WOW !! MUCH LOVE ! SO WORLD PEACE !
Fond bitcoin pour l'amélioration du site: 1memzGeKS7CB3ECNkzSn2qHwxU6NZoJ8o
  Dogecoin (tips/pourboires): DCLoo9Dd4qECqpMLurdgGnaoqbftj16Nvp


Home | Publier un mémoire | Une page au hasard

Influence of an ERP system on the value chain process of multinational enterprises (mnes)


par Bosombo Folo Ralph
University of Johannesburg - Master in business administration (MBA) 2007
Dans la categorie: Informatique et Télécommunications
   
Télécharger le fichier original

Disponible en mode multipage

    The influence of an ERP system on the value chain process of
    multinational enterprises (MNEs)

    by

    Folo Ralph - Bosombo

    SHORT DISSERTATION

    Submitted in partial fulfilment of the requirements for the degree

    MASTER OF BUSINESS ADMINISTRATION (MBA)
    in
    BUSINESS MANAGEMENT
    in the
    FACULTY OF MANAGEMENT
    at the
    UNIVERSITY OF JOHANNESBURG

    Study Leader: Mr H.B. Klopper

    December 2006

    Abstract

    The study set out to assess the influence of enterprise resource planning (ERP) system software on the value chain process of multinational enterprises (MNEs). This was achieved through the literature review that addressed the relation between the value chain approach as a strategic tool and ERP system theory. The ERP system is positioned as a total solution for the MNE, and it contains the best business practices that are derived from the various generic business functions of the value chain architecture and configuration. A set of research hypotheses was developed, which were tested in accordance with the research methodology and the design issues for the qualitative study. The different chapters evolved along with a case study of an ERP system, namely Axapta software. For the quantitative study, preliminary interviews were conducted to select the MNEs that use SAP software. Thereafter a self-administered survey was applied relating to the strategy and the value chain integration through the ERP system to the MNE's ERP system users. The research results in the qualitative study show that for ERP software to integrate the MNE's functional activities and processes in the value chain system globally and effectively, it has to position itself as a value chain system with e-business mechanisms. In addition it has to suit the global ERP characteristics as an information interchange, sharing and service. It has to be a flexible and comprehensive, modular, open, integrated and multifunctional system, with an option to customisation in selecting modules that best suit the MNE's management to craft its business's activities. The above was proved through the analyses of Axapta software attributes by means of a technical strategic planning tool, namely the value chain approaches, and the strategic supply chain factors for ERP software evaluation. Axapta software met the requirements of a general and global ERP system model and it is indeed a value chain system. The following statement can be cited as the most important findings of the qualitative study: For the MNE to derive value from ERP system integration and utilisation, the strategic information technology (IT) plan has to be formulated and followed in order to measure the beneficial cost and efficiency of implementing the ERP system, and to assess the suitability of ERP software during the selection process in accordance with the MNE's objectives that will facilitate the success of ERP implementation usage. ERP software adopted for the MNE has to include the international architecture and configuration types that align with the MNE's strategy and Internet application. This must include all the necessary value chain functional modules relating to the ERP system as an integrating tool that will influence the MNE to align its strategy to gain

    i

    competitive advantage. Consequently, such an ERP system will allow the MNE to strengthen and integrate all its applications and activities in the value chain system. As a result the different organisational suppliers and partners must be linked with the MNE's value chain system to enhance the operational sites' users to operate efficiently, more reliably and in co-ordination with the MNE. The necessary information and data must be available across the entire organisation's system from the trading partners to the customers so that they can be satisfied on with the necessary urgency. In the statistical analysis conducted from the self-administered survey, the major finding is the positive view of the employers and employees of the customisation of ERP, i.e. SAP software, which helps MNEs to craft the software according to their objectives and with the use of a strategic IT plan.

    In conclusion the study highlighted the inseparability of ERP system theory from the value chain approaches. Therefore, the study came to position ERP system theoretically as an evaluative tool and technically as a value chain system that becomes an evaluative tool for ERP software activities assessment. Moreover the study pointed out the importance of the use of a strategic IT plan within the MNE. However, the main contribution and value of this study is obviously to assist any MNE in the process of migrating business systems. The methodical approach facilitates the selection and the evaluation of ERP software requirements within an organisation, which can meet its growth targets and objectives. Thus, the strategic supply chain factors for ERP software evaluation and the application of the value chain approaches discussed in this study will contribute to the acquisition of fit and compatible ERP software. The choice of the right ERP software will definitely allow MNEs to derive the benefits of the ERP system across its entire value chain sites (nationally and internationally). It can be concluded from this study that any organisation wanting to invest in ERP system implementation must apply the methodical approach formulated in this study by the researcher. It is recommended that the assessment of an ERP system's modular and functional activities, together with the organisation's value chain activities, be given priority before the acquisition and adoption of the ERP system.

    ii

    Declaration

    I declare that this short dissertation is my own, unaided work. It is being submitted in partial fulfilment of the requirements for the degree of Master in Business Administration (MBA) in the Faculty of Management at the University of the Johannesburg. It has not been submitted for any degree or examination in any other University.

    Signed at on this day 2006

    Signature

    iii

    Acknowledgements

    I would like to extend my special thanks to the following people and organisations for their encouragement and support during the completion of this study:

    · My supervisor, HB Klopper, for his professional assistance and advice during the entire process.

    · To the Statkon staff, especially Riette and Adam for their assistance and advice on the development of the questionnaire and the statistical process of the research data.

    · To Glenda Buncombe for her assistance in language editing of this dissertation.

    · To my wife Lowa Bibi and my girls: Lokando Folo-Rachel, Yenga Folo-Princilla and Shupamba Folo-Angel, colleagues and friends.

    · To all MNE personnel (CIOs, managers and end-users) who participated in the preliminary study and the self-administered survey.

    · To my parents in the Democratic Republic of Congo (D.R.C). La vision de Kisangani -l' esprit invisible de la destinee Congolo-Zairoise. And Folo brothers in South Africa, for all their love and support during this period.

    My gratitude to God through my ancestors for all his blessings and inspiration.

    Folo Ralph - Bosombo

    iv

    TABLE OF CONTENTS:

    Abstract iDeclaration iii

    Acknowledgements ..iv

    CHAPTER 1: INTRODUCTION AND SCOPE OF RESEARCH

    1. 1 Introduction

    1

    1. 1. 1 Multinational enterprises (MNEs)

    .1

    1. 1. 2 Value chain integration and information system (IS)

    .5

    1. 1. 3 Strategy and value chain model

    6

    1. 1. 4 ERP system. .

    8

    1. 1. 4. 1 Factors contributing to the problem

    10

    1. 1. 4. 2 Selection and evaluation of ERP systems

    10

    1. 1. 5 Axapta Microsoft solution software

    ..11

    1. 2 Problem statement

    .11

    1. 3 Purpose of the research

    12

    1. 4 Research hypotheses

    13

    1. 5 Research design

    13

    1. 6 Research methodology .

    14

    1. 7 Methods of collecting data

    .14

    1.8 Importance/value and benefits of the study

    .16

    1.9 Limitation of the study

    .16

    1.10 Demarcation of the study

    17

     

    v

    CHAPTER 2: LINKING STRATEGY WITH INFORMATION TECHNOLOGY

    THROUGH A VALUE CHAIN APPROACH

     

    2.1 Introduction

    .19

    2.2 The interdependence of technology and strategy

    19

    2.3 The role IT plays within strategy

    20

    2.4 The importance of a strategic IT plan within an organisation

    22

    2.5 The value chain and IT, linked to the strategic management

    23

    2.6 Definition of the value chain concept

    25

    2.7 Different graphic representations of the value chain .

    27

    2.7.1 Porter's value chain .

    .27

    2.7.2 The customer - centric value chain

    29

    2.7.3 Scott's value chain

    .31

     

    2.7.4 Walters and Lancaster's value chain

    .33

    2.7.5 Value nets

    36

    2.7.6 The electronic - business value chain

    .37

    2.8 ERP system and e - business: An evolving relationship for value chain extension

    40

    2.9 The value chain selected and customised for the purpose of this study

    41

    2.10 The value chain's system through ERP system integration.

    43

    2.11 The impact of IT in the value chain system

    ..44

    2.12 Conclusion

    45

     

    vi

    CHAPTER 3: AN OVERVIEW OF ERP SYSTEMS

    3.1 Introduction

    .48

    3.2 The background of ERP systems

    48

    3.3 Defining the concept of an ERP system

    49

    3.4 The general model of an ERP system compared to a value chain

    51

    3.5 The role and benefits of an ERP system

    .53

    3.5.1 The advantage and disadvantage of an ERP system

    ..54

     

    3.5.2 The characteristics of an ERP system

    ..55

    3.6 ERP system: The hub of an MNE

    ..57

    3.6.1 The modules of an ERP system

    58

    3.6.2 ERP system package

    61

    3.7 Global ERP system configuration

    61

    3.7.1 Alignment between ERP system configuration and international strategy

    62

    3.7.2 Types of international strategies

    .64

    3.7.3 ERP systems for organisations that use an MNE strategy

    65

    3.8 Strategic factors for the evaluation and selection of an ERP system

    66

    3.8.1 Selection of an ERP system

    .69

    3.8.2 Methodology of an ERP system

    ..70

     

    3.9 The implementation of an ERP system 71

    3.9.1 Factors affecting the implementation process 73

    3.9.2 A strategic approach to ERP implementation ..74

    3.9.3 Cost of ERP implementation 74

    3.10 Conclusion 75

    vii

    CHAPTER 4: A CASE STUDY OF ERP SYSTEM - AXAPTA MICROSOFT SOLUTION
    SOFTWARE

    4.1 Introduction 76

    4.2 The background of Axapta ..76

    4.3 The analysis of the Axapta Microsoft system 77

    4.4 Axapta supports the entire business operation ..78

    4.5 The selected key features of Axapta Microsoft solution software .79

    4.6 The generic modules of Axapta Microsoft solution .81

    4.7 Conclusion ..84

    CHAPTER 5: RESEARCH METHODOLOGY

    5.1 Introduction .85

    5.2 Qualitative and quantitative study ..85

    5.3 Research design ..85

    5.4 Methods of collecting quantitative data .86

    5.5 Sampling method and sample size ..88

    5.5.1 Sampling method .88

    5.5.2 The sample size 88

    5.6 Questionnaire design for quantitative study 89

    5.7 Response rate ..90

    5.9 Data analysis 92

    5.10 Conclusion 92

    viii

    CHAPTER 6: RESEARCH FINDINGS AND INTERPRETATION OF DATA ANALYSIS

    6.1. Introduction

    93

    6.2. Qualitative findings

    .93

    6.2.1. Axapta software integrates MNEs' value chain and supports MNEs' strategy

    ..93

    6.2.2. Strategic factors of an ERP system evaluation .

    95

    6.2.3 Summary (section 6.2.1 to 6.2.2) for hypothesis 1 (H1)

    97

    6.2.4 Axapta's software evaluation .

    .99

     

    6.2.5 Axapta's value chain system 99

    6.2.5.1 Porter's value chain and Axapta's value chain architecture ..100

    6.2.5.2 Walter and Lancaster's value chain and Axapta's attributes 101

    6.5.5.3 The customer-centric value chain and Axapta software .103

    6.2.5.4 Scott's value chain and Axapta software .104

    6.2.5.5 Value nets and Axapta software value chain architecture ..104

    6.2.5.6 The e-business value chain model and Axapta software architecture .105

    6.2.6 Summary (section 6.2.3 to 6.2.4) for hypotheses 2, 4 and 5 (H 2, H 4 and H5) 105

    6.2.7 Axapta as an IT integrative tool for MNEs' value chain systems .107

    6.2.8 Summary (section 6.2.5) for hypothesis 6 (H6) . 107

    6.3. The findings of the empirical study for hypothesis 3 (H3) 108

    6.3.1 Section A: Demographics

    108

    6.3.1.1 Organisation profile

    .108

    6.3.1.2 CEO/CIO profile

    108

    6.3.1.3 Manager profile

    109

    6.3.1.4 End-user profile

    111

     

    ix

    6.3.2 Section B: Views of CEOs/CIOs on strategic management, SAP and training 113

    6.3.2.1 SAP software and training profile 113

    6.3.2.2 Section C: Strategic management, SAP system and value chain 114

    6.3.2.3 Section D: General information ..114

    6.3.3 Section B: Views of managers and end-users 114

    6.3.4 Section C: Views of managers and end-users on strategic management, SAP and training 119

    6.3.5 Results of statistical testing 120

    6.3.5.1 Job level / full-time employees cross-tabulation 121

    6.3.5.2 Departmental objectives/ strategic IT plan cross-tabulation 122

    6.3.5.3 SAP software selection cross-tabulation 123

    6.3.5.4 Awareness of training cross-tabulation ..124

    6.3.5.5 Training / Responsible for the training cross-tabulation .. 125

    6.6 Conclusion 126

    CHAPTER 7: CONCLUSIONS AND RECOMMENDATIONS FOR FUTURE RESEARCH

    7.1 Introduction

    127

    7.2 Achievement of the objectives

    128

    7.2.1 Primary objective

    128

    7.2.2 Secondary objectives

    .129

    7.3 The value and the contribution of the study

    131

    7.4 The methodical approach for ERP software assessment

    131

    7.5 Conclusion and recommendation

    133

    7.6 Areas for future research

    ..133

     

    x

    References ..135

    xi

    Table of figures

    Figure 2.1: Porter's value chains model 28

    Figure 2.2: The traditional value chain 30

    Figure 2.3: The customer-centric value chain .31

    Figure 2.4: An alternative view of the value chain drivers 32

    Figure 2.5: The value chain components model 34

    Figure 2.6: Value chain structure and process 35

    Figure 2.7: The e-business value chain .38

    Figure 2.8: Prominent applications of the Internet in the value chain . 39

    Figure 3.1: Integrated modules in ERP solutions 49

    Figure 3.2: The general model of an ERP system 52

    Figure 3.3: The conceptual model of ERP system linkages with supply chain factors 68

    Figure 3.4: Outline of the methodology .71

    Figure 6.1: The module activities of Axapta depicted in the Porter' value chain 100

    Figure 6.2: Axapta cost/value drivers depicted in Walters and Lancaster's value chain 102

    Figure 6.3: Full-time employees reporting .. 111

    Figure 6.4: Views of managers and end-users of SAP software efficiency ..115

    Figure 6.5: Responsible for SAP software training (Responded) .116

    Figure 6.6: Responsible for SAP software training (Not responded). 117

    Figure 6.7: Level of agreement ..118

    Figure 6.8: General information/ statement 120

    Figure 7.1: The methodical approach 132

    xii

    Table of tables

    Table 2.1: The key business design differences

    37

    Table 3.1: Characteristics of an ERP system

    .56

    Table 4.1: The selected key features for Axapta Microsoft solution

    .80

    Table 5.1: The usage of ERP software in randomly selected MNEs

    .87

    Table 5.2: Relationships between questions in the self-administered questionnaire survey and the primary and secondary objectives and research hypotheses

    90

    Table 5.3: Response rate to the self-administered survey

    91

     

    Table: 6.1 General ERP system modules compared to Axapta software package modules..........

    96

    Table 6.2: Organisation profile

    .108

    Table 6.3: CEO/CIO profile

    109

    Table 6.4: Manager profile........

    110

    Table 6.5: End-user profile

    112

    Table 6.6: View of CEOs/CIOs on strategic management, SAP and training

    113

    Table 6.7: Views of managers and end-users of the acquisition of SAP software

    115

     

    Table 6.8: Cross-tabulation for question a2 (What is your current job level?) with a5 (How many full-time employees report to you?) .121

    Table 6.9: Cross-tabulation b 9.1 (SAP software supports my department's objectives) with b 9.8 (The IT strategy plan in our organisation influences the extent to which SAP software can be successfully implemented) 122

    Table 6.10: Cross-tabulation b 9.1 (SAP software supports my department's objectives) with b 9 2

    (senior managers were consulted regarding the selection of ERP software used in my organisation) 123

    xiii

    Table 6.11: Cross-tabulation b 9.5 (Sufficient funds were made available to train employees in SAP software usage) with c 10.3 (I received sufficient training on the usage of the SAP) 124

    Table 6.12: Cross-tabulation c 10.3 (I received sufficient training on the usage of the SAP software) with b 8.3 (The training is done on-the job with experienced employees) ..125

    xiv

    Appendix

    Appendix A: Self-administered survey for CEOs/CIOs

    143

    Appendix B: Self-administered survey for managers and the end-users

    146

    Appendix C: Cover letter for questionnaires to MNEs

    149

    Appendix D: List of organisations consulted in preliminary telephonic surveys.

    .150

    Appendix E: List of organisations included in the self-administered surveys .

    .151

    Appendix F: Statistical analysis

    152

    Appendix G: Frequencies and descriptive data for the CEOs/CIOs

    163

    Appendix H: Frequencies and descriptive data of end-users and managers

    .168

     

    xv

    CHAPTER 1: INTRODUCTION AND SCOPE OF RESEARCH

    1.1 Introduction

    «Enterprise Resource Planning (ERP) system is a strategic tool that helps a company to gain competitive advantage by integrating business processes and optimising resources available» (Zeng, Chiang & Yen, 2003:115).

    The different ERP software packages are not always suitable for every type of business, necessitating a proper strategic evaluation of the system before any adoption and/or during implementation to assess its competitiveness impact with regard to the organisation's objectives and its influence on the value chain. In this regard, a technical and strategic planning model tool such as value chains may be applied in order to facilitate the evaluation for selecting and adopting ERP software, which the multinational enterprise (MNE) can integrate in its value chain effectively and efficiently.

    The aim of this chapter is to describe the background of this study relating to an ERP system, the objectives and the research design and methodology used. The research problem and hypotheses are given, the literature review on IT and strategy management, the value chain and ERP system is described briefly, and the demarcation of the chapters are also addressed in this chapter.

    1.1.1 Multinational enterprises (MNEs)

    An MNE is described by economists as any company that «own controls and manages income generating assets in more than one country» (Dunning, 1992:34). Technically, most MNEs have became e-MNEs with facilities in a number of countries and achieve their management through cyberspace. Thus, Zekos (2005:53) defines an MNE as a virtual enterprise that has production facilities in various countries concerning tangible goods and an advanced network dealing with intangible goods. Its processes and transactions are achieved via cyberspace by people or some actions made by electronic agents such as electronic contracts and automated sales.

    Nowadays, MNEs are investing in ERP systems to gain a competitive advantage because of trends
    of liberalisation and globalisation where integrating both customers and suppliers with the entire
    system becomes critical. Furthermore, there is a need to meet the organisation's international

    1

    management needs because of the system performance, which is designed to standardise, streamline and facilitate the integration of the information and processes to flow across functional, product and customer lines over national boundaries (Madapusi & D'souza, 2005:7). In addition, through the recent development of ERP and the benefits associated with it, MNEs are seeking ways of improving their overall performance. In fact, in a study conducted by Blasis and Gunson (2002:17), Caldwell and Stein assert that ERP systems provide the foundation for the add-ons for MNEs. The real payback is in the synergy of people, processes and technology once the system is stable. Below are examples of international MNEs that have unlocked economic value by aligning the ERP with their strategies as investigated by Clemons and Simons, Davenport and Kay (in Madapusi & D'souza, 2005:7).

    · Texas Instruments Company

    ERP systems at Texas Instruments Company in the USA are used worldwide by more than 13 000 users and handle well over 45 000 products and 120 000 orders per month. ERP implementation has helped the organisation standardise its worldwide business processes, leverage its e-commerce supply chain capabilities and achieve a system response time of less than three seconds 90% of the time, according to Sarkis and Sundarraj (in Madapusi & D'souza, 2005:7).

    · Delphi Automotive Systems Europe

    Delphi Automotive Systems Europe has used its ERP systems across eight European countries. The organisation has developed a quantifiable business model, defined its best practices and structured its ERP implementation to achieve its business goals. As a result Delphi's ERP system integration has enabled its 69 geographically dispersed plants to synchronise their operations and fulfil complex customer orders, as highlighted by Jeffery and Morrisson (in Madapusi & D'souza, 2005:8).

    In the South African context, MNEs are upgrading and integrating their current ERP systems.

    · Unilever South Africa

    Unilever Foods succeeded in streamlining their production chain with Infor Advanced Scheduling
    from Apply IT. A Unilever company that refines oil for the production of margarine such as Rama,
    Flora and Stork, together with Apply IT, has implemented ERP software successfully by streaming

    2

    its production chain, from refinement to packing, while avoiding bottlenecks and improving customer service. Unilever has also successfully integrated its supply chain project, slashing Unilever's latency from 36 hours to mere minutes. The second phase of its implementation of Agilisys Advanced Scheduling at Unilever Best Foods Robertson in Boksburg allows Unilever to synchronise supply chain planning between its core SAP R/3 ERP, the oil refinery control system and Info (Unilever SA base case study: available online).

    · Multichoice Africa Company

    Multichoice Africa Company is a provider of a full array of content and pay-media services over a variety of electronic platforms, with the focus on the Internet and interactive television platform services and related technologies (Multichoice Africa base study: available online). The company's operations manager acknowledged in an interview with Financial Mail the limitation of achieving the kind of customer relationship management services that some call centres boast. From this interview it was clear that the ideal would be a system that allows the operator to know who is calling, gather the caller's history and any previous service issues, through a programme that appears on the computer screen as soon as the call comes in (Financial Mail, 2002:1). The real problems facing Multichoice Africa (MBA group assignment study report: 2002:12) fell under its value chain system, in which the different process systems were not integrated and had no interface with each other. The main problem was the duplication in the kind of data/information in all the different systems. The company is, however, in the process of re-engineering itself to establish a system that will integrate all the systems to enhance its business processes.

    However, this is contrary to the running performance and the successful project implementation of ERP in MNEs such Texas Instrument and Delphi Automobile. Others see ERP systems as a waste or a burdensome system. Below is a summary of the case study of Hershey (Laudon & Laudon, 2002:363), where ERP system implementation projects have snarled their internal processes.

