Managing client–consultant relationships to derive benefits from ERP projects

Purpose

Enterprise resource planning (ERP) consultants have the expertise required to understand the specific contextual needs of an ERP client, implement tailored business processes that meet those needs, and ensure that no potential benefit offered by the ERP remains unexplored by the client. However, conflicts between ERP clients and consultants are a significant source of non-benefit realisation, making managing client–consultant agency crucial to ERP post-implementation benefits realisation. This paper aims to elucidate how managing client–consultant agency affects the benefits derived from ERP systems.

Design/methodology/approach

This paper uses microfinance institutions in 15 sub-Saharan African countries to explore different paths through which managing client–consultant agency leads to benefit realisation in ERP projects. It uses partial least squares structural equation modelling to analyse data from 127 managers and explains the results using insights from agency theory and the information system (IS) success model.

Findings

This paper reveals three routes through which contractual agreements and conflict resolution strategies lead to benefits realisation in ERP projects.

Originality/value

This is the first study that attempts to provide quantitative evidence of how managing the complex relationship between ERP project stakeholders affects ERP project success. It also contributes a novel theoretical model for ERP benefits realisation to complement existing research on ERP agency issues, critical success factors, and benefits realisation.

Ashok Leyland

An organization that has been traditionally known to have a strong in house information technology development team and has successfully managed a home grown ERP solution for over a decade faces a transition point. Ashok Leyland, a large leading Indian automobile manufacturer is faced with the dilemma of moving to a product based ERP platform or continuing with the homegrown ERP solution. The challenges with the homegrown ERP solution are evident to the GM, but the potential challenges of the product platform are not crystal clear. What path should he take?

Industry Variables Affecting ERP Success and Status

This manuscript analyzes the views of top financial executives on the information systems (IS) in their organizations and to study the level of enterprise resource planning implementation success and well as current status of activity in ERP systems. Specifically, ERP success and status were studied in 2010 as well as the effect of company size, level of ownership, and industry. An analysis of secondary data obtained from the 2006 and 2010 Financial Executives International comprehensive survey-based research on technology issues for financial executives. The results of this study are further explored deeper in the article.

Factors affecting ERP system implementation effectiveness

Purpose

Enterprise resource planning (ERP) systems enhance productivity and working quality by offering integration, standardization and simplification of multiple business transactions. The present study seeks to introduce a conceptual framework that investigates the way that human inputs (top management, users, external consultants) are linked to communication effectiveness, conflict resolution and knowledge transfer in the ERP consulting process, as well as the effects of these factors on ERP system effective implementation.

Design/methodology/approach

The examination of the proposed conceptual framework was made with the use of a newly developed questionnaire. The questionnaire was distributed to a group of 361 Greek companies that have implemented an ERP system. Information technology (IT) managers were selected as the key respondents of the questionnaire. After the completion of the four month research period (September to December 2008), 108 usable questionnaires were returned (response rate=31 percent approximately). The empirical data were analyzed using the structural equation modelling technique (Lisrel 8.74).

Findings

The main findings of the empirical study can be summarized in the following categories: the assistance provided by external consultants during the ERP implementation process is essential; knowledge transfer is an extremely significant factor for ERP system success; knowledge transfer concerning technical aspects of ERP systems is more important than effective handling of communication, as well as conflict resolution among organizational members; the role of top management support seems to be of less importance that the one provided by users.

Research limitations/implications

The present study is limited by the poor definition of its population (due to lack of available data) and the relatively small size of the sample.

Practical implications

The paper points out areas that adopting companies should emphasize in order to successfully implement an ERP system and, therefore, harvest its potential benefits.

Originality/value

The paper proposes an enhanced conceptual framework that examines vital issues concerning ERP system effective implementation, thus, providing valuable outcomes for decision makers and academics. The originality of the paper lies in its three dimensional approach.

Agency theory and consultant management in enterprise resource planning systems implementation

Enterprise resource planning (ERP) systems are rapidly becoming the foundations to the decision support systems of many organizations, but have all too often failed to deliver their expected benefits. Most ERP implementation projects are carried out using implementation consultants hired from outside the client firm. The current study treated the consultants as agents and the clients as principals, and applied agency theory to test the consultant-client relationship as a predictor of ERP implementation project success.

A survey collected responses from 192 client project managers who worked on the ERP implementation process in their organizations. Data analysis via structural equation modeling showed that more consultant monitoring predicts less moral hazard (i.e., consultant shirking), that less moral hazard predicts greater ERP project success, and that more monitoring directly predicts such success. However, the analysis failed to support expectations that more pre-qualification efforts (i.e., screening of the consultant) would lead to less adverse selection (i.e., the consultant's misrepresentation of skills) or that less adverse selection would lead to greater ERP success. Surprisingly greater incentive alignment predicted greater moral hazard, thus suggesting the potential of incentives to de-motivate rather than motivate.

This study contributed by extending agency theory to outsourced information systems project implementation. It provided new, validated measures of prequalification efforts, monitoring, incentive alignment, moral hazard, and adverse selection constructs. The findings suggest that future researchers may want to learn more about incentive alignment and its impact, and that information systems project managers may want to monitor more to improve ERP and other large-scale system implementation success.

An Investigation of Enterprise Resource Planning Implementation in a Small Firm

Enterprise Resource Planning (ERP) systems have been recognized as complex and costly, which limited their implementation in large organizations. However, an increasing number of small organizations have recently gained interest in this system. This paper investigates the implementation process of ERP in a small firm. The investigation focused on two perspectives of ERP implementation: successes achieved and problems encountered. Despite many problems encountered in the firm, the ERP system still exists. This gives evidence that small organizations are more flexible and motivated to adapt to change and implement an ERP system. Most problems were encountered at early stages of implementation, which can be minimized if deliberate decision making of ERP implementation and proper selection processes were in place. Further, ERP is a good solution for small organizations if they are able to build a relevant in-house system.

An Exploratory Study of the Key Skills for Entry-Level ERP Employees

This research identifies the key skills (e.g., business, team, communication) that industries expect for entry level positions involving enterprise resource planning (ERP) systems. Based on a review of the literature, a number of possible core skills that ERP entry level employees should possess are identified. To identify the relative importance of these specific skills, a web-based survey involving IT professionals from 105 organizations is conducted. Analyzing the findings using exploratory factor analysis and scale reliability analysis indicates four specific and significant factors representing the major key skills that industry expects from entry level ERP positions labeled for this study such as systems analysis and integration, team skills, project management, and business and application understanding. Various common technical skills (e.g., programming, networks) were found to be significantly less important than the business and team skills. This study should assist companies in developing criteria for evaluating potential candidates for entry level positions in ERP systems, as well as universities for evaluating the relevancy of their IT and Business programs.

Factors that Improve ERP Implementation Strategies in an Organization

This paper reports the results of an exploratory research that describes the Enterprise Resource Planning (ERP) implementation experiences of Robert Bosch Corporation over a period of time. In this paper, the author highlights a list of factors that could improve ERP implementations such as large resource commitment to the project, adoption of corporate standards that promote process harmonization, making hard yet important decisions that are irreversible, and top management support. The major contribution of this article is in explaining why the ERP implementation experience at Robert Bosch succeeded in 2004 in contrast to its implementation experience during 1992-1999. The resulting practical implications are discussed.