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Introduction

Strategies for the


adaptation of ERP
systems
Chin-Fu Ho
Wen-Hsiung Wu and
Yi-Ming Tai
The authors
Chin-Fu Ho is Professor and Wen-Hsiung Wu is Associate
Professor, both in the Department of Information Management,
National Sun Yat-Sen University, Kaohsiung, Taiwan.
Yi-Ming Tai is PhD Candidate, Department of Information
Management, National Cheng-Chi University, Taipei,
Taiwan.
Keywords
Manufacturing resource planning, Manufacturing systems,
Product technology
Abstract
Given the significant impact of implementing enterprise
resources planning (ERP), managerial adaptation of ERP
offers a useful method of further maximizing the benefits of
this system. This study employs a technology adaptation
perspective and case research methodology to examine
three dimensions of alignment between organization and
ERP system. Four medium size electronic component
manufacturers are selected, which are typical of domestic
companies that could afford and implement ERP. From the
findings of the case study, this research attempts to build a
theoretical model of prescribing management strategies for
implementing ERP. The findings indicated that the
requirement for successful alignment between the system
and organization falls into two categories. The alignment
issues in the two categories help explain the working of
process integration in the organization and also how to
reduce the alignment gap. To summarize, this study
proposes an adaptation framework containing a set of
propositions and hypotheses to delineate the relevant
research issues.
Electronic access
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Industrial Management & Data Systems
Volume 104 . Number 3 . 2004 . pp. 234-251
# Emerald Group Publishing Limited . ISSN 0263-5577
DOI 10.1108/02635570410525780

Viewed from a technological perspective,


information technology (IT) implementation
means an organizational effort directed toward
diffusing appropriate IT within a user
community (Cooper and Zmud, 1990). Kwon
and Zmud (1987) suggested that the
introduction of IT and the related change
process divides mainly into initiation, adoption,
adaptation, acceptance, routinization and
infusion. The change process thus involves a
total of six phases, with various management
foci for each divergent phase. Furthermore,
according to academic classifications, research
on the introduction of IT divides roughly into
factors research, process research, and political
research (Kwon and Zmud, 1987). Within
these fields, process research examines social
change activities and suggests that
implementation success occurs when
commitment to change and the implementation
effort exists, extensive project definition and
planning occurs, and management of process is
guided by the organizational change theories
(Ginzberg, 1981; DeSanctis and Poole, 1994).
Implementing ERP involves a series of
activities, where each stage is related to certain
organization change factors that are important
to the success of implementation (Gupta, 2000;
Willis and Brown, 2002; Al-Mashari, 2003).
Accordingly, this study applies process
approach to examine the implementation of
ERP.
Current industry demand to implement the
ERP system is growing fast, but currently there
are relatively few success stories. This situation
is demonstrated by the research outcome of
AMR Research (1999). The ERP market was
reported to 15.68 billion dollars in 1997,
representing 36 per cent growth on the previous
year, and is to reach $72.63 billion in 2002.
Furthermore, in this work, AMR also reveals
that around 90 per cent overseas businesses
have spent more than the allocated budget
when implementing ERP system projects, and
in over 20 per cent of cases the implementation
The authors are grateful for the support from the
MOE Program for Promoting Academic Excellence of
Universities under Grant number 91-H-FA08-1-4,
and the support from the National Science Council
under the Grant number NSC91-2416-H-110-006.

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Chin-Fu Ho, Wen-Hsiung Wu and Yi-Ming Tai

of ERP was unsuccessful. Meanwhile, the


success rate in implementing ERP is below 30
per cent.
Numerous scholars and experts have
proposed explanations for the failure of the
implementation of ERP systems. Such
explanations include inadequate resources, a
lack of support from upper management, a lack
of promotion, poor integration of business
strategies (Tarn et al., 2002; Nikolopoulos et
al., 2003), inappropriate choice of tactics
(Holland and Light, 1999), failure to establish
the necessary IT infrastructure within
organizations (Broadbent et al., 1999), as well
as problems of existing system complexity and
system integration (Holland and Light, 1999;
Sprott, 2000), organizational process
transparency (Scheer and Habermann, 2000),
business process reengineering (BPR), exterior
consultancy, the role of suppliers, user training
(Somers and Nelson, 2001), and system
customization (Holland and Light, 1999;
Somers and Nelson, 2001). Previous
investigations have found that the ritical success
factors (CSF) approach requires managers or
users to identify the factors crucial to success
based on their experience. Few studies have
examined the issue of ERP implementation
from the perspective of IT diffusion.
Previous studies focused mainly on the
initiation and adoption periods proposed by
Kwon and Zmud (1987). These two major
implementation periods were employed
because they can control the relevant structural
factors and thus determine the adoption of
technology (Grover and Goslar, 1993; Grover,
et al., 1995). Unlike previous studies, this work
focuses on the adaptation period because the
adaptation reveals initial resistance and also
expresses the innovative force (Zaltman et al.,
1973). Mutual adaptation by both technology
and organizations will become either
advantageous or disadvantageous. Focusing on
the importance of the technology adaptation
process, this study attempts to study the
managerial mechanism that can direct the
adaptation process. The establishment of a
strategy for implementing ERP can achieve
good adaptation of both the ERP system and
organization, and can help fulfill the goal of
implementing an ERP system.

Hence, according to foresaid discussion, the


research problems to be addressed are as
follows.
.
How do the enterprises adjust to the
structural constraints imposed by ERP
technology? Specifically, how can
enterprises exploit the adjustment process
to implement the ERP system?
.
Because the ERP system is based on
integration software, it features its own
design characteristics. How does the
enterprise consider design when selecting
an ERP system?
.
Since the ERP system is a type of package
software, little room exists for changing the
technological specifics, once the technology
vendor is finalized. Accordingly, how does
the manager design an adaptation scheme
for the delivery system and organization
performance to ensure the successful
implementation of the ERP system?

