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THE PHASES OF ERP SOFTWARE IMPLEMENTATION AND MAINTENANCE: A MODEL FOR PREDICTING PREFERRED ERP USE GEORGE E. CLAYTON Penn State Harrisburg ALAN R. PESLAK Penn State University Dunmore, PA 18512 GIRISH H. SUBRAMANIAN Penn State Harrisburg ABSTRACT "Nearly ll information technology educators and practitioners ‘are familiar with the concept ofa systems development life cycle (SDLC). The SDLC model is mainly based on new software ée- velopment. The stages vary based on methodology. but mosly {elude planning and requirements deinition, analysis, design of the new system, implementation, and post-implemeniation sup- port such as maintenance and security. Less explored and known fate the stages involved in commercial off the shelf installation. ‘The actuel implementation of commercial off the shelf software [ERP (enterprise resource planning) systems isan area thats sug- {gested to havea lifecycle of its own. The importance of specific Phases of this ERP implemeatatio life cycle is the subject of, this stdy. By surveying SAP enterprise resource planning imple- rmentations at wo divisions of a major manufacturing company, ‘confirmatory factor analysis confirms the existence of four Ustnct phases of ERP implementation — preparation and train ing, tansition, performance and usefulness, and maintenance. In idition, the overall preferred ERP use is studied and compared with these factors, It was found thatthe two significant phases ‘which directly influenced preferred ERP use were preparation and training phase. and performance and usefulness phase. Nei- ther transition nor maintenance was found to significantly affect ‘referred ERP use. This suggests to practitioners that more focus reeds to be placed on the ey determinants of preferred ERP use — preparation and training phase, and performance and useful- ess phase ‘Keywords: enterprise resource planning, systems develop- iment life cycke, preparation, training, performance, usfulaess INTRODUCTION ‘One of the most important and costly provesses in organiza- tons todsy i the implementation of enterprise resouree planning systems, An ERPsystem is anintegrated commercial off-the-shelf (COTS) software package that can perform all the major business functions of an organization. These functions generally include all elements of the value chain from raw material purchases, in- ventory management, production, goods shipments, invoicing, ‘counting, and human resource management. ERP systems had their roots in munufscturing, including material resoures plan sing. but quickly grew to include all the other related business functions. They now serve asthe basic business systems for most ofthe large and midsize organizations in the world today. The ‘key clements of an ERP system accosding to Mille [32] are: one lange real-time database which reduces data redundancy and im- proves accuracy; integrated business process that cut across basi hess funetions such as supply chain management; and seamiess transitions between business iransactions. ‘Winter 2007-2008 ‘The importance and sizeof the ERP market have grown sig- nificant. On the low end, tis estimated that ERP systems wil exceed 511.9 billion in sales in 2007 [4]. Others suggest a 2004 ‘market as high as $79 billion in 2004 (6). According to Bing, ‘Sharma and Godla [9], seventy percent of the Forture 1000 have ‘oF will have ERP systems. Fisher etal. [20] note that mid-level organizations are now ¢ major market for ERP software imple- ‘mentations. With multiyear, multi-firm ERP implementation and ‘nancial data, firms tha: invest in ERP fend to show higher per formance across a wide varioty of financial metres [26], Clearly with such a prevalent role in information technology, the impor. tance of successful implementation ofthese systems is of great im. portance to practitioners. The massive ERP implementations that ‘must take place within organizations are not without challenges ‘There have been many difficukt and costly implementations of ERP systems that have adversely impacted many organizations including FoxMeyer Drug, Dell Computer, Applicd Materials ‘and Dow Chesnical [16]. Over half of ERP implementations end in failue {8}. Hong and Kim [27] suggest even poorer results with 75% of "ERP projects judged to be unsuccessful.” Scott and ‘Vessey [43] believe tha 907% of ERP projects are late. Huang et Al, (29] note ERP systems cost “organisations « huge amount of ‘money and manpower. Therefore, even major ERP vendors can- ‘not guaraniee the success of implementation.” There can be gaps Detiveen business processes and software [23]. AS result, i is ‘extremely impertane to understind facters that can influence sue cess ofan implementation, The acceptance of new systems, particularly large systems that ‘ratsform the organization, is of vital importance to organizations today. As noted by Rotey etal 42] “newer technologies such 2s ‘enterprise resource planning (ERP) systems continue tobe ass0- ‘ciated with the agenda of organizational transformation... (yet) ‘despite the transformation agenda accompanying the nev system, users initially chose to evoid using ic as much as possible (inertia) ang later to Workaround system constrains in unintended ways”. Sob, Sia, Boh, and Targ, M. [46] found many misalignment is- sues which can adversely impact ERP acceptance Resistance 10 ‘acceptance ofthe new system can adversely affect use and reduce the gains that can be realized with successful implementation. It is vital that key drivers for ERP system preference be identified