Shein theory of change in their six-phase improved decision making and planning, improved implementation model as described in Figure 1. performance) As a response to the realized implementation problems strategic (support for business growth, support for with ERP systems, a number of factor and process models co-operation in business, creating business have been proposed to moderate these problems. The innovations, establishing cost-leadership, supporting factor models describe an extensive set of risk factors as product differentiation, establishing external well as critical success factors for ERP implementation connections) IT-infrastructure related (flexibility for business, lower IT costs, increased capability of the IT-infrastructure) organizational benefits (change in the way of working, common way of working, support for organizational learning, increased possibilities Figure 1. IS implementation model [9] projects [1, 8, 15, 25]. The basic for organizational influence, strategy behind the process models creating a shared vision, increased job satisfaction). varies from a detailed phase model to a big bang approach. Rajagopal [19] extended the process model proposed by In the next section, we discuss the critical issues in the Kwon and Zmud to the problems of the ERP ERP implementation process. implementation process and tied each phase of the general implementation model to the realm of the ERP 2.2. ERP implementation process implementation. Parr and Shanks [18] classify ERP implementations to three broad categories (comprehensive, ERP systems automate and integrate an organization’s middle road, and vanilla) and according to them ERP business processes and allow data and information sharing implementations differ with respect to the following across the different business functions. ERP characteristics: physical scope, BPR scope, technical implementation is a technical, economic, and scope, module implementation strategy, and resource organizational challenge. In the adopting organization, allocation. ERP implementation requires substantial business process Bancroft et al. [2] divided the ERP implementation changes at strategic, tactical as well as operational levels. It process into five successive phases: 1) focus, 2) as is, 3) to also requires decisions concerning software configuration be, 4) constructing and 5) testing, and actual to align the selected package with business demands implementation. In their model the key activities of the effectively. ERP implementation is usually an extensive ‘focus’ phase are the set-up of the steering committee, and costly process that takes time even years and most selection and structuring of the project team, development companies experience serious problems during the of the project's guiding principles and creation of a project implementation process. plan. The key activities of the ‘as is’ are the analysis of the Because ERP implementation is both an organizational current business processes, installation of the ERP, change process and an IS implementation process, the mapping of the business processes on to the ERP functions general models of organizational change and the general and training of the project team. The ‘to be’ phase involves models of IS/IT implementation process can be applied to high-level design, detailed design, and interactive the planning, execution, and evaluation of the ERP prototyping. The ‘construction and testing’ phase consists implementation. In the Lewin-Schein theory of change any of the development of a comprehensive configuration, the organizational change can be viewed as a three-step population of the test instance with real data, building and process consisting of unfreezing, moving (or changing), testing interfaces, writing and testing reports and, finally, and refreezing phases [10, 23]. Unfreezing increases the system and user testing. The ‘actual implementation’ 3
  4. 4. Proceedings of the 39th Hawaii International Conference on System Sciences - 2006 covers building networks, installing desktops and finally alternatives and other criteria. It is assumed that feedback managing user training and support. can better capture the complex direct and indirect effects of During the implementation process, different types of the interplay in organizational settings and hence allows decisions have to be made. Mabert et al. [11] recognize more systematic analysis of the decision situation. It the following seven key strategic decision variables in the allows the inclusion of both tangible and intangible criteria ERP implementation process: and the ratio scale measurements with pairwise Single ERP package versus multiple packages comparisons are used to capture the judgments of the Big-Bang or mini Big-Bang versus a phased-in decision makers. As a default structure, ANP offers four approach kinds of control criteria: benefits, costs, opportunities, and Number of modules implemented risks. These clusters of criteria can be used to make Order of implementation comparisons of outer or inner influences between the Modifications to system elements of the decision situation. Major reengineering upfront versus limited Technically, in ANP, the system structure is presented reengineering graphically and by matrix notations. The