    · Hershey

    Hershey's information systems management set a goal to move to an ERP system using software from SAP of Walldorf, Germany. SAP was to be complemented with software from Manugistics Group Inc. of Rockville, Maryland. Manugistics would support production forecasting and scheduling as well as transportation management. In addition the company decided to install

    3

    software from Siebel Systems Inc. of San Mateo, California. Siebel's software would aid Hershey in managing customer relations and in tracking the effectiveness of its marketing activities. Management believed that the project would help Hershey better execute its business strategy of emphasising its core mass-market sweets business. Problems arose for Hershey when the cutover strategy did not work, because serious problems emerged immediately. It indicated that Hershey's employees were having trouble entering new orders on the system. Once the system was up, the company stated that order details were not being transmitted properly to the warehouses where they could be filled. As soon as the admission of problems was announced, questions arose about the causes of those problems. The general manager verified that consultants were at Hershey sites to help resolve the problems. It was made clear that "there are really no software issues per se", as it was clarified that these consultants "are just making sure they [Hershey employees] are using the business processes [built into the software] correctly". Manugistics also said it was working with Hershey on "business process improvements". Major changes were noted in the way Hershey employees were doing their jobs, which implied the need for more and different training than Hershey's staff had originally received. In early February 2000 Hershey reported an 11% decline in sales and profits for its fourth quarter in 1999. Although Hershey has released very little information on the troubled implementation, observers continue to speculate on the key question: what went wrong? Some point to pushing forward the target data - trying to accomplish too much in the allotted time frame. Others believe that inadequate time and attention were allocated to testing prior to Hershey's new systems going live in July. Still other analysts point to the use of the direct cutover method. Finally, some analysts point their finger at training. Connecticut says that only 10 to 15% of ERP implementations go smoothly. Some observers believe that the lack of education on the why of the system and how the many pieces of the full system fit together is possibly the reason that order entry difficulties created warehouse problems.

    Through the analyses of the above case studies, the researcher noticed that:

    · MNEs are re-engineering themselves due to technical problems, international competitive pressure and the need to improve systems to meet company growth.

    · The adoption of ERP in the company as a strategic IT system tool has led to organisations experiencing an explosion of demand, operation efficiency and the feeding (integration) of

    4

    third-party business partners into the value chain to form extended enterprises.

    · The implementation of an ERP system needs to be managed because of the far-reaching changes that the systems bring to the organisations. Therefore the redesigning of a business requires careful analysis and planning. Keen, Peter and Mourton (1978:39) stipulate that when systems are used to strengthen the wrong business models or business processes, the organisation could become more inefficient at doing what it should not to do and become vulnerable to competitors who may have discovered the right business process model. Keen et al., (1978:39) further emphasise that the organisation must understand which business processes need improvement before launching into process redesign which could be costly to the enterprise as a whole. This is clearly what the researcher noticed in the case study of Hershey.

    · The failure of the ERP system implementation project in Hershey is associated with the business process redesign. Users of the new system processes were not given the proper training and the organisation's management did not consider ERP as a strategic IT tool during the adoption and implementation of the system project. Proper evaluation and analysis are vital.

    1.1.2 Value chain integration and information system (IS)

    According to Forrester research (in Balls, Dunleavy, Grant, Hurley & Hartley, 2000:84), value chain integration is where most organisations are pursuing performance improvement opportunities today. Forrester estimated that by 2001, over 70% of companies would be sharing demand, inventory and order-status information with their trading partners and distribution channels.

    An organisation that tries to integrate within an extended value chain before implementing its own ERP will find the benefits of value chain integration elusive. Without ERP, e-business may do nothing more than create both upstream and downstream problems at Internet speed. These problems result from the lack of reliable, accurate and timely information that trading partners require, as well as from the inability to make intelligent decisions and take effective action on the newly available information coming into the organisation from suppliers and customers (Balls et al., 2000:93). Moreover, a company's value chain is behind its web page. Broadly speaking, a company's simple value chain consists of product planning, procurement, manufacturing, order fulfilment, service and support. Regardless of whether an organisation produces and delivers a physical product or service, it has a value chain (Balls et al., 2000:81). Sarkis and Sundarraj

    5

    (2000:205) assert that the value chain, also known as a supply chain or value-adding process, comprises a number of functions and processes within the organisation. Laudon and Laudon (2002:86) define a value chain as a model that highlights the primary or support activities that add a margin of value to an organisation's products or services. The integration occurs between the primary activities in each value chain and is enabled by the support activities. Therefore the benefits derived from these key parts of the activities integrated in the value chain system allow virtual organisations to become more agile and gain a competitive advantage in order to enhance the core processes of integrated business seen as a flow of the information and activities from customer interest to customer fulfilment (McAdam & McCormack, 2001:117-124).

    However, a vertically integrated organisation extends its control of the value chain as far back as possible, quite literally to "own" the raw materials that are used in its products. For example, some large oil organisations control the product from well head to pump handle. In other cases, organisations may choose to focus on a core competency or set of competencies and let others manage and run various parts of the industry value chain. Reasons for choosing one business approach over another vary from industry to industry, and organisation to organisation, based on each organisation's particular strategy. What is common to all industries is the power of Web-based technologies to change the status quo significantly by providing a mechanism that further integrates the value chain. Therefore, a highly integrated value chain creates greater value for the end-customer by delivering products and services more efficiently and effectively to enhance the cores of value chain integration, which are visibility, access and timeliness. Within the industry value chain, the group of organisations that carry out each step in creating and delivering products is called the supply chain (Balls et al., 2000:82-4). An integrated IT set could not only eliminate many redundant processes, but also provide opportunities for co-ordinating and integrating many disparate processes (Bhatt, 2000:1353). Wyse and Higfins (in Bhatt, 2000:1333) define IS integration as the extent to which data and applications through different communication networks could be shared and accessed for organisational use.

    1.1.3 Strategy and value chain model

    Walters and Lancaster (1999:648) describe strategy as the art of positioning a company in the right place on the value chain for the right business, the right products and market segments, and the right

    6

    value-adding activities. The value chain in the old view of an organisation's management was seen as a backbone of delivering processes from raw material to the end of product. Nowadays, the value chain's role has expanded, becoming an integral component in the strategy process for the evaluation of the company's core competence and its fit in the overall creation of value. Thus, described strategically, the value chain model is an analytical tool that facilitates strategy (Walters & Lancaster, 1999:648). The value chain model is an ideal vehicle, particularly when it is used to identify an organisation's strengths and weaknesses, and to compare these with the opportunities and threats posed by its external environment (i.e. competitors, technology, social change and the legal environment). Walters and Lancaster (1999:644) assert that the value chain model can be used to evaluate «relative position», identify an organisation's distinctive competence(s) and directions for developing competitive advantage, and in fact, to analyse strategically the impact of IT, particularly the ERP system. Therefore a technical strategic planning model becomes an important tool in determining how companies use IT. Corboy (2002:1) states that there are many models available that can be used to analyse how IT can be used strategically. These models can be used to assess the impact of the IS on the organisation's individual value chain, and how the integration between the value systems of the various contributors or activities could be strengthened, as well as the cost/value of product, user, manufacturer and customer (Walters & Lancaster, 1999:644).

    The other strategic tools mentioned by Bakehouse and Doyle (2002:3) are the SWOT analysis and PEST, Nolan's stage hypothesis, Chekland's soft systems methodology, McFarlan's information system strategic grid, the three-stage change process (unfreeze, change, re-freeze), Earl's system audit grid and three-leg analysis, McFarlan's application portfolio and Peppard's adaptation of it, Parson's six information system strategies and Zuboff's automate, informant, transformate model. In addition to these are Porter's five competitive forces theory and the generic strategies approach.

    The aim of an ERP system is to improve the co-operation and interaction between all the departments in the organisation (Bernroider & Tang, 2003:4). The fundamental purpose of this study is to analyse the compatibility of Axapta software with a value chain system through a technical, strategic planning model (value chain approach) in addition to the supply chain factors for ERP software evaluation. The aim is to assess Axapta's requirement status as an ERP system software, and its attributes, configuration and architecture, enabling integration of the discrete systems of the MNE's value chain in order to gain competitive advantage. The benefits derived from

    7

    an Axapta implementation project will facilitate the use and integration of the information process to flow in the MNE's value chain internally and across the national boundaries within the multisite system of the overall organisation.

    1.1.4 ERP system

    ERP systems' roots are in the manufacturing resource planning (MRP) system of 25 years ago. ERP was developed to support the value chain operation in the manufacturing and services sectors. According to Siriginidi (2000:378), an ERP system is an integrated suite of application software modules providing operational, managerial and strategic information for organisations to improve productivity, quality and competitiveness. Its utilisation balances the resources of an enterprise such as human resources, machines, materials, methods, money and marketing to remain competitive in a globalised economy.

    However, the latest enhancement of MRPII, with added functionality such as order management, financial management, warehousing, distribution production, quality control, asset management and human resources management is considered «the back-office». The range of functionality of ERP systems has further expanded in recent years to include the more «front-office» functions such as sales forces and marketing automation, electronic commerce and supply chain systems. ERP systems consist of various functional modules, which include:

    · Engineering data control (bill of materials, inventory and purchase);

    · Resource flow management (production scheduling, finance and human resources management);

    · Works documentation (work order, shop order release, material issue release and route cards for parts and assemblies);

    · Material requirement planning; and

    · Shop floor control and management, and others like costing, maintenance, logistics and management information systems.

    In Bernroider and Tang (2003:4), Boubekri refers to an ERP system as a fine expression of the inseparability of IT and business. It is also an enabling key technology as well as an effective

    8

    managerial tool that allows companies to integrate at all levels and to utilise important ERP applications such as supply chain management (SCM), financial and accounting applications, human resources management and customer relationship management (CRM). Sarkis and Sundarraj (2000:205) postulate that ERP aids the integration of the various functional processes within the organisation's value chain. In addition, Balls et al., (2000:94) assert that a well-operated ERP system makes value chain integration much more powerful.

    According to Slooten and Yap (in McAdam & Galloway, 2005:281), ERP is defined as an
    integrated, multidimensional system for all functions, based on a business model for the planning,
    control and global (resource) optimisation of the entire supply chain, by using state-of-the-art IS/IT

    that supplies value-added services to all internal and external parties. According to Siriginidi(2000:379-87), the deployments of ERP package, selection and implementation play a significant

    role. The most important aspects of the modern ERP system lie mainly in:

    · The integration, which would be implicit in the design of the system software that allows a considerable amount of integration between different elements of the business;

    · The systems packages, which could be customised and parameterised to suit the needs of individual organisations before implementation; and

    · The designs of a proper network infrastructure, in which the application architecture and transaction density factors play a vital role.

    There are about 500 ERP applications available on the market. The select list of ERP packages is Baan from Baan, eBPCS from SSA, CONTROL from Cincom Systems, MFG/PRO from Qad, Oracle from Oracle Corporation, Peoplesoft from Peoplesoft, SAP R/3 from SAP AG, JD Edwards, Marchal from Ramco System, Axapta solution from Microsoft, Ariba, Commerce One, etc. Technically most of the system packages have a few common properties, and they are based on a central, relational database, built on client/server architecture (Shehab, Sharp, Supramaniam & Spedding, 2004:5).

    Despite scepticism about ERP system performance, Adam and Carton (2003:22) mention that the growth in the system's popularity is linked to the following two aspects:

    9


    · An increasing business trend towards globalisation, mergers and acquisitions, short product life cycles, the fear of looming disasters from an ageing legacy system that cannot handle dates beyond the end of the century (commonly known as the year 2000 problem); and

    · ERP appears to solve the challenges posed by means of portfolios of «disconnected, uncoordinated applications that have outlived their usefulness» (Kalakota & Robinson in Adam & Carton, 2003:22).

    1.1.4.1 Factors contributing to the problem

    With regard to organisations that are re-engineering their process systems, the disparate systems and processes are usually at the root of the problems that drive them to consider ERP implementation. Some examples of these drives mentioned by Travis in Sarkis and Sundarraj (2000:203) are:

    · Current system no longer supports organisational needs and requires significant resources for maintenance and support;

    · Current system uses multiple points of input, often with a duplication of effort and a risk of having conflicting sets of information, and employees cannot answer simple questions from customers;

    · Incompatible business processes stem from the lack of a periodic re-engineering effort or from acquisitions or mergers, and information from the current system is outdated; and

    · Management wants to incorporate advanced scientific methods into decision making.

    1.1.4.2 Selection and evaluation of ERP systems

    Baki and Cakar (2005:75) note that choosing the right ERP systems package has become more important. Shehab et al., (2004:6) underline the difficulties of system selection because of the similarities and design differences in most of the system packages and the availability of many software packages on the market. In fact, implementing an ERP project becomes challenging and is an even more complicated process due to the lack of proper evaluation and the system attributes, which sometimes result in the failure of many projects. Therefore, for ERP implementation projects to succeed, it is crucial for the organisation's management to have a strategic IT plan in order to determine how the company IS can be used, managed and suit the organisation's objectives. In the context of the appropriate selection and evaluation of ERP software, a methodical approach model

    10

    has been compiled by the researcher that will be positioned as contributing to any MNE in the process of migrating business systems.

    The scope of ERP implementation in the organisation encompasses what is often referred to as the entire value chain of the enterprise from prospect and customer management to order fulfilment and delivery. The ERP system emphasised in this study is the Axapta Microsoft software solution. The assessment and analysis, and extensive literature review of the value chain approach as well as of ERP system theory will reveal whether the Axapta software is compatible and well designed to add value to the MNE value chain.

    1.1.5 Axapta Microsoft software solution

    The Axapta Microsoft business solution is a multiple language, multiple currency solution, and it is ERP software with core strengths in manufacturing and e-business, and a strong functionality for the wholesale and services industries. Its comprehensive functionality, scalability and flexibility enable medium-sized and large MNEs to take advantage of opportunities to grow their business (Axapta Microsoft software base study: available online). Axapta will be discussed in detail in chapter 5 of this study as a case study.

    1.2 Problem statement

    «Many organisations and businesses have declared ERP system a waste or a burden; there is a mixture of suspicion, scepticism, disappointment and confusion in recent years, flagging ERP projects have snarled internal processes in big companies like Hershey's and Whirlpool. Complaints targeted at ERP software makers and even lawsuits against implementation consultants are not uncommon» (Wah, 2000:20). Regarding the above statement, it is clear that ERP systems account for some problems, which could be associated with misuse, the lack of proper evaluation in the selection processes and the limitations of the system to perform effectively. Some experts comment that the system is not dead, but has a long way to go in bringing bottom-line benefits to corporations. This clearly indicates that ERP systems have not been seen as a strategic tool for the management within MNEs to integrate and strengthen the value chain system and thus act efficiently.

    11

    Some MNEs see ERP systems as an opportunity to integrate their disparate systems in the value chain due to:

    · The inefficiency of their operating system (data conflict and duplication, etc.);

    · International competitive pressure (globalisation and the opening of the world trade market);

    · The need for company system improvement to meet the organisation's growth; and

    · The challenge of this implementation due to the system's complexity and attributes.

    Evaluation processes by means of a technical strategic planning model framework before adoption and/or during the implementation have become important factors in order to analyse an ERP system's fit, compatibility, performance and utilisation.

    The main problem with ERP systems falls under MNEs' value chain systems, where the different applications are not well integrated. In addition, there is a lack of proper evaluation processes of ERP system software by means of a technical, strategic planning model.

    1.3 Purpose of the research

    1.3.1 Primary objective

    To determine the extent to which ERP software could facilitate integration in the MNE value chain process.

    1.3.2 Secondary objectives

    1. To establish the value of ERP system software alignment with the organisation's strategy and to determine the extent to which it can be seen as a strategic IT tool in order to strengthen the organisation's value chain system.

    2. To determine the suitability of ERP, i.e. Axapta Microsoft software among others, through a theoretical study by using a strategic planning tool such as the value chain approach.

    3. To obtain the view of SAP software users in MNEs surveyed of strategic management through the value chain approach, ERP awareness and usage, and training.

    4. To evaluate how the theory of the value chains approach links to strategy and ERP theory.

    5. To compile a methodical approach model that will help MNEs to assess ERP software

    12

    requirements relating to the value chain approach during the selection and evaluation process.

    1.4 Research hypotheses

    The research hypotheses will be thoroughly scrutinised in a subsequent chapter. They pertain to whether or not the system addressed is technically compatible with MNEs with a competitiveness impact. The research hypotheses formulated in this study are:

    H 1 The value chain integration through ERP software helps MNEs to operate efficiently due to

    the software's multifunctional, integrated and modular characteristics, which meet the general model of an ERP system as a value chain system.

    H 2 The use of strategic IT plan theory in ERP evaluation determines MNE competitiveness

    impact and IS usage.

    H 3 Users, managers and CEOs/CIOs are positive about ERP system matters relating to strategic

    management and the value chain concept.

    H 4 Axapta Microsoft software architecture, through a strategy techniques planning model such

    as the value chain, is a strategic IT tool and an ERP system designed for MNEs.

    H 5 ERP software meets the basic requirements of the value chain concept and architecture, and is a value chain system with the IT mechanism facilitating integration, relationship and coordination of all activities within the MNE's value chain.

    H 6 The relationship between an ERP system and e-business benefits the supply chain for the

    company's expansion.

    The report of this study will therefore be based on the analysis of Axapta, as an IT tool designed for an MNE, which requires the ability to integrate business information within the multisites' value chains, manage resources and accommodate diverse business practices and processes across the entire MNE.

    1.5 Research design

    The research design is a plan or blueprint of how the researcher intends conducting the research (Mouton, 2001:55). A descriptive study is a type of conclusive research that has as its major objective the collection of data that could be used to describe something and is often marked by the formulation of specific hypotheses prior to the research being conducted (Malhotra, 1996:89).

    13

    According to Leedy (1997:111), the most widely used technique for gathering data in business and sociology is a descriptive survey. It is used to describe the incidence, frequency and distribution of specific characteristics of a population. The concerns in the design of a survey are with respect to errors of estimation, including measurement errors, frames errors, non-response errors, selection errors and sampling errors.

    Data collection tools for descriptive surveys include interviews and questionnaires. For this study, a questionnaire was used, based on the exploratory and descriptive question format. The details on the research design are discussed under the research methodology section (in chapter 5). The analysis of this study comprises mainly a literature review of the various technical and strategic planning models to evaluate IT and a discussion of the technical side of the different value chains' architecture on which most ERP systems are built and based. The literature review of the ERP concept is analysed under the value chain concept theory, and compared with the attributes and specifications of Axapta under the case study section of this study (in chapter 4). In chapter 5, the methodology and the design for this study are highlighted. The comparison of the literature review on the different aspects of Axapta is highlighted in chapter 6 in order to determine the qualitative outcome of this study. This will reveal whether the system addressed has adhered to the principles of the value chain concept with a competitiveness impact within an MNE. The quantitative outcome established through the self-administered questionnaire survey will also be highlighted. This is followed by conclusions and recommendations.

    1.6 Research methodology

    The descriptive research framework was used to collect and analyse the data for this study, since the research itself falls under descriptive research. The study was conducted using the following source layout: for the qualitative study, the primary source was a case study involving the exploratory method. The secondary source was an exhaustive literature review of the research topics. In addition to the literature review, self-administered questionnaires were used for the findings based on the empirical part of the study.

    1.7 Methods of collecting data

    1.7.1 Methods of collecting quantitative data

    To facilitate the achievement of the research objectives and proving of the hypotheses, a self-

    14

    administered questionnaire survey and structured telephone interviews were used.

    The data collection tool for the quantitative part of the research was based on the self-administered questionnaire survey, which was compiled in accordance with the research problem, the primary and the secondary research objectives and hypotheses in answering hypothesis 3 (H3) of this study. For this reason the questionnaires were structured in two different formats, targeting the CEOs/CIOs, and the managers and end-users of SAP software in the different MNEs. The data for the qualitative study was collected from various sources, including appropriate textbooks and Web-based documents to back the discussion with the case study. Thus, the qualitative study is linked with different paragraphs in chapters 2, 3 and 4, in accordance with the research problem, primary and secondary objectives and hypotheses as stated.

    1.7.2 Population

    The key informants in the preliminary exploratory interview were IT managers. The researcher requested their participation in the survey. This allowed the researcher to compile a list of the companies utilising ERP system software for the self-administered surveys in this study.

    1.7.3 Respondents

    The respondents for this study were five MNEs (two in the banking sector and three in the manufacturing sector) and involved the CEOs/CIOs, managers (general, senior, middle and junior) and the end-users operating SAP software within the IT department as a functional segment of the MNEs selected. In the qualitative study, Axapta was one of the software systems selected to be assessed due to its integrative status. For the quantitative study, SAP software was selected due to its popularity and utilisation in the MNEs randomly selected through the preliminary telephone interviews. The targeted MNEs were selected randomly from a sampling list of the companies operating in South Africa (CIS, 2000-2001).

    1.7.4 Sampling method and sample size

    The sampling method used in this study to draw the representative samples of employees in the MNEs was the probability sampling design, involving simple random samples. The sample size of this study constituted 375 respondents involving five MNEs. Two separate questionnaire formats were used, the first targeting the five CEOs/CIOs and the second the 30 managers on different

    15

    levels and the 44 end-users of all five MNEs.

    1.7.5 Data analysis

    The results of the discussion of the different topics assessed in the literature review are compared with Axapta software as a case study, highlighted in a qualitative manner. In addition to the quantitative results, the questionnaire data collected from MNEs was analysed using different measuring instruments. The chi-square test was used with cross-tabulations in the different questions to examine the exact value of significance (one-sided) of Fisher's exact test. The p-value of this study was set at a significance value of 0.05 to test the hypotheses formulated.

    1.8 Importance/value and benefits of the study

    Much of the research done before was based mainly on ERP system project implementation, but not on the technical aspects of the system. Therefore, it is imperative that a study be conducted to determine the technical influence, requirements and compatibility of ERP software related to the value chain approaches within an MNE's value chain, its configuration and architecture. The possible benefits of this study could include:

    · The provision of a literature framework related to the value chain theory since most ERP architecture on the market is based on that of the value chain concept;

    · The formulation of a methodical approach that facilitates ERP software selection and evaluation; and

    · Clarification for any researcher, corporation and MNE management on the strategic framework of how to evaluate ERP software that will integrate, strengthen and enable the MNE's value chain processes to operate beyond national boundaries with a competitiveness impact.