and measured, ‘The extent end nature of ERP use does determine ERP success [Slandhence the need io study the determinants of ERP use, This sty then isa review and enhancement ofa specific ERP imple- ‘mentation model and en organizational study of how phases in this model can influence and affect preferred use of ERP systems. ‘The study uses systems development theory to build the ERP in= plementation rode. Using data on ERP implementation at two divisions ofa manufacturing organization, the important deterti- rants of ERP use are extended and empirically confirmed. Journal of Computer Information Systems 28 LITERATURE REVIEW ERP Implementation Models and Phases Bouireay and Robey [10] a5 noted, suggest a vital impor- tance to acceptance of ERP systems. Currently they note thit if not successfully implemented, users may work around the system and otherwise doom the project to costly éuplication of effort, ‘or worse system failure. A phased implementation approach is highlighted in Robey etal (42) It is important to have a struc- tured approach, similar to systems development, for the imple- mentation and maintenance of ERP systems, Systems development theory uses the concept of a lifecycle and stages inthe lifecycle to indicate development of infermation systems The waterfall model, incremestal model, RAD (rapid application development) model and spiral model are some of the sysiems development methods prevalent in the literature (39). Newer approaches to systems development address onent-ased development using off-the-shelf packages, sgile ‘evelopment and the unified process for object-oriented oftware {development [39]. The newer approaches have fewer stages inthe development of systems. For example, the unified process which draws upon the best practices of coaveational software provess ‘models [39] has inception, elaboration, construction and transi- tion pheses. A common aspect ofall these models is that they focus Title atemion on implementation and the past implementa- tion of the system, Empirical research has addressed issues that organizations face on and after implementation of systems. Specifically, sev- ral studies have looked at ERP implementation (1}, [27], [42) The implementation and performance stage model (31, (1S]is & taseful tool for understanding the implementation of the ERP technology and provides si stages: initiation, adoption, adap- tation, acceptance, rouinization, and infusion. ‘This six-stage model sets the framework to investigate the implementation and performance issues of utilizing an ERP system within an organization. The initiation stage analyzes the factors that influence the decision to utilize an ERP sysiem such as incom- Datbility, need for connectivity. top management vision, and need to change. Implementation issues are addressed in the ‘doption and adaptation stages including: investment decisions, costbenetit analysis, and choive of sppropriate technolegy. Implementation and performance measures sich as sysiem modifications, training, integration of functional units, enhanced performance, user acceptance, flaws corrected, and organization- al integmtioa realized, are identified during the acceptance and routinization stages. Finally. the infusion stage addresses future innovations including IT integration at global levels and future opportunities Parr and Shanks [38] review differen! models of ERP imple~ meniation and suggest a PPMICSF hybrid model that incorporates. «project phase model (PPM) with critical success factors (CSF), ‘The phases included in their model include planning, project, and ‘enhancement. Our work is beth an extension and a testing oftheir project phase model for ERP implementation. Parr and Shanks [38] are the first io suggest that “ther is justification for creating § project phase mode! (PPM) of ERP implemertation which is centered on the individual, discrete phases ofthe impiementato project itself rather than one which teats the project as just an- ‘ther phase inthe whole implementation enterprise.” Out medel ‘explores preferetce for a new system based on Parr and Shanks rmodel but tho third phase of project ix broken ino two separate 6 Journal of Computer Information Systems phases — transition and performance to better understand what tuly influences project acceptance, ‘What happens after ERP implementation, and the benefits derived from ERP implementation, is specifically addressed by Gattiker and Goodhue (22). The model by these researchers looks atthe subunit level of the organization, similar to our study, and looks at determinants of ERP benefits. Task efficiency, cordin tion improvements ang data quality explain a large amount of the ERP benefits ofthe sub-unit (22). ERP IMPLEMENTATION AND MAINTENANCE PHASES OF OUR STUDY Based on an exploratory study, Rajagopal and Frank (41) revealed that at Owens Coming, marketing and manufacturing cach had its own sales forecasting numbers prior 10 implement- ing their ERP system. As a result, there were discrepancies in the information used for strategic decision making in the same organization. This was a result of the incompatbilty aniong the information systems used in various functions at ‘Owens Corning [40]. System incompatibility ean also impede pecformance, as observed at Eastman Kodak Company. At one point, Eastman Kodak was eperiting their business on 2600 different software applications, more than 4000 system inter- faces, and about 100 different programming languages running ‘on legicy-4ype mainframe systems [48]. It thus ean be conclud- ‘ed that proper preparation