ERP%20Implementation:%20An%20Exploratory%20Study%20of%20Customization%20Levels

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ERP ImplementationAn Exploratory Study of
Customization Levels

• Marcus Rothenberger
• University of Nevada, Las Vegas
• Mark Srite
• University of Wisconsin-Milwaukee

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Objective

• ERP System is an integrated information system
  that coordinates key internal processes of a firm
  across multiple functional areas
• Adoption is a major challenge
• Appropriate versus excessive levels of
  customization
• Study investigates underlying customization
  factors

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Problem

• High customization has been associated with
• High adoption cost
• High maintenance cost
• High upgrade cost
• Higher adoption risk
• Lower perceived organizational risk
• Lower organizational benefit (lost opportunity
  for BPR)
• Companies pursue different customization
  strategies
• Vanilla and BPR (modifications limited to
  configuration)
• Modifications only through add-ons
• Modifications only through ERP code changes
• Both 1 2 (often associated with little BPR)

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Research Questions

• Why do some organizations highly customize their
  ERP implementation?
• What are the project factors that promote high
  customization?
• What are the environmental factors that promote
  high customization?
• How do the factors cause high customization?

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Qualitative Research Approach

• Theory Building from Case Studies (Eisenhardt,
  1989)

Multiple Sources of Evidence (Construct Validity)
Consultant Interviews
Comparative Case Studies
Analytical Generalization (External Validity)
Explanation Building (Internal Validity)
Explanation Building (Internal Validity)
Literature
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Data Collection

• Structured Interview Questions Pre-Tested with an
  SAP Expert and Refined
• Case Studies
• 2 interviews, 50-70 minutes each
• A technical project lead at each ERP adopter
• A functional project lead at each ERP adopter
• Consultants
• 3 Consultants, 50-70 minute interview with each
  consultant
• North America
• Central Europe
• Southern Europe
• Continuous Analysis and Refinement of Questions
  during Early Stages of Data Collection
• All Interviews Taped and Transcribed

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Case Variations

• Customization Level / Type
• Vanilla, Add-ons, Code Modifications
• Role of Consultants
• Educating internal staff, selected for specific
  tasks, leading project
• Culture
• Dimensions of culture including Power Distance
• Internal ERP Knowledge
• Up-front knowledge, benchmarking, learning from
  consultants
• Role of Operational Departments
• Project lead, team members, low involvement
• Motivation for Adoption
• Organizational (merger, process improvements)
• Technical (Y2K, need for new system)
• Success
• Schedule, Budget, User Satisfaction,
  Maintainability

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Customization Model
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Empirical Support
Causal Relationship Southern EuropeanUtility Company Southern EuropeanFood and Beverage Manufacturing Co Central EuropeanFinancial Institution 1 Central EuropeanFinancial Institution 2 North AmericanBusiness Product Manufacturing Co North AmericanEngineering Company North AmericanUtility Company North AmericanConsumer Products Manufacturing Co Southern EuropeanConsultant Central EuropeanConsultant North AmericanConsultant
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Generalizability

• Study investigates SAP adopters in various
  industries
• Results developed to broaden theory by
  consolidating them with existing theories
  (analytic generalization supports external
  validity)
• May apply to other ERP systems or even other COTS
  Software as adoption issues are similar
• May apply to other industries as adoption issues
  are not industry specific
• Future Research Testing of the Model through
  Larger Scale Survey

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Questions?