    1.9 Limitation of the study

    The research was limited to the analysis of ERP Axapta software in the qualitative study. SAP software was studied in the empirical study due to its popularity as established in the preliminary interview. Due to budgetary constraints, the study was limited to MNEs in Gauteng.

    For ERP software project implementation to succeed within an organisation, it has to be seen as a
    strategic IT tool through the use of a strategic IT plan. However, for ERP software to integrate an

    16

    MNE's value chain, it has to be grafted with ERP system software architecture and configuration in alignment with the MNE's strategy. In addition, such ERP software has to meet the fundamental requirements of the value chain concept and reflect itself as a value chain system associated with the global ERP system requirements and characteristics configured with e-business mechanisms. Furthermore, the employees and employers have to know how to manage and use it through education and training. In this study, the ERP system, i.e. Axapta software, was analysed on the basis of the different topics covered in the different chapters, and the empirical study focused on SAP software.

    1.10 Demarcation of the study

    The dissertation is arranged in the following chapters:

    Chapter 2: Linking strategy with information technology through a value chain approach

    In this chapter, the literature review is based on the relationship between technology and strategy, and the competitiveness impact of IT on the enterprise. Included is a discussion of the technical, strategic planning model (value chain approach) to evaluate Axapta software. The definition of and debate on the concept of the value chain are also highlighted, followed by a discussion of the impact of IT in the value chain, the role of value chain integration and the relationship between e-business and ERP for value chain extension benefits.

    Chapter 3: An overview of ERP systems

    In this chapter, the discussion is based on the definition and analyses of the ERP system concept as a value chain system, its background, as well as its benefits, characteristics, advantages and disadvantages. The discussion of the general model of an ERP system will be highlighted and its roles, global architecture and configuration under an MNE strategy will also be discussed. In addition to the assessment of the strategic supply chain factors for the evaluation of ERP software considered before adoption, matters related to the methodology and the success and failure of an ERP system implementation project within an organisation are also discussed.

    Chapter 4: A case study of ERP systems - Axapta Microsoft software solution

    In this chapter, a case study regarding Axapta Microsoft software solution is discussed according to the generics, modules and architecture of the software.

    17

    Chapter 5: Research methodology

    This chapter focuses on the research hypotheses formulated and it provides a detailed discussion of the research type, methodology and design of this study, including data-gathering methods and procedures used. It also explains how the methodology of this research was conducted to gather the data.

    Chapter 6: Research findings and interpretation of data analysis

    This chapter is dedicated to presenting the research results of the collected qualitative and quantitative data related to the ERP system Axapta Microsoft and SAP software. It includes the results in different tables, graphs and explanations of the primary data collected in order to complement the relevant literature, which reinforces the findings of this study.

    Chapter 7: Conclusions and recommendations

    A conclusion is reached addressing the research objectives and the finding of this study, followed by a display of the methodical approach formulated by the researcher to assess ERP software before acquisition and implementation.

    18

    CHAPTER 2: LINKING STRATEGY WITH INFORMATION TECHNOLOGY
    THROUGH A VALUE CHAIN APPROACH

    2.1 Introduction

    It is the objective of this chapter to analyse the strategic importance of information system (IS), linking it with strategy. It is for this reason that the value chain, as a strategic planning tool, will also be evaluated. This enables the researcher to measure the effectiveness of an ERP system, i.e. Axapta Microsoft software, as a strategic IT tool for MNEs.

    2.2 The interdependence of technology and strategy

    Burgelman, Maidique and Wheelwright (2001:6) explain the development of connecting technology and strategy as follows: "During the 1980s, strategic management scholars began to recognise technology as an important element of business definition and competitive strategy." Abell in Burgelman et al., (2001:6) identifies technology as one of three principal dimensions of business definition, noting that "technology adds a dynamic character to the task of business definition, as technology more or less rapidly displaces another over time". Furthermore, Porter (in Burgelman et al., 2001:6) observes that technology is among the most prominent factors that determine the rules of competition. Friar and Horwitch (in Burgelman et al., 2001:6) explain the growing prominence of technology as the result of historical forces that encompass the disenchantment with strategic planning, the success of high-technology organisations in emerging industries and the surge of Japanese competition. This is in addition to the recognition of the competitive significance of manufacturing.

    The four elements that constitute the substantive dimensions of technology in strategy, as explained by Burgelman et al., (2001:36), are as follows: (1) The deployment of technology, which can be positioned in terms of differentiation (perceived value or quality), delivered cost and to gain technology-based competitive advantage; (2) the use of technology, which can be seen more broadly in the various activities comprised by the organisation's value chain; (3) the organisation's resource commitment to various areas of technology; and (4) the organisation's use of organisation design and management techniques to manage the technology function. Johnson and Scholes (2002:10-16) define strategy as the direction and scope of an organisation over the long term, which achieves advantage for the organisation through its configuration of resources within a changing

    19

    environment and to fulfil stakeholder expectations. Strategic management therefore includes an understanding of the strategic position of an organisation and strategic choices for the future in an effort to turn strategy into actions.

    Turban, McLean and Wetherbe (2004a: 6) state that IT supports strategic management through:

    · Innovative applications that provide direct strategic advantage to organisations;

    · The changes in processes: where IT supports changes in business processes that translate to strategic advantage;

    · The competitive weapon: where IS itself is recognised as a competitive weapon;

    · The links with business partners: where IT links a company with its business partners effectively and efficiently;

    · Cost reductions: where IT enables companies to reduce costs;

    · The relationships with suppliers and customers: where IT can be used to lock in suppliers and customers, or to build in switching costs;

    · New products: where IS enables an organisation to leverage its investment in IT to create new products that are in demand in the marketplace; and

    · Competitive intelligence: where IT provides competitive (business) intelligence by collecting and analysing information about products, markets, competitors and environmental changes.

    Therefore it can be concluded that IT helps businesses to pursue the following four basic competitive strategies: (1) Developing new market niches; (2) Locking in customers and suppliers by raising the cost of switching; (3) Providing unique products and services; and (4) Helping organisations in the provision of products and services at a lower cost by reducing production and distribution costs.

    2.3 The role IT plays within strategy

    Dewett and Jones (2001:313-14) mention that an IS includes many different varieties of software platforms and databases. These encompass organisation-wide systems designed to manage all major functions of the organisation provided by companies such as SAP, PeopleSoft, JD Edwards, to name only a few. In addition, more general-purpose database products are found, targeted with

    20

    specific uses such as the products offered by Oracle and Microsoft. Thus, the result is IT encompassing a broad array of communication media and devices, which link IS and people. Typical ISs include voicemail, e-mail, voice conferencing, video conferencing, the Internet, GroupWare and corporate intranets, car phones, fax machines and personal digital assistants. Therefore as IS and IT are often inextricably linked and, since it has become conventional to do so, for the rest of this study both IT and IS will be referred to jointly as IT. A study done by Ward and Griffiths (in Corboy, 2002:7) stipulates that the reason IT could be used for gaining competitive advantage is its status of:

    · Linking the organisation to the customers and suppliers, through electronic data interchange (EDI), websites, wide area networks (WANs) and extranets;

    · Creating effective integration of the use of information in a value-adding process, e.g. data mining, data warehousing and ERP systems;

    · Enabling the organisation to develop, produce, market and distribute new products or services, e.g. computer aided design (CAD) and CRM; and

    · Giving senior management information to help them to develop and implement strategy through knowledge management, for instance.

    IT plays a vital role in improving co-ordination, collaboration and information sharing, both inside and across organisational boundaries. It allows more effective management of task interdependence and facilitates the creation of integrated management information, while simultaneously offering new possibilities for MNEs.

    The generic IT capabilities and their impact on organisations, highlighted by Siriginidi (2000:376), are:

    · Transactional capabilities, which transform unstructured processes into structured transactions;

    · Geographical capabilities, which transfer information rapidly and with ease across large distances, thus making the processes independent of geography;

    · Automation, which replaces or reduces human labour in processes;

    21


    · Analytical capabilities, which introduce complex analytical methods to enlarge the scope of analysis;

    · Informational capabilities, which bring vast amounts of detailed information into the process;

    · Sequential capabilities, which enable changes in the sequence of tasks in a process, often allowing multiple tasks to be performed concurrently;

    · Knowledge management, which allows collection, dissemination of knowledge and expertise to improve the process;

    · Tracking, which allows detailed tracing of task status, inputs and outputs; and

    · Disintermediation, which connects two parties, internal or external, within a process that would otherwise communicate through intermediaries.

    According to Dewett and Jones (2001:314), the findings of Huber's study suggest that IT is a variable that can be used to enhance the quality and timeliness of organisational intelligence and decision-making, thus promoting organisational performance. However, Huber's research extends the role and use of IT into the organisation in the strategic manner of efficiency and innovation. This captures many of the specific benefits and the examination of organisational functioning by describing the impact of IT on a broader array of organisational characteristics from the use of IT to its theory, which treats several organisational characteristics. The research further introduces theory, which treats several organisations as dependent variables, with IT positioned as the independent variable. Indeed, an ERP system is the IS tool and expression of the inseparability of business and IT. It is not possible to think of ERP implementation without a sophisticated IT infrastructure (Gupta, in McAdam & Galloway, 2005:281).

    2.4 The importance of a strategic IT plan within an organisation

    According to Bakehouse and Doyle (2002:1), the planning of an IT strategy is a decision-making process. Such a crucial process should be undertaken carefully, systematically and an understanding of the business context.

    A study conducted by Peppard in Corboy (2002:6) revealed that the meanings of having a strategic
    IT plan within an organisation are seen as establishing entry barriers, affecting the cost of switching
    operation, differentiating products/services, limiting access to distribution channels, ensuring

    22

    competitive pricing, decreasing supply cost, increasing cost efficiency, using information as a product and building closer relationships with suppliers and customers. In addition, the study conducted by Earl (in Corboy, 2002:3) provides a useful list of reasons as to why an organisation should have a strategic IT plan:

    · High costs are involved and it is critical to the success of many organisations.

    · IT is now used as part of the commercial strategy in the battle for competitive advantage.

    · IT is required by the economic context (from a macro-economic point of view).

    · IT affects all levels of management and the detailed technical issues in it are important.

    · IT has meant a revolution in the way information is created and presented to management.

    · IT involves many stakeholders, not just management.

    · IT requires effective management, as this can make a real difference to successfully using it.

    2.5 The value chain and IT, linked to strategic management

    The value chain can be helpful in understanding how value is created or lost. It describes the activities within and around an organisation, which together create a product or service. It is the cost of these value-adding activities that determines whether or not products or services are developed, which in turn underpins competitiveness (Johnson & Scholes, 2002:117).

    According to Corboy (2002:6), the value chain model can be used to assess the impact of IT on the elements of an organisation's individual value chain and how it is integrated with other value-adding activities. Thus, a value chain can be used to evaluate a company's process and competencies and investigate whether IT supports add value, while simultaneously enabling managers to assess the information intensity and role of IT. Turban, King, Lee and Viehland (2004b: 11) state that the value chain is the series of value-adding activities that an organisation performs to achieve its goals at various stages of the production process categorises the generic value-adding activities of an organisation and also the primary activities supported by the secondary activities. Furthermore, it analyses the forces that influence a company's competitive position, which assist management in crafting a strategy aimed at establishing a sustained competitive advantage.

    In an effort to establish such a position, Turban et al., (2004a: 16) suggest that a company needs to

    23

    develop a strategy of performing activities differently than a competitor through:

    · Cost leadership strategies: Produce products and/or services at the lowest cost in the industry;

    · Differentiation strategies: Offer different products, services, or product features;

    · Niche strategies: Select a narrow-scope segment (niche market) and be the best in quality, speed, or cost in that market;

    · Growth strategies: Increase market shares, acquire more customers, or sell more products;

    · Alliance strategies: Work with business partners in partnerships, alliances, joint ventures, or virtual companies;

    · Customer-orientation strategy: Concentrate on making customers happy;

    · Innovation strategies: Introduce new products and services, put new features in existing products and services, or develop new ways to produce them;

    · Operational effectiveness strategies: Improve the manner in which internal business processes are executed so that an organisation performs similar activities better than rivals;

    · Time strategies: Treat time as a resource, then manage it and use it to the organisation's advantage;

    · Lock-in customer or supplier strategies: Encourage customers or suppliers to stay with you rather than going to competitors;

    · The entry-barriers strategy: Create barriers to entry; and

    · Increase switching cost strategies: Discourage customers or suppliers from going to competitors for economic reasons.

    All this will motivate organisations to perform activities differently than a competitor while linking those activities to the value chain. The value chain is a series or «chain» of basic activities that adds marginal increments of value to an organisation's products or services. IT plays a strategic role in those activities that add the most value to the organisation. Does Axapta software support strategic management within the MNE? Has Microsoft positioned Axapta competitively, which will assist MNE management to craft a strategy aimed at establishing a sustained competitive strategy? These issues will be discussed further in chapter 6 in relation to the hypotheses formulated in chapter 1.

    24

    2.6 Definition of the value chain concept

    The initial purpose of the value chain was to analyse the internal operations of an organisation, in order to increase its efficiency, effectiveness and competitiveness. However, nowadays it extends to the company analysis, by systematically evaluating a company's key processes and core competencies in order to eliminate any activities that do not add value (Turban et al., 2004a: 20).

    In a study done by Walters and Lancaster (1999:646-47) different scholars and researchers described the value chain analysis concept as follows:

    1. O' Sullivand and Geringer remind us of the purpose of value chain analysis by explaining that the organisation has limited access to resources, and the purpose of the value chain is to ensure that the resources of the organisation work in a co-ordinated way to take full advantage of market-based opportunities. In addition the analysis should identify the optimal configuration of both the macro- and micro-business systems that will maximise value expectations. Thus, the conceptual concerns of the supply chain and the value chain begin to converge.

    2. Brow pursues a conventional approach to the value chain by introducing two additional perspectives to the debate by putting the emphasis on the links or relationships between activities in the value chain and the organisation's competitive scope as a source of competitive advantage. Brow mentions that links and relationships between buyers, suppliers and intermediaries can lower cost or enhance differentiation. The competitive scope may concern the range of products or customer types (segment scope), the regional coverage (geographic scope), or its activities across a range of related industries (its industry scope).

    3. Porter proposed the value chain as a means by which business actions that transforms inputs could be identified (i.e. value chain stages). Furthermore, from its study the proposition formulates suggested that those stages in the value chain can be explored for interrelationships and common characteristics. This could lead to the opportunities for cost reduction and differentiation.

    Porter provides a detailed view of the value chain and its efficacy and states that its purpose at either macro or micro level is to:


    · Identify relationships and interdependence between stages for both systems within the organisation;

    25


    · Identify meaningful differentiation characteristics, which are unique, or exclusive, to the organisation;

    · Identify costs and cost profiles within the organisation together with cost advantages that could exist, and identify the business actions (stages) which transform inputs;

    · Choose its competitive positioning market segments, customer applications/end-uses and the technologies; and

    · Identify alternative value chain delivery structures (i.e. interrelationships internally and between business units) within the industry delivery structure.

    Therefore, according to Porter (1990:40), both macro- and micro-business systems should consider the value creation process, more recently in the interests of shareholders, suppliers and employees (together with those of the community) included in a broader view of stakeholder interests and value. In addition, Porter (1990:40) explains the concept of the value chain in competition as follows:

    "Competitive advantage grows out of the way organisations organise and perform discrete activities. The operations of any organisation can be divided into a series of activities such as salespeople making sales calls, service technicians performing repairs, scientists in the laboratory designing products or processes and treasurers raising capital. Organisations create value for their buyers through performing these activities. The ultimate value an organisation creates is measured by the amount buyers are willing to pay for its product or service. An organisation is profitable if this value exceeds the collective cost of performing all of the required activities. Organisations gain competitive advantage from conceiving of new ways to conduct activities, employing new procedures, new technologies, or different inputs. An organisation's value chain is an interdependent system or network of activities, connected by linkages. Linkages occur when the way in which one activity is performed affects the cost or effectiveness of other activities. Linkages also require activities to be co-ordinated. Gaining competitive advantage requires that an organisation's value chain is managing as a system rather than a collection of separate parts. Competitive advantage is a function of either comparable buyer value more efficiently than competitors (low cost), or performing activities at comparable cost but in unique ways that create more buyer value than competitors and, hence, command a premium price."

    26

    Thompson and Strickland (1987:115) stress that the primary analytical tool of strategic cost analysis is a value chain, which must identify the separate activities, functions and business processes performed in designing, producing, marketing, delivering and supporting a product or service. The chain starts with raw materials supply and continues on through parts and components production, manufacturing and assembly, wholesale distribution and retailing to the ultimate end-user of the product or service. Johnson and Scholes (2002:160) describe in a simplistic way the value chain as the activities within and around an organisation, which together create a product or service.

    In a study done by Walters and Lancaster (2000:160), Brown offered a succinct definition of the value chain as follows: " The value chain is a tool to disaggregate a business into strategically relevant activities. This enables identification of the source of competitive advantage by performing these activities more cheaply or better than its competitors. Its value chain is part of a larger stream of activities carried out by another member of the channel-suppliers, distributors and customers." The three important perspectives that emerged from the study of Walters and Lancaster relating to the value chain are:

    · Firstly that it emphasises the relationship between activities in the value chain;

    · Secondly, the need for the first to result in competitive advantage; and

    · Thirdly, to identify the role of information to evaluate the nature of opportunities offered, identify optional methods for competing and co-ordinate the value chain's activities towards successful implementation of the value strategy.

    2.7 Different graphic representations of the value chain

    2.7.1 Porter's value chain

    The Porter's value chain model categorises nine generic value-adding activities of an organisation (Johnson & Scholes, 2002:160), as shown in figure 2.1 below. The model constitutes two broad types of categories: primary and support activities.

    The primary activities are those activities involved in the physical creation of the product or service, its delivery and marketing to the buyer and its support after sale. The support activities merely provide the infrastructure that allows the primary activities to take place on an ongoing basis. The five main areas of primary activities are:

    27


    · Inbound logistics, which are the activities concerned with receiving, storing and distributing the inputs to the product or service. They include materials handling, stock control and transport, etc.

    · Operations, which transform these various inputs into the final product or service: machining, packaging, assembly, testing, etc.

    · Outbound logistics, which collect, store and distribute the product to customers. For tangible products this would be warehousing, materials handling, transport, etc. In case of services, they may be more concerned with arrangements for bringing customers to the service if it is a fixed location.

    · Marketing and sales, which provide the means of making consumer/users aware of the product or service and enabling them to purchase it. This typically includes sales administration. In public services, it will be communication networks, which help users to access a particular service.

    · Service, which includes all those activities that enhance or maintain the value of a product or service, such as installation, repair, training and spares.

    Figure 2.1: Porter's value chain model

    Secondary activities

    Value

    Primary activities Primary activities

    Upstream value activities Downstream value activities

    Inbound
    logistics

    (raw materials,
    handling and
    warehousing)

    (machining, assembling, testing)

    Operations

    Firm infrastructure

    (general management, accounting, finance, strategic planning)

    Procurement
    (purchasing of raw materials, machines, supplies
    )

    Human resource management
    (recruiting, training, development)

    Technology development

    (R&D, product and process improvement)

    (warehousing
    and distribution
    of finished

    product)

    Outbound
    logistics

    (Advertising, promotion, pricing, channel relations)

    Marketing and
    sales

    (Installation, repairs, parts, etc.)

    Services

    Source: Adapted from Turban et al., (2004a: 11).

    28

    The element of primary activities can be broken down to form a particular activity. Those primary activities, which occur before outbound logistics, are commonly referred to as upstream value activities, while those that occur after outbound logistics are called downstream value activities.

    The upstream logistics are more important for buyers, while downstream logistics are more important for the marketers of the organisation's products. Each of these groups of primary activities is linked to support activities. Support activities help to improve the effectiveness or efficiency of primary activities and are divided into four areas:

    · Procurement, which refers to the processes for acquiring the various resource inputs to the primary activities. As such, it occurs in many parts of the organisation.

    · Technology development, where all value activities have a «technology», even if it is just know-how. The key technologies may be concerned directly with the product (e.g. R&D, product design) or with processes (e.g. process development) or with a particular resource (e.g. raw materials improvement). This area is fundamental to the innovative capacity of the organisation.

    · Human resource management, which is a particularly important area, which transcends all primary activities. It is concerned with those activities involved in recruiting, managing, training, developing and rewarding people within the organisation.

    · Infrastructure, which the system that plans the finance, quality control and information management.

    In most industries it is rare for a single organisation to undertake all of the value activities in-house from the design to the delivery of the final product or service to the final consumer (Johnson & Scholes, 2002:160). However, although the names that attribute processes to each activity differ, the organisations perform activities more or less in the same way. In the study of Walters and Lancaster (2000:162-3), Sutton reminds us of «the totality surrounding one organisation as the value chain». Each step can only be justified if it creates more value to the end-user than it consumes as cost. An individual organisation's competitive position depends on the effectiveness of the chain as an entity, not just its own position as a link in the value chain.

    2.7.2 The customer-centric value chain

    Highly competitive markets and abundant information have placed the customer at the centre of the

    29

    business universe. In this new environment, successful business are those that employ customer-centric thinking to identify customer priorities and construct business designs to match them (Slywotzky & Morrison, 1997:17). Slywotzky and Morrison (1997:28-29) comment that in «the old economic order, the focus was on the immediate customer. Today, business no longer has the luxury of thinking about just the immediate customer. To find and keep customers, the perspective has to be radically expanded. In a value migration world, the vision must include two, three, or even four customers along the value chain. For example, a component supplier must understand the economic motivations of the manufacturer who buys the components, the distributors who take the manufacturer's products to sell, and the end-user».

    According to Slywotzky and Morrison (1997:20), the traditional value chain begins with the company's core competencies, its assets. It then moves to inputs and other raw materials, to an offering, to the channels, and then finally to the customer, as shown in figure 2.2 below.

