ERP system implementation: How top managers' Involvement in a change project matters

The purpose of this thesis is to enhance the understanding of how top managers’ involvement in an ERP system implementation project may affect organisational effectiveness. Top managers must be involved in ERP system implementations because an ERP system spans the whole organisation. Only the top manager has the authority to make decisions at the level above the units that will be influenced by the implementation. In the literature, however, the role of the top managers’ involvement is described in vague terms only. To study the significance of top management involvement, I have conducted a longitudinal study examining the implementation of an ERP system in an international production enterprise. To take care of competitive advantages, the project comprised the development of two custom-made ERP system modules, a sales module and a corporate production-planning module. The complexity of the project, which is attributable to its custom-made modules, makes great demands on the management of the project. I have conducted more than 50 interviews with the top managers and some of the employees, and I have observed and modelled work processes in detail, the sales process and the production-planning process. In my study, the top managers were involved in all phases of the implementation. In the initiation phase, they developed the vision of the enterprise “to be”, and they communicated the vision and the need for the system to their employees. They participated in the development of the invitation to tender, emphasising the distinctive characteristics of the production processes. Furthermore, they allocated resources to prepare the enterprise for the ERP system, among others, by standardising names of components. This involvement in the initiation and planning phases contributed to cost savings in later project phases. During the project period, the top managers were members of the steering committees, allocating resources to compose project teams with local specialists and external experts. However, this phase also revealed that the top managers were not able to manage a complex project adequately. After a period of scope increase and heavy delays related to the development of the production-planning module, the managers and members of the project teams learned the need for more agile project management from experience, and the rest of the project was implemented according to plan. I have explored the effects that derived from the ERP system implementation and how these effects influenced organisational effectiveness. I found that the main effects were improvements in the effectiveness of the extended supply chain, such as improved exploitation of capacities, reduction of managerial lead-times, reduction of costly mistakes, and improved services to the customers. The corporate production-planning module made 13 local planners redundant; that is, they were employed elsewhere in the enterprise. In addition, my thesis has contributed to the development of tools that help researchers get an overview of a large quantity of data. I have extended an information system implementation model to include the representation of sub-projects, and I have extended a process modelling technique so that it is suitable for comparing work processes and highlighting the effects of process changes. My thesis contributes to the understanding of the top managers’ role in ERP system implementation projects: developing the vision, communicating that vision, allocating relevant resources, and active participation in all phases of the project. In my case study, the top managers understood the potential of information technology to increase the effectiveness of the enterprise, and they had a detailed knowledge of the production and management processes. This knowledge made it easier for them to take an active role in the project. They just lacked the knowledge of agile project management. My findings support the importance of dividing a complex project into more manageable subprojects. In addition, my study demonstrates that it is essential to evaluate the complexity of each sub-project critically and to select an adequate implementation strategy. In projects dealing with software development and work process development, this critical evaluation should concern both the technical complexity of the software solution and the organisational complexity. My findings have implications for managers. Managers who are not mastering project management principles need two types of consultants when they are involved in ERP system projects. Because of the technological complexity, managers need consultants from the vendor when they implement an ERP package. They may also need other types of specialists, such as programmers, when the project involves the development of custom-made software. In addition, they need the support of a professional project manager to help them apply appropriate project management methodologies to achieve the project goals in time and on budget.