Multinational ERP implementation introduces another dimension of complexity—national differences—into the already complex nature of ERP implementation in the context of global information management. This study reviewed several issues critical to the success of international ERP implementation. Using both case research and secondary data, we examined ERP implementation at several multinational companies in the US, Taiwan, China, and Europe. Our primary purpose was to investigate the dimensions of national differences and how they affect ERP implementation practices across nations. Our findings suggest that language, culture, politics, government regulations, management style, and labor skills impact various ERP implementation practices at different countries. Understanding such effects will enable companies to be more proactive in planning project budget and duration.
An ERP is an information system that manages, through integration, all aspects of a business including production planning, purchasing, manufacturing, sales, distribution, accounting, and customer service [1]. In the past few years, ERP has become a “must have” system for many firms to improve competitiveness. More than 60% of US companies have installed or planned to install a packaged ERP system [2]. The popularity of ERP systems is also evidenced by its sales exceeding $30 billion in 2002, an increase of 300% since the late 1990s.
Information managed by ERP systems can play an active role in international supply chain systems to gain a competitive advantage [3]. Take a simple ERP function as an example. When a sales person for a multinational company enters an order from a customer in any location in the world, the transaction data can permeate the entire supply chain's (including suppliers’) information system. The system updates the inventory of parts and supplies automatically, changing the production schedules of overseas facilities and balance sheets at headquarters as well. Thus, the employees of different departments in various countries quickly have the information needed to complete the processing of their jobs. Feedback is fast and efficient. From this information the sales person can inform customers of updated delivery dates, and the managers can receive accurate inventory status immediately. ERP facilitates the enterprise-wide integration of information by tying together suppliers, distributors, and customers without geographical restrictions. To summarize, an ERP system provides multinational organizations with extensive information and coordination of supply chain functions. In this vein, Davenport [43] notes, “for the first time ever, information will flow seamlessly across diverse business functions, business units and geographic boundaries”.
While companies worldwide have made substantial investments in the installation of ERP systems, implementation has proven to be unexpectedly difficult, and final benefits have been uncertain. Several researchers have concluded that failures are usually the result of business problems instead of technical difficulties [4], [5] and [6]. The technical aspect of installing ERP systems is undoubtedly critical, but the management aspect of ERP systems could have an even greater impact on the success of the system or use. Davenport [4], Bowersox et al. [7], and Jacobs and Whybark [8] asserted that ERP was not only a software package but also “a way of doing business”. There is no single “best process” to do business as ERP systems assume. “Misfits”, the gap between the functionality offered by ERP systems and that required by the adopting company, would arise from country-specific or company-specific requirements [9]. These misfits can be related to data format, operating procedures, and output format, which force companies to make package and/or organizational adaptation during the implementation process. Studies indicate that no ERP implementation can succeed without resolving those misfits [9] and [10]. Even worse, firms can lose their source of competitive advantage by adopting ERP systems that do not fit their business strategies [4].