    Figure 2.2: The traditional value chain

    Assets/Core
    Competencies

    Inputs, Raw
    Material

    Product/Service
    Offering

    Channels The Customer

    Source: Adapted from Slywotzky and Morrison (1997:20).

    Therefore Slywotzky and Morrison use a "customer-centric" approach to propose a modern value chain, as shown in figure 2.3, in which the customer is the first link to all that follows. The approach therefore changes the traditional value chain in that it takes on a customer-driven perspective. Slywotzky and Morrison (1997:20-7) state that an organisation's value chain must merge with those of other value chain members. Figure 2.3 below takes an industry perspective of this value chain where IT provides a co-ordinating function.

    As is evident in the customer-centric value chain, the task of management is to identify the

    30

    customer needs and priorities of the channels that can satisfy those needs and priorities, the services and products best suited to flow through those channels, the inputs and raw materials required in creating the products and services and the assets and core competencies essential to the inputs and raw materials.

    Figure 2.3: The customer-centric value chain

    Value criteria Security

    Performance

    Aesthetics

    Convenience

    Economy Reliability

    Channels

    Information

    Value added

    Costs added

    Customer

    Value Value offer Inputs, raw

    Attributes Channels materials

    Assets and core
    Competencies

    Source: Adapted from Slywotzky and Morrison in Walters and Lancaster (1999:648).

    2.7.3 Scott's value chain

    Scott (1998:87) notes that all organisations, whether industrial or services, have a value chain. Each part needs a strategy to ensure that it drives value creation for the whole organisation. For a piece of the value chain to have a strategy means that it must be clear on what capabilities the organisation requires to deliver effective market impact.

    Walters and Lancaster (1999:648) explain Scott's value chain by taking a strategic management view and using the value chain concept to identify the tasks necessary to deliver a product or service to the market. Therefore, Scott's approach to the value chain combines segmentation and value chain analysis, followed by suggesting a number of questions such as: In which areas of the value chain does the organisation have to be outstanding to succeed in each customer segment? What skills or competencies are necessary to deliver an outstanding result in those areas of the value chain? Are they the same for each segment or do they differ radically? According to Scott (1998:17), in order to segment an organisation or a product based on competencies it is necessary to

    31

    understand the value chain of the company. The core elements of Scott's value chain shown in figure 2.4 comprises seven areas: (1) operational strategy; (2) marketing sales and service strategy; (3) innovation strategy; (4) financial strategy; (5) human resource strategy; (6) information technology strategy; and (7) lobbying position with government. In the Scott value chain, coordination across the value chain is essential, which did not occur in the traditional value chain.

    Figure 2.4: An alternative view of the value chain drivers

    · Application rates

    · Staff turnover

    · Labour productivity

    · Hierarchy/layers

    · Accountability

    · Remuneration ratios

    · Ownership

    · Bonusing

    · Speed of promotion

    · Training/revenue

    · Internet comms

    · Space/employee

    · Cost

    · Unionisation

    · Leverage

    · Cost of debt

    · Debt maturity

    · Investor relations

    · Dividend policy

    · Cost structure

    · Cash flow

    · Internal controls

    · Acquisitions

    Finance

    Human resource
    management

    Innovation

    Purchasing and

    Supplier Process

    · Relationship
    quality

    · Material inventory costs

    · Unit input

    · R&D training/revenue

    · Patents/100 Employees

    · New product launches

    · Position on innovation curve

    Core Production Process

    · Unit costs - Utilisation

    - Scale

    - WIP

    · Quality - Scrap rate

    - Rework

    · Timeliness - Cycle time -Throughput time

    · Flexibility - Changeover time

    · Exposure to regulatory change

    · Lobbying capability

    Distribution

    Marketing

    Sales and service

    Government
    relations

    · Speed to market

    · Finished goods
    inventory

    · Unit distribution Cost

    Information

    technology

    · Customer targeting

    · Customer loyalty
    - Churn

    · Customer acquisition

    · Customer yield

    · SOV

    · Unprompted
    recall

    · Price premium

    · IT spend/revenue

    · Communications
    networks

    · Knowledge sharing

    · Value chain integration

    · Channel complexity

    · Channel control

    · Trade relationships

    · Market responsiveness

    · Customer churn

    Source: Adapted from Scott (1998:87-222).

    Scott's study of the value chain emphasised primarily the relationship between the company's value

    32

    chain and its strategic business units (SBUs). Furthermore, according to Scott (1998:88), certain parts of the value chain are likely to be common to all its SBUs. These include human resources, IT and large parts of its financial and selling functions. Therefore Scott concludes that the information requirements of individual SBUs might differ and require specific services. In a market/customerfocused business, the core elements of the business should be capable of developing specific service inputs to ensure competitive advantage.

    2.7.4 Walters and Lancaster's value chain

    The value opportunities are distinguished by understanding customers' priorities and producing, communicating and delivering the identified value. This suggests that the value chain must be an analytical and a facilitating concept (Walters & Lancaster, 2000:161-165). However, strategy must be considered as the value-creating system itself in which members work together to create value. Normann and Ramirez (1998:29) note that offering goods and/or services is the result of a complex set of value-creating activities involving different actors working together at different times and locations to produce them for and with a customer. Walters and Lancaster (2000:162) point out that the key strategic task is the reconfiguration of the value chain roles and relationships in order to «mobilise the creation of value in new forms and by new players». They further state that the underlying goal is to "create an ever improving fit between competencies and customer". To understand how this may be achieved, two models are required. The first is a model of the value chain itself and the second is one describing the value chain structures and processes.

    According to Walters and Lancaster (2000:162-3), the value chain depicted in figure 2.5 combines the two models. Topics and subcomponents describe the notion of customer value, comprising customer value criteria less their acquisition costs. In order for the value chain to be successful it is essential that the individual objectives of all stakeholders as well as those of customers be met. It is important to note that value production and co-ordination are created by identifying and understanding customer benefits and costs, and the combinations of organisational knowledge and learning, together with organisational structures that facilitate response and delivery. Essentially it requires the management of information and relationships. An important influence is the impact of the value and cost drivers, which in turn are the important strategic and operational relationship criteria influencing value delivery and cost structures. A depiction of components of the value chain is displayed in figure 2.5 below. "Corporate value" is a value chain perspective of profitability and

    33

    cash flow objectives, "knowledge" refers to market-based intelligence developed for strategic and operational use within the value chain and "information management" components include market identification, time, accuracy, relevance and control aspects. Walters and Lancaster (2000:162) claim that relationship management comprises the obvious co-ordination activities together with coproduction (upstream and downstream within the value chain), co-destiny (the promotion of interdependence), cost management (to achieve optimal value chain costs for the value added throughout) and cost transparency (the notion that effective co-operation and co-ordination are only achievable if visibility exists).

    Figure 2.5: The value chain components model

    Key success factors

    Value proposition

    'Corporate value'

    · Profitability

    · Productivity

    · Cash flow

    · 'Knowledge'

    Information management

    · Identification

    · Time

    · Accuracy

    · Relevance

    · Control

    Value

    strategy and
    positioning

    Organizational structure and

    management

    · Knowledge

    · Learning

    · Partnerships

    Value production
    and coordination

    Operation structure and management

    'Production'

    · Time to market

    · Service

    · Quality

    · Risk

    · Cost management

    · Reputation

    Relationship management

    · Coordination

    · Coproduction

    · Codestiny

    · Cost management

    · Cost transparency

    · Sourcing and procurement

    · Production processes

    · Flexibility

    'Logistics'

    · Order management

    · Delivery

    · Reliability

    · Availability

     

    Value/
    cost
    drivers

    Customer value criteria

    · Security

    · Performance

    · Aesthetics

    · Convenience

    · Economy

    · Reputation

     
     

    Customer value added = Results produced for the customer and the process quality

    less

    Price to the customer and the cost of acquiring the product service

    Customer acquisition costs

    · Specification

    · Search

    · Transactions

    · Installation

    · Operations

    · Maintenance

    · Disposal

    Source: Adapted from Walters and Lancaster (2000:163).

    In his influential book Competitive advantage, Porter (1985) depicts the relationships between actors in a productive system in terms that are uni-directional and sequential in nature. In Porter's value chain notion, economic actor A sells (or passes on) the output of his work to actor B, who 'adds' value to it, and sells or passes it on to actor C, who adds value to it, and sells or passes it on to actor D, and so on until it is sold to the end-consumer. However, with microprocessor technologies, economic actors are increasingly engaged in sequential and simultaneous activity relations with other economic actors. Thus, Normann and Ramirez (1998:viii) assert that provider-customer

    34

    relationships should be conceived not as one-way transactions but reciprocal constellations in which the parties «help each other and help each other to help each other». In addition, Walters and Lancaster (2000:162) argue that the organisational structure management is concerned with ensuring that maximum use is made of knowledge generated in the value chain and partnerships, which lead to effective learning.

    Therefore Walters and Lancaster (2000:163) conclude that the activities and topics influence the production and co-ordination of value delivery through the impact of the value/cost drivers. Not surprisingly, the value/cost drivers influence organisational and operations structure and their management. As figure 2.5 infers, both production and logistics are important components of the operations structure, which is the other input into value production and co-ordination. The impact of globalisation (for procurement and marketing purposes) has made the value chain a more useful approach to identifying and evaluating business opportunities. The view of value chain structure and process mentioned by Walters and Lancaster in figure 2.6 below becomes important because it incorporate the expansion of the role of the value chain by means which the relationship and information management activities become more effective by identifying value chain constraints.

    Figure 2.6: Value chain structure and process

    Value Chain Management

    Supply Chain Management

    Relationship Management

    Customers' Value criteria

    less Customers' Costs of Acquisition

    Product - Service Attributions

    Value Delivery

    Value Communication

    Value production Assets & core

    - inputs Value Competencies Value

    - processes Proposition - required Objectives and strategy

    - available

    · Security

    · Performance

    · Aesthetics

    · Convenience

    · Economy

    · Reliability
    less

    · Specification

    · Search

    · Transactions

    · Operation

    · Maintenance

    · Disposal

    · Core product

    · Tangible product

    · Augmentation

    · Extended product

    · Marketing logistics

    · Transaction channels

    · Physical distribution channels

    · Benefits available

    · Competitive advantage (s)

    · Acquisition
    costs

    · Times to market

    · Service

    · Quality

    · Risk

    · Costs

    · Partnerships

    · Materials management

    · Target

    customers

    · Internal

    · value drivers

    · activities

    · costs

    · External

    · value attributes to be delivered

    · ' relative value '

    · Key success
    factors

    · Skills

    · Ressources

    · 'Corporate value'

    · Profitability

    · Productivity

    · Cash flow

    · Knowledge

    · Performance

    Information Management

    Source: Adapted from Walters and Lancaster (2000:163)

    35

    Sutton (in Walters & Lancaster, 2000:162-3) proposes the market mechanism as a means to coordinate activities. It is suggested that the term "market co-ordination" be used for the situation in which specialisation is separate and where the value chain comprises a series of sequential individual activities under individual ownership. An alternative model is one in which more than one organisation"... seeks to combine two or more stages under single control and rely upon internal management to ensure co-ordination". Sutton uses the conventional term "vertical integration" for this structure. An organisation may also act as a contractor to co-ordinate the other links in the value chain but relies on external agreements rather than internal management.

    The vertical co-ordination comprises individual organisations having specific objectives but shared purpose (customer satisfaction) within the value chain. According to Sutton (in Walters & Lancaster, 2000:162-3), vertical integration has alternative structural options, namely breadth and depth. Breadth occurs in companies that rely on co-ordination of some activities while assuming ownership of others.

    Sutton (in Walters & Lancaster, 2000:162-3) suggests differentiation as breadth being the extent of co-ordination with vertical integration and depth the activities that are combined into one activity, given that the value chain is concerned with value maximisation and cost optimisation. Therefore, the availability of economies of scale and scope is important. These relate to the ability to specialise and gain cost advantages and/or to offer a limited range of specialist products and/or services that have significant impact on customer costs, for which much of the fixed costs are shared.

    2.7.5 Value nets

    A traditional supply chain is designed to meet customer demand with a fixed product line, relatively undifferentiated, one-size-fits-all output and average service for average customers. In contrast a value net forms itself around its customers, who are at the centre. It captures their real choices in real time and transmits them digitally to other net participants.

    36

    Table 2.1: Key business design differences

    Old supply chain New value net

    · One size fits all

    · Arm's-length and sequential

    · Rigid, inflexible

    · Slow, static

    · Analogue

    ·

     

    · Customer-aligned

    · Collaborative and systemic

    · Agile, scalable

    · Fast-flow

    · Digital

     
     
     
     
     
     

    Source: Adapted from Bovet & Martha (2000:6).

    According to Bovet and Martha (2000:2), a value net views every customer as unique. It allows customers to choose the product/service attributes they value most. The traditional supply chain manufactures products and pushes them through distribution channels in the hope that someone will buy them. In contrast, a value net begins with customers, allowing them to self-design products and builds to satisfy actual demand. Thus, Bovet and Martha (2000:2) describe a value net as a business design that uses digital supply chain concepts to achieve both superior customer satisfaction and company profitability. It is a fast, flexible system that is aligned with and driven by new customer choice mechanisms. Therefore a value net is not what the term `supply chain' conjures up. It is no longer just about supply, it is about creating value for customers, the company and its suppliers. Nor is it a sequential, rigid chain.

    2.7.6 The e-business value chain

    The e-business processes enable efficient and effective collaboration between organisations, directly or through so-called e-marketplaces. This means that responsibilities are shared between organisational units of the collaborating organisations. The improvement of SCM and CRM processes are key to enabling the organisation value chains (Kirchmer, 2004:25).

    When the Porter value chain is considered and e-business technologies are placed into the
    framework, it gives an insight into the reach of these technologies into the value activities. The

    37

    major enabler is the Internet and that is why the resulting processes are called e-business processes, connected to entire networks of processes across various organisations. Thus, the e-business value chain model by Hooft and Stegwee (2001:49) in figure 2.7 below, is used to illustrate that e-business can reach all activities of the organisation, and that some applications cover multiple value activities. In this model, the linkages already exist between activities; some of these linkages have been integrated by using e-business technologies, ultimately providing a fully integrated e-business process. By analysing the e-business value chain model, it helps the organisation lower the costs and increase the value of activities.

    Figure 2.7: The e-business value chain

    Source: Adapted from Hooft & Stegwee (2001:49).

    Porter (in Diana & Judith, 2003:242) examines the Internet as it applies to the value chain as shown in figure 2.8 below. In this depiction, Porter employed his well-known value chain model to examine Web-based initiatives. Consequently, the focus is on strategy as it relates to the value chain. The model therefore suggests the dimensions of operations, technology, logistics and marketing as being potentially strengthened by the adoption of e-commerce strategies.

    38

    Figure 2.8: Prominent applications of the Internet in the value chain

    Dissemination throughout the company of real-time inbound and in-progress inventory data

    Firm Infrastructure

    · Web-based, distributed financial and ERP systems

    · Online investor relations (e.g., information dissemination, broadcast conference calls)

    Human Resource Management

    · Self-service personnel and benefits administration

    · Web-based training

    · Internet-based sharing and dissemination of company information

    · Electronic time and expense reporting

    Technology Development

    · Collaborative product design across locations and among multiple value-system participants

    · Knowledge directories accessible from all parts of the organization

    · Real-time access by R&D to online sales and service information

    Procurement

    · Internet-enabled demand planning, real-time available-to-promise/capable-to promise and fulfillment

    · Other linking of purchase, inventory, and forecasting system with suppliers

    · Automated " requisition to pay"

    · Direct and indirect procurement via marketplaces, exchanges, auctions and buyer-seller matching

    Real-time integrated scheduling, shipping, warehouse management,

    demand management and planning, and advanced planning and scheduling across the company and its suppliers

    Inbound Logistics

    Web-distributed supply chain management

    Integrated information exchange, scheduling, and decision making in in-house plants, contract assemblers and components suppliers

    Real-time availableto-promise and capable-to-promise information available to the salesforce and channels

    Operations

    Real-time transaction of orders whether initiated by an end consumer, a salesperson, or a channel partner

    Automate customer-specific agreements and contract terms

    Customer and channel access to product development and delivery status

    Collaborative integration with customer forecasting systems

    Integrated channel management including information exchange, warranty claims, and contract management

    Outbound Logistics

    Real-time inside and outside access to customer information, product catalogs, dynamic pricing, inventory availability, online submission of quotes, and order entry

    Online sales channels including Web sites and marketplaces

    Online product configurators

    Customer-tailored marketing via customer profiling

    Push advertising

    Tailored online access

    Real-time customer feed-back through Web surveys, opt-in/- out marketing, and promotion response tracking

    Marketing and sales

    Customer self-service via Web sites and intelligent service request processing including updates to billing and shipping profiles

    Real-time field service access to customer account review, schematic review, parts availability and ordering, work-order

    Update,

    and

    service

    parts manage-

    ment

    Online support of customer service representative Through e-mail response management, billing integration, co-browse, chat, " call me now," voice-over IP, and uses of video streaming

    After-Sales Service

    Source: Adapted from Porter in Diana & Judith (2003:242).

    For effective value chain reconfiguration, the process of reconfiguring is necessary to an organisation's survival in a changing environment (Normann & Ramirez, 1998:99). Thus, having an offering code that enhances fit for potential value-creating activities between supplier and customer is necessary. This is where the concept of leverage comes in.

    According to Normann and Ramirez (1998:59), leverage explores and exploits opportunities based
    on better utilisation of the joint resources of both parties, as well as those of subcontractors, partners
    or other suppliers as appropriate. Therefore, leveraging can take the form of relieving and/or

    39

    enabling the customer. Both concepts concern the configuration of activities as they are manifested in the relationship linking customer and supplier; that is, in the offering.

    2.8 ERP system and e-business: An evolving relationship for value chain extension

    In the 1990s, software developers developed ERP software, a fuller "suite" of applications capable of linking all internal transactions. Since then the use of ERP software has exploded, and some advocates claim that it is the ultimate solution to information management. While traditional production management information systems have focused on the movement of information within an organisation, Web-based technology facilitates movement of information from business to business (B2B) and from business to consumer (B2C), as well as from consumer to business (Balls et al., 2000:2-3).

    According to Balls et al., (2000:2-3), research groups such as Forrester, Gartner and AMR all project incredible growth for e-business in the first five years of the new century. Some analysts in Balls et al., (2000:2-6) comment that in their rush to become an e-business, most organisations have decided against implementing an ERP system. Balls et al., (2000: 4-6) have discovered that some client companies are building e-business applications while largely ignoring ERP development, hoping someone, someday will integrate the back end. As a result, companies whose e-business applications have no order-fulfilment and order-status capabilities either lack data or need to recreate it.

    E-business simply does not work without clean internal processes and data. The choice, though, is not between developing e-business solutions or implementing ERP. Clearly, both are necessary. According to Balls et al., (2000:4-6), making ERP work most effectively in an e-business environment means shedding old notions of ERP. One such notion is whether ERP will always look the same. Balls et al., (2000:2-3) assert that ERP software in the next few years will certainly not look like ERP software designed in the 1990s. The delivery of ERP functionality will also change. For instance, a software vendor that today focuses on one front-end e-business application may in the future build into its products a transaction engine component that can then be attached to other organisations' front-ends. The other option is that ERP vendors will successfully make products more flexible and less difficult to implement, and they will either add e-business functionality or make their systems more compatible with third-party front-end e-business products. Why is this a

    40

    challenge for ERP vendors? Organisations use ERP software to enable processes that confer a competitive edge. Consequently, e-business is forcing ERP vendors to rethink their products' role within the enterprise. All are in some way looking to broaden ERP functionality to incorporate front-end technology and create trading communities through portals and joint ventures with Web-based technology and other vendors.

    For many organisations, ERP itself may be delivered over the Web through business application outsourcing undertaken by application service providers. In the future, it is clear that companies will work together in extended value chains. Those that are able to plug their internal IS into the information chain that parallels the physical goods value chain will prosper; those that are not will fail. Successful organisations will be part of a networked team of business partners dedicated to delivering customer value. Very few (if any) organisations will be able to compete single-handedly against such a team. The technology to "team" is available today, and strong teams are already beginning to form. In short, together, e-business technologies (the Internet, the Web, a host of e-enabling technologies) and ERP systems will provide companies with new options for raising profitability and creating substantial competitive advantage (Balls et al., 2000:7). Balls et al., (2000:7) realise that properly implementing e-business and ERP technologies in harmony truly creates a situation where synergism is created. Web-based technology puts life and breath into ERP technology that is large, technologically cumbersome and does not always easily reveal its value. While ERP organises information within the organisation, e-business disseminates that information far and wide. ERP and e-business technologies supercharge each other. The purpose of these new technologies (ERP and e-business) is to enable the extended value chain.

    2.9 The value chain selected and customised for the purpose of this study

    This study involves Porter's value chain, Walters and Lancaster's value chain, the e-business value chain, the Scott value chain and the customer-centric value chain as discussed at the beginning of this chapter. The reasons for selecting these value chains respectively are given below.


    · Porter's value chain model

    Porter's value chain model is one of the foundation concepts on which most ERP systems are built.
    Even though IT has revolutionised it, the concept remains an important tool for evaluation.
    Therefore for this study the model will be applied by comparing the generic modules and functions

    41

    of Porter's value chain with Axapta Microsoft software modules and configuration as motivated in chapter 1.

    · Walters and Lancaster's value chain model

    Walters and Lancaster (2000:178) point out that identification of customer value criteria and an understanding of the key success factors are necessary for creating both competitive advantage and resultant success. Therefore value propositions become the means by which the customer understands the value offer (typically made explicit as a series of product/service attributes) and by which the value chain components assist in the formulation, evaluation and decision on their value-adding contributions in organisations. Walters and Lancaster (2000:178) view strategy as the value-creating system itself in which members work together to create value. Therefore, a key strategic task in the reconfiguration of value chain roles falls under relationships in order to "mobilise the creation of value in new forms and by new players". The model will be applied in this study to test Axapta Microsoft software value chains in its roles, relationships and leveraging mechanisms for the creation of value and its cost drivers for MNE users.

