On-premise ERP Organizational Post-implementation Practices
Comparison between Large Enterprises and Small and Medium-Sized Enterprises
Victoria Hasheela
Department of Software Engineering and Information Management, Lappeenranta University of Technology,
Lappeenranta, Finland
Keywords: Enterprise Resource Planning, Small and Medium Sized Enterprises, Large Enterprises, Case Study,
Grounded Theory, Post-implementation.
Abstract: This paper presents a multiple case study, which was aimed at identifying similarities and differences on how
companies of different sizes operate after ERP system go live (post implementation phase). The study has
found several differences and similarities and concluded that the differences are caused by the differences in
company structures, sizes, financial constraints and decision making processes. Large Enterprises (LEs) often
have in-house competence which Small and Medium-Sized Companies (SMEs) usually lack, and this leads
to SMEs to depend on external sources, which makes the operations slightly different. SMEs also focus on
their technical operations, often disregarding strategic planning, and this leads to higher risks.
1 INTRODUCTION
Enterprise Resource Planning (ERP) is known to
improve efficiency, performance as well as
productivity, and it is regarded as a strategic resource
by organizations, providing competitive advantage
and a strong market position (Law and Ngai, 2007).
ERP is also known to improve operational efficiency
for organizations (Shang and Seddon, 2000).
However, ERP implementation can be a costly
and complex exercise, as it involves a large amount
of investments, which are usually doable only for
very large corporations (Andriole, 2006). Small and
Medium Enterprises (SMEs) are however rapidly
becoming the economy backbone around the world
(IDC 2007), and therefore ERP vendors have been
diverting their attention toward SMEs by developing
simplified solutions from both the organizational and
technological points of view (Chen, 2001).
Over the years, research on ERP in SMEs has
been growing. Today, many empirical studies have
concentrated on ERP adoption, success factors and
implementation challenges. Willis and Willis-Brown
(2002) pointed out that even if the ERP system is
successfully implemented, the ERP journey does not
end at the “go-live” point, indeed it is where real
challenges begin (Hillman Willis and Hillary Willis
Brown, 2002). This phase is referred to as the post
implementation phase.
While SMEs are rapidly implementing ERP in
order to compete on the market and to gain
competitive advantage, ERP systems implementation
remains one of the most risky and costly exercise a
company can get involved in (Lenart, 2011), In
addition, SMEs and LEs are different, hence there
cannot be one-size fits all solutions. So far, most of
the studies have been focusing on LEs, more so in
developed countries. This study aims to compare
organizational practices that take place in LEs and in
SMEs in Namibia, during the post implementation
phase in order to understand issues that companies of
different sizes face and how they can be solved. It
also looks into factors that contribute to failure in the
same phase and how best they can be handled.
The paper seeks to answer the following research
questions:
1) How do ERP post implementation practices
differ in LEs and SMEs?
2) What causes failure in the post implementation
phase?
The objectives of the research are to gain a deeper
understanding of different practices that take place in
the post implementation phase for both LEs and
SMEs, and to identify factors that companies should
focus on in order to have a successful post
implementation phase. Companies of all sizes are
increasingly adopting ERP systems, but failure rates
243
Hasheela V..
On-premise ERP Organizational Post-implementation Practices - Comparison between Large Enterprises and Small and Medium-Sized Enterprises.
DOI: 10.5220/0005348802430250
In Proceedings of the 17th International Conference on Enterprise Information Systems (ICEIS-2015), pages 243-250
ISBN: 978-989-758-096-3
Copyright
c
2015 SCITEPRESS (Science and Technology Publications, Lda.)
remain high. SMEs usually have limited resources
and cannot afford to invest their resources in systems
resulting in failure. This research is therefore
important to understand how companies of different
sizes operate, after the completion of ERP systems
and to make recommendations for a successful post
implementation.
The rest of the paper is organized as follows:
Section 2 presents a literature review, Section 3
describes the research method, Section 4 presents the
results, followed by Section 5 that presents the
findings. Section 6 discusses the findings, while
Section 8 concludes the paper.
