Effects of Implementing Enterprise Resource Planning Systems

Total Page:16

File Type:pdf, Size:1020Kb

Effects of Implementing Enterprise Resource Planning Systems Effects of Implementing Enterprise Resource Planning Systems Y. Helio Yang, Nikhil Varaiya, and Chee W. Chow, College of Business Administration, San Diego State University, San Diego, CA 92182-8234 ABSTRACT In the 1990's inftnmation technology and business process re-engineering have combined to provide organizations a competitive advantage. Enterprise Resource Planning (ERP) systems were particularly considered as critical change agents for such development. This paper reports the results of a survey on ERP implementations to explore the benefits and impacts to organizations. 1. Introduction In the past decade, business has changed dramatically. Organizations today confront new markets, new competition and increasing customer expectations. Thus today's organizations have to constantly re-engineer their business practices and procedures to be more and more responsive to customers and competition. In the 1990's information technology and business process re-engineering (BPR) have combined to provide organizations a competitive advantage. Enterprise Resource Planning (ERP) systems were particularly considered as critical change agents for enhancing competitive advantage. According to AMR Research (1999) the ERP market is projected to grow to $66.6 billion in 2003 from $16.7 billion in 1998. Although there are discussions on pros and cons of ERP implementation at individual firm level, little research provides overall assessments on its benefits and impacts. Consistent guidelines and measurements to determine ERP adoption and return on investment in an ERP system do not exist. Hence we conducted a survey to study the benefits resulting from these software installations and process changes. Based on an extensive review of extant writings on ERP, we identified 18 claimed benefits to measure ERP implementation. These benefits can be classified into three categories: intrafirm, interfirm, and overall benefits. The generation of ERP packages at the time of the survey is based upon a traditional hierarchical functional view of organizations. ERP systems typically exist within a single organization, using a single database at the point of integration with internal organizations. Consequently, ERP systems are usually considered valuable to intrafirm process support. Hence we examine the following research question: Is there a significant difference between intrafirm benefits and interfirm benefits from ERP implementation? ERP implementation typically requires reengineering to refit business processes into the best practices within an industry. For example, Baan's approach is to conduct a concurrent business process re-engineering during the ERP implementation and aim to shorten the total implementation time frame using its comprehensive scenario and compact scenario. Hence we examine the following question: Is there a significant difference in terms of benefits achieved through ERP implementation among various business process re-engineering efforts? 2. Research Method 2.1. Survey instruments A questionnaire was designed as the research instrument containing multiple choices and five-point Likert-sealed questions. Questions include type of ERP software, modules implemented, factors in selecting software vendors, time frame, cost and schedule of implementation, composition of implementation team, extent of process reengineered, payback period, benefits on eighteen measurements, and concerns during implementation. 2.2. Sample Surveys were mailed to 251 potential respondents in June 1999. The mailing list was compiled from: (a) many ERP vendors' client lists obtained from their web sites, (b) attendant lists from an ERP executive conference, (c) articles citing companies implementing ERP from sources such as Datamation, AMR Research, Information Weekly and CIO. A reminder letter was sent one month alter the first mailing. In addition to the printed version, the survey was also posted on a web site at the same time. The survey web site was publicized at SAP and Oracle user groups, various bulletin boards, GeoCities, Planet IT, and as well as at a major IT convention. Fifteen of the mailed surveys were returned due to incorrect address or addressee. Forty-two surveys were returned for a response rate of 18% for the mailed survey. In addition, twenty-nine responses were received from the web site. Sixteen of the returned stagey respondents were discarded because they did not implement ERP systems. This resulted in a usable sample of sixty-three observations. A majority of the respondents are information system managers or ERP 864 project managers and some are managers in finance or engineering departments from U.S. firms. Eighteen percent of the respondents have less than $50 million dollars in annual sales; fifteen percent have annual sales between $50 million and $1 billion dollars; majority (67%) of them have over $1 billion dollars in annual sales. One third of the respondents are from the service sector while two thirds of them are from the manufacturing sector. 