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European and Mediterranean Conference on Information Systems 2008 (EMCIS2008)

May 25-26 2008, Al Bustan Rotana Hotel, Dubai

A FRAMEWORK FOR THE IMPLEMENTATION OF ERP TO


IMPROVE BUSINESS PERFORMANCE: A CASE STUDY
Almahdi .M. S. Ibrahim, Management and Management Research Institute, Salford
Business School, Salford University, Greater Manchester, UK

John. M. Sharp, Management and Management Research Institute, Salford Business School,
Salford University, Greater Manchester, UK
j.m.sharp@salford.ac.uk

Aris. A. Syntetos, Management and Management Research Institute, Salford Business


School, Salford University, Greater Manchester, UK

Abstract
This paper presents a theoretical framework that has been developed which portrays the “soft”
critical success factors in the process of implementing an ERP system. It was developed
through a critical synthesis of the relevant literature. The results of the implementation
framework, being tested in a case study Libyan Oil company, are presented and some
conclusions drawn.

Keywords Enterprise Resource Planning, Implementation, Framework, Soft issues.

1 INTRODUCTION
Enterprise Resource Planning (ERP) system solutions are currently in high demand by both
manufacturing and service organisations, because they provide a tightly integrated solution to
an organisation’s information system needs. ERP allows employees to manage their company
with one system that integrates the entire business process and creates an enterprise-wide
view of significant corporate information. Today organisations face a new challenge of
increasing competition, expanding markets and enhancement in customer expectations
(Umble et al., 2003) and thus ERP systems have been developed to provide a total business
system (Huang, et al, 2001) in order to improve business performance. ERP software is a set
of applications that links systems such as manufacturing, financial, human resources, data
warehousing, sales force, document management, and after-sales service together, and helps
organisations handle jobs such as order processing and production scheduling. O’Kane,
(2004) points out that the attention of researchers in implementing ERP solutions should shift
from the “hard” 1 elements to the “soft” 2 issues related to such an implementation, i.e. address
human-related and organisational culture problems, when trying to explain the reasons for
ERP implementation failures. Moreover, an effective ERP implementation requires
appropriate managerial interventions as part of the implementation process. In this regard, our
study considers soft ERP related requirements in the process of introducing such a system.

2 HIGH PERFORMANCE IN ORGANISATIONS


Castka, et al (2001, p124) cite that according to Stott and Walker, performance, in general,
can be determined by three factors:
1
The use of word “hard” implies issues of a technical nature.
2
The use of word “soft” implies issues related to strategy and people’s nature.
Almahdi .M. S. Ibrahim 1
A FRAMEWORK FOR THE IMPLEMENTATION OF ERP TO IMPROVE BUSINESS PERFORMANCE: A CASE STUDY
European and Mediterranean Conference on Information Systems 2008 (EMCIS2008)
May 25-26 2008, Al Bustan Rotana Hotel, Dubai

ƒ ability
ƒ motivation
ƒ working environment

and further, that this can be expressed by the equation:


Performance = ability x motivation x environment

Uden (2005) demonstrated that there are nine identified areas which contribute to influencing
an organisation’s ability to achieve high performance, shown in Table 1, “which is based on
the idea that certain types of behaviour will lead to certain types of results”, and that it is
people who are the main factors, so it is necessary that the working environment is right and
that people are managed in a way that ‘brings out their best’ (Mintzberg (2004, p12), thus
improving morale and commitment, while encouraging them to manage the organisation’s
processes in a way that will increase the level of performance and achievement.

Areas affecting performance


Leadership
People
Policy and Strategy
Partnerships and Resources
Processes
People Results
Customer Results
Society Results
Key Performance Results
Table 1. Areas affecting Organisational high performance (Source: Uden, 2005)

According to Colenso (see Castka et al, 2001), the preconditions to high performance are such
things as purpose, empowerment, support and objectives, with characteristics being things
such as interpersonal skills, participation, decision making, creativity and managing the
external environment. Arnett et al (2002, p90) say that emotions, for example pride, have
been linked to high quality service delivery and employees ‘going out of their way’ or
‘beyond the call of duty’.