graphic An accelerated implementation strategy presentation describes the network of influences among the elements and clusters by nodes and arcs. The results of In the categorization above, attention is paid to the pairwise comparisons (weights in priority vectors) are modules implemented and to the order of implementation. stored to matrices and further to a super matrix consisting ERP packages are wide-scale products that cover all of the lower level matrices. After the super matrix is significant functions of organizations. ERPs are not, ‘normalized’ to be column stochastic arbitrary large however, monolithic, undivided giants, but rather they are number of powers of the matrix is taken. This is the constructed by a number of modules that are independent genuine idea and challenge in ANP. By taking powers of in the sense that their implementation order can be the matrix, the indirect effects of the feedback relations are determined relatively freely taking into account the cumulated towards the equilibrium. organizational requirements. Proper implementation of the Appropriate software (e.g. Super Decisions, ECNet) modules requires two decisions: 1) selection of the can support ANP methodology. ANP process typically modules and 2) sequencing the implementation order of the consists of the following six steps: modules. Both of these implementation decisions are Problem structuring: grounded on business goals and requirements, costs, and o Determine the logical grouping of the elements risks. Additionally, there can be some, for example, (clusters) in the problem to be modeled. technical solution constraints that affect the decisions. Model definition at upper level: Next, we propose a methodology for deciding the proper o Create the clusters. order to implement the selected modules. It is assumed Model definition at lower level: here that the initial decision of which modules are going to o Build the nodes (elements) within each cluster. be implemented is already done. Model construction: o Create the links between nodes in the same cluster 3. Research Methodology or in the other clusters. Data collection: 3.1. Analytic Network Process o Make judgments in the form of pairwise comparisons with respect to a controlling element. The Analytic Network Process (ANP) is a methodology System calculates priorities for decision elements. that extends the Analytic Hierarchy Process (AHP) to the Solution: problems with dependence and feedback between the o Synthesize to prioritize the alternatives with clusters of the decision situation. In ANP the hierarchical respect to the structure of the whole system. relations between criteria and alternatives are generalized to networks. ”Many decision problems cannot be structured The problem-structuring phase cannot be done hierarchically, because they involve the interaction and effectively without a deep understanding about the domain dependence of higher-level elements on lower-level in question. Theoretical or practical knowledge helps to elements. Not only does the importance of the criteria find the most essential issues and their relative determine the importance of the alternatives as in a significance. Typically the process starts from upper level hierarchy, but also the importance of the alternatives and continues towards details. themselves determines the importance of the criteria“[21]. The modeling process with an appropriate support Thus, in ANP the decision alternatives can depend on system continues with the definition of the key clusters. criteria and each other as well as criteria can depend on Some clusters are devoted to criteria and some of them 4
  5. 5. Proceedings of the 39th Hawaii International Conference on System Sciences - 2006 include the decision alternatives. When the clusters are business reasons. After careful investigations and ERP defined, the elements inside each cluster are identified. suite comparisons, Oracle eBusiness Suite was selected to After that, the relationships between the elements are be the preferred software to fulfill the various business defined by dichotomized fashion; there is a link between requirements better than competitors’ products or the two elements or there is not. legacy ERP. One of the authors worked as sales consultant In data collection, it is important to make the questions in this selection process. Because Oracle is offering a large in the right form. Alternatives are evaluated by the ERP suite of business applications, we considered the ANP importance with respect to a criterion but a criterion is methodology relevant for analytical ERP module evaluated by the dominance of an alternative. Similarly, sequencing decisions. Next, we will present the results of when making judgments about costs and risks, the the ANP analysis, including the ERP module sequencing questions are formulated asking which element is more for the case company. Also, the usability of the ANP costly or more risky. Fortunately, the construction of the methodology is discussed. super matrix and the process to synthesize are performed automatically by the support systems. 