    · The e-business value chain model

    With regard to the challenge of e-business in the value chain system, it is the objective of this study to determine if Axapta attributes have been incorporated in e-business mechanisms, which could extend the value chain of an MNE. For its reason this model will be applied to indicate the possibility of its use or otherwise.

    · The customer-centric value chain

    "The value of any product or service is the result of its ability to meet a customer's priorities" (Slywotzky & Morrison, 1997:23). Customer-centric thinking begins first with the customer and then moves, ultimately, to the assets and core competencies. It literally reverses the value chain so that the customer is the first link in the chain and everything else follows (Slywotzky & Morrison, 1997:21). Thus, the customer-centric value chain will be applied in order to analyse the Axapta Microsoft software, to determine if it has been formulated according to the customer-centric philosophy.

    42


    · Scott's value chain

    There is now an increasing shift away from this departmental view of competencies to managing the value chain holistically. The SBUs that do well in a particular segment will ensure that the entire value chain works to support their differentiating attributes. It is the ability of an organisation to integrate all its departmental skills behind a single goal that gives it decisive advantage over the competition (Scott, 1998:89). Thus, the value chain model will be applied to analyse Axapta Microsoft software capability in its relationship between a company's value and its SBUs.

    The question can be asked whether Axapta software is based on the value chain model and, if it is a value net with a leverage capability, whether it has an impact on the effectiveness of an MNE's value chain in fulfilling its requirements. The value chain models selected for this study, as evaluative tools, will attempt to answer the above questions. This will be debated further as part of the findings of this study in chapter 6, where results will be put in relation to some of the hypotheses and objectives formulated in chapter 1.

    2.10 The value chain's system through ERP integration

    «The value chain's system integration is the process by which multiple organisations with a shared market channel collaboratively plan, implement, and manage (electronically as well as physically) the flow of goods, services, and information along the entire chain in a manner that increases customer-perceived value» (Balls et al., 2000-12). ERP systems facilitate this integration, and as a structured approach, they optimise an organisation's internal value chain.

    According to Balls et al., (2000:82-4), a highly integrated value chain creates greater value for the end-customer by delivering products and services more efficiently and effectively. Within the industry the group of organisations that carry out each step in creating and delivering products is called the supply chain. Therefore the supply chain transforms into an integrated value chain when it:

    · Extends the chain all the way from sub-suppliers to customers;

    · Integrates the back-office operations with those of the front office;

    · Becomes highly customer-centric, focusing on demand generation and customer service;

    · Is proactively designed by chain members to compete as an «extended organisation»; and

    43

    É Seeks to optimise the value added by information and utility enhancing services.

    The tangible benefits of system integration are inventory reduction, personnel reduction, productivity improvement, order management improvement, financial-close cycle improvements, IT cost reduction, procurement cost reduction and revenue/profit increase, etc. On the other hand, the intangible benefits are information visibility, new/improved processes, customer responsiveness, standardisation, flexibility, globalisation and business performance. Consequently, value chain integration allows real-time synchronisation of supply and demand and enables support of an organisation in its efforts to become part of an extended organisation, beyond electronic supply chain management. This pushes MNEs to develop collaborative business systems and processes that can span across multiple organisation boundaries.

    2.11 The impact of IT in the value chain system

    In his introduction of the value chain theory, Porter makes no reference of IT as a backbone to support the mechanism behind the process. However, later Porter and Millar (1985:150) acknowledge the importance of IT by mentioning that this technology «is transforming the nature of products, processes, companies, industries, and even competition itself. Until recently, most managers treated IT as a support service and delegated it to electronic data processing departments. Now, however, every company must understand the broad effects and implications of IT and how it can create substantial and sustainable competitive advantages».

    The revolution of IT, especially computers, came to change the traditional value chain. In the study of Walters and Lancaster (1999:646), Brow comments that the changes in and convergence of information and communication technologies are the significant issues to highlight. Brow illustrates changes in value chain structure by arguing that the role of outsourcing has become more important in order to achieve the effectiveness of the value delivery. Brow further emphasises the role and impact of information management as an important feature that provides a co-ordinating activity. In addition, Evans and Wurster (1997:71) write that: «the changing economies of IT threaten to undermine the established value chains in many sectors of the economy, requiring virtually every company to rethink its strategy - not incrementally, but fundamentally». Evans and Wurster refer to this phenomenon as the "deconstruction of the value chain". Ghosh (1998:130) refers to it as

    44

    "pirating of the value chain" and explains that companies are forced to risk the relationships in their physical chains in order to compete in the electronic channel.

    IT is spreading through the value chain system and it is performing optimisation and control functions as well as judgmental executive functions (Porter & Millar, 1985:151). Indeed, IT has had a revolutionary effect on competitive scope in the way in which it facilitates local, regional, national and international operations and co-operation. Truly the role and impact of an ERP system as an integrative and a strategic IT tool challenges the way businesses used to operate, and consequently supports the value chain operation to act efficiently and globally for MNEs to gain competitive advantage. With regard to the above view, the question is: Is Axapta software a value chain system with IT mechanisms, which facilitate the integration and the co-ordination of other ERP system applications? This question will be answered in chapter 6.

    2.12 Conclusion

    «A business is profitable if the value it creates exceeds the cost of performing the value activities» (Porter & Miller, 1985:152). Therefore, an organisation succeeds by ensuring that the entire process necessary to deliver a good or service is attuned to achieving the single goal of competitive positioning in the market. This requires co-ordination across the entire value chain, even if certain pieces of it are more critical than others (Scott, 1998:89). Thus, assert Day, Georges, Rebstein and David (1997:33), the attractiveness of a certain industry or product market depends upon how the economic value created for certain customers is shared throughout the value chain.

    The analyses of the value chain concept in this chapter have focused on the assessment of the different value chains, and the linkage of all activities within them for competitive advantage. A competitive advantage requirement is that a viable number of buyers end up preferring the organisation's product offering because of its perceived «superior value». Superior value is nearly always created in either one of two ways: (1) by offering buyers a "standard" product at a lower price, or (2) by using some differentiating technique to provide a "better" product that more than offsets the higher price it usually carriers (Thompson & Strickland, 1987:134). In this study, it was determined that:


    · IT plays a key role in the value chain in terms of the co-ordination of the different activities to create a product and the delivery of the service in an efficient manner to satisfy customers.

    45


    · The value chain approach could indeed help to measure the strength of an organisation's value
    chain system, as well as of a product's value chain, using ERP software, i.e. Axapta Microsoft.

    · The ERP system is based on the value chain concept, which supports the observation that it is a value chain system too. Unfortunately, most ERP architecture of the past did not incorporate IT as one of its core competencies. Therefore current ERP systems must be incorporated with IT mechanisms, such as e-business technologies, to facilitate integration and relationship within the value chain system.

    · Based on the qualitative study of the ERP concept, an ERP system as a value chain system becomes an evaluative tool and IT instrument to evaluate ERP software (i.e. Axapta, SAP, Oracle, Aruba and others) attribute and specification integrative status in its relationships to support activities, strengths and ERP modules and applications.

    The analysis of an organisation's value chain through a formal value chain model, as introduced in this chapter, highlights the linkages between the organisation's primary activities and support activities, isolating both efficient and inefficient activities. By capitalising on the efficient linkages and improving inefficient ones, organisations can increase efficiency, lower costs and create value. Therefore, the surplus value created through the achievement of efficiency translates directly into competitive advantage for organisations pursuing a cost leadership strategy. In addition, through the use of value chain analysis, organisations can identify the attributes of products and/or services which customer's desire, resulting in the creation of offerings that address these customer needs and desires. Organisations are successful in differentiating their products and/or services when they have a competitive advantage, which in turn, creates value and, hopefully, profit for the organisation (Porter, 1998: 40).

    However, the theories behind the value chain make the concept impossible to be universally applicable owing to differing organisation structures and objectives, which means that the value chain system must be configured and applied differentially to every type of MNE. The value chain architecture is therefore a unique tool, which is crafted for every type of organisation, especially for MNEs where the architecture is very complex because of the broad operation at different sites.

    In chapter 6, the value chain theory assessed in this chapter will indicate whether the Axapta

    46

    software value chain architecture, configuration and business functional activities fulfil the requirements and help MNEs to craft their value chain. It will be determined whether Axapta software as a value chain system and the ERP system do in fact meet the requirements of a general global ERP system model and the MNEs' value chain system for competitive advantage.

    The next two chapters will be dedicated to ERP systems as an associate value chain system in order to show how it relates technically to the value chain configuration and architecture, since most ERP system software is built upon it.

    47

    CHAPTER 3: AN OVERVIEW OF ERP SYSTEMS

    3.1 Introduction

    Expanding the discussion of the value chain theories in the previous chapter, this chapter focuses on ERP systems and their relation to the value chain concept. The purpose of this chapter specifically is to define and analyse the concept of an ERP system, its background as well as its benefits, characteristics, advantages and disadvantages. This is followed by a discussion of the integrating role ERP plays in IT, its modules, global configuration and architecture. The factors of strategic evaluation of ERP software, including a brief overview of the selection and key factors associated with the success and failure affecting the system during and after implementation, are also investigated. The evaluation of the system will provide the technical background theory, allowing the researcher to compare Axapta Microsoft software under the magnifying glass (in chapter 4) with the theories assessed on value chain architecture and configuration related to ERP systems in chapter 6, to develop the overall qualitative part of this study.

    3.2 The background of ERP systems

    During the 1960s the focus on manufacturing systems was on traditional inventory control concepts. Most of the software was limited generally to inventory based on traditional inventory processes, owing to the need for manufacturing operations. Since then manufacturing systems have moved to material requirement planning systems, which translated the master planning schedule to build for the end items into time-phased net requirements for the sub-assemblies, components and raw materials planning and procurement. In 1975, MRP grew from a simple tool to become MRPII.

    However, according to Chung, Snyder and Gumaer (in Chin, Hsiung & Ming, 2004:235) the shortcoming of MRPII in managing a production facility's orders, production plans and inventories, and the need to integrate these new techniques led to the development of a rather more integrated solution called an ERP system. The ERP system vanquishes the old stand-alone computer systems in finance, human resources, manufacturing and the warehouse, replacing them with a single unified software program divided into software modules that roughly approximate the old stand-alone systems. Therefore, Baki and Cakar (2005:75) position an ERP system as an integrated enterprise-wide system, which automates core corporate activities such as manufacturing, human resources,

    48

    finance and supply chain management. With these benefits, an organisation achieves many improvements such as easier access to reliable information, elimination of redundant data and operations, reduction of cycle times and increased efficiency, hence reducing costs.

    3.3 Defining the concept of an ERP system

    ERP system software links divisions or departments together through the supply chain, enabling anyone to look into the warehouse, for example, to see if an order has been shipped. What is important to note is that most vendors of ERP software are flexible enough that some modules can be installed without buying the whole package. Therefore many organisations implementing an ERP system for the first time install the ERP software modules of finance or human resources, leaving the rest of the functions for later (Baatz, Koch & Slater: available online). An ERP system works essentially at integrating the whole business information function, allowing organisations to effectively manage their resources of people, materials and finance. The system combines both business processes and IT into one integrated solution in the organisation, which MRP and MRPII were unable to provide. Thus, asserts Aladwani (2001:266), the ERP system is an integrated set of programmes that provides support for core organisational activities. Blasis and Gunson (2002:16-7) state that an ERP system is a tool that grafts a solution for human resources, finance, logistics etc., and eventually to SCM and CRM. This provides a closer relation to partners with the expansion of the customer base from large organisations to small and medium, and from a wide industry offer by encompassing service as well as manufacturing industries due to the Web-enabled technologies as shown in figure 3.1 below.

    Figure 3.1: Integrated modules in ERP solutions

    Enhanced ERP Web ERP

    ERP basic modules

    · Finance

    · Logistics

    · Manufacturing

    · Human resources

    · etc.

    · SCM

    · CRM

    +

    Web-enabled
    technologies

    +

    49

    Source: Adapted from Blasis & Gunson (2002:17).

    For many users, an ERP system is a «do it all» that performs everything from sales orders to customer service. Others view it as a data bus with data storage and retrieval capability. In addition, Gardiner, Hanna and LaTour (in Shehab, Sharp, Supramaniam & Spedding, 2004:8) point out that an ERP system can be used as a tool to help improve the performance level of a supply chain network by helping to reduce cycle times. Boykin (in Shehab et al., 2004:8) argues that an ERP system is the price of entry for running a business and for being connected to other organisations in a network economy to create B2B and electronic commerce. ERP brought about the myriad of interconnections, which ensure that any other unit or department within the organisation can obtain information in one part of the business. This makes it simpler to see how the business as a whole is doing. ERP systems help people eliminate redundant actions, analyse data and make better decisions (Sweat in Gupta, 2000:115).

    An ERP system is the information pipeline system within an organisation which allows the organisation to move internal information efficiently so that it may be used for decision support inside the organisation and communicated via e-business technology to business partners throughout the value chain (Balls et al., 2000:186). In addition, Siriginidi (2000:378) defines ERP as an integrated suite of application software modules, providing operational, managerial and strategic information for organisations to improve productivity, quality and competitiveness.

    From the above definitions, it can be concluded that an ERP system can be regarded as an integrated organisation-wide software package that uses a modular structure to support a broad spectrum of key operational areas of the organisation. It provides a transactional backbone to the organisation that allows the capture of basic cost and revenue related movements of inventory. In so doing, ERP affords better access to management information concerning business activity, showing actual sales and cost of sales in a real-time fashion (Adam & Carton, 2003:22). The full installation of ERP software across an entire organisation connects the components of the organisation through a logical transmission and sharing of commonalties. Therefore, in this interface the data such as sales becomes available at any point in the business, and it courses its way through the software, which automatically calculates the effects of the transaction on areas such as manufacturing, inventory, procurement, invoicing and bookkeeping (Balls et al., 2000:12). Clemons and Simons

    50

    (2001:207) state that ERP is a term used to describe business software that is multifunctional in scope, integrated in nature and modular in structure. Indeed, ERP systems are designed for multisite, multinational companies, which require the ability to integrate business information, manage resources and accommodate diverse business practices and processes across the entire organisation. In support of the above view, Wood and Caldas (in Adam & Carton, 2003:22) found in their survey of 40 organisations that had implemented ERP that the main reason for doing so was the need to "integrate the organisation's processes and information".

    3.4 The general model of an ERP system compared to a value chain system

    According to McAdam and McCormack (2001:116), the concept of integration within the functions of an organisation can be represented by Porter's value chain model as depicted in figure 2.1. Porter looked at the organisation as a collection of key functional activities that could be separated and identified as primary activities (inbound logistics, operations, outbound logistics, marketing and sales, and service) or support activities (infrastructure, human resource management, technology development and procurement). Porter arranged these activities in a value chain. Maximising the linkages between the activities increases the efficiency of the organisation and the marginal availability for increasing competitive advantage or for adding shareholder value. Integration occurs between the primary activities in each value chain, and is enabled by the support activities. It can also take place between activities in different organisations, and in some cases, the support activities also share resources. Thus, ERP systems aid the integration of these various functional processes within the organisation's value chain. Figure 3.2 below represents the general model of ERP systems and execution, integrated functionality and the global nature of present-day organisations in the different functional activities format of Porter's value chain model in figure 2.1.

    In figure 3.2, the circle at the centre represents the entities (organisation, payroll/employees, cost accounting, general ledger, job/project management, budgeting, logistics and materials, etc.) that constitute the central database shared by all functions of the organisation. The border represents the cross-enterprise functionality (multiplatform, multimode manufacturing, electronic data interchange, workflow automation, database creation, imaging, multilingual, etc.) that must be shared by all systems. The cross-organisation borders would be multifaceted, act as multifacilities and represent the capability required by the organisation to compete and succeed globally. It is important for the system's total solution to support multiple divisions or organisations under a

    51

    corporate banner and seamlessly integrate operating platforms as the corporate database that results in integrated management information (Siriginidi, 2000:379-80). The co-ordination performed by information system integration (ERP system) within the organisation's value chain enables more views to be shared, employee awareness to be broadened and customer expectations to be tracked and met (Bhatt, 2000:1331)

    Figure 3.2: The general model of an ERP system

    Source: Adapted from Siriginidi (2000:380).

    The emphasis is further placed on the fact that the heart of any ERP exercise materialises in the creation of an integrated data model. Approaching it holistically, the ERP and execution model and its flexible set of integrated applications keep operations flowing efficiently. It should be looked upon as the acquisition of an asset, not as expenditure. An ERP system as a business tool seamlessly integrates the strategic initiatives and policies of the organisation with the operations, thus providing an effective means of translating strategic business goals to real-time planning and control. In order to achieve the integration of all the basic units of the business transaction, ERP systems rely on large central relational databases. This architecture represents a return to the

    52

    centralised control model of the 1960s and 1970s (Stirling, Petty & Travis, 2002:430), where access to computing resources and data was very much controlled by centralised IT departments. Therefore, ERP implementations are an inherent part of a general phenomenon of centralisation of control in large businesses back to a central corporate focal point (Clemons & Simons, 2001:207).

    3.5 The role and benefits of an ERP system

    According to Ming, Fyun, Shihti & Chiu (2004:689-90), ERP systems have developed beyond their originally design intended to provide organisations with integrated, consistent and concurrent information that is available across the organisation. Integrated with electronic data interchange, it is used to streamline business processes in vertical markets, giving organisations the control and management of their resources. Furthermore, ERP systems provide a platform for integrating applications such as executive information system data mining, SCM, CRM and e-commerce systems. The real benefits of ERP systems currently are associated with the arrival of Web applications, which facilitate ERP systems to extend to electronic markets integrated with supply chains through B2B e-hubs. It further also extends to partners to integrate their own operations with other functions and to manage, monitor and execute all transactions in real time. An ERP system is considered to be the price of entry into B2B, e-market and other organisations in a network economy.

    Davenport (in Adam & Carton, 2003:24) shows the paradoxical impact of an ERP system on organisation and culture. ERP systems provide universal, real-time access to operating and financial data, and allow the organisations to streamline their management structures, creating flatter, more flexible and more democratic organisations. ERP systems also involve the centralisation of control over information and the standardisation of processes, which are qualities more consistent with hierarchical, command and control organisations with uniform cultures. Indeed, ERP systems help organisations in cross-organisation application integration, where the organisations can link their ERP systems directly to the disparate applications of their suppliers and customers. Therefore, such integration benefits the organisation in the following ways, which have been emphasised by Gupta (2000:115-6):


    · Web-based procurement application;

    53


    · The incorporation of the Internet in its applications; and

    · The outsourcing of ERP applications where the major vendors of ERP are offering outsourcing programs to small and medium organisations that are unable to implement the system themselves

    Furthermore, an ERP system links processes, people, suppliers and customers together, and it helps a business to globalise its operations, expand its supply chain and customer relations base while simultaneously integrating it with e-commerce. Adam and Carton (2003:22) highlight some of the benefits achieved by the organisations looking to harness the tight global co-ordination afforded by ERP systems, which are:

    · Streamlining global financial and administrative processes;

    · Global lean production models with rapid shifting of sourcing, manufacturing and distribution functions worldwide in response to changing patterns in supply and demand; and

    · Minimising excess manufacturing capacity, while reducing component and finished goods inventory.

    Thus, Spathis and Constaninides (in Ming et al., 2004:690) position an ERP system as a tool which can be used to integrate manufacturing and marketing functions to determine the competitiveness and profitability of organisations and the production of real-time data, which is shared across the organisation, resulting in the integration and the automation of business processes, and the real benefit of integration and its ability to share information with customers and suppliers within the organisation. The core competency of ERP systems within an organisation can be expanded to vertical networks. Sharing information is what transforms ERP systems into the backbone of a supply chain, and not just the backbone for internal networks. The benefits are magnified from the same internal advantages with better co-ordination and optimisation by eliminating external uncertainties (Ming et al., 2004:690).

    3.5.1 The advantage and disadvantage of an ERP system

    According to Gupta (2000:115-16), the advantages and disadvantages of ERP systems are as follows:

    54

    Advantages

    · Y2K compliance;

    · Ease of use;

    · Integration of all functions;

    · Online communication with suppliers and customers;

    · Customisation;

    · Improvement of decision-making due to the availability of timely and appropriate information;

    · Improved process time;

    · Feasibility of administering pro facto control on the operations;

    · Internet interface; and

    · Reduction of planning inaccuracies.

    Disadvantages

    · Organisational resistance to change, which may be high;

    · Changeover, which may take a long time causing cost overruns;

    · Data errors, which can be carried throughout the system; and

    · Maintenance is costly and time-consuming.

    3.5.2 The characteristics of an ERP system

    According to Hyung, Nam-Kyu & Sang (2003:197-200), the major characteristics of an ERP system are an enterprise-wide system that covers all the business functions and information resources, integrated database, built-in best industry practice, packaged software and open architecture. In addition, ERP enables reduction of system development time, flexibility, standardisation of workflow and effective business planning capability. Therefore, ERP is characterised by the aspects of classification of information exchange, sharing and information service as shown in table 3.1 below.

    55

    Table 3.1: Characteristics of an ERP system

    Classification Characteristics of ERP system

    Information interchange EDI connection

    Open system and globalisation

    Information sharing One fact, one place (integrated task system)

    Standard business process model, GroupWare connection and executive information system function

    Information service End-user computing and integrated database

    Source: Adapted from Hyung et al., (2003:200).

    It must further possess some key characteristics and features to qualify as a true business process integration solution. These features are:

    · Flexible. An ERP system should be flexible in order to respond to the changing needs of an organisation. Client/server technology enables ERP systems to run across various database servers through open database connectivity.

    · Comprehensive. An ERP system is able to support a variety of organisational functions and is suitable for a wide range of business organisations.

    · Modular and open. An ERP system should have open system architecture, meaning that any module can be interfaced or disconnected whenever required without affecting the other modules. It should also support multiple hardware platforms for organisations having a diverse collection of systems.

    · Beyond the organisation. A good ERP system is not confined to the organisational boundaries, but can support online connections to other business entities outside the organisation.

    · Simulation of reality. An ERP system can simulate real business processes on the computer.