2.3. Data Analysis Eighteen questions were used to measure the benefits of ERP implementation. The respondents were asked to rate the benefit level for each of the measurements using a five-point scale with endpoints "no benefit" (=1) and "dramatic benefit" (=5). We then classified these benefits into three categories: intrafirm, interfirm, and overall. By grouping the measurements, we will be able to see a comprehensive picture in terms of understanding the contributions of ERP implementation. Intrafirm benefits assess the benefits achieved through coordinating and integrating business processes and information within the enterprise. There were nine measurements in this category. Interfirm benefits assess the benefits achieved through coordination and integration beyond the enterprise boundary to connect with external customers and suppliers. There were six measurements in this category. Overall benefits assess the impacts on competitive advantage. There were 3 measurements under this category. Principal component is used to explore the underlying stl"ucture of the questionnaire items for each benefit category. Table I shows the varimax rotated factor loadings oftwo-faetor solutions for intrafirm and interfirm benefits and one- factor solution for overall benefits. Factors were extracted with eigenvalues greater than 1.0. The factor loadings either exceeded or are close to the .6 level. Inter-item analysis is used to check the scales for internal consistency or reliability. Cronbach's reliability coefficient alpha is calculated for each scale, as recommended by many researchers (Flynn, et at., 1990, Makhotra and Grove, 1998). Cronbach's alpha values for each scale ranged from .7691 to .8902. These values well exceed the .5 to .6 criterion generally considered adequate for exploratory work (Nmmally, 1978). Cronbach's alpha addresses vertical validity, which describes the extent to which a scale represents its construct. Analysis on the principal components identified two factors: quality&inventory and time-for the intrafirm benefits. Five items loaded significantly on the "quality&inventory" factor. Three of the items dealt with improvements in finished goods inventccy, work-in-process inventory, and raw materials/components inventory. Two of the items dealt with quality improvement in defect rate and customer retm'n rate. Four items loaded significantly on the "time" factor. The items include product design time, delivery time to the customers, response time to customer requests, and the development of a knowledge base to share information. Two factors-supplier and customer relationships-are identified for the interfirm benefits. These two factors reflect that supplier relationship management and customer relationship management are two key components to achieve these benefits. Companies need to communicate and coordinate information and activities with upstream suppliers and downstream customers. Three items loaded significantly on the "supply" factor. These items dealt with the quality level of suppliers, delivery time from suppliers, and real time integration with suppliers' information systems. Three items that loaded on the "customer" factor are real time integration with customers' information systems, global network and location management, and e-commerce development. The e-coramerce definition at the time the survey was conducted was mainly on business to customer (B2C) transactions over the lnternet. The three items loaded on the "overall" factor include competitive advantage, market share, and the potential of new business development. 3. Results For the choice of software, the majority of respondents use either Baan or SAP systems, with the two systems representing a cumulative percentage of 51.7% (26.7% Baan and 25% SAP). The next two highest percentages were 10°4 for Oracle and 7.5% for both JD Edwards and Lawson systems. Table 2 shows a detailed breakdown of software packages. The most widely implemented module among respondents was the fmance module (92.6% of respondents), followed closely by the manufacturing module (88.1%). Table 3 provides a breakdown of modules implemented by respondents. This supports findings in the existing literature. A KPMG study on major motor carriers and third-party logistics providers also found that most of their respondents use primarily the accounting and general ledger functions of the ERP software and Peoplesofl, Baa, SAP and Oracle represented one third of the packages (Bradley and Thomas, 1999). In selecting a software
Recommended publications
  • Business Development and Project Management 4 Manager – Business Development and Project Management
    JOB DESCRIPTION Manager – Business Development and Project Management 4 Manager – Business Development and Project Management About Us The Indian Institute for Human Settlements (IIHS) is a national education institution committed to the equitable, sustainable and efficient transformation of Indian settlements. IIHS aims to establish an independently funded and managed national university of eminence for research and innovation focused on the challenges and opportunities of India’s urban transition. The proposed IIHS University will be an institution of eminence that will host an integrated programme of quality campus-based education and research, training and lifelong learning for working professionals, distance and blended learning, as well as a whole array of practice and advisory services. The university will have a strong interdisciplinary orientation bringing together theory and praxis that is grounded in the South Asian context and also engages with and draws from knowledge across the globe. For more information, please see http://www.iihs.co.in About the Practice Programme at IIHS This position will be part of the Practice Programme at IIHS. The Practice Programme is responsible for providing cutting-edge and integrated solutions to India’s urban development challenges by bringing together faculty and experts across diverse domains of knowledge and practice; exposing learners to real-life problems; and integrating practice into academics and research. Job Description The Manager – Practice Office will be part of the core Practice team, responsible for supporting and building the Practice Programme. The key roles of the Manager will include business development, programme and project management (including setting up and managing processes), relationship building with key partners and collaborators, and knowledge management.