4. Research results 3.2. Case context for the ANP model 4.1. ANP model for ERP module sequencing The case organization is a global industrial The problem structuring for ERP module sequencing manufacturing company, which has been growing through produced the following logical grouping of the elements acquisitions. Meanwhile IT investments have been at quite (clusters) in the problem to be modeled (Figure 2): from moderate level. Therefore the company’s legacy systems the investment control perspective there are costs and risks, are rather heterogeneous. Even the newest and most and the key business requirements and solution constraints common legacy ERP software (referred as legacy ERP) represent the alignment perspective. Naturally, one cluster was not capable to respond the sales and operations includes the alternative modules. The model is designed planning requirements, which caused the business to with the Super Decisions ANP tool. consider a major investment into a new enterprise Goal for our ANP model is optimal ERP module information system. implementation sequence, and the alternative ERP modules European level program for reengineering of business as options for the implementation sequencing decision. The operations was initiated, including a new business implementation sequence is analyzed against the criteria of operations model, which requires large changes into the key business requirements, solution constraints, costs and enterprise information systems. Legacy ERP could be risks. In Super Decisions software all four criteria, the extended with Supply Chain Management (SCM) overall goal and the alternatives are called clusters. applications, but some of the major European business Clusters include sub-elements called nodes. In this model, units were not interested in investing into the somewhat the key business requirements, costs and risks are the old-fashioned legacy ERP, which should be further criteria directly connected to the goal of sequencing extended with SCM, CRM and EAM applications. Also alternative ERP modules. The solution constraints are American and Asia-Pacific business operations were having more complex relationships between the alternative interested in investing in the new ERP system for several modules and other criteria, because what is possible from Figure 2. High-level ANP model for ERP sequencing 5
  6. 6. Proceedings of the 39th Hawaii International Conference on System Sciences - 2006 the software perspective may be limited by the sometimes implementation: knowledge, process culture, localizations, conflicting business requirements, all bringing in some integration, services, module dependencies, data, networks, implementation costs and risks. Solution constraints are software tools/components, hardware configurations, environmental factors having loop back to themselves: usability and centralization/decentralization. The nodes in while considering ERP module implementation sequence the alternative eBusiness Suite modules cluster are limited one must phase ERP module sequence and elimination of to the 2 most relevant modules and the 7 most relevant solution constraints to achieve the possible future module domains totaling 9 possible candidates for ERP enterprise information system. With this ANP design we module implementation. The detailed ANP model is are trying to explicitly express that from the software point depicted in Figure 3. of view all business requirements can be solved, but from Next, we will discuss in more details the key business the enterprise information system point of view the process requirements and the solution constraints, which play a change from “AS-IS” to “TO-BE” as well as new vital role while prioritizing ERP modules for ERP knowledge requirements, changes in the data model and implementation. technology have complex and intertwining relationships, which should be taken into consideration while making 4.1.1. Key business requirements. The key business decision about ERP module sequence and scope. Solution requirements represent the benefits required from new ERP constraints are possible change management elements, system. These requirements should be initiated while which must be balanced while making ERP module making the ERP adoption decision, and the requirements decisions, because too much change will bring additional list should be maintained and referred to during the whole inertia, risks, delays and costs, which will consume more ERP implementation process. The requirements list should effort and resources than more modest space of change. contain all the key business requirements from strategic, Figure 3. Detailed ANP model for ERP sequencing tactical, operational and technical levels, and therefore the list might be quite long and contain even somewhat While making our ANP model definitions at the lower conflicting requirements. In our case company the list of level and building the nodes (elements) within each cluster, key requirements is impressive with 244 key business we have tied the model tightly to our case context. In the requirements (224 main requirements and 20 sub- key business requirements cluster there are 24 nodes, requirements) for the main process areas covering new which are derived directly from the most important process product development, forecast to finished goods, procure step for demand forecasting as documented in the software to pay, and order to cash processes. These requirements selection phase in the case company. The risks and costs of were generated while preparing the ERP adoption decision, the ERP project in the model, such as application and at that point of time the financial operations and complexity and vendor experience, reflect rather well other internal accounting processes where considered to be out- corporate wide software investments, such as the case of of-scope for this investment. But during the ERP software Web Content Management investments reported by acquisition phase it soon became obvious that all the major Hallikainen et al. [7]. The solution constraints cluster ERP vendors suggested financial operations as a default contains 12 nodes of possible practical constraints for ERP 6