Uden (2005) has identified that many authors say that the characteristics of a learning
organisation lead to high performance, and that according to Ford (see Uden, 2005),
“a learning enterprise is one where individuals, teams and the enterprise itself are
continually learning”.

According to Gollan, (2005, p26), overall, the sustainability of high performance work
systems is predicated on organisations recognising the needs of employees and implementing
sustainable policies and practices to reinforce its values and principles through greater
employee involvement and participation and also, by acknowledging the importance of
Almahdi .M. S. Ibrahim 2
A FRAMEWORK FOR THE IMPLEMENTATION OF ERP TO IMPROVE BUSINESS PERFORMANCE: A CASE STUDY
European and Mediterranean Conference on Information Systems 2008 (EMCIS2008)
May 25-26 2008, Al Bustan Rotana Hotel, Dubai

employee satisfaction and commitment through the development of integrated employee


consultation, organisational change, work and life policies, workplace institutions and
comprehensive career development programs. Huang, et al, (2001) pointed out that ERP
systems have been developed to provide a total business system in order to improve business
performance whilst Markus et al (2000) pointed out that companies experience problems at
all phases of the ERP system life cycle. The factors that affect these problems are of interest
to this research and are collated in the next section.

Soft Factors of ERP Implementation


There are numerous soft factors, cited in the literature, regarding ERP implementation. These
factors, often referred to as critical success factors (CSF) are as Rockhart (1979) explained are
“areas of activity that should receive constant and careful attention from management”, have
been classified into three major groupings of strategy, People and Organisational and are
discussed in detail by Ibrahim (2007) and summarised in Table 2.

Type Factors Key Authors


Soft Factors Top management (Bingi et al.,1999; Holland and Light, 1999; Sumner,
(Strategy) commitment 1999; Gupta 2000; Sarker and Lee, 2000; Rao, 2000;
Huang and Palvia, 2001; Aladwani, 2001; Chen
2001; Dong 2001; Soliman et al.,2001; Nah et al.,
2001; Krammergaard and Rose 2002; Al-Mashari
2002; Kuruppuarachchi et al., 2002; Al-Mashari et
al., 2002; Al-Mashari, 2002; Sarker and Lee 2002;
Muscatelloet et al., 2003; Al-Mashari, 2003; Zhang
et al,. 2003; Marble 2003; Voordijk et al., 2003;
Umble et al., 2003; Ferrario and Montagna, 2004;
and James, 2004).
ERP strategy (Davenport, 1998; Holland and Light 1999;
Aladwani, 2001; Davenport, 2000; Al-Mashari et al.,
2003; and Umble et al., 2003).
Clear goals, focus (Holland and Light, 1999; Nah et al., 2001;
and Kuruppuarachchi et al., 2002; and Umble et al.,
scope 2003).
Legacy systems (Holland and Light 1999; Markus et al (2000); Nah et
management al., 2001; Reimers, 2002; Al-Mashari et al., 2003;
and Ferrario and Montagna, 2004).
Soft Factors Training and (Davenport, 1998; Bingi et al., 1999; Sumner, 1999;
(People) education Gupta, 2000; Rao, 2000; Rao, 2000; Zhang et al.,
2001; Mabert et al., 2001; Aladwani, 2001; Al-
Mashari, 2002; Kuruppuarachchi et al., 2002;
Gyampah and Salam, 2003; Umble et al., 2003;
Voordijk et al., 2003; Al-Mashari et al,. 2003;
Mandal and Gunasekaran, 2003 and James, 2004).
Employees (Bingi et al., 1999; Trimmer et al., 2002; Mandal and
attitude Gunasekaran, 2003; and Ferrario and Montagna,
2004).