2 RELATED RESEARCH
2.1 Post Implementation Phase
The ERP post implementation phase starts as soon as
the system goes live into the hands of the users and
lasts until the system is replaced with a new one
(Markus and Tanis, 2000). After an ERP system is
implemented in an organization, practices such as
review, evaluation, support, performance evaluation,
and maintenance take place in order to ensure benefit
realization (Nicolaou, 2004; Ng, 2001). Infrastructure
management support, business process reengineering,
upgrading systems and network resource planning are
also very crucial in this phase (Esteves and Pastor,
1999). Ng (2001) pointed out that, apart from
maintaining the system for the purpose of realizing
maximum benefits, organizations also update their
systems in order to keep up with the support from the
vendors, who sometimes support a certain version for
a certain period, after which a client has to maintain
it themselves (Ng, 2001).
Several studies have reported that the main reason
why ERP post-implementation failure occurs is
mainly due to inadequate training, lack of top
management engagement, issues regarding external
consultancy, change management, and alignment of
the ERP system with the business objectives
(Davenport, 1998; Chang et al., 2008; Ruivo et al.,
2012; Peng and Nunes, 2010; El Sayed et al., 2013;
Kiriwandeniya et al., 2013). Hustad & Olsen (2011)
in their study found training to be a must after
implementation, as some users avoid using the system
due to reasons such as anxiety and lack of confidence.
Similarly, Soja (2006) identified user resistance, lack
of skills and interdepartmental communication as
constraints that can hinder ERP post implementation
success.
Mantakas & Doukas (2011) did a study on ERP
use practices in Greek SMEs, particularly analyzing
business processes use practices and deficiencies.
They found ERP system use deficiencies to be related
to the sizes of the companies. The smaller the
company, the more lack of know-how and
insufficient manpower (Mantakas and Doukas,
2011).
2.2 What Characteristics Distinguish
SMEs from LEs?
SMEs are known to be poor in human, financial and
material resources (Iacovou et al., 1995) . Due to this,
they are seldom willing to commit a large portion of
their resources to high fees that come with ERP
implementation (Buonanno et al., 2005). They also
lack strategic planning of information systems (Levy
and Powell, 2000). When compared to large
organizations, SMEs are at a disadvantage of being
unable to attract highly qualified workers, and this
leads to lack of competitiveness (Westhead and
Storey, 1996).
Hsin and Chin-Fang (2005) have found that
companies of different sizes have different ways of
managing their information systems. A system can be
managed by over 200 employees in an LE, whereas
the same system can be managed by one employee in
a small company (Hsin and Ching-Fang, 2005).
SMEs do not have formal structures, and their
management teams are usually small and focus on
what seems best for an organization. In addition,
small company owners often make all business
decisions, while decision making authority in LEs is
scattered among different management layers in large
organizations (Spanos et al., 2001).
Given the fact that post implementation poses
high risks of failure, it is very crucial for research to
suggest methods of improving post implementation
results. The previous studies (Chang et al., 2008;
Ruivo, Peng and Nunes, 2010; El Sayed, 2010;
Kiriwandeniya et al., 2013) have not, however,
specified whether the practices and failure factors
found are unique for companies of certain sizes or
whether they are size independent. The studies are
either done solely in LEs or in SMEs. Mantakas &
Doukas (2011) for example specifically focused on
SMEs in their study and recommended the role of the
company size to be investigated.
This study aims to fill this gap and provide
understanding of the differences and similarities
between large and small enterprises.
ICEIS2015-17thInternationalConferenceonEnterpriseInformationSystems
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3 RESEARCH METHOD
In order to gain first hand insight into ERP post
implementation activities, a multiple case study
methodology was employed, and six companies were
selected for the study. A multiple case study is used
to compare or analyse a particular phenomenon in
diverse settings (Walsham, 1995). A multiple case
study approach was chosen to enable us to compare
different practices in LEs and SMEs.