  7. 7. Proceedings of the 39th Hawaii International Conference on System Sciences - 2006 module for implementation, and financial shared service data, networks, software tools/components, hardware center was suggested operational implementation model to configurations, usability, centralization/decentralization. improve the business case for the whole ERP investment. These are perhaps the most typical solution constraints that This way, the financial operations became included into the may eliminate, delay or decrease the benefit realization ERP implementation scope, but the actual key business despite of the technically optimal ERP system and requirements were never explicitly generated for this area. implementation efforts. For ANP purposes these 244 key business requirements are far too much for pairwise comparisons. Therefore we 4.2. Preferred ERP module sequence have focused on the core process for sales and operations planning as the primary factor for ERP module sequencing. Using the ANP model for the ERP module sequencing But even for this process there were 76 requirements and 8 one of the authors entered the pairwise comparisons into sub-requirements totaling 84 requirements, which would our Super Decision model using questionnaire have still generated rather extensive pairwise comparisons. comparisons. The data for this study is thus based on the Therefore we focused our ANP model on the first process step called as “demand management”. This process step contains 24 key business requirements ranging from new product development to key account management, from graphical user interface to analytical reporting requirements, from budgeting integration to master data management and customer collaboration. Because demand management is one of the most important strategic activities for the new business operations model, and because this selection of 24 key business requirements well represents Figure 4. Data entry example as questionnaire the whole variety of strategic, tactical, operational and author’s retrospective understanding about the preferences technical key business requirements for the case, we have of the ERP selection group in our case company. This selected these 24 key business requirements as nodes in our understanding about the case is collected through various ANP model. transactions during a one and a half year software selection and implementation phases. A data entry example as 4.1.2. Solution constraints The solution constraints questionnaire mode is presented in Figure 4. represent mostly intangible environmental realities that Data entry with this big ANP model is a rather tedious may limit the ERP implementation and the realization of process, which may cause data errors. To eliminate the the possible benefits enabled by the new ERP software. errors Super Decisions contains functionality to check Typically this kind of constraints can be related to internal sanity and consistency for data entries. Sanity check reports and/or external resources, services, capabilities, data about network calculation warnings and incomplete node models and relationships, which may require additional comparisons, which is valuable information to ensure that efforts, time and money to be converted into ERP all pairwise comparisons have been entered. Sanity check compatible model. In our case, we have listed 12 solution does not, however, analyze the data content, which may be constraints as node, which may bring in additional costs checked with various inconsistency tools. Inconsistency and compromise the possible ERP benefits required by the measures the logical inconsistency of judgments. In key business requirements. These solution constraints are general, the inconsistency ratio should be less than 0.1 to more often included as topics for change management be considered reasonably consistent [20]. First, we checked activities, which try to manage these constraints, risks and our data using the Super Decision function called “Most costs in a proactive manner. Our ANP model includes the Inconsistent”, which is available in the comparison mode to following solution constraints: knowledge, process culture, find out the most inconsistent value while comparing the localizations, integration, services, module dependencies, currently evaluated node against all the nodes in the 7
