A Framework for Understanding the Stakeholder Involvement in ERP Selection: The Case of HSP and NZM

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A Framework for Understanding the Stakeholder
Involvement in ERP Selection The Case of HSP and
NZM

• Liaquat Hossain
• Information Systems
• Basser Dept of Computer Science
• The University of Sydney
• Australia

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Outline of the Presentation

• Introduction Background to ERP
• ERP Research Problem Its Context
• A Normative Framework for ERP Selection
• The Design of the ERP Research
• A Descriptive Framework for ERP Selection for New
  Zealand
• Towards a Predictive Framework for ERP Selection
• Conclusions

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The Aim of this ERP Study

• A stakeholder involvement framework is developed
  and applied here to understand stakeholders
  involvement in the selection process of ERP
  systems for the Health Service Provider (HSP) and
  the New Zealand Manufacturing (NZM)
• A multiple case study design approach is used
  here to collect primary data from the HSP, the
  NZM and five leading ERP vendors.

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Introduction Background to Enterprise Resource
Planning

• What is ERP Systems?
• ERP systems are a multi-module application
  software packages.
• provides integration of an organisations
  business information processing.
• Supports the integration of functions such as
  sales, marketing, human resources and others.
• Originated from the MRP systems.

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The Benefits of ERP Systems

• The implementation of ERP removes inconsistencies
  enables the firm in attaining consolidated
  reports.
• More than 60 percent of the Fortune 1000
  companies are implementing packaged ERP systems
  (Kraft, 1999).
• ERP can be used for enhancing-
• supply chain management (SCM)
• customer relationship management (CRM)
• professional service automation (PSA)

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The ERP Vendors

• _______________________________________
• Vendors Product Revenue (m)
• _______________________________________
• SAP R/3 5,079
• Oracle Oracle 2,140
• PeopleSoft PeopleSoft 1,313
• Bann Bann 736
• JD Edwards OneWorld 934
• _____________________________________________
• Table 1. A Summary of the product and revenue of
• the ERP software offered by five leading vendors

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ERP Research Problem Its Context

• Trends in ERP Selection 1997 1998 1999
• Portfolio Approach No No Yes
• SMEs No Yes Yes
• Research Surveys No Yes Yes
• Fixed Price ERP No No Yes
• CRM No No Yes
• Outsourcing ERP No Yes Yes
• Partnerships No Yes Yes
• Compact Packages No No Yes
• OO Programming Paradigm No Yes Yes
• SCM No Yes Yes
• Management Framework Yes Yes Yes
• ERP Consultants No No Yes
• Application Integration No Yes Yes

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ERP Selection-Preliminary Investigation

• Stakeholders involved in the selection
• and implementation of ERP

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Problem Statement

• How is the selection of ERP Systems being
  practiced by the HSP and NZM?
• What is the interaction between internal and
  external stakeholders in the ERP selection
  process of HSP and NZM?
• How can the development of a Stakeholder
  Involvement Framework (SIF) help improve the
  selection and implementation of ERP systems?

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A Normative Framework for ERP Selection
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The Design of ERP Research
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Background of the HSP

• HSP
• is a crown health enterprise established in 1993.
  
• The company provides hospital-based services,
  community-based and domiciliary services.
• The organization has a board of directors
  appointed by the minister for crown health
  enterprises.
• The principal officer is the chief executive
  officer (CEO) who reports to the board.

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Background of the HSP

• HSP maintains three broad categories of records
  and files
• medical records (written case-notes, lab reports,
  x-ray reports etc.),
• personnel records and administrative financial
  records, each in hard copies and computer files.
• The systems that were considered for the ERP
  project included the personnel, administrative
  and financial records systems only.

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Background of NZM

• NZM
• was established in the late 19th century
• produces a wide range of food products that are
  sold to manufacturers and retailers both in New
  Zealand and export markets
• The company had 100 of the NZ market, which was
  under Government "Supervision" until 1986, when
  the Government removed all import and financial
  controls.
• At that time it was realized that for NZM to
  compete in a deregulated market, it would have to
  change from being production driven to market
  driven.

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Background of NZM

• NZM is controlled by a Board of Directors with a
  CEO who reports to the board
• A group of three shareholders own the company.
  Shares distribution is 50 to the main partner
  and 25 to the other two.
• The three shareholders own similar percentages of
  the Australian sister company, Australian
  Manufacturing (AUM) who produces similar
  products.
• NZM and AUM are separate business entities. Being
  in the same industry and of similar operations,
  their financial results are often compared by the
  shareholders.
• Current information systems are custom-made
  software that were developed in-house during the
  late eighties.

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Conclusions

• Involvement of all stakeholders to increase
  ownership
• Spreading control
• Sufficient information availability to
  stakeholder during selection
• Awareness and identification of influence
• Evaluation committee

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Implication of the SIF for ERP Selection
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The relationship between SIF and the ERP project
timeline