    · Multiple environments required. For ERP, most businesses must maintain multiple environments in order to achieve uptime requirements: development/test, promote-toproduction, highly available production, and disaster recovery.

    56

    3.6 ERP system: The hub of an MNE

    Davenport (in Adam & Carton, 2003:22) states that organisations collect, generate and store vast quantities of data which is «spread across dozens or even hundreds of separate computer systems, each housed in an individual function, business unit, region, factory or office». Therefore, ERP systems have a huge impact on business productivity due to the workload of reeking, reformatting, updating, debugging, etc. When management is relying on information from incompatible systems to make decisions, instinct becomes more important than sound business rationale. Thus, ERP systems are positioned as a tool designed for multisite, multinational organisations, which require the ability to integrate business information, manage resources and accommodate diverse business practices and processes across the entire organisation. In addition, Balls et al., (2000:30-1) note that an ERP system provides consistency of information across a global organisation and integrates the following:

    · Resource planning, which includes forecasting and planning purchasing and material management, warehouse and distribution management, product distribution, accounting and finance. By providing timely, accurate and complete data about these areas, ERP software helps a company to assess, report on and deploy its resources quickly, while also focusing on organisational priorities. For example, a company can assess its total cash position globally for a large supplier who may also be a customer. All too often, bills are paid to suppliers who are also customers and who are owing more than they are owed.

    · Supply chain management, which includes understanding demand and capacity, and the scheduling of capacity to meet demand. By linking disparate parts of an organisation with ERP, more efficient schedules can be established that optimally satisfies the organisation's needs. This reduces cycle time and inventory levels, and improves a company's cash position.

    · Demand chain management, which includes handling product configuration (quotes, pricing and contracts, promotions and commissions). By consolidating information with ERP, contracts can be better negotiated, pricing can be established to consider the total organisation-wide position, and sales offices can be better assessed, rewarded and managed.

    · Knowledge management, which includes creating a data warehouse, a central repository for the organisation's data, performing business analysis on this data, providing decision support for organisation leadership and creating future customer-based strategies. These activities comprise

    57

    a management information system, which facilitates the making of appropriate business decisions. In this capacity, ERP evolves from a transaction-processing engine into a true distiller of information. Data warehousing can become a powerful tool for corporate executives and managers only if it is fed with data that is consistent, reliable and timely.

    3.6.1 The modules of an ERP system

    ERP systems generally include some of the most popular functions within each module, but the names and numbers of modules in an ERP system provided by various software vendors may differ. A typical system integrates all these functions by allowing its modules to share and transfer information freely, centralising information in a single database accessible by all modules. The model of an ERP system, according to Siriginidi (2000:380) and shown in figure 3.2 above, includes areas as such as:

    · Finance (financial accounting, treasury management, organisation control and asset management);

    · Logistics (production planning, materials management, plant maintenance, quality management, project systems, sales and distribution);

    · Human resources (personnel management, training and development and skills inventory); and

    · Workflow (integrates the entire organisation with flexible assignment of tasks and responsibilities to locations, positions, jobs, groups or individuals).

    In addition, other functionality requirements stipulated by Sarkis and Sundarraj (2000:201) include:

    · Business planning and material requirement planning;

    · Marketing and sales (sales and distribution, inventory and purchases);

    · Resource flow management (production scheduling, finance and human resources management);

    · Works documentation (work order, shop order release, material issue release and route cards for parts and assemblies), shopfloor control and management and costing;

    · Manufacturing and maintenance; and

    · Engineering data control (bill of materials, process plan and work centre data).

    58

    In a fully integrated ERP system, these activities are accomplished by utilising the five tightly integrated modules of finance, manufacturing, logistics, sales and marketing, and human resources, as briefly discussed next (Balls et al., 2000:31).

    · Finance

    ERP software significantly reduces the cost of financial record keeping. The consistency of ERP system data provides improved information for analysis and a seamless reconciliation from the general ledger sub-ledgers. The data is updated in real time throughout the month, and a basis is created for linking operational results and the financial effects of those results. With ERP, a physical transaction cannot be booked without the resulting financial effect being shown. This visibility of activities across finance and operations allows operational managers to better understand the effects of their decisions. The company's financial department is better equipped to provide decision support to corporate leadership, create strategic performance measures and engage in strategic cost management.

    · Manufacturing

    With ERP software's ability to explicitly link the operational and financial systems, organisations can easily determine how operational causes equal financial effects. The software provides a consistent set of product names in a central product registry, a consistent way of looking at customers and vendors, integration of sales and production information, and a way to calculate availability of products for sales, distribution and materials management. An integrated ERP system also enables better order to production planning by linking sales and distribution to materials management production planning, and financials in real time, real-time visibility of customer orders and customer demand, and modelling of anticipated orders. With ERP, sales opportunities turn into orders based on past performance information, stock can be adjusted nearly instantly and detailed manufacturing resource planning can be performed daily.

    · Logistics

    ERP integrates distribution more tightly with manufacturing, sales and financial reporting, thereby
    enhancing reporting of future performance indicators as well as past performance measures. The
    software provides an integrated basis for managing the signals that support the distribution

    59

    environment necessary to meet twenty-first century customer desires and demands. ERP technology supports strategic purchasing and "materials only" costing rather than standard costing and aligned performance indicators, rather than traditional indicators that measure functional silos and support customer-driven, low-cost operations. ERP also supports cross-functional, process-driven, customer-focused logistics and distribution.

    · Sales and marketing

    ERP software enhances an organisation's sales efforts in a number of ways. Performing profitability analyses requires real-time data for costs, revenue and sales volumes. With an ERP system, the company can perform profitability analysis, showing profits and contribution margins by market segment. With ERP software, it is also possible to design sophisticated pricing procedures that include numerous prices, discounts, rebates and taxes considerations. The sales organisations can use ERP to project much more accurate delivery dates for orders. In an e-business environment, customers will be able to receive much more accurate delivery date information over the Web, and, when the ERP system is properly linked to an e-business front-end, look into the company's finished-goods and work-in-process inventories, as well as materials availability to determine how quickly an order can be filled.

    · Human resources

    An ERP system supports an organisation in its human resource planning, development and remuneration areas. It provides an integrated database of personnel (employed or contracted), maintains salary and benefits structures, supports planning and recruiting, and keeps track of reimbursable travel and living expenses. ERP does payroll accounting for a wide variety of individual national requirements and allows a company to centralise or decentralise the payroll function by country or by legal entity. ERP records individual qualifications and requirements used for resource planning, enhances career and succession planning, and co-ordination of training programmes, and maximises time management, from planning to recording and controlling time, including shift planning, time exception reporting and time reporting for cost allocation where staff charge their time to specific cost objects such as projects or service orders.

    60

    3.6.2 ERP system package

    According to Shehab et al., (2004:361), although an ERP system is a pure software package, it embodies ways of doing business. In addition, an ERP system is not just a pure software package to be tailored to an organisation, but rather an organisational infrastructure that affects how people work. It "imposes its own logic on an organisation' s strategy, and culture" (Davenport, Lee & Lee in Shehab et al., 2004:361). ERP has packaged best business practices in the form of a business blueprint. This blueprint could guide organisations from the beginning phase of product engineering, including evaluation and analysis, to the final stages of product implementation.

    In total there are about a hundred ERP providers worldwide, e.g. SAP-AG, Oracle, JD Edwards, PeopleSoft and Baan, SSA, BPCS, Inertia Mover, QAD, MFG and PRD. The systems have a few common properties and they are all based on a central, relational database, built on client/server architecture and consist of various functional modules as indicated above. Among the most important attributes of an ERP system, according to Shehab et al., (2004:60-5), is its ability to:

    · Automate and integrate business processes across organisational functions and locations;

    · Enable implementation of all variations of best business practices with a view towards enhancing productivity;

    · Share common data and practices across the entire organisation in order to reduce errors; and

    · Produce and access information in a real-time environment to facilitate rapid and better decisions and cost reduction.

    All ERP system packages need to be customised and parameterised to suit the needs of individual organisations. However, the system packages touch many aspects of a company's internal and external operations. Consequently, successful deployment and use of ERP systems are critical to organisational performance and survival.

    3.7 Global ERP system configuration

    Davenport (in Adam and Carton, 2003:24) estimates how much uniformity should exist in the way
    ERP does business in different regions or countries. The differences in regional markets remain so
    profound for most organisations that strict process uniformity may actually be counter-productive.

    61

    A configuration table enables a company to tailor a particular aspect of the system to the way it chooses to do business. Organisations can select, for example, the functional currency for a particular operating unit, or whether they want to recognise product revenue by geographical unit, product line or distribution channel (Adam and Carton, 2003:24). Therefore, Davenport (in Madapusi & D'souza, 2005:8) warns that organisations must remain flexible and allow regional units to tailor their operations to local customer requirements and regulatory structures. In practical terms, in Europe, ERP projects are more complex than in North America because of diverse national cultures, which influence organisational culture and make successful implementation of MNEs' ERP solutions difficult.

    However, in the study of Adam and Carton (2003:23-4), Krumbholz states that failure to adapt ERP packages to fit the national culture leads to projects which are expensive. Therefore, MNEs face a choice between using their ERP as a standardisation tool or preserving (or rather tolerating) some degree of local independence in software terms. The resulting standardisation in business processes allows companies to treat supply and demand from a global perspective to consolidate corporate information resources under one roof, shorten execution time, lower costs in supply chains, reduce stock levels, improve on-time delivery and improve visibility and product assortment with respect to customer demand. Thus, Davenport (1998:126) recommends a type of federalist system, where different versions of the same system are rolled out to each regional unit. This raises its own problems for the company, i.e. deciding on what aspects of the system need to be uniform and what aspects can be allowed to vary (Horwitt, 1998:1).

    3.7.1 Alignment between ERP system configuration and international strategy

    Madapusi and D'souza (2005:8) suggest that successful ERP systems tend to be those that are closely aligned with the types of international strategies that the organisation has chosen to adopt. Therefore, it is important that management understand the interrelationship between ERP system configuration and the international strategy of the organisation. Madapusi and D'souza use the two constructs to develop a framework explaining how management at an MNE can use it to align ERP configuration with the international strategy of the organisation. According to Markus, Tanis and Van Fenema (2000:42), the prevailing wisdom on ERP system configuration is that management has to address three issues, namely:

    62


    · ERP software configuration;

    · ERP information architecture; and

    · ERP system rollout.

    ERP software configuration

    The findings of Koch (2001:68) indicate that an ERP system should be configured hierarchically at four levels in an organisation:

    · Organisation level. There are four types of organisation-level ERP configurations that international organisations can adopt, namely single-financial/single-operation, singlefinancial/multi-operations, multi-financials/single-operation, and multi-financials/multi-
    operations.

    · The system level. At this level, business activities such as logistics, financials and operations are implemented as modules.

    · Business process level. At this level, the focus is on the customisation of user profiles, parameters and business processes.

    · Customisation level. This involves custom-designed modifications and extensions to ERP application.

    ERP information architecture

    According to Clemons and Simons, and Zrimsek and Prior (in Madapusi and D'souza, 2005:10), there are three commonly accepted ways to configure ERP information architecture:

    · Centralised architecture. This refers to an organisation that has achieved high levels of standardisation of data and commonality of business processes.

    · Distributed architecture. This refers to the organisation that has a strong history of autonomous business units.

    · Hybrid architecture. This refers to the organisations that want to leverage their global supply chains and at the same time localise their products and services, and prefer hybrid architectures that are less than completely centralised or distributed.

    63

    ERP system rollout

    Parr and Shanks (2000:7) comment that when configuring ERP systems, organisation's management must deal with the challenges of ERP system rollout. Parr and Shanks' (2000:8) research findings suggest that system features such as the number of sites and users, the level of complexity of the business processes, the level of customisation, the mix of ERP modules chosen and the existence of legacy system could be critical in determining the success of an organisation's rollout strategy. These factors can lead to varied approaches to ERP system rollout.

    However, there is good support for two general approaches to ERP system rollout that were popularised in the mid-1990s by Mabert, Soni and Venkataraman (2003:237) and Markus et al., (2000:45), namely the "big bang" approach and the phased implementation approach. The organisations that prefer a "big bang" approach to ERP implementation roll out a set of ERP application modules across their worldwide operations simultaneously. A well-planned big bang rollout enables the organisation to rapidly implement and derive benefits from a core set of integrative application modules and processes. By contrast, the phased implementation of application modules takes place at national level, with integration primarily through financial reporting modules. Although phased implementation is time-consuming, it involves less risk compared to the big bang approach, and tends to involve less re-engineering efforts. The phased implementation component of the rollout allows the organisation to learn, adapt and explore alternate courses of action (Scott and Vessey in Madapusi & D'souza, 2005:14).

    3.7.2 Types of international strategies

    Businesses typically adopt one of three types of international strategies, namely multinational, global, or transnational as briefly discussed next (Madapusi and D'souza, 2005:11).


    · Multinational strategy

    One of the primary objectives of a multinational strategy is to build sensitivity and responsiveness to differing national environments. Organisations that pursue this strategy offer differentiated products and services to satisfy the local needs of their national units. These organisations derive most of their value from downstream value chain activities, such as marketing, sales and service, and often clone their value chains in multiple national markets.

    64


    · Global strategy

    The constant search for global efficiencies and cost considerations drives the actions of organisations that choose a global strategy. These organisations leverage economies gained through product standardisation and global sourcing. Control and co-ordination of activities are typically concentrated at the organisation's headquarters.

    · Transnational strategy

    Organisations that adopt a transnational strategy focus on local responsiveness and global efficiency - a "best of both worlds" approach. Organisations that pursue this strategy recognise that their competitive advantage accrues from location advantages and economic efficiencies. The theoretical underpinnings of ERP systems discussed above relate to the configuration and international strategy viewed in ERP configuration, architecture and rollout, with international strategy alignment for organisations that use a multinational strategy only, together with global and transnational strategies.

    3.7.3 ERP systems for organisations that use an MNE strategy

    Organisations that adopt an MNE strategy are often structured as decentralised federations that grant strategic and operational latitude to national units. Because headquarters focuses primarily on the bottom line, it treats each national unit as a profit centre and prefers governance mechanisms that favour standardised outputs. Mutual adjustment is encouraged through informal headquarter-national unit relationships. Not surprisingly, organisations that have strongly independent national units also have independently run IT operations, as stipulated by Bartlett and Ghoshal, Jarvenpaa and Ives, Karimi and Konsynski (in Madapusi & D'souza, 2005:12).

    · ERP software configuration and MNE strategy

    At organisation level, organisations that implement an MNE strategy tend to select a multifinancials/multi-operations logical structure for their ERP. At system level, an organisation tends to have a system independent of but linked to headquarters through financial reporting modules. At business process level, the system is based on detailed levels. At customisation configuration level, the system is based on high levels.

    65


    · ERP information architecture and MNE strategy

    Organisations using an MNE strategy typically opt for distributed information architectures with stand-alone local databases and application, the configuration of local hardware requirements, the involvement of maximum use of a local area network (LAN) and minimal use of a wide area network (WAN). In this ERP architecture, each local unit is autonomous. Headquarter linkage occurs primarily through financial reporting structures (Clemons & Simons, 2001:207-10). The national units are allowed considerable latitude in determining their own hardware requirements. Network bandwidth requirements are restricted to managing and co-ordinating local operations. WAN bandwidth requirements are minimal because of limited headquarter-national unit interactions.

    · ERP system rollout and MNE strategy

    The preferred rollout option would be a phased implementation of application modules at national level, with integration primarily through financial reporting. Organisations that adopt a multinational strategy face unique challenges. The near absence of centralised control and standardisation often results in multiple and varied ERP configurations across national units. Application functionality can also vary across multiple platforms, making it difficult to obtain an integrated/holistic view of crucial business data. Industry best practices, which are embedded in typical ERP vendor packages, have been found to enhance control and integration over worldwide operations. However, because an ERP system is independently developed, organisations must invest in customised integration code to facilitate data alignment (Madapusi & D'souza, 2005:12).

    3.8 Strategic factors for the evaluation and selection of an ERP system

    For an ERP system to meet the requirement of the organisation's value chain system, it needs to be evaluated in terms of its modules and functionality relating to the organisation objectives. ERP encompasses all the traditional functional areas of a business, in addition to the manufacturing focus of MRPII systems. A typical set of business functions supported by an ERP system is summarised below based on Dykstra and Cornelison, and Olinger (in Sarkis & Sundarraj, 2000:206).

    · Business planning includes the vision and the mission of the organisation, and the strategies needed to accomplish them.

    66


    · Organisation performance measurement systems help the organisation to determine how well they are doing, to continuously improve and manage the organisational processes. These systems include performance information on the internal and external supply chain.

    · Decision support helps in the management of the internal and external supply chain, which may
    include optimisation, simulation, heuristic, quantitative and qualitative modelling approaches.

    · Marketing and sales include sales analysis and forecast of the demand for products in the
    business plan, sales order management, customer maintenance and billing information system.

    · Manufacturing includes the functions of a traditional MRPII system (capacity planning, material resource planning, inventory management, bills of material).

    · Finance and accounting include payroll, product costing, accounts payable and receivable, general ledger and asset management information systems.

    · Engineering includes changes made by the engineering department with respect to routings, bills of material, quality control, machining programs, product designs, maintenance information, etc.

    · Human resources include a listing of employees, their status within the organisation and benefits owed to them by the company.

    · Purchasing includes supplier, performance, product sourcing, in-bound logistics tracking and materials management information systems. These systems can provide direct linkage to the upstream external supply chain.

    · Logistics help the outbound logistics management of the organisation with control and linkage to external customers or other divisions of the same organisation such as warehouses. These systems provide significant linkage to the downstream external supply chain.

    · After-sales service is meant to aid the customers after the sale of a product. Information concerning service parts inventory, such as locations and sources, product reliability, and other performance measures would be needed in this system. Its inclusion is important because it is one of the more forgotten factors.

    · Information systems are a function central to the management of ERP. Data accuracy, maintenance, user and performance information is all-important to this function. They ensure that the value chain operates efficiently and effectively with respect to information sharing, acquisition and delivery.

    67

    Sarkis and Sundarraj (2000:205) integrate the evaluation factors mentioned above into one conceptual model as shown in figure 3.3 below. The control factors (business planning, decision support and organisation performance measurement system) of the internal supply chain are placed over the various internal supply chain factors. The various internal supply chain factors are composed of the remaining processes and functions as described above (factors, especially the engineering and purchasing, are close to the suppliers, although they are not the only ones with linkages to suppliers). In a similar vein, customers are linked to marketing, logistics and after-sales service. In the middle of figure 3.3, linking all these internal supply chain factors is the IS factor (ERP). It is clear that there is a two-way relationship with IS to show that it is meant to integrate all the various factors to each other, and that they are allowed and able to communicate with one another.

    Figure 3.3: The conceptual model of ERP system linkages with supply chain factors

     
     

    Total Supply Chain

     
     
     
     
     

    Business Planning

    Enterprise
    Performance
    Measurement System

    Decision Support

    MRP II

    Engineering

    Marketing

    Suppliers

    Purchasing

    Information
    System

    DRP/ Logistics

    Human Resources

    After - Sales Service

    Finance and Accounting

    Internal Supply Chain

    Customers

    Source: Adapted from Sarkis and Sundarraj (2000:207).

    68

    3.8.1 Selection of an ERP system

    For a global ERP rollout, the MNEs that want to implement the system need to know if the ERP software selected is designed to work in different countries. A good selection will allow a global organisation to be able to control and co-ordinate its various remote-operating units with accurate and real-time information provided by ERP software, since some of the system software has the ability to integrate the more remote subsidiaries into corporate practice and allows the sharing of information in standard format across departments, currencies, languages and national borders. ERP software product purchasing is a high cost and risky process. It is therefore critical to make this project successful for an organisation. To be successful, the right solution should be selected and the selected software package must be used effectively (Baki & Cakar, 2005:76). Tanner (in Neves, Fenn & Sulcas, 2004:45) argues that correct ERP selection is vital to minimise financial risk and uncertainties about the software and its compatibility with the organisation's business structure.

    If a poor choice of software system is made, it can adversely affect the organisation as a whole, even jeopardising its very existence. This highlights the need for performing adequate levels of research into making the correct choice of software and preparing the organisation for its introduction (Neves et al., 2004:45). Bingi, Sharma and Godla, as well as Horwitt (in Adam & Carton, 2003:22) note that ERP systems could be used to provide a «common language» between units. In addition, Baki and Cakar (2005:76) assert that a selected ERP solution should be able to support decision-making. Mabert et al., (in Baki & Cakar, 2005:76) argue that if the right ERP solution is selected, it can be an excellent decision support tool that will provide a competitive advantage. In addition, Somers and Nelson (2001:2939) stress that the choice of package involves important decisions related to budgets, time frames, goals and deliverables that will shape the entire project. Choosing the right ERP solution that best matches the organisational information needs and processes is critical to ensure minimal modification and successful implementation and use. The wrong software will not fit the organisation's strategic goal or business.

    This necessitates the involvement of a proper selection mechanism, evaluation and strategic technical planning model tool such as the value chain approach discussed in chapter 2 and the methodical approach formulated in chapter 7 of this study. In fact, software and hardware characteristics are critical for ERP implementation success, and conducting a requirement analysis

    69

    in the early stage of project implementation and thoroughly reviewing a number of hardware/software solutions that might result in the system that better fits the users' requirements are essential (Petroni, 2002:333). Baki and Cakar (2005:77-81) recommend the importance and usage of a benchmark selection criteria checklist when selecting the package. Elements such as functionality, technical aspect, cost, service and support, vision, system reliability, compatibility with other systems, and ease of customisation must be taken into account. Other factors to be considered are:

    · Market position of the vendor, better fit with organisational structure, domain knowledge of the supplier, references of the vendors and fit with parent/allied organisation systems; and

    · Cross-module integration, implementation time, methodology of the software and consultation.