    [Show full text]
  • International Business Development INTERNATIONAL BUSINESS DEVELOPMENT New York State SBDC Central Administration
    International Business Development INTERNATIONAL BUSINESS DEVELOPMENT New York State SBDC Central Administration 10 North Pearl Street Albany, NY 12246, USA Tel: 518-944-2857 Fax: 518-320-1593 E-mail: [email protected] Website: www.nysbdc.org Plattsburgh l New York State l Niagara Falls l l Albany l Buffalo Rochester l Syracuse Long Island New York City Funded in part through a Cooperative Agreement with the U.S. Small Business Administration NEW YORK STATE SBDC 国际业务部 e New York State Small Business Development Center 美国纽约州中小企业发展中心总署国际业务部,是美国纽约州中小企业发展中 (NY SBDC) is the premier business assistance organization funded 心总署的重要组成部分, 其职能是帮助各类中小企业进入、开发和拓 展国际市 by the U.S. Small Business Administration and the State of New 场和业务。 York. e program provides a wide range of assistance and services 国际业务部向各类中小企业提供多方面的专业咨询与服务,协助企业寻找和利 to start-up and existing businesses across the state. 用商机,并直接协助企业进入和拓展国外市场,推动企业与国外的合作。同时 也为中国的企业进入和投资美国市场提供对接与协助。 rough its 23 regional centers and outreach offices, the NY SBDC applies the resources of government, higher education, and the 国际业务部与国外一些政府经济发展部门和企业界有着广泛的联系 , 并建立了 长期密切的合作关系,通过多方通力合作,实现资源共享,把握商机,降低风 private sector to solve business problems and foster entrepreneurship. 险,有效地推动和扩大双方的商贸往来,促进共同的经济发展。 e NY SBDC focuses on technology-oriented companies, manufacturers, exporters, and projects that advance investment, job development, and the economic growth priorities of New York State. Business assistance services are available to all New Yorkers that 国际业务部向企业提供的服务和协助包括: request them. ■ 推荐对外投资、国际项目、对外贸易,对接并协调双边的合作 e NY SBDC ■ 提供对外项目投资、国际贸易商机信息,协助市场调研、评估和选择 Business Research ■ 提供政府相关政策、法规、税收、商务运作、文化习俗等方面咨询和指导 Network – one of ■ 协助寻找国外合作方、制造商、批发商、代理商,对接与建立合作关系 the most advanced business ■ 帮助建立合资企业和独资企业,协助投资、项目外包、出口加工业务的对接 information ■ 提供专题培训,组织和安排各类讲座、论坛、商贸洽谈对接会、大型会议 resources in the United States, ■ 组织美国政府、企业工商贸易代表团赴国外进行商务考察访问,协调各类商务活动 provides NY SBDC ■ 协调与安排来访的外国政府 、 企业、工商贸易代表团组在美国的官方和商务活动 business advisors with the latest economic development, business, demographic, regulatory, and other information that can have an impact on business success.
    [Show full text]
  • USING ENTERPRISE RESOURCE PLANNING (ERP) for ENHANCING BUSINESS PROCESSES in SMALL and MEDIUM ENTERPRISES (Smes)
    USING ENTERPRISE RESOURCE PLANNING (ERP) FOR ENHANCING BUSINESS PROCESSES IN SMALL AND MEDIUM ENTERPRISES (SMEs) By: Mimin Nur Aisyah Abstract Increasing number of small medium enterprises (SMEs) is using enterprise resource planning (ERP) as they start to recognize the benefits provided to the organisations. The benefits include tangible and intangible benefits. They can be identified in the operational, managerial, strategic, organizational, as well as in IT infrastructure dimension. To successfully implement ERP, organizations should recognize the barriers in attaining expected benefits, especially people-related issues which are more dominant than the technical-related. A combination of IT factors and business factors motivate SMEs to adopt ERP. However, several factors characterized in SMEs should be considered in analyzing their need for ERP. SMEs must prepare themselves in both technical aspects and human aspects. It is also very important for SMEs to recognize critical success factors (CSFs) that contribute to a successful ERP implementation. CSFs can be used to measure the success at different points in the ERP life cycle. Keywords: Enterprise Resource Planning (ERP), small and medium enterprises (SMEs), critical success factors (CSFs), ERP benefits, and ERP adoption INTRODUCTION When your company deals with the daily business complexity, such as what products to be delivered, how much capacity will be needed, when and where the activities should be carried out and other related activities then it is time to call for the Enterprise Resource Planning (ERP). ERP helps companies to plan forward their planning and controlling decisions. It also provides the understanding of the implications brought by any changes made in plan.