Relevant concepts from literature


Literature review of ERP
Since the focus of manufacturing systems in the
1960s was on traditional inventory control
concepts, most of the software was limited
generally to inventory based on traditional
inventory processes (Gumaer, 1996). Owing to
the need for manufacturing operations,
manufacturing systems have moved to material
requirement planning (MRP) systems which
translated the master schedule built for the end
items into time-phased net requirements for the
sub-assemblies, components and raw materials
planning and procurement (Gumaer, 1996).
Since 1975, the MRP system has been extended
from a simple tool to become the
manufacturing resource planning (MRPII)
(Chung and Snyder, 1999). However, the
shortcomings of MRPII in managing a
production facility's orders, production plans,
and inventories, and the need to integrate these
new techniques led together to the development
of a rather more integrated solution called ERP
(Chung and Snyder, 1999). ERP systems work
essentially at integrating the whole business
information, allowing organizations to manage
effectively their resources of people, materials,
and finance (Markus et al., 2000). In fact, ERP

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advocates believe that ERP could combine both


business processes in the organization and IT
into one integrated solution, which MRP and
MRP II were not able to provide (Chung and
Snyder, 1999; Gupta, 2000).
Like many other new IT areas, much of the
initial literature in ERP provides anecdotal
information based on a few successes or
failures. These publications have chronicled
some high profile failures (Deutsch, 1998), and
some model implementations (Kirkpatrick,
1998). Also, several authors (Piturro, 1999;
Trunk, 1999; Zuckerman, 1999) emphasize
that ERP is a key ingredient for gaining
competitive advantage and streamlining
operations. More recently, many academically
oriented papers have tended to study the
various aspects of ERP implementation.
Davenport (1998) looks at the reasons for
implementing ERP systems and the challenges
of the implementation project itself. McAfee
(1999) studied the impact of an ERP system on
operational performance. Stratman and Roth
(1999) proposed an integrated conceptual
model including strategic planning, executive
commitment, project management, IT skills
and change management. Van Everdingen et al.
(2000) surveyed several European companies to
determine adoption and penetration of ERP.
Mabert et al. (2000) surveyed manufacturing
companies in the USA to study penetration of
ERP, motivation, implementation strategies,
and operational benefits in the manufacturing
sector. Liu and Yeh (2002) proposed an
integrated methodology of BPR to guide ERP
implementation. Yang (2002) surveyed IT
companies in Taiwan to study the new thought
of ERP implementation. While there may be a
wide range of methodologies and contextual
emphasis under which ERP research can be
conducted. Many of these literatures could be
classified into factor research, since they
addressed only the ``individual, organizational,
and technological issues'' related to ERP
implementation (Kwon and Zmud, 1987;
Cooper and Zmud, 1990).
There are various contextual factors
associated with implementing various types of
ERP systems. From the perspective of
implementing ERP as a large software project,
avenues of exploration includes major IT
investment (Holland and Light, 1999; McAfee,

1999; Welti, 1999; Liu and Yeh, 2002; Yang,


2002), enterprise motivation focus on efficiency
(Davenport, 1998; Stratman and Roth, 1999;
Sprott, 2000; Scheer and Habermann, 2000;
Van Everdingen et al., 2000; Mabert et al.,
2000; Somers and Nelson, 2001), performance
evaluation (Sinclair and Zairi, 2000;
Al-Mashari and Zairi, 2000; Al-Mashari,
2002), and project failure (Broadbent et al.,
1999; Deloitte Consulting, 2001).
Implementation and technology
adaptation for ERP system
The implementation of ERP system is quite
different from the development of traditional
information systems. The difference lies in the
fact that the traditional development takes a
considerable amount of time in system analysis
and design, but the counterpart in ERP system
has been reduced to the parameter setting for
software. Such an alternation is that the ERP
system being a package software has already
spent a lot of efforts on system analysis and
design in the software development process.
Thus, focus of implementing ERP is mainly on
the realization for the functions in the ERP
system.
Various strategies exist for implementing
ERP systems (Holland and Light, 1999). In the
literature, implementation strategies for ERP
systems are based on organizational inclinations
regarding change. Notably, the skeleton
approach (Bingi et al., 1999) introduces
summaries of package systems and then adds
new functions according to practical needs.
Furthermore, the complete functionality
approach directly adopts the whole package of
the ERP system to replace the existing business
systems. The single module approach
introduces the system module in a stepwise
fashion. This method implements modules
consecutively (Holland and Light, 1999).
Moreover, other implementation methods also
exist, such as the best practices approach and
the reengineering approach (Bingi et al., 1999).
System implementation is a challenging
management issue and is no less important than
system research and development. Owing to the
rapidly changing business environment, ERP
implementation process is seldom a simple
matter of realizing a plan. Instead, ERP is often
a dynamic process of mutual adaptation

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between IT and the surrounding environment.


Within the dynamic implementation process,
the adaptation is essential because it is rare for
an ERP system to perfectly match the
environment of its users. Given the slim
possibility of achieving a perfect match between
technology and organization, misalignment can
occur. Such misalignment can be rectified
through technological measures, organizational
measures, or a combination of both.
Focusing on overcoming misalignment,
Leonard-Barton (1988) adopted the case study
method research and selected 12 large-scaled
corporations in various industries.
Leonard-Barton conducted a field study of
companies implementing new technologies, and
identified three types of misalignments (Figure 1
reveals their successful adaptation process):
technology: the technology with its original
specifications or with the production process
into which it is introduced; delivery system: the
technology with user organization
infrastructure; performance criteria: the
technology with job performance criteria in the
user organization. This adaptation process is
viewed in terms of cycles of misalignments and
it adjusts itself to compensate for minor
defection in misalignment mainly through the
continuous alignment within. The adaptation
process evolves over time in response to
interruptions from technology, delivery system,
and performance criteria, and the interaction
between technology and users' environment
displays a recursive cycle. Furthermore, the
variation amplitude in these adaptation cycles
depends on whether the impact has influenced
the rudimentary structures of technology,
delivery system, and performance criteria.
Taking technology as an example, a large cycle
Figure 1 Summary of misalignment model

indicates that the designer has returned to the


engineering blueprints, while a small cycle
indicates a minor change such as revision for
partial software programs.
This study discusses the implementation of
the ERP system using the Leonard-Barton's
model, which has expressed the fact that the
deviation from the damage caused by the initial
design is less than the extent of misalignment,
triggered by its subsequent extension. Instead,
it will bring considerable more satisfaction to
users' demands for technology rectification.
This implies that adaptation is the process
continuously maintaining alignment. This
study employs three types of misalignment,
namely technology, delivery system and
performance criteria as the research framework
to explore the implementation strategy of ERP.
Issues relevant to the implementation of
ERP
Leonard-Barton (1988) proposed that most
misalignments relating to technology involve
incomplete compatibility between the
specification of the new technical design and
the environment of the users, combined with
the maturity for utilizing the new technology
when the business is implementing the new
technology. Regarding delivery system,
Leonard-Barton indicated that the extended
support of business environment infrastructure,
a proper interpretation of new IT, and the
selection for software suppliers, are very
important factors. Finally, regarding
performance evaluation, Leonard-Barton
assumed that through the important influence
of new technology on tasks and efficiency
indicators, combined with the actual impact on
an organization, these two influenced
dimensions can be expressed using the actual
impact on the organization to indicate that
organizational performance indicators and the
implementation of new technologies will create
misalignment in their interaction.
Based on Leonard-Barton's view of
technology implementation, this study
proposed three misalignment dimensions
including technology, delivery system and
performance criteria, and then gathered critical
issues for the implementation of ERP system
based on this framework, as listed in Table I.