  8. 8. Proceedings of the 39th Hawaii International Conference on System Sciences - 2006 currently evaluated cluster. The “Most Inconsistent” function did not always seem to function with this big model, so this functionality in Super Decisions is for limited value. After fixing the most inconsistent data entries in those nodes where “Most Inconsistent” function worked we further analyzed our data using a tool called “Full inconsistency report” also available in the comparison mode. The full inconsistency report represents the calculated best values for the alternative module comparisons. Interesting best values were suggested for comparisons in the "KBR01 Statistical Figure 5. Overall synthesized priorities for ERP module sequencing demand generation" node in the "Alternative modules" cluster, where M05.4 DP is assessed These results mean that the prioritized ERP module to be extremely more important than M01 Intelligence. implementation sequence for our customer case is: Because our initial data entry mode was the questionnaire 1. M05.4 DP: Demand Planning from M05 Supply we entered the highest possible value 9 for Demand Chain Planning suite Planning, but the software calculates the best value for this 2. M02 Marketing and Sales: EBS/CRM Marketing comparison to be 23.306789. According to tutorial of Saaty and Sales suite [20] for Super Decisions: ‘When a number greater than 9 3. M03 Order Management: EBS/ERP Order is suggested by the inconsistency checking, this means that Fulfillment suite the elements you have grouped together are too disparate. 4. M05.5 CP: Collaborative Planning from M05 You may input a number greater than 9, but perhaps you Supply Chain Planning suite should re-organize your structure so that such a 5. M04 Logistics: EBS/ERP Inventory & comparison is not required. It will do no great damage to Transportation modules allow numbers up to 12 or 13, but you should not go much 6. M01 Intelligence: EBS intelligence and analytical beyond that.’ This result suggests that we should not reporting compare the reporting module M01 Intelligence to the 7. M11 Product Lifecycle Management: EBS/PLM actual data processing module M05.4 DP, which is a valid modules statement for this particular key business requirement 8. M15 Customer Data Management: EBS/CRM regarding statistical demand generation. In general, one Master Data might expect that each alternative ERP module should 9. M12 Financials: EBS/Financials modules contain relevant reporting capabilities, but in practice this In this list M05.4 Demand Planning and M05.5 is not necessarily true: even modern ERP software modules Collaborative Planning are modules included in Oracle’s include quite limited reporting functions for a limited set of Supply Chain Planning suite for Advanced Planning and transactional data. Often, more advanced aggregative and Scheduling/APS. The rest of the modules are actually analytical reporting requirements may be solved with module groups or domains containing several software separate reporting modules, tools and datawarehouse modules. This list gives one possible sequence for the ERP solutions. module implementation, but it does not give actual It should also be noted that when using Super Decisions suggestion for the scope of the ERP implementation data entry mode may have influence on results: in matrix project. It’s interesting to note that even the three first and direct data entry modes Super Decisions enable direct modules represent various application areas: CRM, SCM data entry with decimals, in graphic and verbal data entry and ERP. This finding supports company’s decision to mode graphical user interface may be used to enter decimal select full ERP suite instead of best of breed APS or SCP values, but in the questionnaire mode data entry is done approach, because the typical planning applications do not using full digits from 1 to 9. In our case, we used the include modules or functionality for master data matrix mode to enter decimal values while fixing the most management nor for demand data standardization. But inconsistent values. implementation of the full ERP suite of course activates an After these data entries we were able to report the array of solution constraints, which may consume a lot of following overall synthesized priorities for alternative ERP resources. Therefore, expectation management will be an modules as depicted in Figure 5. important part of internal communication to increase the 8
  9. 9. Proceedings of the 39th Hawaii International Conference on System Sciences - 2006 awareness of the complexity of the wall-to-wall ERP in the case company. We believe that the process presented implementation project. Patience is required also from in the paper represents a relevant model for communicating management while realizing the expected business benefits and managing the key business requirements and the from a full scale ERP investment, because ERP solutions solution constraints as well as the costs and the risks when may require fine-tuning, new competencies and considering the module sequencing. organizational learning before the full payback may be The ANP methodology itself seems to be applicable for perceived. We argue that the decision-makers should this kind of decision-making, but ANP model easily evaluate various combinations and ERP module generates too many pairwise comparisons to be practically configurations before running into ERP implementation: executable for practitioners without scientific interests. But there are other options than implementing only the top at the same time ANP approach enforces the analytical prioritized ERP modules or implementing all the relevant comparison between the alternatives as well as the decision ERP modules from 1-9 at the same time. In this case, one visibility for external auditors and boards investing huge possible option for solution phasing might be the amounts of money in the ERP software. A possible concern implementation in three different ERP module groups: regarding the ANP model abstraction level is related to the demand forecasting and fulfillment history related modules alternate ERP modules: at strategic level alternate ERP ranked between 1-5, master data and reporting modules modules might be grouped into module groups or system ranked between 6-8, and financials as a separate module domains, but at tactical and operative levels the decision ranked as the least important. Again, these ERP module alternatives might be covered at the individual ERP module groups might be implemented in various sequences: if level. In our model, we did compromises while including quick benefits are preferred, the implementation might start both key modules and related module domains, which from demand related modules; if risk avoidance is resulted in some comparisons to compare apples to preferred, implementation might start from financials; if all grapevines. To get the full benefit from the ANP approach, benefits are preferred and additional investments are done the decision alternatives should be analyzed at module to change management, then implementation project might level, but this would make the pairwise comparisons with try to implement all the possible modules at the same time. the full key business requirement list a very demanding and Our ANP model does not, however, enable analysis using tedious process. logical module combinations, which would require another The benefits from utilizing the ANP model for ERP ANP model including various ERP module combinations module sequencing do not only come from the explicit as alternatives for decision-making. More detailed analysis priorities between the alternative modules. Major value can inside supplier’s module list may also be required, because come from the knowledge transfer during the ANP data there may be several modules available for the same set of collection process, because answering to pairwise data or same core operations, but functionality and comparisons requires an enhanced dialog between the ERP usability between alternative modules may differ. vendor, the IS department and the business units. ERP Therefore ERP module sequencing is not a simple task: it implementation process is more knowledge, resource, requires patience and careful analysis inside and between requirements and change management challenge than key business requirements, alternative modules and technical IT system deployment. Thus, issues regarding IT solution constraints. and business alignment, as well as IT governance might At the high-level these results are well aligned to our surface during the data collection process. Key business key business requirements. Demand forecasting and requirements may be biased, current understanding about generation related modules are ranked as the most solution constraints may be limited, and priorities may be important, while demand related master data management unintentionally sub-optimized because of bounded modules are ranked as less important. Finally, the rationality and past experiences from non-integrated Financials module gets the lowest priority, which is a valid operations and systems with limited data models. Therefore research result, because the Financials area was originally our decisions can never be fully optimized, but at least defined to be out of the scope for this ERP investment. But these decision elements of behavioral analytics can be these results do not give any absolute recommendation for documented and communicated in structured manner this case company, because we have used simplified and through the data collected in pairwise comparisons. We theoretical model with limited set of key business could have used sensitivity analysis in Super Decisions to requirements. elaborate how sensitive our results were for chancing priorities, but this field of behavioral analytics opens own 5. Discussions and conclusions discourse, which we have left for future research. Our ANP approach for ERP module sequencing might As a result of this research we achieved an ANP model be translated towards the service-oriented IS architecture. for the ERP module sequencing and the preferred sequence When prioritizing between future information needs and 9