and planning is needed for ERP im- plementation. Implementation planning influences ERP system performance [56]. User training that included both technical and business pro- cesses, along with a phased implementation approach, helped firms to overcome assimilation knowledge barriers [42) noting the importance of traning and a phased approach to ERP imple- ‘mentation. Gupta [24] and Umble and Umble [53] saw taining as ‘one of the mos! important factors ip ERP success. Training is also noted as an important fctor by Gallivan etal. [21] and Barker and Frolick {8}. Training is seen as a crucial comporentin continuous improvement. Training helps to improve employee participation and involvement in quality programs through propagation of pr orities and missions of the organization (25) So, as ERP is tied closely with business processes and continuous quality improve- ‘ment, i caa be seen that taining would influence ERP success. "One of the primary challenges is selecting an appropriate plan for end-user education... Managers must avoid this mistake by looking at various options for end-user ERP traning atthe begin- 24), “People are one of the hidden costs of ERP imple- ‘mentation. Without proper txining abot 30 percent to 40 percent ‘of from-ine workers will nt be able to handle the demands ofthe new system.”[9] So, preparation for ERP implementation is ex- twemely Important. In preparation and training phase, we car include the initiation, dopzion and adaptation phases of Cooper and Zmud [15 ‘This model includes the three phases ofthe Parr and Shanks [58] model but the second phase — project is broken into two subphases ~ transition and performance. Gupta [24] has noted the importance of performance as a Key success factor in ERP implementation. Al-Mashari, Al-Mudimigh, and Zairi (2} note the importance of transition suggesting that “it is important that an orpanization approaches the transition af legacy system carefully and with « comprehensive plan”. Davenport (16] sug- _gews legacy systems represent a major issue for new IT projects, Bondrcau end Robey [10] identified ansition as a key Factor ia ‘Winter 2007-2008 ERP implementation, Transition is also an important phase in the trified process model [30 “A-key issue when implementing ERP is performance. Tying such an array of decision support logic toa single database en- gine process can generate huge amounts of load on conventional systems, .. . Modern businesses need a much faster and more dynamic decision structure — something that ERP supports but ‘tese) earlier systems cannot. To combat this, ERP vendors are Creating new versions of MRP and MPS under a single umbrella dubbed advanced planning and scheduling (APS). Though some of these engines are still being tested, they promise drastically faster response times and much better business rests in the form ‘of accurate inventory planning and precise delivery schedule. With faster background eaginss like APS combining with ubiy uitous front-end Web browser access. you have the foundation to build self-service business systems like the insurance example cited earlier. Companies that st up limited self-service functions teday will have a competitive edge.” (24). Noh, Zuckwiler, and Lau [36] in their survey of Fortune 1000 COs found performance ‘as major factor in ERP success Siaw [45] sees quality of service as essential in ERP implementations. Usefulness is also related to performance. Perceived usefal- ness looks at productivity, jab effectiveness, and ease of doing the job [48], [51] which could be argued as performance relat- ced variables. For example, our performance phase also looks at ‘productivity and use of information from the ERP sysiem by the ‘ter. Extensive research supports the notion that usefulness and cease of use ae primary drivers of user intentions to adopt new technology [17] [18], [51] [54]. However, this researeh has Been ‘conducted primarily in environments in which adoption was vol unary [12]. Brown et al. [12] found significant impact on tech- nology accepiance in mandated use environments and conclude that “results suggest that TAM (Technology Acceptance Mod!) ‘and related variations of the mode! do not generalize directly to ‘mandhtory use situations.” Hence, we look at the performance and usefulness phase. “The problem of maistaining integrated applications is no mecns ‘4 simple one and requires an intrdisciplinary appreach” [33] “Without the understanding of how the system is implemented, ‘and how to maintain the efficiencies ani functionality of that ERP) system, it will be uscless to the organization” [7]. The ume of packaged software is shown to result in decreased solt- ‘ware complexity and software enkancement effort (7) and so iis ‘expected that ERP packages Would have reduced maintenance in ‘comparison wo traditional development. While stuieson software maintenance have often considered maintenance asthe dependent variable, the influence of maintenance on preferred use of a sys- tems not studied. So the final phase is maintenance. RELATIONSHIP OF ERP IMPLEMENTATION PHASES TO PREFERRED ERP USE — RESEARCH MODEL AND HYPOTHESES An organization has to prepare itself for ERP implemen tion much before the actual ERP decision is taken [5] and these researchers believe that such preparation is key to ERP success. It may tke years of build-up and requisite preparation with TT {iffusion and infusion to determine, in large part, whethor users demonstrate a combination of a postive predisposition to a new system when they view it from the standpoint oftheir work. Ad- ditional