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Table I Critical factors of ERP implementation


Dimension

Critical issue

Critical factor

Technology (A)

Adequacy for specification (A1)

Delivery system (B)

Role of the MIS department in organization (B1) IT infrastructure (Leonard-Barton, 1988; Caron et al., 1994; Broadbent et al.,
1999; Holland and Light, 1999)
Enterprise vision and strategic goals (Holland and Light, 1999; Welti, 1999)
Process adaptation (B2)
Information transparency business process redesign (Hammer and Champy,
1993; Bingi et al., 1999; Somers and Nelson, 2001)
Harmonious implementation (B3)
Upper management support for implementation (Bingi et al., 1999; Laughlin,
1999; Somers and Nelson, 2001)
Change management (Appleton, 1997; Laughlin, 1999)
System establishment (B4)
Implementation tools and methodologies (Holland and Light, 1999; Scheer
and Habermann, 2000)
Project management (B5)
Project team ability (Somers and Nelson, 2001)
Project management (Ryan, 1999; Somers and Nelson, 2001)
Employee education and training (B6)
Employee education and training (Leonard-Barton, 1988; Davenport, 1998;
Bingi et al., 1999; Somers and Nelson, 2001)
External partner support (B7)
Software vendor support (Bingi et al., 1999)
The ability of consultancy (Bingi et al., 1999)
The collaboration of external partner (Bingi et al., 1999)
Internal staff involvement (B8)
Participation and coordination of internal staff (Grover et al., 1995; Bingi et
al., 1999; Kumar and Hillegersberg, 2000)
Quality and suitability of internal staff, and human resource management
(Appleton, 1997)

Performance criteria (C)

Performance evaluation (C1)

Technical specification (Leonard-Barton, 1988)


Customization (Holland and Light, 1999; Somers and Nelson, 2001)
User's maturity for the application of new
User's maturity against the application of new technology (Leonard-Barton,
technology (A2)
1988; Cole-Gomoiski, 1998)
Evaluation and integration for legacy system (A3) Evaluation and integration of legacy system (Holland and Light, 1999; Sprott,
2000)

Impact of performance criteria (Leonard-Barton, 1988)


Assessment of system performance (Leonard-Barton, 1988)

Research method
Research framework
Confronted with complex issues relating to the
implementation of ERP system, Holland and
Light (1999) proposed that the issue should be
discussed from the dimensions of organization
and technology. Accordingly, this study adopts
the Leonard-Barton's model as a research
framework and further addresses the key factors
in this framework that have been displayed in
Table I.
The Leonard-Barton's model hypothesizes
that types of misalignment can be rectified from
the large or small cycles until the final
alignment status is reached. Additionally, any
given dimension of misalignment is featured
with an automatic adaptation mechanism.
However, the ERP system belongs to a type of

package software, and the available


configuration and process parameters do not
permit modification of the basic system
framework. Moreover, ERP is quite a
complicated system, and the technology,
delivery system and performance criteria all
influenced one another in its implementation.
The successful implementation of ERP benefits
significantly from the harmonious interaction
among these three dimensions, but not from the
adaptation of any single dimension. For
example, consultancies must understand ERP
system and organizational performance criteria
well enough to implement ERP smoothly. In
fact, effective linkage among technology,
delivery system and performance criteria is the
responsibility of management. The
implementation of highly complex

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organizational innovation is a process of


internal diffusion. That is, the implementation
requires the participation of numerous
organizational members to be successful.
Management must provide an environment
conducive to innovation and focus their
attention on members' acceptance of
innovation (Leonard-Barton and Descamps,
1988). Consequently, management must exert
its influence to address the issues related to the
technology, delivery system and performance
criteria in implementing ERP systems
(illustrated in Figure 2).
Case study method
Currently, ERP system implementation remains
in its infancy. Both mature theory development
and support from empirical studies continue to
be required. The analogy of falling short of
theoretical support can also be applied to
Taiwan. The reason is because the ERP
resources have only recently been introduced to
Taiwan, and there are few cases of complete
implementation that have been conducted to
date. Moreover, implementing ERP systems can
influence the entire organization; thus leading to
a large set of variables being required to address
implementation related issues. Given such
consideration, this article must adopt the case
study approach.
Case selection
The subject of this research is the Taiwanese
electronic industries. The Taiwanese electronic
and semi-conductor industries play an
important role in global supply chains. To cope
with the intensity of global competition, large
multi-national corporations typically request
that their partners introduce the ERP systems

to achieve synergistic effects of the whole supply


chain management.
Regarding the selection of ERP system
introduced in the businesses considered here,
this study selects the major international ERP
suppliers, which are most representative of the
wider field. SAP, which has the largest
international market share, should be originally
taken as the first choice, but companies capable
of implementing SAP products often require a
relatively large organizational scale. In fact,
small or medium size companies can represent
the majority in Taiwanese business community.
Therefore, in view of the generalizing capability
of case research methodology, this study selects
medium-scaled companies for case studies.
System Software Associate (SSA) and Oracle
are both global ERP software suppliers and
both have established branch offices in Taiwan
with numerous local medium businesses as
customers. Thus, this study takes the local
Taiwanese customers of these two ERP vendors
as a case study. Two local customers are
selected for each of the ERP vendors, meaning
a total of four cases are included in this study.
Data collection
Initial data gathering was performed through
semi-structural questionnaires with in-depth
interviews. The interviews were recorded to
ensure complete and reliable subsequent data
analysis. Furthermore, secondary data were also
collected such as relevant literature on ERP,
company released information and
implementation documents provided by the
interviewees. All of these were analyzed to
support the case analysis. Table II lists the
interviewed companies.
Table II Interview subject