An explanatory case study was chosen for our
study, particularly because we wanted to obtain
information from users about how and why certain
events take place.
Given our desire to analyse interviews and to
build theories from them, we have chosen to use the
three coding techniques of grounded theory (Corbin
and Strauss, 1990). These include open coding, axial
coding and selective coding. Open coding according
to Glaser and Strauss (1967) is the first step that takes
place in the grounded theory coding process. It is a
process of collecting raw data and breaking it, and
categorizing it into segments in order to make it easy
to interpret (Glaser and Strauss, 1967). In this step,
we categorized our data into different themes,
followed by axial coding, whereby the relationship
between different categories were established. In the
selection coding stage, we established the core
category. A core category represents all categories
and groups them under one umbrella.
3.1 Data Collection
The companies interviewed ranged in size from 120
employees to 5000 employees. We have conducted
face to face interviews and in addition we have also
conducted some interviews on skype due to the
interviewees being in a different country. Altogether
6 companies were contacted. Three of them are LEs,
while the other three are SMEs according to the
definition of SMEs based on the EU commission
guidelines (European Commission, 2005). The
guidelines define that an SME is the one with less
than 250 employees with an annual turnover not
exceeding 50 million euro. The participants ranged
from CEOs, IT Managers and Business Analysts
(Table 1). The criteria used was that the companies
have implemented ERP at least two years before,
because according to Velcu (2007), a company can
only realize benefits after two years of
implementation.
We used semi structured questions that are aimed
at gaining insight into the post implementation
activities discovered from the literature review
Table 1: Companies and Interviewees.
Case
Interview
role
Company
Type
Company
Size
A
IT Manager
SME 120
Owner
B
Business Analyst
LE 5000
IT Manager
C
SAP System
Analyst
LE 1134
SAP System
Analyst
ERP Manager
D
Owner
SME 240
IT Manager
E
Owner
SME 200 IT Manager
End user
F
Senior Business
Analyst
LE 1500
Business Analyst
such as: Maintenance, Decision Making, Benefits
Evaluation, Consultant involvement and Training
(Somers and Nelson, 2004).
4 RESULTS
Data analysis was performed using a qualitative
research analysis tool ATLAS.ti. As previously
stated, we followed the three coded technique
grounded theory method by Strauss and Corbin
(1967). In the study, we focused on activities and
issues related to the post implementation phase. As
we read through the interview questionnaires, we
started making open codes based on these activities
and writing memos related to the codes. As a result,
143 codes were produced.
4.1 Categories
According to Seaman (2008), when the study
objectives are clear as it is the case in our study, a set
of preformed codes can be constructed before the data
collection process, and these can be used to categorize
the data. These codes can be initialised from the
research questions or from predefined variables of
interest. This is very useful for getting the process
started (Seaman, 2008). We have opted to use this
approach to code our data. Our categories were
formulated based on the research questions and on the
themes used to construct interview questions. Table 2
shows these categories.
On-premiseERPOrganizationalPost-implementationPractices-ComparisonbetweenLargeEnterprisesandSmalland
Medium-SizedEnterprises
245
Table 2: Categories and their descriptions.
Categories Descriptions
Performance &
Usability
This category aims at looking at: a)
User involvement, b) Performance
measurement c) Training
Infrastructure
management
support
This category looks at a)
Management Influence b) Decision
making
Maintenance
This category includes: a) System
upgrades b) External consultancy
and Vendor involvement
5 FINDINGS
5.1 Performance Measurement
Performance measurement is seen as a crucial
element for managers directing projects, to know the
effectiveness of the system and to know where to
institute changes if necessary. We observed a
difference on how different organizations value this
exercise. All LEs interviewed did not do any
performance evaluation for their ERP systems. “The
benefits were as clear as daylight for everyone to see.
The previous system only had ± 20 users, the SAP
ERP solution has over 600 users.” ERP Manager,
Case C. However all SMEs admitted to have
appointed auditors to evaluate the invested systems.