    [Show full text]
  • SBA Contracting Resources
    SBA Contracting Resources 8(a) Business Development Program In order to help small, disadvantaged businesses compete in the marketplace, the SBA created the 8(a) Business Development Program What is the 8(a) Business Development Program? The 8(a) Business Development Program is a business assistance program for small disadvantaged businesses. The 8(a) Program offers a broad scope of assistance to firms that are owned and controlled at least 51% by socially and economically disadvantaged individuals. The 8(a) Program is an essential instrument for helping socially and economically disadvantaged entrepreneurs gain access to the economic mainstream of American society. The program helps thousands of aspiring entrepreneurs to gain a foothold in government contracting. Participation in the program is divided into two phases over nine years: a four-year developmental stage and a five-year transition stage. Pro tip: For more information about the 8(a) Program and its detailed requirements, visit the Code of Federal Regulations at: http://1.usa.gov/1DsuPyN What are the benefits of the 8(a) Program? Participants can receive sole-source contracts, up to a ceiling of $4 million for goods and services and $6.5 million for manufacturing. While we help 8(a) firms build their competitive and institutional know-how, we also encourage you to participate in competitive acquisitions. 8(a) firms are also able to form joint ventures to bid on contracts. This enhances the ability of 8(a) firms to perform larger prime contracts and overcome the effects of contract bundling, the combining of two or more contracts together into one large contract.
    [Show full text]
  • Supply Chain Management
    Bachelor of Science in Business Administration with a major in Supply Chain Management Supply Chain Management graduates are prepared to assume leadership roles in a wide variety of careers in logistics, supply chain, transportation and warehousing areas. Students pursuing a major in Supply Chain Management are required to complete advanced study in Supply Chain Management, Business Logistics, Supply Chain Analytics, and Global Transportation Management. These majors have the opportunity to select from a wide offering of electives in the areas of Business Intelligence, Advanced Supply Chain Management, and Retail Management. Employers recommend that in order to be successful and competitive when entering this field, students should complete one or more internships. Career types associated with SCM Common interests of SCM majors “Thinker” • Work part time in supply chain related areas. “Doer” • Conduct informational discussions with individuals “Organizer” from the industry. Attend networking events. “Coordinator” • Develop strong analytical skills and interpersonal Related skills, values, and qualities communication skills. • Ability to communicate ideas and concepts to others • Explore various professional designations and • Strong verbal and written communication skills licenses relevant to SCM career paths. • Complete an internship in SCM. • Proficiency in analytical thinking, problem solving and effective decision making • Strong interpersonal and networking skills • Ability to manage data For more information about the major Contact the Department of Business Administration, • Ability to understand different cultures in global supply 233 deFrancesco, 610-683-4580, chain environment or visit www.kutztown.edu • Ability to motivate and lead others Courses SCM majors typically enjoy KU Majors related to SCM • Accounting Management, Marketing, Finance, Accounting, Information Technology, Computer Science.