Figure 2
Case (company)
Sino-American Corporation
(SAC)
Taiwan IC Packaging
Corporation (TICP)
Prosperity Dielectrics Co.
Ltd (PDC)
Arima Group Organization
(Arima)

239

Position

Time with
company
(years)

The role in ERP


project

CIO

Project manager

CIO

Project manager

CIO

Project manager

CIO

Project manager

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Case discussion and analysis


Two types of ERP systems, namely SSA and
Oracle ERP were studied in this research. SSA
was established in 1981 and its ERP product,
eBPCS, is an integrated application software
specifically designed for core business
processes, with customers in the automobile,
chemical, electronics, pharmaceutical and
consumer good industries. Founded in 1977,
Oracle is the second largest software company
globally and the largest supplier of database
system software. Oracle's ERP is called
E-Business Suite which contains several
modules including a manufacturing module. It
is a Web-based ERP system. Overall, SSA
places a greater emphasis on the manufacturing
functions, and the eBPCS is equipped with a
comprehensive set of modules covering this
area. Oracle ERP stresses database function
and is focused on financial integration.
The implementation of ERP system for each
case is described in this section, including case
introduction and the process analysis for
implementing ERP. This section ends with a
summary, comparison and analysis of these four
cases.
Introduction and discussion of the case
study
Sino-American Corporation (SAC)
SAC was founded in 1968 to develop advanced
external power supply technologies for everyday
applications. The information system
previously used by SAC has been in place for
about 20 years. The system was developed with
little regard to integration, and was
characterized by poorly managed
documentation. The ERP project began on
April 1997, and the system was finally brought
on-line some two years later. The
implementation motivation was to integrate the
business internally using an ERP system,
producing a sound business management
mechanism.
The main goal for SAC in implementing an
ERP system was to improve order processing.
To achieve customer satisfaction in order
processing requires process integration.
Consequently, existing business processes have
been redesigned based on the suggested

management mechanism by the implemented


ERP system (see Table III).
Taiwan IC Packaging Corporation (TICP)
TICP was founded in 1998 to provide
professional semiconductor assembly and
testing services. Given the swift changing
business climate and ferocious competition, the
company felt the need for IT to support its
business operation. TICP initiated its ERP
project in March of 1999, and finally put the
project online one and half years later. The
motivation of the implementation is to integrate
all relevant business processes and obtain the
resultant efficiency and effectiveness.
The main goal of TICP implementing ERP
system was to enhance the order processing.
Obtaining customer satisfaction from order
processing requires process integration.
Consequently, the business processes related to
customer orders were redesigned during the
implementation of ERP (see Table IV).
Prosperity Dielectrics Co. Ltd (PDC)
PDC was established in 1990 to create the
high-quality dielectric powders. The company
felt a strong need for integrated information
system in response to global competition, a
solution that was necessary for rapid business
growth. The ERP project was initiated in May
of 1998, and was executed online some ten
months later. The motivation for
implementation was to prepare Y2K, integrate
organizational resources through reengineering
tools, and update the legacy system.
The main goal of PDC in implementing ERP
system was to improve order processing. Obtain
customer satisfaction with order processing
obviously required process integration, and thus
the business processes relating to customer
orders were redesigned (see Table V).
Arima Group Organization (Arima)
Arima was founded in 2000 to develop cell
phones, PDA, and LCD. Because the company
realizes that it confronts global competition and
a highly changeable business climate, it realizes
the need to equip itself with IT to maximize its
performance. Consequently, Arima initiated an
ERP project in October of 1999, which was
completed and online some ten months later.
The main goal of implementation was to
automate the manual operations and integrate

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Table III Integrated analysis for the case of SAC


Execution description
A1

To meet the characteristics of the salary system regulated by SAC, the salary solution and management report were customized
To fit the specific requirement of the manufacturing process, the quality control module was customized
In order to fit customers' demand, SAC designed two bill of material (BOM) sets

A2

A lack of knowledge of the connection between sequential processes and holding on to the previous operational environment delayed integration
among different departments

A3

The existing system contained data format derived from various sources that were mutually inconsistent. Data in the existing system were
manually input into ERP system through a standard procedure that follows the requirement of the new ERP system

B1

The MIS department was responsible for assessing ERP and administration affairs, whereas the fieldwork was directed by the consultants

B2

Through learning from the built-in management mechanism of the ERP system, coordinating tasks like production management, procurement, and
out-bound logistics, previously distributed in different departments, was centralized and executed by dedicated authorities

B3

The CEO supported the ERP investment and key users (KUs) from different departments actively participate in the implementation. Nevertheless,
the program was delayed by internal resistance and took two years to be put online

B4
B5

The MIS department was responsible for organizing an interdepartmental project team to conduct the implementation
The CIO headed the project team, which included the MIS department, and managers and KUs from all related departments
The task of the project team was to coordinate the rationality of the process redesign, allocating departmental resources, identifying departmental
tasks for the new process, and controlling the project schedule

B6

The SSA consultants conducted user training, including explanation of system functions, system operations, and the basic concept of the ERP
process

B7

A group of senior consultants from SSA was invited by SAC to guide the whole project

B8

The staffs of the MIS department and KUs were required to join the project full-time, serving as a bridge between general users and the
consultants

C1

SAC's core competence lay in R&D, and manufacturing capability in power supply devices for the household appliances. Accordingly, the ERP
implementation program helped the company to cope with its business environment, thus improving its core competence
The integrated database helped the ERP system to allow the execution of centralized operations for procurement, warehousing, and delivery,
unlike decentralized operations managed by the departments involved
The key to high overall performance lay in integrating production information dispersed among different departments, leading to improved quality
of decision making

the internal resources and systems, producing a


standardized mechanism for BPR.
The main goal of Arima in implementing
ERP system was to improve current material
purchase processing. For Arima, achieving
efficient material purchase processing requires
process integration. Consequently, the business
processes related to material purchase require
redesigning (see Table VI).
Synthesis
Analyzing the data from these four cases reveals
the following common traits:
(1) Learning business processes embedded in ERP
system provides foundation for technology
adaptation of each company. Clearly, process
reengineering in individual companies
depends on learning the built-in ERP
process. This feature of process

reengineering is totally different from the


traditional enterprise information
implementation in which the implemented
software is modified based on previously
defined user requirement for business
process, thus supporting processes unique
to a particular company. Conversely, the
implementation of the ERP system focuses
on following the best practices embedded
in the system software, which are based on
industry domain knowledge. Learning the
system knowledge thus is important to the
company in technology adaptation.
(2) The coordination function of the MIS
department and KU's mentoring help to
promote organizational learning. Learning
exists in the system delivery process in all
cases. The purpose of learning is to provide
training in learning the ERP system and to