Almahdi .M. S. Ibrahim 3


A FRAMEWORK FOR THE IMPLEMENTATION OF ERP TO IMPROVE BUSINESS PERFORMANCE: A CASE STUDY
European and Mediterranean Conference on Information Systems 2008 (EMCIS2008)
May 25-26 2008, Al Bustan Rotana Hotel, Dubai

Empowerment (Sarker and Lee, 2000; Mabert et al., 2001; and


Aladwani, 2001).
Project team (Bingi et al., 1999; Sumner, 1999; Rao,
2000; Markus et al (2000); Mabert et al., 2001; Nah
et al., 2001; Reimers, 2002; Umble et al., 2003;
Zhang et al,. 2003; Sarker and Lee, 2003; Marble,
2003; and Ferrario and Montagna, 2004).
User involvement (Markus et al (2000); Marble, 2003; Zhang et al,.
and satisfaction 2003; Mandal and Gunasekaran, 2003; Marble, 2003;
and Ferrario and Montagna, 2004).
Soft Factors Organisational (Davenport, 1998; Summner, 1999; Huang and
(Organisation culture Palvia, 2001; Nah et al., 2001; Zhang et al, 2003;
al) Al-Mashari et al., 2003; Ferrario and Montagna,
2004; O’Kane, 2004; and James, 2004).
Effective (Holland and Light 1999; Sumner, 1999; Mashari and
communication Zairi, 2000; ; Sarker and Lee, 2000; Aladwani, 2001;
Nah et al., 2001; Kuruppuarachchi et al., 2002; Al-
Mashari et al., 2003; Al- Mandal and Gunasekaran,
2003; and Ferrario and Montagna, 2004).
Computer culture (Markus et al (2000); Huang and Palvia, 2001)
Effective project (Holland and Light, 1999; Al-Mashari and Zairi,
management 2000; Gupta, 2000; Markus et al (2000); Nah et al.,
2001; Krammergaard and Rose, 2002; Al-Mashari,
2002; Remers, 2002; Al-Mashari, 2003; Marble,
2003; Al-Mashari et al., 2003; Zhang et al,. 2003; Al-
Mashari, 2003; Umble et al., 2003; and Mandal and
Gunasekaran, 2003).
Change (Holland and Light, 1999; Al-Mashari and Zairi,
management 2000; Markus et al (2000); Nah et al., 2001; Mabert
strategy et al., 2001; Aladwani, 2001; Mandal and
Gunasekaran. 2003; and James, 2004).
Process (Bingi et al., 1999; Sumner, 1999; Al-Mashari and
management Zairi, 2000; Markus et al (2000); Nah et al., 2001;
Huang and Palvia, 2001; Zhang et al, 2003; Al-
Mashari et al., 2003; Mandal and Gunasekaran,
2003; and James, 2004).
IT maturity (Markus et al (2000);Huang and Palvia, 2001).
Table 2. Soft Factors of ERP Implementation

3 THE PROPOSED THEORETICAL FRAMEWORK


The implementation of an ERP system in an organisation is very complex such that many
researchers have proposed stage models of ERP implementation (Bancroft et al.1998;
Langenwalter, 2000; Davenport, 2000; Mandal and Gunasekaran, 2003; Umble et al., 2003;
and Gupta et al., 2004) in order to provide guidelines for a successful implementation.

Collis and Hussey (2000) stated that a theoretical framework is a collection of theories and
models from the literature. It is a logically developed, described, and elaborated network of
Almahdi .M. S. Ibrahim 4
A FRAMEWORK FOR THE IMPLEMENTATION OF ERP TO IMPROVE BUSINESS PERFORMANCE: A CASE STUDY
European and Mediterranean Conference on Information Systems 2008 (EMCIS2008)
May 25-26 2008, Al Bustan Rotana Hotel, Dubai

associations between the variables deemed relevant to the problem situation, and which have
been identified through such processes as interviews, observations, and literature survey
(Sekaran, 2000). The theoretical framework to be used for the purposes of this research has
been developed based on an extensive review of the literature. It comprises strategy, people
and organisational critical success factors and attempts to relate them to various
implementation stages as those identified in Table 2.

