Two Key ERP Principles
• Standardisation
– Industry level
– Firm level
• Centralisation
– Cost saving – eg computing
– Control over resources
– Organisational transformation – eg: shared
services
Impact of ERP
• Impact on processes
– how to identify it?
– How to measure it?
• Impact on ability of the firm
– Autonomy
– Decision making
– Collaboration
– Etc…
Impact on Processes
• As is / to Be analysis
– Current processes
– Would be process
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•
Template processes
Data collection routines
Workarounds
“devil is in the details”
– Business process steps
– authorisations
Impact on decision making
• Research on the impact of IT
– Particularly on middle management
• Number of middle managers
• Role and contribution to the firm
– Contingency framework
• Research on ERP – very little!
Pre-ERP observations
“One reason, then, that we expect top acceptance of information
technology is its implicit promise to allow the top to control the
middle just as Taylorism allowed the middle to control the bottom.”
Leavitt and Whisler (1958)
The computer and the new decision-making techniques associated
with it are bringing changes to white-collar, executive and professional
work as momentous as those that the introduction of machinery has
brought to manual jobs.
Simon (1977)
Principles of Scientific management
• describe and bread down a task to its smallest unit;
science for each element of work
• restrict behavioral alternatives facing worker
• remove worker discretion in planning, organizing,
controlling
• use time and motion studies to find one best way to
do work
• provide incentives to perform job one best way-tie
pay to performance
• use experts (industrial engineers) to establish various
conditions of work
Impacts and problems
• new departments– industrial engineering, personnel, quality control
•
•
•
•
•
•
growth in middle management
separation of planning from operations
rational rules and procedures
increase in efficiency
formalized management, mass production
human problems
– dehumanization of work; sabotage, group resistance,
hated by workers
Analogy with ERP
• New departments
– ERP team / data integrity team
– Shared services
• New roles and responsibilities
– Middle manager group split two ways
– Winners and losers
• Increase in efficiency in the general case
• Problems with exceptions
• Dysfunctional uses of the application
Key problem
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ERP are designed for the operational level
Even at that level, virtualisation is imperfect
Management decisions are not all mechanistic
Main job is to deal with exceptions
Current environment = exceptions are the norm
Winter (1985) the case for mechanistic decision
making
• But need organisational routines for deciding
when to automate responses.
Tangible /
Certain
Spreadsheet tool
Virtual representation
of the world
Configuration / distribution model
Business Logic
Data Model
Snapshot
Real World
Intangible /
Uncertain
Cognitive Map
(THINK)
SEE
Scenario for Automatic Decision
Making
NON ROUTINE
DECISION ARENA
EMERGENT
PROCESSES
Primary Decision Cycles
AUTOMATED
DECISION ARENA
Secondary Decision Cycles
FORMALISED
PROCESSES
Joint Workshop on Decision Support Systems, Experimental Economics & e-Participation
June 5th - 7th, 2005 - Graz, Austria
Scenario for Automatic Decision
Making with ERP
NON ROUTINE
DECISION ARENA
AUTOMATED
DECISION ARENA
Primary Decision Cycles
Secondary Decision Cycles
EMERGENT
PROCESSES
FORMALISED
PROCESSES
Joint Workshop on Decision Support Systems, Experimental Economics & e-Participation
June 5th - 7th, 2005 - Graz, Austria
Decision Making Life Cycle
New
Problems
Primary Cycle
“People” Level
Old
Problems
Revisited
Dialogue
Coded /
Formalised
Problems &
Solutions
Embedded Knowledge
Extract
(exit strategy)
Secondary Cycle
Systems Level
Capture
Joint Workshop on Decision Support Systems, Experimental Economics & e-Participation
June 5th - 7th, 2005 - Graz, Austria
Some conclusions
• Implementing ERP is non-trivial
• Visibility on post ERP impact is low
– Business processes
– Managerial decision making
• ERP is an imperfect tool (eg: virtualisation)
• Commitment to spending means
implementations rarely done properly
(“Mindlessly” Swanson and Ramilier)
• And never reversed…just taken to next stages
with more implementations
Business processes
• Sales order processing
• Purchasing
• Production planning
• Describe in terms of inputs, process steps, output
and actors involved
• Specify what data must be collected at the
various stages
• Identify some generic impacts of ERP