  10. 10. Proceedings of the 39th Hawaii International Conference on System Sciences - 2006 possible services, companies must make difficult [10] Lewin, K. (1952), Group Decision and Social Change, In comparisons between current and future information needs Newcomb and Hartley (eds.) Readings in Social Psychology, (key business requirements), as well as current and future Holt, New York. [11] Mabert, V. A., Soni, A. and Venkataramanan, M. A. (2003), information services (alternative services), without fully Enterprise resource planning: Managing the implementation understanding the differences between the data models and process, European Journal of Operational Research, 146, pp. the service integration supported by the heterogeneous 302-314. service providers and information sources (solution [12] Markus, M.L. (2004), Technochange Management: Using IT constraints). This opens new research opportunities to to Drive Organizational Change, Journal of Information improve our initial ANP model in more heterogeneous Technology, Vol. 19, pp. 3-19. information service environments covering composite [13] Meade, L.M. and Presley, A. (2002), R&D Project Selection applications, but at the same time it would make the ANP Using the Analytic Network Process, IEEE Transactions on model abstraction even more demanding task, when Engineering Management, Vol. 49, No. 1, pp. 59-67. [14] Mirani, R. and Lederer, A. (1998), An Instrument for individual information services would be added to Assessing the Organizational Benefits of IS projects, Decision alternative decisions in addition to module domains, Sciences, Vol. 29, No. 4, Fall 1998, 803-838. module combinations and individual modules. [15] Nah, F.F.H. and Lau, J.L.S. (2001), Critical Factors for To conclude, for practical usability, the abstraction successful Implementation of Enterprise Systems, Business level of alternative ERP modules for ANP model should be Process Management Journal, Vol. 7, No. 3, pp. 285-296. carefully considered and the analysis should focus on a [16] Nandhakumar, J., Rossi, M. and Talvinen, J. (2003), rather limited set of the decision-making domain to make Planning for ‘drift’?: implementation process of enterprise the actual results of ANP assessment useful. But ANP resource planning systems, Proceedings of the HICSS-36, Big process itself would be valuable for enhanced knowledge Island, Hawaii, USA. [17] Orlikowski, W.J. (1992), The Duality of Technology: transfer and improved communications regarding ERP Rethinking the Concept of Technology in Organizations, module sequencing decisions. Organization Science, Vol. 3, No. 3, pp. 398-427. [18] Parr, A. N. and Shanks, G. (2000), A Taxonomy of ERP 6. References Implementation Approaches, Proceedings of the HICSS-33, Island of Maui, Hawaii, USA. [1] Al-Mashari, M., Al-Mudimigh, A. and Zairi, M. (2003), [19] Rajagopal, P. (2002), An innovation-diffusion view of Enterprise Resource Planning: A Taxonomy of Crititcal Factors, implementation of enterprise resource planning (ERP) systems European Journal of Operational Research, Vol. 146, pp. 352- and development of a research model, Information & 364. Management, 40, pp. 87-114. [2] Bancroft, N, Seip, H. and Sprengel, A. (1998), Implementing [20] Saaty, R.W. (2003), The Analytic Hierarchy Process (AHP) SAP R/3, Manning Publications, Greenwich. for Decision Making and The Analytic Network Process (ANP) [3] Davenport, T.H. (1998), Putting the Enterprise into the for Decision Making with Dependence and Feedback, a tutorial Enterprise System, Harvard Business Review, Jul-Aug, pp. 121- for Super Decisions 131. [21] Saaty, T. L. (2001), The Analytic Network Process, RWS [4] Davenport, T.H. and Stoddard, D.B. (1994), Reengineering: Publications, Pittsburgh Business Change of Mythic Proportions?, MIS Quarterly, Vol. [22] Sarkis, J. and Sundarraj, R.P. (2003), Evaluating 18, No. 2, pp. 121-127. Compnentized Enterprise Information Technologies: A [5] Earl, M.J., Sampler, J.L. and Short, J.E. (1995), Strategies Multiattribute Modeling Approach, Information Systems for Business Process Reengineering: Evidence from Field Frontiers, Vol. 5, No. 3, pp. 303-319. Studies, Journal of Management Information Systems, Vol. 12, [23] Schein, E. H. (1961), Management Development as a No. 1, pp. 31-56. Process of Influence, Industrial Management Review, 2, pp. 59- [6] Glover, S.M., Prawitt, D.F. and Romney, M.B. (1999), 77. Implementing ERP, Internal Auditor, Vol. 56, No. 1, pp. 40-47. [24] Shang S. and Sheddon, B. (2002), Assessing and Managing [7] Hallikainen, P., Kivijärvi, H. and Nurmimäki, K. (2002), the Benefits of Enterprise Systems: the Business Manager’s Evaluating Strategic IT Investments: An Assessment of Perspective, Information System Journal, Vol. 12, pp. 271-299. Investment Alternatives for a Web Content Management System, [25] Sumner, M. (2000), Risk Factors in Enterprise-Wide/ERP Proceedings of the HICSS-35, Big Island, Hawaii, USA projects, Journal of Information Technology, Vol. 15, pp. 317- [8] Hong, K.W. and Kim, Y.G. (2001), The Critical Success 327. Factors for ERP Implementation: an organizational fit [26] Themistocleous, M., Irani, Z. and O’Keefe, R.M. (2001), perspective, Information & Management, Vol. 40, pp. 25-40. ERP and Application Integration – Exploratory Survey, Business [9] Kwon, T. H. and Zmud, R. W. (1987), Unifying the Process Management Journal, Vol. 7, No. 3, pp. 195-204. fragmented models of information systems implementation, in [27] Venkatraman, N. (1994), IT-Enabled Business Boland, R. J. and Hirscheim (eds.), Critical Issues in Information Transformation: From Automation to Business Scope Systems Research, John Wiley & Sons Ltd., pp.227-251. Redefinition, Sloan Management Review, Vol. 35, No. 2, pp. 73- 87. 10

×