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Table IV Integrated analysis for the case of TICP


Execution description
A1

The salary module was customized to meet the characteristics of the salary system required by TICP
The modules of cost, order/delivery, manufacturing process control, quality control, and equipment management were customized to fit the specific
requirement of the manufacturing process
In order to make the user interface friendly, the system interface was customized to suit the requirements of the individual unit

A2

The learning curve of the new system was improved because of TICP's tracking of user's performance in system usage

A3

The fact that the MIS department of TICP was able to develop new modules independently reduced the risk of deficient system integration and
data inconsistency

B1

The CIO planned the blueprint of IT infrastructure. Meanwhile, the MIS department was responsible for requirement definition and implementation
planning for each department

B2

Learning built-in management mechanism provided the basis for process reengineering. However, TICP had already proposed its own reengineering
plan

B3

The CIO of TICP provided support for Oracle consultants regarding the domain knowledge of business processes

B4

The implementation of the system module depended on the progress of factory construction. A gradual implementation approach was adopted

B5

The CIO headed the project team, the members of which included the MIS department, managers and KUs from all related departments
For each department, the task of the project team included defining business process requirements, allocating resources, identifying departmental
tasks under the new process, explaining the rationality of process redesign, and controlling the project schedule

B6

The Oracle consultants provided the training and TICP evaluated the training performance

B7

The Oracle consultants provided technology support and training

B8

The MIS department took over the change management and won the support of each department

C1

TICP's core competency lay in product quality, order delivery, and operation cost. The ERP implementation programme helped the company to gain
benefits in providing real-time information in decision making, improving the rate of order delivery, and promoting interdepartmental integration
The integrated database helped each department to continuously control the schedule and the utilization of resources
Overall performance improvements came from reducing time spent in meetings by managers, omitting the need for manual audits, and sharing
information among departments, producing improvements in order delivery

provide preparation for BPR. The


importance of the MIS department lies
particularly in its coordination function,
which provides administrative support for
both training and BPR. The KU can
furnish mentoring for individual
department users. The formal and informal
channels form the organizational learning
environment, whereas the MIS department
serves the former and the KU provides the
latter.
(3) Solution for system inadequacy. Since the
ERP package may not satisfy all the
requirements of a business, companies can
develop their own solutions or adopt
plug-in programs to compensate for the
inadequacy of system functions. This
customization approach seems to be a
common practice because each ERP has a
close centralized system framework, and
direct modification of the program source

codes causes maintenance difficulty.


Consequently, whether self-development or
plug-in solutions are adopted, the
customization of ERP systems always
employs the module-based approach to
ensure the system maintainability.
(4) System migration and organization resistance.
When the legacy system is migrated into the
ERP system, data inconsistencies can occur
when transferring old data to the new
system, because of differences in data
formats. System migration also tends to
cause organizational resistance because of
the built-in system processes disrupting
current business processes and thus
changing corporate power structure.
Following the ERP system requirement, the
standardization of input data solves the
problem of data inconsistency. The
problem of organizational resistance can be
resolved by CEO support and effective

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Table V Integrated analysis: the case of PDC


Execution description
A1

eBPCS solution could support category management of a few material items with numerous end products, which is important for PDC to manage
its specifics and satisfy customer demands
To meet the characteristics of human resources policy of PDC, the salary system was customized
The management report and system interface were customized

A2

Because the implemented ERP system was an updated vision of eBPCS, with which the company was already familiar, the employees easily
adapted to the new technology

A3

The legacy system data were transferred directly into the database of the ERP system using a program developed by PDC itself, causing data
inconsistency and difficulty in subsequent maintenance

B1

The MIS department was responsible for assessing information infrastructure needs and coordinating with the implementation methodology
provided by technology consultants

B2

Through learning from the built-in management mechanism, PDC conducted transformation from manual operations to an integrated ERP system for
scheduling coordination, material purchases, task auditing, and process management and control

B3

The CEO clearly stated the implementation goals for ERP and requested that all employees participate, and the employees responded accordingly

B4

Based on the process improvement and reduced employee resistance, PDC adopted the overall ERP implementation

B5

The project team was handled by the MIS department, and was divided into three groups: information resource, process improvement, and auditing
For each department, the tasks of the project team included defining business process requirement, allocating resources, identifying departmental
tasks under the new process, coordinating the conflict of process redesign based on different views, controlling project schedule, and negotiating
with consultants

B6

The SSA consultants trained the KU in each department, including explaining the system function, system operations, and the basic concepts of the
ERP process

B7

The SSA consultants provided consultancy, technology transfer, project audit, and implementation guidance for the MIS department

B8

The KU of each department oversaw training and knowledge distribution among their colleagues

C1

The core competence of PDC lay in R&D on new materials for passive electronic components, maintaining a complete product line, and rapid order
delivery. The ERP implementation programme helped the company to audit the workflow of order processing, thus improving core competence
The integrated project- and order-processing management from ERP helped the delivery department and manufacturing units operate under uniform
standards
Overall performance improvements came from time spent on meeting managers and replacing manual control with automatic system management,
thus leading to improved order delivery

coordination from the MIS department.


Additionally, the KUs fulfill an informal
role in reducing organizational resistance
since they can penetrate deep into each
department and interact with the staff.