    [Show full text]
  • SBA's “8(A) Program”: Overview, History, and Current Issues
    SBA’s “8(a) Program”: Overview, History, and Current Issues Updated August 3, 2021 Congressional Research Service https://crsreports.congress.gov R44844 SBA’s “8(a) Program”: Overview, History, and Current Issues Summary The 8(a) Business Development Program—commonly known as the “8(a) Program”—provides participating small businesses with training, technical assistance, and contracting opportunities in the form of set-aside and sole-source awards. A set-aside award is a contract in which only certain contractors may compete, whereas a sole-source award is a contract awarded, or proposed for award, without competition. In FY2020, 8(a) firms were awarded $34.0 billion in federal contracts, including $9.3 billion in 8(a) set-aside awards and $11.1 billion in 8(a) sole-source awards. Other programs provide similar assistance to other types of small businesses (e.g., women-owned, HUBZone, and service-disabled veteran-owned). 8(a) Program eligibility is generally limited to small businesses “unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of and residing in the United States” that demonstrate “potential for success.” Members of certain racial and ethnic groups are presumed to be socially disadvantaged, although individuals who do not belong to these groups may prove they are also socially disadvantaged. To be economically disadvantaged, an individual must have a net worth of less than $750,000 (excluding ownership interest in the applicant’s business, equity in their primary personal residence, and funds invested in an official retirement account), no more than $350,000 in average adjusted gross income over the preceding three years, and no more than $6 million in assets (excluding funds invested in an official retirement account).
    [Show full text]
  • Business Development Manager (BDM) for a CBO
    Sample Job Description Business Development Manager (BDM) for a CBO Context and Explanation This SAMPLE job description highlights some of the roles and duties AAAs, CBOs and AAA/CBO networks should look for in a Business Development Manager and should be modified to suit the specific needs of the agency seeking to fill the position. Function The Business Development Manager is principally responsible for raising revenue and expanding business oppor- tunities that allow the organization to achieve and sustain its mission. The BDM achieves these goals by creating and executing an ethical business strategy to: a) expand existing funding relationships and b) identify and secure opportunities with new business partners (e.g., integrated health systems, managed care organizations and large employers) through grants, pilots, business service contracts and/or private-pay services. Primary Responsibilities • Collaborates with staff, Board of Directors, partners, vendors and other staff to carry out the mission and goals of our organization • Develops and regularly updates a comprehensive business development plan, with targeted goals, objectives, methods, quantifiable outcomes and timelines to achieve agency sustainability and annual budget goals • Analyzes and identifies scope for business case analysis and recommends solutions and improvements to business procedures • Develops program sustainability strategies to ensure financial viability of programs and services • Identifies business opportunities (i.e., long-term services and supports, care
    [Show full text]
  • A Better Way to Measure & Value Business Relationships: The
    AN ADVISORY SERVICES WHITE PAPER A Better Way to Measure & Value Business Relationships: The Enterprise Relational Quotient™ Assessment © 2010 The Relational Capital Group April 2010 AN ADVISORY SERVICES WHITE PAPER Contents Executive Summary ..................2 Executive Summary We All Know Relationships We All Know Relationships Impact Results Impact Results ..........................3 A recent national survey of VP level and above executives showed nearly universal agreement that relationships have a highly significant impact The Performance on business results each year. And it wasn’t just customer relationships Management Paradox ...............3 delivering the impact, but rather a wide range of internal and external relationship types. If business relationships are having such a significant The Warmth and impact, how can they be better measured, managed and strengthened to drive improved performance? Competence Model ..................4 The Performance Management Paradox What Do We Mean Effective internal and external relationships are critical to the daily by “Business performance of nearly every organizational function. Basic business Relationship” Anyway? .............4 performance levers such as customer loyalty, operational productivity, cross- functional collaboration, employee retention and leadership development The Enterprise all depend on healthy, productive relationships between people. So here’s the paradox: why don’t organizations have more insight, expertise and RQ™ Assessment .....................5 visibility on the key business relationships that are so clearly critical to their success? Perhaps because they’ve lacked a clear, compelling and Relationship reliable method for measuring and valuing them. Assessment Findings .................5 What Do We Mean by “Business Relationship” Anyway? Predictive Validity of Some may have the perception that the words “business relationship” refer the Enterprise RQ™ to the superfluous interpersonal aspects of conducting business.