“Internal Auditors came to evaluate what was
delivered vs what was promised and advised
management and the board on the investment status,
as well as recommendations on the way to rectify
problems identified.” Owner, Case E. Based on this
observation we have formulated our first hypothesis:
SMEs seem to value performance evaluation more
than LEs.
5.2 User Involvement
It is crucial for users to be involved in the ERP project
from the beginning, in order for them to realize the
system importance. Even though this is not part of the
use and maintenance phase, involving users in the
implementation process is very important in order for
them to understand its importance. Chow and Leitch
(1997) stated that user involvement leads to perceived
usefulness of the system that leads to behavioural
intention. Remarkably, we have found that not all
companies involve users from the beginning. The
studied LEs claimed to discuss the objectives of the
system with users and included them in workshops
and meetings. "The objectives and scope were
discussed through various meetings, emails,
communique and memos and shared with everyone."
SAP Business Analyst, Case C. The studied SMEs
however preferred to have users get involved only
after the project was complete, which could have an
effect on their intention of use.
Decision making was also approached differently
in different organizations. Studied LEs also claimed
to have involved different line managers in their
decision making before management made the final
decision. Whereas the studied SMEs preferred not to
involve technical teams or line managers in their
decision making. Line managers did not have
decision making authorities, neither do they have any
say in strategic planning. Top management made all
the strategic decisions and left the line managers with
the responsibilities of taking care of operational
activities. “We use a top down approach. We have to
get authorization from CEO on all IT related matters.
We are however empowered to make
recommendations that are then forwarded to
management for final endorsement. But we do not
have authority to make any decisions.” IT Manager,
Case E
The observation in Case E suggests that, no matter
how vital a certain action is, it will not necessarily
take place if management does not concur.
Based on this observation, we have formulated
our second hypothesis: SMEs use top down decision
making approach in their ERP projects, while LEs
use the bottom up approach.
5.3 User Effectiveness
Previous research has identified user resistance as one
of the constraints that hinder ERP success (Soja,
2006). However, based on the findings from all the
companies that were interviewed, the users were
willing to use the systems, mostly due to the fact that
training was provided. On-going skills enhancement
is a crucial post-implementation activity needed to
maximize efficiency (Somers and Nelson, 2004). All
organizations claimed to have sent employees for
training. LEs concentrated on functional training.
They also trained selected users to enable them to
train others. Therefore, user guidance is available
during actual use. The main problem experienced in
studied SME regarding training was that, it was
provided before go-live, resulting in users lacking
confidence when they use the actual system. They
needed the training to be repeated whenever they did
not understand anything. However, they did not have
a dedicated personnel to train them. “The problem is,
we do not have a dedicated trainer in the company.
ICEIS2015-17thInternationalConferenceonEnterpriseInformationSystems
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But we have training manuals that come as part of the
training package, but it is not always sufficient.
Sometimes we are really stuck that we have to call in
a consultant.” Business Analyst, Case D
With this observation we have formulated our
third hypothesis: On-going enhancement positively
affect user effectiveness, and LEs seem to invest in
on-going enhancement more than SMEs.
5.4 Management Influence and
Resources Dedication
Management support is essential when it comes to
resources dedication. If management understands the
need for the system, they will be open to avail
resources should a need arise. The level of IT
knowledge of the CEO in the company also matters
in SMEs, because unlike in LEs, decision making
usually lies with one person and if they do not
understand the benefits of having an up to date
system, they will not be keen to spend extra costs.
The LEs have indicated to always make room for
releasing funds when necessary. “The company has
always made funds available to improve the system”
Business Analyst, Case C. However for SMEs, the
management tries to stick to budget as much as
possible. “We weight the benefit against the cost, to
measure the value addition. We try to stick to the
budget otherwise you end up spending additional
costs that you did not consider.” Owner, Case A.
“Few licenses were purchased and we only
discovered at go-live that we were under-licensed.