Conclusion
The symptoms of misalignments observed in
the case analysis can be attributed to
insufficient understanding of the embedded
knowledge in ERP systems partly because of the
unparalleled system complexity for which the
company has not experienced yet, and the lack
of BPR capability. Moreover, these two factors
are often intertwined together. The BPR

capability is not merely related to the issues in


streamlining a company's business processes
according to its objectives. This refers to a
firm's ability to recognize differences in its
existing processes and the benchmark processes
in the ERP system, reconcile these differences,
and take concerted action to reduce or
eliminate the misalignments. In addition, the
benchmark processes should not be solely based
on the original function setting of the ERP
system. Instead, the firm should define ``an
ideal framework of business processes'' and let
the ERP system to follow, as indicated in the
TICP case.
This study is focused on adaptation strategies
that management can employ to meet
challenges associated with the implementation

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Table VI Integrated analysis the case of Arima


Execution description
A1

To meet the human resource management policy regulation of Arima, the system modules of human resource management were customized
To fit financial process demands, the bill system, invoice system, tax system, and relevant financial reports were customized

A2

Because of the simplicity and convenience of the new system, acceptance of the new system was prevalent; for example, the accounting staff
understood why there was no need to repeat data entry

A3

The data format of the existing system was incompatible with the ERP system. Data thus were manually input into the ERP system using the
standard procedure

B1

The lack of experience in implementing a large system project meant that the MIS department merely played a supporting role

B2

The manual operation of the MRP process, including calculation of material delivery date and quantity, submission of and permission for material
request sheets, and submission of material purchase sheets, was transformed into the automatic process based on information from the built-in
management mechanism of the ERP system

B3

The implementation tended to be directed by the Oracle consultants, with the MIS department playing a supporting role

B4

Arima conducted the ERP project by following the implementation methodology of consultancy

B5

Oracle consultants directed the project team, whose members included staff from the MIS department and KUs from all involved departments
The task of the MIS department included assessing software, supporting the external consultants, getting the system online, and providing progress
reports to the CEO

B6

The KU was responsible for training the staff of their departments

B7

Oracle consultants directed the entire project

B8

The KUs from each department participated in implementing the project

C1

Arima's core competence lay in product quality control. The ERP implementation programme helped the company to change its employees from
traditional operators into process supervisors, thus increasing employee added value
Information exchange among the manufacturing, purchase, and financial departments was conducted online, thus increasing the speed and quality
of decision making
The transformation of traditional documentary operations and saving time spent on audits increased manufacturing speed, material preparation and
delivery

of ERP. Based on the analysis of case studies


presented here, a set of propositions and
hypotheses are developed from a technology
adaptation perspective.

Propositions and hypotheses


Three general propositions were proposed, each
summarizing a set of inferences as a theme,
leading into specific hypotheses.
P1. During the implementation of ERP,
compatibility between system and
organization facilitates the execution of
the process integration.
According to the argument of Leonard-Barton
(1988), misalignment in the technology
dimension occurs because of incompatibility
between a new technology and the
environment. ERP systems are designed with
certain business processes and data models in

mind. If the business processes and the


associated information requirements of a firm
are quite different from the underlying
assumptions of the adopted ERP system, then
the costs of implementation will be high and the
usefulness of the system to the firm will be low
(Janson and Subramanian, 1996). The
company must consider the original design
spirit and the supporting functions of the ERP
system to determine whether or not these
requirements can be met. Furthermore, the
technological platform of the legacy system
must also be assessed, to seek possibilities for
integration with the ERP system. All these
efforts can eventually lead to implementation
success for the ERP system under the minimum
customization cost (DeSanctis and Poole,
1994; Holland and Light, 1999; Somers and
Nelson, 2001).
In the four case studies presented herein, the
companies assessed the ERP system functions

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and the best methods of integrating their legacy


systems based on their individual perspectives.
An ERP system was selected for
implementation based on this process of
evaluation. Three hypotheses regarding the
system compatibility were generated based on
the results of the case study.
H1.1. The implementation of ERP must
consider the system specifications,
whose conformance to the business
requirements can lead to better system
compatibility.
A gap between business process requirements
and ERP software specifications is often
inevitable (Janson and Subramanian, 1996).
Consequently, it is very important to select and
assess the standardized package software that
most closely fits the business requirement, and
thus minimizes customization (Holland and
Light, 1999).
SAC and PDC examined manufacturing
process planning and material management,
which are the specialties of SSA. The
implementation software included the core
manufacturing modules and the plug-in of
customized system functions. Meanwhile,
TICP and Arima addressed system function in
order processing and financial management,
together with special database requirements.
Consequently, these two companies selected
Oracle to provide their ERP systems, since it
specializes in databases and has well-organized
financial modules.
H1.2. The implementation of ERP must
consider system integration solutions
for the legacy system within the
organization, since the more
comprehensive these solutions, the
better the results of the compatibility
will be.
Integrating ERP system with the technology
platform that supports the legacy system poses
another important issue for system
compatibility (Somers and Nelson, 2001; Xu et
al., 2002). It is important for enterprises to
select an ERP system using more elaborative
system integration solutions.
The choice of ERP system made by SAC and
PDC was based partly on the fact that their
legacy systems operated on the platform of IBM
AS/400, besides their consideration of

manufacturing functions. The availability of


integration solution for IBM AS/400 was an
important factor for SSA in winning the
contract. On the other hand, the legacy systems
of TICP and Arima were focused on database
function. Consequently, their two companies
chose Oracle based on its abilities in of database
transformation and its system integration
development tool (Oracle Develop, 2000).
H1.3. The implementation of ERP must
consider the management mechanism
built into the system, since learning the
management mechanism will facilitate
process integration.
The ERP system itself implies a set of business
rules for enterprises. The best practices
identified by ERP vendors on the basis of many
years of implementation experience are
incorporated into the ERP system (Jenson and
Johnson, 1999; Gupta, 2000). The main
objective of an enterprise in implementing ERP
is not just installation of a software package, but
is to apply learning to create a paradigm for the
business processes.
Findings based on case studies of those four
companies indicated that learning of a built-in
management mechanism is an important
phenomenon in the implementation process.
For example, process redesigns in procurement
management, warehousing management, and
delivery management in SAC, the redesign in
order processing in TICP and PDC, and the
redesign in material procurement in Arima,
were all attributed to the impact of learning.
The system compatibility refers to the
alignment between system specification and
organizational requirement, as well as the
flexible integration of the legacy system.
However, the value of the ERP system lies in its
ability to improve the overall organizational
process. Given the premise that an ERP system
can resolve the problem of system
compatibility, and then learning of a built-in
management mechanism will contribute
significantly to process integration.
P2. During the implementation of ERP, the
adaptation of internal processes will
facilitate the execution of process
integration.
The ERP system implies the reference model of
best practices, and model mapping requires