support for suck requisite build-up comes from Brest ‘han & Brynolfison [11], who wse the phrase ‘complementary in vestment.” “We have reason to believe that organizations that are ‘etter prepared to absorb information technology will be able 0 leverage the benefits of information technology’ [5]. One of the ‘rtisal factors for influencing user” atitudes and involvement ‘can be understood in tems of the “tition paid for the learning” [19] tha: precedes any part of ERP implementations showing the importance of training for ERP use. Hence, we expect a posi- tive relationship between preparation and training phase and preferred ERP use, Boudreau and Robey [10] identified transition as a key fac~ tor in ERP implementation, Transition is also an important phase in the unified process model [39] used in building information systems, The unified process model combines all the different systems development frameworks into a unified process model. ‘So, we expecta positive relationship between transition phase and preferred ERP use. Zviran et al, [57] note that perecived usefulness influences user satisfaction in ERP systems. Amaolo-Gympah and Salam [3] show that taining and project communication influence shared bliefe about benefits of technology and these beliefs influence perceived usefulness and ease of use of the technology. Job rel fevance, output quality, and result demonstrably significantly influenced user acceptance in the TAM2 motel showing the importance of performance related variables and thir influence ‘on user acceptance [54], Task efficiency. coordination improve- ments and data quality (key performance variables) explain @ large amount of the ERP benefits of the sub-unit [22] pointing Preparation and Phase Transition Performance and Usefulness Training > Phase Phase Maintenance phase Figure 1 shows the four ERP implementation and maintonance phases. ‘Winter 2007-2008 Journal of Computer Infermation Systems to the importance of performance in ERP systems. Zviran et al, [57] report that ERP systems are associated with high levels of user Satisfaction and perceived usefulness. Perceived usefulness (productivity, jab effectiveness, ease of doing job is shown to in- fluence predicted future usage [$1]. Hence, we expect a positive relationship between performance and usefulness phase and preferred ERP use. Stach, Shanks, and Sedion [49] found strong importance in the post implementation period of ERP implementation. The use Of packaged software is shown to result in decreased software ‘complexity and software enhancement effort (7] and so it is ex- pected that ERP packages would have reduced maintenance in ‘comparison to traditioral development. This result could be @ factor for users to prefer ERP use as ji wculd involve reduced ‘maintenance. Sa, we expect a pasitive relationship between the maintenance phase and preferred ERP use. We argue, through our research model, that preparation and ‘taining, transition, performance and usefulness, and maintenance phases of ERP implementation and maintenance activity in or ‘ganizations would positively influence the prefered use of ERP system. ‘The dependent variable of our study is preferred ERP use Usoge varishles are seen as the key variables in systems studies [50], End-users’ reluctance or unwillingness to adopt or use the newly implemented ERP system is often cited as one of the main reasons for ERP failures [30], [36], [33]. Perceived compatibility and perceived ease of use have both direct and indirect effecte (mediated by atitude) on symbolic adoption, while perosived fit and perceived usefulness influence symboliz adoption by being Hyp. 4 Preparation & Training Performance & Usefulness fully mediated through attitude [55]. We argue tat, in situations of mandatory use, we need to study the preferred use of the ERP system (as a measure of user acceptance of mandated ERP sys- tem) in comparison tothe system it replaced. Hypothesis 1. There are preparation and training, transition, performance and usefulness, and maintenance phases in the ERP implementation and maintenance activity of a organization. Hypothesis 2. The prepantion and training, transition, per- formance and usefulness, ané maintenance phases in the ERP Implementation and maintenance activity of an organization have «positive influence on preferred ERP use. Hypothesis 3. There are differences in the influence of the preparation and traning, ransition, performance and usefulness, ‘and maintenance phases in the ERP implementation and mainte ‘nance activity of en organization on preferred ERP use, ‘The fist hypothesis explore the idea that ERP project imple- mentation and maintenance consists of phases as proposed by Pur and Shanks [38]. Their general mode! was used as the basis for developing an approach to answer whether specific phases of SAP ERP implementation can be identified. Other research- ens such as Cooper and Zmuc [15] have also identified an ERP ‘implementation model. Several other researchers have identified specific phases — preparation [S6), transition [2], [10} [39], per formance (24), and maintenance (7], [33] inthe ERP implementa- tion and maintenance activity of an organization. We would like tocontfirm the existence of these phases in ERP implementation and maintenance. ‘The second hypothesis tests the infuence of these four phases on preferred ERP use. The thitd hypethess is a logical Preferred ERP use igure 2. Research Mods! and Hypotheses Journal of Computer Information Systems ‘Winter 2007-2008

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