Hence, we had to pay more for additional licenses. So
as long there is a strong business case that will yield
benefits, we unfortunately have to folk out that extra.”
IT Manager, Case E.
With this observation we have formulated our
fourth hypothesis: LEs are more open to out of
budget resources dedication than SMEs.
5.5 External Consultancy and Vendor
Involvement
Literature indicates that due to a company’s lack of
experience, companies usually hire a consultant with
experience (Somers and Nelson, 2004). External
consultants offer outside expertise and knowledge. It
has been observed that all studied companies have
used external consultants, however not for the same
purpose. The SMEs used consultants for overall
project management as well as independent quality
assurance. Since these organizations are core business
focused, they needed external consultants to assist
them in case of system difficulty. Whereas LEs only
needed consultants for producing end user manuals
and blueprints. LEs have indicated to have internal
project management teams, whereas SMEs lack in-
house expertise. “At the time of implementing ERP,
there was no internal project management capability
and hence an external consultant was hired to
oversee and manage the implementation process.”
Owner, Case D
As a result of the implementation process in SMEs
being managed by external consultants who might not
have all the necessary information, results can be an
unsatisfactory system. This happened in Case C,
whereby requirements were not fully understood.
“The document management system requirements
were not properly understood, hence the system is not
fully operational as expected. There were a number
of critical systems functionalities that were not
clearly defined and as a result not implemented. So
the system does not represent all business processes.
In this case, further customization became necessary.
” IT Manager, Case E
Somers & Nelson (2004) stated that a relationship
between a customer and the vendor is very crucial,
whereby a vendor can enhance the customer’s
efficiency (Somers and Nelson, 2004). A project
usually relies on vendor support even after it is
complete. All organizations interviewed have a good
relationship with the vendor. Most ERP vendors
usually give technical support until twelve to eighteen
months after the release of a new version. All
interviewed companies had up to date versions of
their systems. This somehow explains that, when
companies implement the ERP, they understand that
they would need to be paying for new licenses after a
certain period in order to have their vendor’s sup-port.
“It is very critical to have a good relationship with the
vendor, you always need them along the way. We are
on a maintenance agreement with them, and they are
also offering us support services.” Senior Business
Analyst, Case F
With this observation we have formulated our
fifth and sixth hypothesis: Unlike LEs that have
dedicated internal project management teams,
SMEs involve external consultants in
requirements decision making, which can have a
negative effect on system satisfaction.
Hypothesis 6: Company size has no effect on the
vendor relationship.
5.6 Issues
All companies have admitted to have faced some
issues regarding their implemented systems. Some
problems were common in all organizations, while
On-premiseERPOrganizationalPost-implementationPractices-ComparisonbetweenLargeEnterprisesandSmalland
Medium-SizedEnterprises
247
others were common in SMEs only. All companies
regardless of company size complain about the
unfriendliness of the system. “It is too complex,
continuous training is a must. I mean, users need to
have access to training in order to help reduce
anxiety. Even eLearning maybe, something
affordable.” IT Manager, Case A. Most companies
have also complained about lack of flexibility. In
addition to these problems, all studied SMEs have
indicated high cost as a major issue, as they have
limited funds. Two of them also indicated the
problem of functionalities not being implemented due
to misunderstandings of requirements, and these were
only found out after sign off. “Lack of funds is our
major problem. We cannot implement other modules
now, considering how expensive it is to maintain the
existing ones. But don’t get me wrong, the investment
was totally worth every penny.” Owner, Case D.
With this observation we have formulated our
seventh hypothesis: Regardless of investments
made on the ERP systems, all organizations
experience some post implementation issues.
6 DISCUSSION
The study generated seven hypotheses that describe
how organizational activities and players differ in
SMEs and LEs. We have identified several different
point of views regarding post implementation
practices in companies of different sizes.
Patil et al (2012) in their study have argued that it
is important to evaluate the performance of the ERP
system in order to ensure that it reached its goal. We
have found that this is commonly practiced in SMEs.