    3.8.2 Methodology of an ERP system

    According to Stirling, Petty and Travis (2002:430-5), the methodology has seven decisions points, each relating to a different outcome. The methodology is supported by a series of questions to assist users in making appropriate decisions. The goal of the methodology in the analysis of ERP has to provide a structured approach to the problem of meeting systems requirements within a specific department or overall within the organisation. Therefore, once an ERP system database is based on a proprietary package selection, and in new business requirement identification, this is then subject to a series of tests in decision point framework questionnaires to assist users in tailoring their system.

    The methodology framework below in figure 3.4 guides the user through a structured decision-making process, and the decisions at each point require judgement and experience. As a result, a series of questions were devised to be applied at each decision point, once the methodology has been developed. Stirling et al., (2002:431) state that it is crucial to undertake some forms of validation. This can be achieved through a series of structured interviews with systems development professionals.

    70

    The methodology proposed by ERP vendors should be effective and should not include unnecessary activities for the organisation. In every stage of the methodology, it should be determined what activities will be carried out how, when and with which resources.

    Figure 3.4: Outline of the methodology

    No

    No

    No

    Change core

    system

    Yes

    Change business process

    Purchase

    appropriate module

    Yes

    Use

    spare field

    Yes

    Yes

    Business requirement

    Does the business requirement
    represent a radical change?

    Should the process be change?

    Can an available module be used?

    Can spare fields in the core systems
    be utilised?

    No

    Yes

    No

    Yes

    Use subsidiary system

    Modify core system

    Can a subsidiary system be used?

    Must the core be modified?

     

    No

    Yes

    Requirement for data transfer

     

    Linked system

     
     
     
     
     

     
     
     
     
     
     
     

    Use an independent system

     
     
     
     
     
     
     
     
     
     
     
     
     

    No requirement for data transfer

    Source: Adapted from Stirling et al., (2002:436).

    3.9 The implementation of an ERP system

    The acquisition and implementation of ERP systems are very effort-intensive processes. An
    empirical analysis of the implementation process in European organisations revealed mean

    71

    implementation costs of 1.5 million Euros and a mean implementation time of 13.5 months (Buxmann & Konig in Bernroider & Tang, 2003:7). In addition, high risks are also involved in every ERP project. The far-reaching structural changes following ERP software implementation can be disastrous. Many ERP implementations fail to achieve their corporate goals (Buckhout, Frey & Nemec, 1999:118). It can be assumed that the failure of the system project implementation can often be attributed to the major mistakes made in the early stages of the ERP life cycle prior to the implementation process.

    According to Esteves and Pastor (in Bernroider & Tang, 2003:5), a typical life cycle of an ERP system covers six different stages, namely adoption decision, acquisition, implementation, use and maintenance, evolution and retirement. Conducting a requirement analysis in the early stage of the project implementation and thoroughly reviewing a number of hardware/software solutions might result in a system that better fits the users' requirements. MNEs that implement a global ERP solution frequently find themselves in a position where the changes are imposed rather than designed. Blasis and Gunson (2002:6) assert that IT software projects often fail and ERP implementation projects do not escape this tendency. However, ERP solutions do not fail primarily for technical reasons. Further analysis of the factors of success or failure of ERP implementation projects indicates that it is primarily the implementation effect of an organisation, the workplace and the individuals at work, which yields a positive or negative result.

    The main implementation risks associated with ERP projects are related to change management and business re-engineering those results from switching to ERP software. To overcome users' resistance to change, Aladwani (2001:273) recommends that top management study the structure and needs of the users and the causes of potential resistance among them, and deal with the situation by using the appropriate strategies and techniques in order to introduce ERP successfully and evaluate the status of change management efforts. In addition, for many organisations, the real challenge of ERP implementation is not the introduction of new systems, but the fact that they imply "instilling discipline into undisciplined organisations." Because of its modularly, ERP software allows some degree of customisation (i.e. selection of modules best suited to the business's activities). However, the system's complexity makes major modifications impracticable. The very integration afforded by the interdependencies of data within the different modules of the system means that changes in configuration could have huge knock-on affects throughout the system.

    72

    From a management perspective, the nature of ERP implementation problems includes strategic, organisational and technical dimensions. ERP implementation involves a mix of business process change and software configuration to align the software with the business processes.

    Ho, Wu and Tai (2004:235) state that numerous scholars and experts have proposed explanations for the failure of the implementations. These include inadequate resources, a lack of support from upper management, a lack of promotion, poor integration of business strategies, inappropriate choice of tactics and failure to establish the necessary IT infrastructure within organisations. Together with problems of existing system complexity, system integration and organisational process transparency, business process re-engineering, exterior consultation, the role of suppliers, user training and system customisation all complicate matters.

    3.9.1 Factors affecting the implementation process

    The factors specific to ERP implementation success include re-engineering business processes, understanding corporate cultural change and using business analysts on the project team. Bancroft, Seip and Sprengel (Shehab et al., 2004:367) provide the following critical success factors for ERP implementation:

    · Support from top management;

    · The presence of a champion;

    · Good communication with stakeholders; and

    · Effective project management.

    Nah, Lau and Kuang (Shehab et al., 2004:369) researched the critical factors for initial and ongoing ERP implementation success and identified 11 factors:

    · ERP teamwork and composition;

    · Change management programmes and culture;

    · Support from top management;

    · Business plan and vision;

    · Business process re-engineering with minimum customisation;

    73


    · Project management;

    · Monitoring and evaluation of performance;

    · Effective communication;

    · Software development, testing and troubleshooting; and

    · Project champions, and appropriate business and IT legacy systems.

    In a study focusing on the complexity of multisite ERP implementation, Markus et al., (2000:43) claim that implementing ERP systems could be quite straightforward when organisations are simply structured and operate in one or a few locations. However, when organisations are structurally complex and geographically dispersed, implementing ERP involves difficult, possibly unique, technical and managerial choices and challenges.

    3.9.2 A strategic approach to ERP implementation

    The are two different strategic approaches to ERP implementation, according to Baatz, Slater and Koch (available online). In the first approach, an organisation has to re-engineer the business process to accommodate the functionality of the ERP system, which means changes in long-established ways of doing business and reviewing important people's roles and responsibilities. This approach takes advantage of future ERP releases, benefits from the improved processes and avoids costly irreparable errors. The other approach is the customisation of the software to fit the existing process, which slows down the project, introduces dangerous bugs into the system and makes upgrading the software to the ERP vendor's next release excruciatingly difficult, because the customisations will need to be developed and rewritten to fit with the new version. Since each alternative has drawbacks, the solution can be a compromise between complete process redesign and massive software modification. However, many companies tend to take the advice of their ERP software vendor and focus more on process changes (Shehab et al., 2004:8).

    3.9.3 Cost of ERP implementation

    ERP implementation involves two kinds of costs: quantifiable costs that lend themselves to a discounted cash flow analysis, and human factor costs that are unquantifiable but very real. Quantifiable costs fall into five categories: hardware, software, training and change management, data conversions, and re-engineering. Other costs to the organisation involve non-quantifiable costs

    74

    to the governance structure. An ERP installation affects both the power structures within the organisation and the company's usual decision-making process (Balls et al., 2000:53). The benefits of ERP system implementation are both quantifiable and qualitative. The quantifiable benefits are increased process efficiency, reduced transaction costs due to the availability and accuracy of data and the ability to turn that data into meaningful information, reduced information organisation costs in hardware, software and staff necessary to maintain legacy systems, and reduced staff training costs over time as people become more «change ready». The qualitative benefits include a more flexible governance and organisational structure, and a workforce ready to change and focus more on high-value-added tasks and easy capitalisation on opportunities as they present themselves (Balls et al., 2000:54).

    3.10 Conclusion

    There is different ERP software in the market, consisting of many modules. Since every organisation is unique, before implementing an ERP system, the organisation must choose the most suitable solution to meet its needs and thus enable it to gain a competitive advantage. It was argued in this chapter that this could be achieved by viewing ERP as a strategic IT tool, and conducting a proper analysis before the adoption and implementation process. Verville and Halingten (2002:207) highlight the importance of the acquisition process of an ERP system as it allows examination of all the dimensions and implications (benefits, risks, challenges, costs, etc.) prior to the commitment of formidable amounts of money, time and resources.

    The literature study of the ERP concept in this chapter has revealed that ERP software itself is a value chain system related to the value chain approach. Therefore, the theory of the ERP system discussed in this study is becoming an evaluative tool relating to the value chain theory that can be used to analyse and evaluate ERP software (Axapta Microsoft solution software) components and attributes, modules and functionalities.

    75

    CHAPTER 4: A CASE STUDY OF ERP SYSTEM - AXAPTA MICROSOFT
    SOLUTION SOFTWARE

    4.1 Introduction

    Microsoft's Axapta is an ERP system designed for MNEs. It has been chosen to be evaluated in this study because of its ability to integrate the value chain in any organisation. In this chapter, the literature review of Axapta as a case study will be discussed and analysed according to its background, its generic modules and architecture in order to build a theoretical framework. In chapter 6 the software attributes will be compared with the theory behind the ERP concept debated in chapter 3. This will also be brought into perspective with the different value chain models assessed in chapter 2. The information on Axapta software has been extracted from Microsoft's Green Paper on the topic (Axapta Microsoft solution software base study: available online).

    4.2 The background of Axapta

    Axapta is a highly respected accounting system and ERP solution, which was originally brought to the United States from Europe by IBM in 1996. Brother's Damgaard in Copenhagen, Denmark first created Axapta in 1983. The company claims that from the start, Axapta wanted to create an international product that was integrated, scalable and flexible in order to develop a software package for all markets and platforms. It was Damgaard's vision to build a platform that could evolve with technology and market demands. Written completely in Java, Axapta is designed to be a complete ERP solution that includes advanced distribution, process and discrete manufacturing, built-in CRM capabilities and outstanding customisation.

    It is important to note that IBM's motivation behind teaming up with a successful software application was primarily for marketing leverage. Most people would not attend a seminar on hardware, databases, or infrastructure and IBM had a long-standing history of using various software applications to attract prospects. This is a marketing strategy that works well for IBM, but the point is that IBM's primary focus was never on Axapta. After the IBM/Axapta relationship played out in 2000, Axapta (Damgaard Software) merged with their long-time Danish rival Navision Software.

    In 2001 the company made many enhancements including:

    76


    · Rebranding «Navision Financial» as «Navision Attain» and «Damgaard Axapta» as «Navision Axapta»;

    · Integrating the e-commerce applications, commerce gateway, commerce portal into both products;

    · Introducing user portal and browser-based access to both products;

    · Introducing supply chain collaboration functionality, manufacturing and distribution capabilities, and new financial management functionality; and

    · Receiving the designed for Microsoft XP logo.

    In 2002 Microsoft acquired Navision Axapta and Navision Attain (Axapta Microsoft base study: available online).

    4.3 The analysis of the Axapta solution system

    The analysis of Axapta will be conducted through the factors below, in order to assess its architecture and configuration. This will reveal if the software has capabilities to integrate MNEs' value chains.

    · Axapta programming language

    The Axapta kernel is developed in C++ and the object-oriented nature of this language is carried on through the application that is written using the Axapta development tools and source code written in X++ (which is a Java-derivative with embedded SQL support). According to Navision Axapta, X++ uses object-oriented programming principles such as encapsulation, inheritance, classes, objects, methods and properties. The language has Java-like syntax and incorporates SQL data manipulation statements.

    The development environment in Axapta is called MorphX. The architecture behind the Axapta product was built on the concept that it could evolve with technology and market demands. The initial release of Axapta was in 1998, followed by the release of version 2.0 in 1999. This version introduced the Axapta object server that made the product a true three-tier offering and a COM interface to Microsoft products. In 2000 Axapta 2.1 introduced the first Web applications for Axapta. The current release of Axapta is version 2.5, which was released in 2001. It introduced new

    77

    modules in the application, more Web applications, and the commerce gateway that provides an (XML) interface to Microsoft BizTalk server.

    Database - Axapta runs on either the Microsoft SQL server or the Oracle database.

    Source code - Axapta's MorphX development environment is available to everyone. All resellers are trained in the MorphX language and in customising Axapta.

    · Axapta's database performance

    For top performance, Axapta complies fully with Microsoft SQL server and Oracle standards. Maintenance is simple because it can use the standard tools of each database. Switching between databases is also easy.

    4.4 Axapta supports the entire business operation

    Axapta solution can support the entire business. Selections can be made from the comprehensive functionality that spans manufacturing, distribution, supply chain management, project management, financial management, CRM, human resource management and business analysis. The business processes can be extended to the Internet with all functionality that can be stored in one source. In addition, it is easy to connect and collaborate with the customers, partners, employees and trading community. It does not matter whether the company is operating in one location, multisite or doing business across borders. The flexibility and ease of use mean that the organisation's management team can run the business the way they want and expand quickly.

    · Axapta connects everyone

    Any customer, vendor, partner, or employee can connect with Axapta, whether it is via the Web, Windows, WAP, wireless, VAN, LAN, XML, or COM. They get live access to the data and functionality they need to perform their role by desktop, laptop, and palmtop or cell phone. No additional software or hardware is needed. Axapta software has built-in Web applications. Customers can view product catalogue, get price and delivery quotations and submit and track orders. Vendors can track orders, view documents and diagrams, enter prices and change contact information. Employees can maintain contact details, qualifications, absences, view appraisals and development plans. Projects can submit time reports and sale representatives can view customer

    78

    records, give quotations, submit orders, change prices, track current orders and backorder lines.

    · Axapta solution and communication with other ERP systems

    Without any additional software or hardware, Axapta software can exchange information with any other ERP system in a company's IT infrastructures, such as that of a parent company or subsidiary. Company users can thus complete tasks such as financial reporting quickly and accurately. When combined with Microsoft BizTalk server, Axapta can exchange documents with any company, whatever their system.

    4.5 The selected key features of Axapta Microsoft solution software The features of Axapta Microsoft solution software are its:

    · Speed - Axapta is an extremely fast product.

    · Scaling up - In a recent benchmarking test, Oracle and Compaq showed that with an average response time of 0.08 seconds, Axapta supports 3 600 simultaneous users processing 315 000 sales order lines per hour relating to the three-tier architecture.

    · Low cost - Even though Axapta has the power and functionality of a Tier 1 ERP product, it is priced very reasonably.

    · Customisation - Axapta is highly customisable. It provides a unique feature in which newly created customised fields are assigned to a category. With this assignment, the newly created fields then show up throughout the Axapta product on the appropriate user screens.

    · Multiple databases - Axapta can be deployed on either the Microsoft SQL server or Oracle databases. This translates to high-end scalability.

    · Worldwide features - Each implementation of Axapta includes all features from around the world.

    · All-in-one product - The whole Axapta product has been developed in-house and written with the Axapta tools. Many other products have been pieced together when the vendors purchase third-party add-on products.

    · High reseller standards - Historically, and under Navision's control, Axapta resellers were held to high standards, which included extensive training and testing requirements.

    · Foreign language and foreign currency - Because Axapta is deployed in so many countries,

    79

    the product has developed excellent multicurrency and foreign language capabilities. It can work in 37 languages.

    · Built-in remote access - With most high-end accounting software systems, remote solutions such asCitrix or Terminal Services are required to provide remote access. This is not the case with Axapta because it has its own built-in remote capabilities, which are included in the price of the product.

    · Questionnaires - Axapta's CRM solution includes a wizard that makes it relatively easy to create questionnaires that may be scheduled days, weeks, months or years in advance. At the appointed time, Axapta sends the questionnaires out to the designated recipients, and upon return, Axapta automatically computes the results and compiles a detailed report showing the number of questionnaires sent, number of responses and analysis of responses.

    Axapta Microsoft has a few selected key features within its package (as summarised in table 4.1 below).

    Table 4.1: The selected key features of Axapta Microsoft solution

    Keys Features

    Description

    MANUFACTURING


    ·

    MRPII-compliant supply and demand planning, finite and infinite capacity and materials planning, and job scheduling and sequencing

     


    ·

    Resource management, shop floor management

     


    ·

    Work order management with job costing, product configuration

     


    ·

    Graphical bill of materials designer with version control

    DISTRIBUTION


    ·

    Multisite warehouse management, inventory management with dimensions, and item and lot number reservation and tracking

     


    ·

    Order handling with trade agreements, order promising

    SUPPLY CHAIN


    ·

    Demand forecasting, intercompany trade

    MANAGEMENT


    ·

    Procurement management, partner self-service websites

     


    ·

    Performance monitoring, electronic information exchange

     

    80

    PROJECT MANAGEMENT


    ·

    ·

    Project types and hierarchies, and project finance and invoicing Consultant self-service websites

    FINANCIAL MANAGEMENT


    ·

    ·

    Financial management with dimensions

    Intercompany accounting and consolidation, and complete audit trail

    HUMAN RESOURCE


    ·

    Organisation charts and employee registration

    MANAGEMENT


    ·

    Skills mapping and recruitment, employee self-service websites and business process management

    CUSTOMER


    ·

    Sales force and marketing automation

    RELATIONSHIP


    ·

    Telemarketing and questionnaires, sales management

    MANAGEMENT

     
     
     


    ·

    Customer self-service websites, computer telephone integration and document management

    BUSINESS ANALYSIS


    ·

    Designer for multidimensional data cubes, integration with

     
     

    Microsoft analysis services, analysis views through embedded pivot tables and balanced scorecard with key performance indicators

    GLOBAL SOLUTION


    ·

    Supports local legal and accounting requirements

     


    ·

    Multiple languages, currencies and local sales and support

    TECHNOLOGY


    ·

    One integrated and Web-enabled business logic, three-tier, scalable system architecture

     


    ·

    Highly customisable code with integrated development

    environment

     


    ·

    Conforms to all relevant technology standards and interfaces

     

    Source: Adapted from Axapta Microsoft software base study: available online.

    4.6 The generic modules of Axapta Microsoft solution

    The Axapta software solution offers the full breadth and functionality equivalent to other high-end products. A complete listing of Axapta's modules is provided below:

    · Financial management - Comprehensive accounting, financial reporting and analysis. 81


    · Business analysis - Helps an organisation to create, view and understand multidimensional reports.

    · Object server - Technology that minimises bandwidth requirements and offers secure client deployment.

    · Tools - These allow almost every aspect of Axapta to be tailored, including user screens, reports, statements, tables and fields.

    · Commerce gateway - Supply chain solution.

    · Enterprise portal framework - Workflow is made smoother by allowing employees, customers, vendors and other business partners to interact directly with an organisation's ERP system.

    · HR balanced scorecard - Business performance can be monitored based on key performance indicators.

    · HR business process management - Business processes can be developed and managed by identifying and monitoring actions.

    · Human resource management I - Helps gather and structure employee information.

    · Human resource management II - Automated recruitment processes and employee absence analysis.

    · Human resource management III - Resources can be developed to meet strategic goals.

    · Logistics - Purchasing, production, customer demand, inventory and other key areas of other business can be streamlined.

    · Master planning - Product forecasts are produced to project long-term needs for materials and capacity.

    · Product builder - Web-based product configuration, allows for configuration of complex products.

    · Production - Production I: Handles the material flow from suppliers, through production, to customers. Organisations can plan and execute routes, operations and do rough capacity planning. Includes operation management and detailed production scheduling.

    · Shop floor control - Personnel and production can be managed. Tasks, time and material are registered via bar codes. Definitions of non-productive time are created and management can obtain an overview of who is doing what, and when.

    82


    · Trade - Automated sales and purchasing, exchange sales and purchasing information electronically (in combination with the commerce gateway module). System automatically calculates tax and cheks inentory and customer credit information. Picking and receiving documentation is automatically generated. Automatic tracking of back orders. Automatic unit conversions.

    · Warehouse management - Warehouses can be managed according to individual needs. Warehouse layout is optimised to increase efficiency. The warehouse can be divided into zones to accommodate different storage needs. Warehouse locations can be specified on five levels: warehouse, aisle, rack, shelf and bin. Helps the organisation to find the optimal storage location.

    · Project - Project I: Time, materials and supplies consumption is entered, and projects and financial follow-up are managed for shorter-term time and material projects and internal projects. Project II: Advanced financial management for longer-term time and material projects, internal project, and fixed-price projects.

    · Marketing automation - Specific audiences are targeted. Prospect information can be used to segment organisation target audience into meaningful profiles. An organisation can add and remove targets to meet its exact requirements and import address lists.

    · Questionnaires - Online surveys, such as customer or employee satisfaction, can be designed in a matter of minutes, without any technical experience. Searches can be done for survey participants in system by criteria, for example job title. Surveys and results are made available via intranet or public website.

    · Sales management - Individuals, teams and the entire organisation can be managed and monitored. Sales targets for individuals, teams and the company can be defined. The system tracks progress of activities, including pending sales quotes and generate forecasts.

    · Sales force automation - Contact management can be streamlined. One centralised place provides a quick status of customers, prospects, vendors and partners. The system automatically detects incoming phone numbers and finds the contact card. Transaction log gives the organisation an overview of who has been in contact with a prospect or customer and what has been done. The system supports mail merge files and group e-mails.

    · Telemarketing - Telemarketing campaigns can be managed. Call lists are generated by selecting fields, such as sales district, revenue, relation types, segment and past sales behaviour. Call lists can be distributed to salespeople and telemarketing staff. Questionnaires and

    83

    telemarketing scripts can be attached to call lists and call logs can be used to check the status of calls and create reports and future lists.


    · Sales and marketing - Helps the organisation to access relevant sales information and instant cost-benefit analyses of revenue for executed campaigns. Gives the entire organisation access to contact information. Forecasts based on anticipated sales can be made.

    4.7 Conclusion

    The Axapta Microsoft software discussed in this chapter will be compared with the literature review in chapters 2 and 3 in order to highlight the qualitative outcome of this study in chapter 6.

    The next chapter (5) deals with the research methodology used in this study.

    84

    CHAPTER 5: RESEARCH METHODOLOGY

    5.1 Introduction

    In this chapter the methodology and research design utilised in this study are described. The type of research, the population, the data collection, as well as the sampling methodology and procedures, and data analysis used in this study is also outlined. Included in this chapter are the description of the methods used to collect the qualitative and quantitative data relating to the objectives and hypotheses formulated in this study.