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examining the business processes of an


enterprise to seek possible alignment (Somers
and Nelson, 2001). Such examination often
requires BPR, which considers both business
requirement in its specialized domain and the
reference model of the ERP system. In fact,
Hammer and Champy (1993) suggested that
BPR creates a dramatic change through
analyzing business activities, and manages the
change process. Executing BPR would trigger
managerial adaptation to facilitate the
implementation program, which will
continuously adapt and revise business
processes to enhance organizational
performance (Holland and Light, 1999; Somers
and Nelson, 2001).
The case studies presented here indicate that
BPR is critical to process integration. SAC,
PDC, and Arima learned to use the built-in
management mechanism of the ERP system as
a guide to modify their processes, but only
followed the advice of consultants and did no
effective preparation on their own initiative
before implementing BPR. The lack of initiative
in their learning process caused turbulence
during their implementation of ERP. Although
learning the built-in management mechanism
was part of the BPR effort, TCIP redesigned
the processes according to its own requirements
while learning the ERP system.
Well-planned adaptation of TICP was
associated with smoother process integration
than was achieved by the other three
companies, as well as with other benefits such
as reduced implementation time.
Consequently, based on relevant theory and the
results of the case study, four hypotheses on
BPR are developed.
H2.1. The implementation of ERP requires
organizational change management.
Process adaptation will improve with
the capability to manage organization
change.
Implementation of the ERP system cannot be
deemed to be a technological project, but rather
it represents an opportunity for organizational
change. Essentially, ERP introduces a new
business model and management mechanism to
organizations (Appleton, 1997). A fully
implemented business model and management
mechanism can integrate an organization.

Consequently, the organization becomes


process oriented, which designates deployment
of resources and work assignment, producing
new tasks and new process designs. Based on
such structural change of an organization, the
planning and management capability of
organization change are essential to successful
ERP implementation (Laughlin, 1999; Somers
and Nelson, 2001).
It is not difficult to find examples of efforts to
manage change by the case study companies.
For examples, SAC changed organizational
structure and merged three departments,
including production management,
procurement, warehousing and import/export,
into a single division. Furthermore, a new
process paradigm was also created for the single
division. This radical change caused employee
resistance, and led to CEO support and active
participation of KU being mustered to resolve
the tensions. The CIO of PDC also
demonstrated the importance of planning and
management abilities in implementing
organizational change in the following
statement.
Don't push too hard for imminent organization
change, which is often challenged by employees
who feel their interests are compromised in the
process. Project promotion should consider timing
and organization skills. Change that is associated
with strong pressure from upper levels of the
hierarchy is likely be challenged by employees,
while a well-planned approach to change, which
reserves room for negotiation, will meet with less
resistance.

The above statement indicated that


organizational change requires a transformation
of the mental model of organizational members
to develop a culture of innovation within the
organization. Such a culture of innovation
stimulates reengineering efforts in strategies,
structures, and processes, leading to enhanced
organizational performance.
ERP implementation is a risky method of
organizational change. ERP implementation
not only requires CEO support but also the
coordination and participation of the KU. Such
efforts can unify the entire organizational
hierarchy, and trigger a positive organizational
atmosphere amenable for change. The results of
the case studies examined here indicated that
studying the processes built into ERP to
provide a reference for adapting their own

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businesses is prevalent the companies examined


here. This fact implies that abilities to plan and
manage organization change play an important
role in ERP implementation. Organization
change supported by a stronger capability base
has a better possibility of implementation
success.
H2.2. The implementation of ERP must
involve coordination from the MIS
department. The more coordination
exerted by the MIS department, the
better the process of adaptation will
be.

Therefore, the MIS department of TICP


exerted a better ability to coordinate the ERP
implementation than did the departments of
SAC, PDC, and Arima. Accordingly, TICP
enjoyed smoother BPR process and shorter
implementation time compared to the other
three companies.
H2.3. The implementation of ERP must
require support from the top
management. The more support
exerted by the top management, the
better the process of adaptation will
be.

As the focus of ERP implementation has shifted


towards mapping of reference models, the role
of MIS departments has changed from system
development to IT knowledge consultation and
the organizational coordination
(Cole-Gomoiski, 1998). This coordination
mechanism in MIS departments can reduce the
gap between the underlying technology and the
process requirements based on the
organizational domain knowledge. This
phenomenon occurs because that the MIS
department can apply its professional
knowledge to assume the role of promoting IT
and coordinating internal departments. By
playing this role properly, the MIS department
becomes the impetus for the technological
innovation and knowledge diffusion (Thong
and Yap, 1995; Grover et al., 1995). Thus, in
the BPR aspect of ERP implementation, the
importance of the professional knowledge and
coordination of MIS departments should not be
neglected (Kumar and Hillegersberg, 2000).
For SAC, PDC, and Arima, outside
consultants directed ERP implementation,
while the MIS departments played a supporting
role. The task of MIS departments thus was
limited to evaluating ERP system and providing
administrative support for the implementation
project. The MIS departments lacked the
power to guide the project. In comparison, the
MIS department of TICP was authorized to
direct ERP implementation. Prior to
implementation, the CIO of TICP established
its strategic plan for IT implementation. During
the implementation process, the MIS
department helped to enhance internal business
processes by learning from the built-in
management mechanism of the ERP system.

Successful implementations require strong


leadership, commitment, and participation by
top management (Laughlin, 1999). Since
executive level input is critical when analyzing
and rethinking existing business processes, the
implementation project should have an
executive management planning committee
that is committed to enterprise integration,
understands ERP, fully supports the costs,
demands payback, and champions the project.
Moreover, the project should be spearheaded
by a highly-respected, executive-level project
champion (Maxwell, 1999).
The top management in both PDC and TICP
has provided enough support for the
implementation project. Furthermore, the MIS
department in TICP has obtained delegation of
authority to direct ERP implementation. In
comparison, the top management in SAC and
Arima has not provided enough support for the
implementation project. The project
management teams in these two companies
lacked the power to guide the project.
Therefore, the project management team of
TICP exerted a better ability to coordinate the
ERP implementation than its counterparts in
SAC, PDC, and Arima. Accordingly, TICP
enjoyed smoother BPR process and shorter
implementation time compared to the other
three companies.
H2.4. The implementation of ERP requires
that the KU, as an instructor, transfer
the relevant knowledge of ERP.
Process adaptation improves with the
knowledge diffusion exerted by the
KU.
Leonard-Barton (1988) proposed that
employee training is required to implement new

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technology implementation within a business.