LEs did not prioritise performance evaluation.
However, it is evident that the SMEs found it
important to take count of the value of their money,
since ERP implementations are quite costly.
We have also observed that LEs involved
employees from the beginning, discussing the
objectives of the system with them. However SMEs
often kept the communication about the system
objectives at the management level. End users were
seldom involved in any planning or meeting
discussions. As per El Sayed (2013)’s study, user
involvement contributes to ERP success. Somers &
Nelson (2004) also argued that not involving users in
the project results in user resistance. Therefore it is
important for SMEs to involve end users more in
discussions that may have an impact on their roles.
Similarly, line managers did not have any decision
making authorities, neither did they have any say in
strategic planning. Top management made all the
strategic decisions and left the line managers with the
responsibilities of taking care of operational
activities. This has shown that top down approach
lacks transparency.
Training is vital for every company adopting ERP,
due to its complexity. This is regarded as one of top
success factors that lead to ERP success. In our study,
we have found that all companies had their users
trained. The difference however is that, unlike LEs,
SMEs did not invest in in-house training. According
to Chang et al.(2008), enhancement of skills should
be ongoing in the post implementation phase. Hustad
& Olsen (2001) found the same results, which
suggested that on-going training should be
implemented to avoid anxiety and lack of confidence.
Our study has found that the studied LEs usually
made funds available for extra costs that may arise.
We have observed however that SMEs tried to stick
to budget as much as possible. This could probably be
a result of their lack of funds. However as Reel (1999)
has stated, it is very important to dedicate all the
necessary resources to a project to avoid its failure.
Therefore it is recommended for SMEs to study the
necessary resources before deciding to implement
ERP.
External consultants are known to be of
importance in ERP projects, as they bring experience
and knowledge to the organization. We have found
that SMEs also outsourced their project management
activities to external consultants, because they often
do not have a project management team in-house. As
mentioned by one SME employee, the company has
experienced missing critical functionalities that were
not implemented because they were not understood.
This finding shows that even though external
consultants come in handy, they may not always
understand the company’s procedures and objectives.
Therefore it is important to involve in house
employees on the project management team to
oversee the work done by external consultants.
We have observed that all organizations
interviewed have a good relationship with the vendor
and enjoy the vendor’s support regarding
maintenance and other technical services. This was
common in all organizations. Many have claimed to
have a contract with their vendors for certain services.
This goes to show that all the companies understand
the importance of maintaining a good relationship
with the vendor, in order to gain lifelong strategic
values.
As stated by Iacovou (1995), SMEs usually lack
human and financial resources, therefore they are
careful when it comes to spending. This has been
observed in this study, as many issues experienced in
ICEIS2015-17thInternationalConferenceonEnterpriseInformationSystems
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SMEs are related to cost. Since ERP implementation
involves ongoing costs, such as those that result from
system upgrades and maintenance, companies found
themselves spending more than they have planned.
However this is necessary to ensure the system
achieves its desired results.
7 CONCLUSIONS
This study focused on activities and players in the
ERP post implementation phase. We have observed
that there are some activities that take place in the
studied SMEs more than in LEs, such as performance
evaluation. There were also some practices such as in
house training that have been observed to take place
in LEs but not in SMEs. There is a need to have
tailored training for SMEs based on their
implemented system, in order to cut costs for bringing
in a consultant, since they do not have the in-house
technical man-power. Their training usually takes
place before the system go live and this is not
efficient.
We have also found differences in the decision
making process regarding ERP between companies of
different sizes. The study has found that the main
reasons why activities take place differently in SMEs
and LEs is because of the differences in company
structures, sizes, cost constraints and decision making
processes.
SMEs can learn from LEs to involve more
employees in the requirement specification process,
in order to allow them to state their processes better
and to have satisfactory systems.
The grounded theory method undertaken in this
study has allowed us to build theory from our
findings. However our findings need more
observation in more companies, also looking at small,
medium and micro companies as separate entities.
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