Similarities and Differences of Custom Designed ERP Systems Development and Implementation in Two Cases in Services and Manufacturing

In this paper we made a comparative review of two case studies in development, design, and implementation of in-house custom-designed Enterprise Resource Planning packages in manufacturing and services. For comparison, we scanned through business solutions, tangible and intangible benefits, process of implementation, implementation problems and planning, benefits of ERP implementation, business processes, business strategies, project goals, IT infrastructure, and key critical success factors (KCSFs). The KCSFs and the important key factors were the focus point in evaluation of differences. For instance, in manufacturing, the innovation strategy was identified as an important KCSF in implementation planning phase whereas in service, understanding client business processes was identified as an important KCSF in planning phase. INTRODUCTION In the course of the 1990s, ERP systems evolved when the functionality of MRPII in production was blended with other applications concerning quality, maintenance, marketing, sales, personnel and various other support activities. Thus, ERP systems moved away from the manufacturing environment to support of the entire manufacturing company and from there to the support of service companies as well. These changes in functionality and application environment have had an important impact on implementation processes for these systems. There is a voluminous literature on implementing ERP systems, which has resulted in an increasingly long list of critical success factors. There is little systematic attention, however, for the question if implementation requires different approaches if it takes place in a services environment instead of a manufacturing environment. Inspired by some implementation failures in a services environment, we have carried out a systematic review of the literature on this issue. First, we have compared the literature on MRP implementation with the literature on ERP implementation. Since ERP is supportive of many more service elements in the manufacturing environment, we expected some first clues from this comparison. Furthermore, we have compared the literature on ERP implementation before 2000 with that after 2000. Before 2000, implementing ERP was most frequently tied to solving the Y2K problem and solving various other problems with legacy systems, whereas this is most certainly less so after 2000. F. Salimi 2008 Volume 17, Numbers 3/4 168 Again, we expected this comparison to give us a clearer view on differences in implementation requirements between manufacturing and services. In our review we looked at differences in the reasons for ERP adoption (including project goals, business objectives) and differences in project routes (project phases) and key critical success factors in implementation between manufacturing and services. Our investigation shows that some differences can indeed be identified that appear to be related to the inherent differences between manufacturing and services. We conclude that, compared to a manufacturing environment, implementation in a services environment needs to be less technology oriented, more bottom-up and more concerned with external integration with customers (Salimi, 2005; Salimi, Dankbaar & Davidrajuh, 2006). In contrast to off-the-shelf ERP implementation, there are not much literature available in the process of custom-designed ERP implementation and the differences of these packages in manufacturing and services. This lack of literature and practitioners explicit knowledge motivated the reason for elaborating the process of custom-designed ERP implementations in these two case studies in manufacturing and services. The objective of this paper is to take this unique opportunity to evaluate the hands on custom designed implementation of ERP in manufacturing and services. We followed the same route as earlier researchers in search for identification of critical key success factors in the process of MRP and ERP implementations. We have reviewed literature comprehensively for KCSFs in two sectors in preceding ERP articles (Salimi, 2005; Salimi, Dankbaar & Davidrajuh, 2006). For a shortcut reference to KCSFs, we have provided the reader with the following section in KCSFs as below. The case studies were conducted by project leader (β project manager) and key participant (α HR manager) in ERP development and implementation. The methodology was the collection of tacit knowledge during hands-on participation, and brainstorming teams of different or relevant disciplines in both firms by the key participants. Key Critical Success Factors (KCSFs) This section is concerned with the KCSFs used in industry practice. KCSFs can determine whether the ERP implementation will be successful. There is a large literature on KCSFs based on the traditional method of identifying KCSFs such as in the project management body of knowledge (PM-BOK). Similarly, there is a large literature on KCSFs based on the same traditional method of identifying KCSFs in ERP implementation. These KCSFs are the pressure points in IT projects. We used the approach to finding KCSFs, which has been applied in industry for a long time. The KCSFs bridge the link between ERP implementation and improvement in business performance across strategy, business processes, IT, structure, culture and management systems. ERP KCSFs demonstrate the linkages between ERP critical factors of success, ERP success and ERP benefits (Al-Mashari et al., 2003). The KCSFs are the welldeployed visions and missions that have been translated and communicated at all levels within the organization. How well the KCSFs are relayed into the organization is a major condition for the ERP systems to yield the desired benefits (Lyytinen & Hirschheim, 1987). Custom Designed ERP Systems Journal of International Technology and Information Management 169 KCSFs determine whether the ERP implementation will be successful. A number of authors have identified a variety of factors that can be considered to be critical to the success of an ERP implementation (Umble et al., 2003). Nah et al. (2003) stated that the high failure rate of ERP implementation called for a better understanding of its KCSFs (Somers et al., 2000). Nah et al. (2003) identified eleven KCSFs from an extensive literature review and then she used this result as a benchmark to evaluate the survey of Chief Information Officers’ (CIO) perceptions of the degree of criticality of these KCSFs in ERP implementation. Nah et al.’s (2003) identification of the KCSFs and their citations by ERP practitioners point to knowledge accumulation and convergent opinions of both academics and practitioners. A number of researchers have identified KCSFs in the process of MRP implementation (Chen, 1996). In a comparative analysis of MRP II implementation and ERP implementation, researchers have also identified the KCSFs prior to the millennium change (Cramer, 1998). Their research suggested differences in KCSFs between MRP implementation in manufacturing and ERP implementation in manufacturing and services such as project related tasks, contingency approach to ERP implementation, contingency approach to interfaces, outsourcing ERP implementation tasks, application of simulation cases, and the importance of continuity of team members in ERP implementation projects (Kylstra, et al., 1997). In the period of around the millennium change with the related software problems, a number of scholars also focused on identification of KCSFs in the process of ERP implementation (AlMashari, et al., 2003). The differences in KCSFs between ERP implementation and MRP implementation routes appear to be due to (a) incorporation of a service section in ERP, (b) higher requirements for project management skills (c) the invisibility of the project route. The intention of the literature review was initially to compare and analyse the findings of various researchers in different ERP projects across all industries. We review the development phases in two case studies in implementation of in-house enterprise resource planning software packages in manufacturing and services in post Y2K period. Case Study α The α-group is a firm of accountants, fiscal advisers, management consultants, financial and legal advisers. Since 1948, α has been consulting clients in optimising their financial position, business reporting, business operations and fiscal planning. The clients market consists mostly of wealthy entrepreneurs, their firms, professionals and wealthy private individuals. α is a service-oriented firm with 140 employees consulting clients at personal and professional level. The new organizational structure (implemented in January of 2002) consists of a board of directors with HRM, ICT and administration as supportive organs. The firm’s success relies on the knowledge, skills, commitment and devotion of its personnel. In this case study, we critically F. Salimi 2008 Volume 17, Numbers 3/4 170 analysed and evaluated the practical implementation of custom-designed ERP software, α-net, at client’s facilities ( Ω b.v.). Business solutions In 1997, α launched a research and development plan to customize the labour intensive services of making annual reports. α developed a CaseWare (audit-agent) program to its own-customdesigned ERP system for to automate the process of annual report. This process of annual report automation later extended to annual budget, monthly reporting and consolidated annual reports. In the course of six years, the preliminary in-house software programme was developed to a serious custom-designed ERP application program fitting well with α business processes. However, the users had to change their working process to adapt to the new system. Furthermore, IT infrastructure had to be restructured to accommodate the new application and provide sufficient speed for a smooth operation. By the introduction of α-net, the organization marketed a new service in consulting to existi