Previous research has demonstrated that a lack
of user training frequently causes ERP failure
(Welti, 1999; Gattiker and Goodhue, 2000).
Accordingly, the successful implementation of
ERP requires the effective transferal of the
relevant knowledge of ERP to internal
employees through education and training
(Davenport, 1998). Regarding knowledge
transmission, Swap et al. (2001) believe that the
function of KU is critical. Specifically, Swap et
al. (2001) argued that, if companies focus on
the training of primary users, mentoring could
help them extend their influence into the inner
working environment of various departments.
This extension of influence can then help to
facilitate the transfer of ERP knowledge and the
achievement of the goal of BPR.
The case study companies generally believed
that the training of KUs and their instructional
role in the work place significantly helped
organizational learning atmosphere. All four
companies followed a similar pattern. Outside
consultants first engaged in knowledge transfer
to the MIS department's personnel and KUs
through formal training. KUs returned to their
various departments and passed their
experiences onto their colleagues through
formal or informal training. The case results
suggested that KU has become a mentor
performing ERP related knowledge
transmission, leading to creation of a new
learning atmosphere in the organization. This
phenomenon indicates that during the
implementation of ERP, knowledge diffusion
allows the KU to facilitate process adaptation.
P3. During the ERP implementation,
considering the influences on the ERP
system and influences of the BPR factors
on the organization will benefit process
integration. Consequently,
organizational performance can be
enhanced by generating synergies.
ERP systems are based on the technology for
integrating business information. ERP systems
aim to incorporate resulting integrated systems
and the associated best practices to achieve the
goal of sharing information and integrating
relevant resources among different processes
(Davenport, 1998; Holland, 1999). Besides the
synergy associated with the ERP

implementation, the deleterious impact on the


organization must be noted. The risk in
implementing ERP project exists mainly
because of the inadequacy of the ERP system to
meet business requirements, and the conflict
between the reference model suggested by the
ERP system and existing organizational
business processes. The constraints on ERP
systems have caused implementation of such
systems to be associated with a similar risk to
failure in a large software project, and
implementation of such systems can also suffer
from implicit costs related to process adaptation
and system modification (Bingi and Sharma,
1999; Gattiker and Goodhue, 2000).
Accordingly, based on the deduction from P1
and P2, an essential part of implementing an
ERP system to achieve process integration lies
in solving the problem of system compatibility,
which calls considering system specification and
integration with the legacy system. Learning the
built-in management mechanism should be
combined with process reengineering factors to
develop strategies for managerial adaptation to
cope with problems relating to the
implementation of ERP systems. Combining
both ERP system and process reengineering
factors helps to form a managerial adaptation
mechanism, contributing to process integration
and eventually improving organizational
performance.

Adaptation framework for ERP


implementation
The implementation of ERP system itself is
often costly, and thus whether the project
results match with the implementation purpose
must be considered. To relieve the constraints
imposed by the ERP system, enterprises must
assess the technological and organizational
dimensions. The technological compatibility
between ERP and organizations should be
considered, as should the organizational BPR
problem. Managerial adaptation is the
management endeavors dedicated to
eliminating discrepancies between these two
dimensions. Strategies for managerial
adaptation can be based on the propositions
and hypotheses developed in this research,
which are presented in Figure 3:

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Figure 3 Adaptation framework of ERP

Dimension of the ERP system. Misalignment


in the technological dimension is mainly
caused by constraints based related to the
design goals and application domains of the
ERP system. This in turn indicates the
importance of the system compatibility
problem and the issue of the learning
management mechanism. The arguments
regarding such factors are addressed in P1
and H1.1, H1.2 and H1.3. This study
argues that the compatibility between ERP
system specifications and organizational
requirement, the completeness of the
solutions provided by the ERP system for
legacy system, and the learning of the
suggested management mechanism for
organization management tend to have a
positive relationship with process
integration, leading to improvement in
organizational performance.
Dimension of process reengineering. The
misalignment in the organization
dimension is mainly because of the
difference between the best practices
suggested by the ERP system and existing
business processes, combined with the
process changes implemented by the ERP
system. Consequently, the ability to
manage organizational change, the
coordination function of the MIS
department, and KU's role in knowledge
sharing and distribution become important
issues, addressed in P2 and H2.1, H2.2,
H2.3, and H2.4. This study argues that the
capability to manage organizational change,
the coordination function of the MIS
department, top manager support, and
KU's role in knowledge diffusion tend to be
positively related to process integration.

Dimension of synergy. From a holistic


perspective, misalignment between
technology and organizations is the major
problem of this research that calls for a
technology adaptation approach to achieve
the objective of alignment. The managerial
adaptation mechanism presented in
Figure 3 is based on the system
compatibility and suggested best practices
factors in the ERP system dimension, and
the reengineering factors in the
organizational dimension. The synergy is
the improvement achieved through
IT-enabled business process integration
and change management approach to ERP
implementation. Successful
implementation of the ERP system will
produce an environment where IT
efficiently supports streamlined business
processes. Realization of process
integration benefits is often measured by
the scale based on the implementation
objective of an organization.

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Industrial Management & Data Systems


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Strategies for the adaptation of ERP systems

Industrial Management & Data Systems


Volume 104 . Number 3 . 2004 . 234-251

Chin-Fu Ho, Wen-Hsiung Wu and Yi-Ming Tai

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Further reading
Eisenhardt, K.M. (1989), ``Building theories from case study
research'', Academy of Management Review, Vol. 14
No. 4, pp. 532-50.
Kirkpatrick, D. (1998), ``The e-ware war: competition comes
to enterprise software'', Fortune, Vol. 138 No. 11,
pp. 103-12.
Rajagopal, P. (2002), ``An innovation-diffusion view of
implementation of enterprise resource planning (ERP)
systems and development of a research model'',
Information & Management, Vol. 40, pp. 87-114.
Ross, W. (1998), The ERP Revolution: Surviving versus
Thriving, White Paper, MIT, Cambridge, MA,
November.
Weill, B. and Clair, S. (1999), ``The implications of
information technology infrastructure for business
process redesign'', MIS Quarterly, Vol. 23 No. 2,
pp. 159-82.

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