    [Show full text]
  • Client Development & Relationship Management
    Business Development Inc.’s Marquee Training and Coaching Program Client Development & Relationship Management - Getting New Business in the Door© Lawyers, law firms and other professional services firms are facing intense competitive challenges and opportunities in today's marketplace. These days, each and every Partner has a role in contributing to their firm’s growth and success – it is no longer optional. Understanding the business development process intimately and maximizing each Partner’s role and contribution in this area is crucial to continued success. Program Description: This highly tailored and interactive workshop measurably increases participating lawyers’ and the firm’s book of business, improves client development skills and client service. This program focuses on integrating into each participant's practice, successful and systematic strategies and tactics that secure, develop and advance relationships with appropriate contacts. Emphasis is placed on making the most of each participants personal client development style, areas of contribution and selling or service skills by developing a personal routine and pipeline for: whom to target for work; where to find them; how to approach; what and how to communicate: and how to follow-up as appropriate. In some states, this program comes with CLE credits (up to 14 depending upon the jurisdiction). Content: The objective of this program is to bring measurable new business in the door. Our past results show that this program yields a minimum of five dollars returned to the firm
    [Show full text]
  • Business Development Guide November 2016
    Business Development Guide November 2016 The purpose of this guide is to provide business proponents, and those who work with them, with a tool to assist in the business development process. The guide briefly outlines this process and, more importantly, highlights many of the considerable business development and operating resources available to individuals and businesses. The guide is divided into five main areas: • Exploring the Idea; • Evaluating the Idea – Feasibility; • Developing the Business Plan; • Implementing Your Business Plan; and • Ongoing Business Management. There are several sub-sections within each of these broad areas, which identify additional sources of information to assist in the development process. This guide is not intended to be a complete list of all available resources. Rather, the guide outlines a process and highlights some key resources that may be helpful. It is not intended that a business proponent utilize all resources in this model. Depending on the phase the proponent is currently in, only some of the resources identified in this document will apply. Key resources, which are particular to a business development project, can be identified and used according to the type and nature of the business idea. Saskatchewan Agriculture assumes no responsibility for the accuracy or completeness of information contained in this document. The website addresses provided and the material contained therein, are subject to change on a continuing basis. All reasonable efforts are made to keep this resource guide current.
    [Show full text]
  • Senior Project Manager, Southern Region Reports To
    IFF Position Description Title: Senior Project Manager, Southern Region Reports to: Executive Director, Southern Region Department: Southern Region Executive Department Function: The Southern Region includes all aspects of IFF’s work including Core Business Solutions and the Social Impact Accelerator. Core Business Solutions includes: Capital Solutions, which provides loan and other financing products; and Real Estate Solutions, which provides a wide range of real estate consulting services to nonprofits. IFF’s Social Impact Accelerator Group is a cross-cutting team that sits at the nexus of nonprofits, communities, and IFF talent, and expertise. The SIA Group provides thought leadership and expertise to drive corporate strategy across markets and Core Business Solutions, leads IFF’s work in comprehensive place-based solutions and special initiatives, evaluates IFF’s work for nonprofits and communities, and implements internal IFF initiatives. The Group includes Research and Evaluation, Talent Management, Development, and Vital Services. The Organization IFF values equity, diversity and inclusion as part of its mission to strengthen nonprofits and the communities they serve. IFF is an equal opportunity employer. IFF provides flexible loans, facilities-related consulting, research and evaluation, real estate development and other community development leadership to clients across the nonprofit sector in the Midwest, including human service agencies, health centers, schools, affordable housing developers, grocery stores, and arts and culture
    [Show full text]
  • Real Estate Development Project Manager Job Description
    REAL ESTATE DEVELOPMENT PROJECT MANAGER JOB DESCRIPTION About Northern Real Estate Urban Ventures, LLC We are a full service minority and woman-owned real estate development company who is a leading provider of real estate finance and development services for affordable housing, single--family homes, retail and commercial facilities in the Washington, DC metropolitan area. GENERAL RESPONSIBILITIES Development Project Manager is responsible for the financing, approvals and design of infrastructure, townhouse, condominium and affordable housing developments and mixed-use community development projects. Project Managers must provide high quality development management, managing financial objectives of the project, and meeting project objectives. In addition project managers are accountable for developing and fostering effective relationships internally and externally including all third parties (e.g., consultants, public funders and private lenders/equity providers, community organizations, architects, constructions managers, government liaisons, etc.) REAL ESTATE PROJECT MANAGEMENT Responsible for managing the predevelopment activities and project financing tasks of development project including affordable housing tax credit projects and other multifamily and mixed-use development projects Structure and close complex mixed-finance deals with multiple lenders including managing due diligence process Negotiate and draft letters of intent (LOI) for purchase with sellers Apply significant knowledge of LIHTC regulations and industry standards
    [Show full text]