ERP (Enterprise resource planning) systems implementation is a complex exercise in organizational innovation and change management. Government organizations are increasing their adoption of these systems for various benefits such as integrated real-time information, better administration, and result-based management. Government organizations, due to their social obligations, higher legislative and public accountability, and unique culture face many specific challenges in the transition to enterprise systems. This motivated the authors to explore the key considerations and typical activities in government organizations adopting ERP systems. The article adopts the innovation process theory framework as well as the (Markus & Tanis, 2000) model as a basis to delineate the ERP adoption process. Although, each adopting organization has a distinct set of objectives for its systems, the study found many similarities in motivations, concerns, and strategies across organizations.
Enterprise Resource Planning systems are reshaping business and government organizations as they promise to solve the challenges posed by portfolios of supposedly disconnected and uncoordinated applications (Davenport, 1998). Also referred to as enterprise-wide systems or enterprise systems due to their enterprise-wide scope, these integrated enterprise-computing systems provide seamless integration of all the information flowing through an organization Davenport 1998 and Markus and Tanis 2000. According to the research firm Meta Group, more than 70% of U.S. federal, state, and local government agencies, drawn by the same reasons as businesses, have installed ERP systems or are looking to implement an ERP system in the next five years. ERP vendors are wagering that the coming years will see government agencies around the world making a big push to purchase ERP applications to amend or replace their aging legacy systems.
Organizations that have adopted successfully ERP systems to manage their operations view them as one of the most important innovations that have lead to the realization of substantial tangible and intangible improvements in a variety of areas Davenport 1998, Davenport 2000 and Markus and Tanis 2000. However, there are a number of examples in which organizations were not successful in reaping the potential benefits that motivated them to make large investments in these systems Davenport 1998, Davenport 2000 and Markus and Tanis 2000. In the near-term, managers find ERP projects to be the most difficult systems development projects (Wilder & Davis, 1998). ERP projects are set apart by their complexity, enterprise-wide scope and challenges posed by the accompanying large-scale organizational changes in transition to new systems and processes. In the long-term, the impact on the organization’s information technology (IT) support and maintenance and organizational performance of ERP projects is still unknown (Glass, 1998). Despite wide spread popularity of ERP, not all organizations are aggressively adopting ERP systems. Some have adopted certain stand-alone or partially integrated functional modules, while some organizations have even discontinued implementing ERP systems after adoption Davenport 1998 and Bingi et al 1999. 1
ERP implementation is a complex exercise in technology innovation and organizational change management (Markus & Tanis, 2000). The ERP adoption process is also important because ERP applications lock the operating principles and processes of the organization into software systems. Organizations must reconcile the technological imperatives of the enterprise systems with the business needs (Davenport, 1998). The cost, complexity, investment of time and staff, and implications of modifications, make a rollback after adoption very difficult. One extreme example of not getting strategic ERP adoption choices right is FoxMeyer Drugs, where the bankruptcy trustees are suing its systems’ vendor and consultant company, blaming the ERP system for its business failure (Davenport, 1998).
The government of Canada is exploring new and better ways of delivering its services to Canadians, including alternative service delivery, public/private partnerships, and privatization. Many alternatives to traditional departmental structures for delivering programs, such as ongoing program review, a move to corporate-like administration and result-based management, have been identified. The government is vigorously pursuing those alternatives. The strategic use of IT is playing a key role in this modernization process. The Canadian government’s management of information technology policy (last revised in 1994) has set its objectives, “to ensure that information technology is used as a strategic tool to support government priorities and program delivery, to increase productivity, and to enhance and support its corporate goals such as service to the public” (Nilsen, 1999, p. 15). The policy goes on to state that the government is to “… use a business-case approach… . . to select and approve government information technology based investments” and requires government institutions to “… make information more easily accessible” (Management of Information Technology, 1994, pp. 1–2). The Treasury Board Secretariat has established a new three-year strategic direction for information technology, which will guide progress and investment across government (OAG Report, 1999). A major information systems initiative in the direction towards realization of corporate-like administration and result-based management is the adoption of enterprise resource planning (ERP) systems by government departments, agencies and crown corporations.
This research explores ERP implementation projects in government organizations that have a unique culture and face many challenges due to their social obligations and higher legislative and public accountability. We explore the key considerations and successful strategies in typical activities in the ERP implementation projects such as selection of project manager, ERP vendor, and implementation partners; constitution of project team; challenges in training; and upgrading the infrastructure; ongoing project management; quality assurance; and stabilization of ERP. The theoretical foundation is based upon the innovation process theory approach wherein we adopt the “ERP systems experience cycle” framework of (Markus & Tanis, 2000) to delineate the innovation process. The results presented are based on data collected from 10 Canadian government organizations by means of a questionnaire and structured interviews of ERP project managers. The next section provides a literature review of ERP and the organizational innovation process of ERP implementation. Section 3 describes the methodology used in collecting data and analysis. Section 4 presents findings and managerial implications, and Section 5 presents conclusions and recommendations for further research.