The theoretical framework (Figure 1) is represented by three main sets of factors, namely
strategy related factors (top management commitment, clear goals focus and scope, legacy
systems, and ERP strategy), people related factors (training and education, users involvement,
employee’s attitude and project team) and organisational related factors (effective project
management, process management, change management strategy, IT maturity, computer
culture, empowerment, organisational culture, and communication).

No attempts have been made in the academic literature to link any soft critical success factors
to the various ERP implementation related stages. A theoretical implementation process was
identified by Ibrahim (2007) such that it is suggested that there is an explicit linkage between
factors and ERP implementation stages. Figure 1 shows the proposed theoretical framework
for ERP implementation.

People Organisational
Factors Factors
Strategy
Factors

Feasibility Planning Selecting Pre- Implementation Post-


studies stage stage implementation stage implementation

Successful Implementation of ERP Project

Figure 1. The Theoretical Framework

4 RESEARCH METHODOLOGY
The empirical data collected for the purposes of this research comes from one case study
conducted in a Libyan oil company. Qualitative data collection methods (mainly semi-
structured interviews) were utilised along with observations and collection of supporting
documentation. The interviews processes relate to the Trust-Confidence-Distrust (TCD)
framework of Gans et al (2003) which was developed to model relationships between
different groups in an organisation/social network. This framework was used to structure the
interview sessions in order to highlight important soft issues that affect the implementation of
Almahdi .M. S. Ibrahim 5
A FRAMEWORK FOR THE IMPLEMENTATION OF ERP TO IMPROVE BUSINESS PERFORMANCE: A CASE STUDY
European and Mediterranean Conference on Information Systems 2008 (EMCIS2008)
May 25-26 2008, Al Bustan Rotana Hotel, Dubai

the ERP modules in this case study. The interviewees were general managers, middle
managers, IT technicians and end users from the different departments within the company
under concern. The empirical data from the case study was collated to see how the three
factors of strategy, organisational and people affect the implementation stages of the
framework. The results confirmed the validity of the proposed framework and enabled
insight to be gained into other issues of particular importance to the process of implementing
an ERP system.

5 THE CASE STUDY COMPANY


The case study was in an oil company in Libya which has adopted several ERP modules in
several functions. The company has broken down ERP packages in modules that handle
several functional departments including accounting, finance, human resource and material
management and they left the rest of the functions to be installed in future.

The Case Study Findings


• Strategy Factors
Top management provided all human and financial resources for successful implementation
of ERP, without their involvement and support, the company would not implement the ERP
system. They provided the necessary resources, leadership for ERP implementation, clear
directions of the project, training and their role extend to the post implementation stage. There
was a strategy for ERP implementation and clear goals. The business processes were clearly
reengineered before ERP project started, the implementation approach was step-by-step, the
majority of employees were well trained, and the configuration process was created to allow
the company to save time and money. The legacy system at the company was not complex,
because the company has common business processes and a simple technical architecture.
Therefore, the amount of technical and organisational changes was low.

• People Factors
The end users were involved in the ERP project by participating in the system development
and implementation processes in the early stages, involved in defining the company
information system needs and requirements and the company collected end user ideas
regarding the ERP project. There was executive sponsorship available to give users who did
not have the right skills useful feedback about the ERP project. There was resistance to
change from employees in the early stage of the ERP implementation because of the lack of
awareness of the ERP system through employees’ lack of understanding of the strategic
purposes of ERP project. Attitudes changed when top management gave more explanation
about ERP and when employees started to have training about the ERP system. The
implementation team was mixed of internal staff and consultants. Training and education
regarding the ERP system started at the beginning of the project for some selected employees;
this kind of training was about how the system would work and how it would change the
different business processes. Employees received, from the early stages of the ERP project,
different kinds of training in the company as well and training tools were provided in hard
copies for individual training.