This research is at an exploratory level as ERP is a relatively new concept and not much
empirically supported research is available. While it does not produce generalizable results, the
reasonably representative sample selected provides valuable insight into the ERP implementation
process and documents critical ERP implementation issues in government organizations. The
research identi
fi
es a number of critical management challenges in the ERP implementation
activities such as training, upgrading infrastructure, project management, and stabilizing ERP
systems. Organizational strategies in testing and quality assurance, increasing user acceptance,
and resolving challenges in shakedown are also documented. A number of
fi
ndings from the
research may be helpful to government policy makers in successfully institutionalizing ERP
systems which have been adopted by a large number of government departments world-wide, a
major shift in the traditional use of proprietary systems.
Most of the ERP systems are generically designed for private sector and for-pro
fi
t organiza-
tions, and a number of respondents con
fi
rmed modifying the software as a strategy to meet their
government speci
fi
c requirements. This not only required extra investment but also complicated
the implementation of new software releases. Given the increased number of ERP adoptions bygovernment organizations, government may be able to combine their resources to negotiate an
increased focus on government speci
fi
c needs from ERP vendors in new releases.
Outsourcing skills from consultants came out as a widely accepted method in ERP
implementation. However, no formally modeled methodology was used for evaluating
technical and management consultants. Interestingly, an organization also found incompetent
consultants to be a major challenge in implementation. Respondents in our study identi
fi
ed
availability and retention of skilled project persons as a major roadblock. A good reason may
be the de
fi
cient Human-Resource policies and reward structures to attract and retain skilled
project persons. A review of Human-Resource policies and reward structures would bene
fi
t
the government organizations in retaining and attracting ERP skilled employees. As well it
would reduce dependence on consulting and aid better ongoing support for ERP systems.
It was obvious from the results that in implementing ERP systems organizations faced
more behavioral and management related challenges than pure technical glitches such as
software bugs and technical dif
fi
culties in con
fi
guration. These included end user not being
ready, resistance to change, lack of training, lack of co-ordination between functional groups,
lack of project planning. When asked about the lessons learnt from the project, most of the
respondents resolved to stress more on behavioral and management issues of implementa-
tion, and improving the processes. As one respondent commented:
“
In essence, ERP deployment in itself saves nothing and does not improve anything. It
’
s the
people and processes that create bene
fi
ts.
”
In essence government organizations may focus on behavioral issues of ERP implemen-
tation such as buy-in from the organization, early involvement of systems key users and
frontline managers, and increased communication about expected changes. Government
organizations may also focus on improving their processes more than just modifying the new
systems to
fi
t the requirements of their existing processes. A key component of process
improvement is developing the capability of the people managing the processes by providing
them with training around new and ef
fi
cient ways of executing their responsibilities with new
systems.
Integration bene
fi
ts promised by ERP cannot be realized without integrating mechanisms
such as standardization of work processes, and an output and supervision structure that
promotes co-ordination between departments towards end goals of optimizing all the cross-
functional business processes. Interestingly, very few respondents had organizational initi-
atives towards revising their output and supervision structure to support the new processes
implemented with ERP systems adoption. Because the government legislates procedures,
government organizations may
fi
nd greater dif
fi
culties in changing structures in comparison
to the private sector. Nonetheless, conscientious efforts should be made towards implement-
ing complementary supervision structures and performance measures to realize integration
bene
fi
ts.
A number of avenues for future detailed research can be recognized that are based on
organizational concerns found in this study. For example a detailed study on training, one of
the major organizational concerns, would ascertain how ERP training can be effectively
carried out. ERP systems introduce a process centric view into largely functionally organized
government organizations. It would be interesting to study adoption of process focus ingovernment organizations. Another natural extension of this study could be to explore
organizations which have stabilized their ERP systems and have moved to the Onwards and
Upwards stage, a stage where the organization realizes business bene
fi
ts. The following
comment by one of the respondents testi
fi
es to the scope of research in the Onward and
Upward phase:
“
ERP is a gigantic system; we do not have the staff to explore every corner of ERP to see
what all the capabilities of ERP are. There are not many ERP delivered reports, we have to
create our own reports; we have not done a lot much of that, we haven
’
t implemented all the
reporting.
”