• Organisational Factors
A project management unit was established and a project manager was selected from the
better employees. People in project management were given responsibility and the
implementation plan was clearly defined. The ERP system was involved in reengineering the
existing business processes. The business processes were analysed to identify the potential
Almahdi .M. S. Ibrahim 6
A FRAMEWORK FOR THE IMPLEMENTATION OF ERP TO IMPROVE BUSINESS PERFORMANCE: A CASE STUDY
European and Mediterranean Conference on Information Systems 2008 (EMCIS2008)
May 25-26 2008, Al Bustan Rotana Hotel, Dubai

chances of re-engineering. To follow the new system the main business processes were
redesigned and developed to support a variety of organisational structures. A culture for
introducing the new system was created by empowering employees, getting employee
involvement and training and education. Moreover, the main method for informing employees
regarding the ERP project was carried out through personal communication by the manager.
IT maturity and computer culture were perceived to be at the required level. The relevant
qualifications and experience of the employees were also adequate, so that both the IT
maturity and computer culture were helpful for the necessary levels for ERP implementation
success.

The Company’s Unique Soft ERP Implementation Factors


It became evident from the interviewees that they reported that the company provides no
incentives to encourage the employees to increase their proficiency and to push them to
introduce modern techniques, such as the ERP system, into their company. They reported that
there also a very important and impressive factor which is directly related to the introduction
of ERP system to the oil company. This factor is the National Organisation that controls all
the activities related to the oil companies and has a direct connection to the development of
systems, regulations and laws which organise oil companies. The interviewees also mentioned
that such regulations and laws had not changed or undergone development for many years.
The interviewees also stated that experience of working with similar software and selecting an
ERP software system, and vendor, are very important factors for successful implementation of
an ERP system. These results are discussed in more detail in Ibrahim (2007).

6 CONCLUSIONS
Soft ERP implementation factors were identified in the case study company which supported
the key elements of the theoretical framework, however several unique soft implementation
factors were also identified (described in the previous section). From the experience gained by
the authors, from the case study, the most important factors for consideration in similar ERP
implementations would be incentives to encourage employee involvement, the role of the
national organisation that controls all activities related to oil companies and experience of
working with similar software and selecting ERP software and vendor. Regarding the link
between soft factors and ERP implementation stags, all respondents identified that all soft
factors should start from the early stages to the end of the ERP project. Many of the
interviewees felt that the soft factors were adversely affecting the ERP implementation and
thus performance of the company. This agrees with the findings of Markus et al (2000) who
stated that companies implementing ERP should “pay particular attention to the early
identification and correction of problems”. It also supports Huang et at (2001) that the ERP
implementation affects the business performance. From the responses of all interviewees, it
was important to note that strategy factors and people factors were also highlighted as
important factors in the feasibility stage. The results show that the theoretical framework
identified soft issues, however it has only been tested in a single case study developed
therefore can only be generalised to the theory and not to the population (Collis and Hussey,
2000). Clearly more investigations need to be carried out to ensure that the soft issues
identified in this paper are considered for ERP implementations in developing countries such
as Libya.

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Almahdi .M. S. Ibrahim 7


A FRAMEWORK FOR THE IMPLEMENTATION OF ERP TO IMPROVE BUSINESS PERFORMANCE: A CASE STUDY
European and Mediterranean Conference on Information Systems 2008 (EMCIS2008)
May 25-26 2008, Al Bustan Rotana Hotel, Dubai

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Almahdi .M. S. Ibrahim 8


A FRAMEWORK FOR THE IMPLEMENTATION OF ERP TO IMPROVE BUSINESS PERFORMANCE: A CASE STUDY
European and Mediterranean Conference on Information Systems 2008 (EMCIS2008)
May 25-26 2008, Al Bustan Rotana Hotel, Dubai

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A FRAMEWORK FOR THE IMPLEMENTATION OF ERP TO IMPROVE BUSINESS PERFORMANCE: A CASE STUDY
European and Mediterranean Conference on Information Systems 2008 (EMCIS2008)
May 25-26 2008, Al Bustan Rotana Hotel, Dubai

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A FRAMEWORK FOR THE IMPLEMENTATION OF ERP TO IMPROVE BUSINESS PERFORMANCE: A CASE STUDY