    5.2 Qualitative and quantitative study

    This study involved both quantitative and qualitative research. Kruger and Welman (2002:191) stipulate that qualitative research is not concerned with the methods and techniques to obtain appropriate data for investigating the research hypothesis, as in the case of quantitative research. Qualitative data is based on meanings expressed through words and other symbols or metaphors. Qualitative studies can be used successfully in the description of groups (small) communities and organisations by studying cases that do not fit into particular theories. Thus, in this study qualitative research was applied to compare the different ways in the literature of linking strategy with IT through the value chain approach, and the general theory of ERP systems with the Axapta Microsoft software information. The quantitative research dealt with the factors associated with IT strategy, the ERP concept, usage and selection. This data was obtained through mail survey questionnaires in order to investigate some of the research objectives and hypotheses of this study (see table 5.2).

    For the qualitative part of this research, the literature review dealt with the primary objective, as well as secondary objectives 1, 2, 3 and 4. For the empirical part of this research, the study involved a self-administered survey, which attempted to highlight the primary objective, as well as secondary objective 3 and hypotheses 1, 2, 4, 5 and 6 (H1, H2, H4, H5 and H6) to answer the overall hypothesis 3 (H3) of this study. Objective 5 is linked to chapter 7.

    5.3 Research design

    According to Kruger and Welman (2002:94), the design of a study concerns the plan to obtain
    appropriate data for investigating the research hypothesis or question. Data collection tools for
    surveys include interviews and questionnaires. In this study interviews allowed the researcher to

    85

    clarify answers and follow up on interesting answers, while questionnaires were designed to be self-administered, since they can be mailed to a larger number of respondents. This short-dissertation was conducted using primarily a case study, which laid the foundation for the exploratory and empirical study. Interviews were used to explore the organisations using ERP systems, i.e. SAP software. Secondary to this, the researcher conducted an exhaustive literature review of the research topic. This involved the study of appropriate textbooks and conference papers, and the maximal use of Web-based documents that were used in the discussion of literature assessed in the case study. The study falls into the category of descriptive research, which aids in accommodating larger sample sizes, thus giving the research findings more generalisability than those of exploratory or qualitative designs (Hair, Buch & Ortinau, 2003:256).

    Melville and Goddard (1996:44-5) point out that non-returns are a particular problem with questionnaires. Repeated follow-ups are most effective for reducing the non-response rate. Most research in the world is hampered by constraints of resources, subjects and time. Furthermore the researcher's work is complicated by many sources of bias and error that must each be dealt with as effectively as possible to ensure the high quality of the research (Bless & Higson-Smith, 1995:79). Thus, in this study, the researcher dealt with the non-response rate through the follows-ups. Non-respondents were contacted by telephone to remind them about the questionnaires that they had been asked to complete.

    5.4 Methods of collecting quantitative data

    The researcher chose self-administered surveys and structured telephone interviews to achieve the research objectives of this study. Hair et al., (2003:265) note that a self-administered survey is a data collection method where respondents read the survey questions and record their responses in the absence of a trained interviewer.

    In this study, the researcher first conducted an exploratory telephone interview survey to identify the participants, especially the MNEs operating with any ERP system software. From that, the researcher contacted the key informants by telephone, most of them IT managers, to explain the purpose of this study. Respondents were also asked for their participation in the survey, which therefore allowed the researcher to compile the list of companies that use ERP software. These companies were used in the self-administered survey (see appendix E).

    86

    The participants in the survey of this study were CEOs/CIOs, managers (general, senior, middle and junior) and the end-users in the MNEs that use ERP, i.e. SAP software. The questionnaires were distributed to the IT human resource department in the nominated companies. For some of the MNEs, questionnaires were distributed through the general human resource department.

    In total, 11 MNEs using SAP software were identified during the preliminary structured telephone interview survey. Only five MNEs using SAP software in Gauteng were involved in the self-administered surveys. The limited number was owing to budget constraints (see appendices D and E).

    The researcher chose Axapta Microsoft solution from the available ERP software to be included in the qualitative study for several reasons:

    · Firstly, it is designed for MNEs and has the ability to integrate the value chain so that the organisation can act globally and increase competition.

    · Secondly, it is one of the leading ERP software systems in the world for manufacturing and service organisations.

    For the quantitative study, SAP software was selected owing to its popularity and utilisation in the MNEs randomly selected through the preliminary structured telephone interview survey conducted by the researcher, as indicated in table 5.1 below.

    Table 5.1: The usage of ERP software in randomly selected MNEs

    Number of companies using ERP

    Type of ERP software used

    Size of company

    4

    Oracle

    Medium

    11

    SAP

    Medium

    4

    JD Edward

    Medium

    1

    Axapta Microsoft solution

    Medium

    1

    ARIBA

    Medium

     

    Source: Obtained from the preliminary structured telephone interview survey conducted by the researcher.

    87

    5.5 Sampling method and sample size

    5.5.1 Sampling method

    Sampling is defined as the selection of a small number of respondents from a larger defined target population, assuming that the information gathered from the small group will allow the researcher to make generalisations or judgements concerning the larger group (Hair et al., 2003:333). According to Kruger and Welman (2002:46), there are two sampling designs:

    · The probability sample involving simple random samples, stratified random samples, systematic samples and cluster samples; and

    · The non-probability sample involving accidental or incidental samples, purposive samples, quota samples and snowball samples.

    In probability sampling, the probability that any element or member of the population will have to be included in the sample can be determined. This is not the case in non-probability sampling. Considering the advantages and disadvantages of the sampling methods discussed above, it was concluded that a probability sampling design involving simple random samples had to be implemented in this study to compile the representative samples of employees in the MNEs. The researcher selected five out of eleven MNEs from a random list of the organisations using SAP in Gauteng (appendix E). By focusing only on these organisations in one province, the sample constituted a good representation of the organisations operating in Gauteng with a total turnover of nearly R1 billion per annum. Most of these organisations have been classified in the sector of financial services and manufacturing.

    5.5.2 The sample size

    The sample size of this study consists of five MNEs. In total 75 self-administered surveys were issued to each MNE, with the total sample size (N) equal to 375 participants. (One self-administered survey targeted one CEO/CIO with N = 1; one self-administered survey targeted managers (general, senior, middle and juniors) in each MNE with N = 30, and 44 end-users of the IT department of each MNE, N= 44). See table 5.3 (Response rate to the self administered survey).

    88

    5.6 Questionnaire design for the quantitative study

    A questionnaire is a tool for collecting information to describe, compare or explain knowledge, attitudes, behaviours and/or socio-demographic characteristics of a particular target group (Rojas & Serpa, n.d.). The questionnaire used in this study to collect primary data was designed in accordance with the primary and some of the secondary objectives and research hypotheses proving the overall hypothesis 3 (H3) of this study, as will be discussed in more detail in chapter 6. The researcher compiled the questionnaire in accordance with seven basic principles of questionnaire design and layout (Dillon, Madden & Firtle, 1993:304).

    The principles are as follows:

    · Principle 1: Be clear and precise.

    · Principle 2: Response choices should not overlap and should be exhaustive.

    · Principle 3: Use natural and familiar language.

    · Principle 4: Do not use words or phrases that show bias.

    · Principle 5: Avoid double-barrelled questions.

    · Principle 6: State explicit alternatives.

    · Principle 7: Questions should meet criteria of validity and reliability.

    The empirical data collection was structured and subdivided into two separate questionnaires (see appendices A and B).

    · Firstly, a questionnaire was designed to target the CEOs or CIOs to get their views on the strategic part of the system within their organisation.

    · Secondly, a questionnaire was designed to target the managers and the end-users in order to get
    their views on the management and operational aspects of the system, its usage and awareness.

    Table 5.2 contains a summary of the objectives and hypotheses as linked to the questions used in the questionnaire.

    89

    Table 5.2: Relationships between questions in self-administered questionnaire survey and the primary and secondary objectives and research hypotheses.

    · Questions linked to the primary and secondary objectives

    Primary objective

    Questions

    To determine the extent to which ERP software could facilitate integration in the MNE value chain process.

    A9 & A10 B9

    Secondary objectives

    Questions

    Objective 1: To establish the value of ERP system software alignment with the organisation's strategy and to determine the extent to which it can be seen as a strategic IT tool in order to strengthen the organisation's value chain system.

    A7, A9 & A10 B9

    Objective 3: To obtain the view of SAP software users in MNEs surveyed of strategic management through the value chain approach, ERP awareness and usage, and training.

    A6, A7, A8, A9,

    A10 & A11, B6, B7, B8, B9 & B10

     

    · Questions linked to hypothesis

    Hypotheses

    Questions

    Hypothesis 1: The value chain integration through ERP software helps MNEs to operate efficiently due to the software's multifunctional, integrated and modular characteristics, which meet the general model of an ERP system as a value chain system.

    A9 & A10 B9

    Hypothesis 2: The use of strategic IT plan theory in ERP evaluation determines MNE competitiveness impact and IS usage.

    A10 & B9

     

    5.7 Response rate

    The three-page questionnaire was mailed to every participant (CEOs/CIOs, managers and end-users), resulting in a total of 375 questionnaires. Therefore each of the five MNEs received 75 questionnaires. In total only three MNEs returned the completed questionnaires, with a total response of 137 constituted of 3 CIOs, 61 managers and 73 end-users (In some of the statistical analysis in the chapter six, the missing value were found therefore N value vary between 134 and

    90

    137). The total response rate therefore was 36.53 % of the sample (137 of the questionnaires returned out of 375 questionnaires issued).

    Table 5.3: Response rate to the self-administered survey.

    · Sample population

    Questionnaire issued

    CIO

    Managers

    End-users

     
     

    N

    %

    N

    %

    N

    %

    N

    %

    1

    20.0%

    30

    20.0%

    44

    20.0%

    75

    20.0%

    1

    20.0%

    30

    20.0%

    44

    20.0%

    75

    20.0%

    1

    20.0%

    30

    20.0%

    44

    20.0%

    75

    20.0%

    1

    20.0%

    30

    20.0%

    44

    20.0%

    75

    20.0%

    1

    20.0%

    30

    20.0%

    44

    20.0%

    75

    20.0%

    5

    100.0%

    150

    100.0%

    220

    100.0%

    375

    100.0%

     

    · Sample response

    Questionnaire returned

    CIO

    Managers

    End-users

    N

    %

    N

    %

    N

    %

    N

    %

     

    33.3%
    33.3%
    33.3%

    24

    18

    19

    39.3%
    29.5%
    31.1%

    29
    21
    23

    39.7%
    28.8%
    31.5%

    54
    40
    43

    39.4%
    29.2%
    31.4%

    3

    100.0%

    61

    100.0%

    73

    100.0%

    137

    100.0%

     

    · Response rate

    Response rate

     

    CIO

    Managers

    End-users

     

    Response per respondent group

    60%

    46.66%

    33.18%

     

    Total response rate

    0.8%

    16.26%

    19.46%

    36.53%

     

    91

    5.8 Data analysis

    The different measuring instruments of mean, mode, standard deviation and so on were used to analyse the data collected (see appendices G and H). Furthermore, statistical analysis through chi-square was conducted to test the relationships between the hypotheses formulated (H0 and H1) in cross-tabulation with the different questions formulated. Fisher's exact test exact significance (one-sided) value was used as the p-value in this study. In cases where the p-value was less than 0.05, the hypothesis was rejected. If the p-value was greater than 0.05, the hypothesis was accepted.

    5.9 Conclusion

    This chapter dealt with the various methods and techniques used to collect the data in this study. An overview of the self-administered questionnaire as the specific measuring instrument was also provided. Reference was made to the sample size, the population of this study, as well as the detail of the interdependence of the questionnaire and the primary and secondary objectives and hypotheses of this study for the empirical part of the research.

    The chapter to follow (chapter 6) will provide the qualitative and quantitative findings of this study relating to the various hypotheses proposed in chapter 1.

    92

    CHAPTER 6: RESEARCH FINDINGS AND INTERPRETATION OF
    DATA ANALYSIS

    6.1 Introduction

    While the previous chapter described the methodology and research design utilised in this study, this chapter outlines the finding of the qualitative study relating to the primary and some of the secondary objectives as indicated in the previsious chapter. The findings are related to the literature review (linking strategy with IT through a value chain approach, and the ERP system), with Axapta Microsoft software attributes given in the case study. The findings of the empirical study conducted through self-administered questionnaires are also represented in a similar order as given in the measuring instrument.

    6.2 Qualitative findings

    The findings of the qualitative study indicate that Axapta software is a value chain system that meets the requirements of a global ERP system due to its configuration and architecture under MNE strategy. It was found that its integrated status, which encompasses ERP system attributes and characteristics, its functionalities, modules and open system function with e-business mechanisms help to integrate, co-ordinate and leverage the MNEs' value chain. Cost leadership and differentiation strategy elements within Axapta software also position it as a strategic IT tool, which therefore supports the MNEs in crafting their business strategy to gain competitive advantage.

    6.2.1 Axapta software integrates MNEs' value chain and supports MNEs' strategy

    The Axapta Microsoft software is consistent with the concept of competitive business strategy as discussed by Turban et al., (2004a: 6) in section 2.2. These authors stipulate that IT can help any business to pursue competitive strategies by developing new market niches, locking in customers and suppliers by raising the cost of switching, providing unique products and services and helping organisations to provide products and services at a lower cost by reducing and distributing costs.

    According to Ward and Griffiths (in Corboy, 2002:7) and Siriginidi (2000:376), IT can be used to gain competitive advantage because of its capabilities and status of linking the organisation to the customers and suppliers through EDI, VANs and extranets, creating effective integration of the use of information in a value-adding process, enabling the organisation to develop, produce, market and

    93

    distribute new products or services and provide senior management with information to assist them to develop and implement strategies through knowledge management. See section 2.3.

    Axapta software can be used as a strategic IT tool within MNE management because it improves co-ordination, collaboration and information sharing, both within and across the various organisation's sites, and integrates the management information processes and applications within the MNE's operations. (See sections 4.4, 4.5 and 4.6.)

    · Axapta's various functionalities and the Internet allow MNEs to collaborate and connect with their customers, vendors, partners, or employees via the Web, Windows, WAP, wireless, VAN, LAN, XML and Microsoft BizTalk. It allows MNEs to exchange information with others through ERP software in their IT infrastructure, such as a parent company, subsidiary or supplier.

    · The selected key features are speed, customisation options, multiple databases, worldwide features, all-in-one products, foreign language and foreign currency, built-in remote access and questionnaires.

    · The generic modules of Axapta consist of Financial management, Business analysis, Object server, Tools, Commerce gateway, Enterprise portal framework, HR business process management, Human resource management I, II and III, Logistics, Master planning, Product builder, Production, Shop floor control, Trade, Warehouse and sales management, Project, Marketing automation, Questionnaires, Sales force automation, Telemarketing and Sales and marketing. The modules could be customised to suit the MNE structure and objectives.

    Axapta attributes include programming language (Java-derivative with embedded SQL support), database (either Microsoft SQL server or Oracle database), source code (MorphX), Web applications and the commerce gateway that provides an XML interface to the Microsoft BizTalk server as discussed in section 4.3. These attributes classify Axapta software's generic capabilities as a transactional and geographical automation and an analytical, informational and sequential system for MNEs. Therefore Axapta software is truly an ERP system, which provides a platform for integrating MNE applications such as SCM, CRM, executive information system data mining and e-commerce systems. Axapta thus conforms to the view of Aladwani (2001:266) that an ERP system is an integrated set of programmes that provides support for core organisational activities. Blasis

    94

    and Gunson (2002:16-7) state that an ERP system is a tool that grafts a solution for human resources, finance, logistics etc., and eventually to SCM and CRM, as discussed in section 3.3. Ming et al. (2004:690) and Davenport (in Adam & Carton, 2003:24) are of the opinion that an ERP system influences the cross-organisation application integration, where organisations can link their ERP systems directly to the disparate applications of their suppliers and customers. Such integration benefits the organisation due to its current associated trends. Axapta fulfils these requirements as well. (see section 3.5.)

    Axapta software could support MNEs' value chain internationally since it has centralised, distributed and hybrid architecture as mentioned by Clemons and Simons, and Zrimsek and Prior (in Madapusi & D'souza, 2005:10). Axapta software can be configured and customised according to the MNE strategy at organisation, system and business process level (see sections 3.7.1 and 3.7.3). Thus, through the MNE's strategy, Axapta architecture is multifunctional and can be customised and parameterised to suit the MNE with distributed information architecture, a stand-alone local database and application as options.

    6.2.2 Strategic factors of an ERP system evaluation

    To meet the requirements of the MNE's value chain system, ERP software needs to be evaluated in terms of its modules and functionality. It must also be possible to configure the different ERP software systems with different modules, thereby making it look different from others (Sarkis & Sundarraj, 2000:205). A typical set of business functions supported by an ERP system as the supply chain factors for ERP software evaluation was summarised in section 3.8. Sarkis and Sundarraj (2000:205) have integrated those evaluation factors into one conceptual model, shown in figure 3.3, to explain the linkage and the relationship of all processes and functions within the supply chain through an ERP system, allowing communication between the different activities to take place. A comparison was made between Axapta software attributes and functional modules (section 4.6) and general ERP system modules and business functionality (section 3.8). Table 6.1 below indicates that Microsoft has made Axapta software with various functional modules in its package to meet the general conceptual model of an ERP system, which can be depicted in different activities and processes, standardised and customised to suit the MNE. An ERP system has a large central relational database, which allows the sharing of all the information within the MNE's departments through the execution, integrated functionality and global nature of the system. Other characteristics

    95

    are the multiplatform, multimode manufacturing, electronic data interchange, work automation, database creation, imaging, multilingual and modules as noted by McAdam and McCormack (2001:116), Siriginidi, (2000:379-80), Bhatt (2000:1331), Stirling, Petty and Travis (2002:430) and Clemons and Simon (2001:207) in section 3.4. Thus, Axapta as an ERP system matches the view of Siriginidi (2000:379-80), who stipulate that the general model of an ERP system must be a system's total solution to support multiple divisions or organisations under a corporate banner and seamlessly integrate operating platforms as the corporate database that results in integrated management information. In addition, Axapta also corresponds with the views of Shehab et al., (2004:361) in section 3.6.2, who state that ERP systems are all based on a central, relational database, built on a client/server architecture and consist of various functional modules.

    Table 6.1: General ERP system modules compared to Axapta software package modules

    ERP system modules

    Axapta software modules

    1. Business planning

    1. Axapta business planning

    2. Enterprise performance

    measurement

    2. HR balanced scorecard and Business analysis

    3. Decision support

    3. Tools, Project I and HR business process management

     

    4. Marketing and sales

    4. Marketing automation, Sales and marketing, Sales force automation and Sales management

    5. Manufacturing

    5. Master planning, Production I and Shop floor control

    6. Finance and accounting

    6. Financial management and Project II

    7. Engineering

    7. Product builder

    8. Human resources

    8. Human resource management I, II and III

    9. Purchasing

    9. Trade

    10. Logistics

    10. Logistics and Warehouse management

    11. After-sales services

    11. Object server, Telemarketing and Questionnaires

    12. Information technology

    12. Enterprise portal framework, Integrated and Web- enabled business logic, Internet, Commerce gateway and object server

    Source: Dykstra and Cornelison, and Olinger (in Sarkis & Sundarraj, 2000:206).

    96

    6.2.3 Summary (sections 6.2.1 and 6.2.2) for hypothesis1 (H1)

    With regard to hypothesis 1 (H1), and the questions asked in section 2.5 were whether Axapta software supports strategic management within the MNE and whether Microsoft has positioned Axapta competitively. These issues will assist MNE management in crafting a strategy aimed at establishing a sustained competitive strategy. The following can be stated:

    Hypothesis 1 (H1) is not rejected and it can therefore be concluded that Axapta software is an ERP system with an integrated value chain system due to the elements discussed above (in section 6.2.1) and in sections 6.2.5.1-2, 6.2.5.3-4; 6.2.5.5 and 6.2.5.6 below. Axapta modules also suit the strategic factors of an ERP software evaluation as discussed in section 6.2.2. Furthermore, Axapta has various advantageous elements incorporated, as discussed in section 3.5.1, such as Y2K compliance, ease of use, integration of all functions, online communication with suppliers and customers, customisation, improvement of decision-making due to the availability of timely and appropriate information, improved process time and feasibility of administering pro facto control on the operations and Internet interface (Gupta, 2000:115-16). Axapta characteristics (in section 3.5.2) are that it is flexible, comprehensive, with modular and open systems, operating beyond the organisation, capable of simulating the reality and with a multiple environment.

    The integrated configuration and the e-commerce functionality as core competence within Axapta software could support the MNE's strategy management due to its cost leadership and differentiation strategy, local hardware requirements, the involvement of maximum use of LANs and minimal use of WANs, the autonomy of each local unit, and headquarter linkage, which occurs primarily through financial reporting structures (section 3.7.3). Axapta software could influence the MNE to integrate the business process activities across its value chain functions, enabling the implementation of all variations of best business practices with a view towards enhancing productivity, operation efficiency, sharing common data and practices across the entire organisation to reduce errors, produce and access information in a real-time environment to facilitate rapid and better decisions and cost reduction (see section 3.6.2).

    As mentioned in section 2.5, Turban et al., (2004a: 16) discuss the cost leadership and
    differentiation strategies. A cost leadership strategy focuses the organisation's attention on
    manufacturing scale and efficiency that exhibit the capital investment, process engineering skills,

    97

    intense supervision, design for manufacturing, low-cost distribution systems, tight cost controls, frequent and detailed cost reports, high specialisation and incentives based on quotas for organisation management. Differentiation strategies focus on select product or service attributes that customers deem important and create value by supplying products and/or services with the desired attributes. To achieve success with a differentiation strategy, an organisation must differentiate between product or a service attribute different from those chosen by industry rivals (Porter, 1998:10). Therefore, a differentiation strategy is most likely to produce an alternative and lasting competitive edge when it is based on technical superiority, quality, giving customers more support services and the appeal of more value for money (Thompson & Strickland, 1987:110).

    In answer to the question asked at the start of this summary section, Microsoft has indeed positioned Axapta software with cost leadership and differentiation strategies due to the attributes incorporated in the Axapta package (sections 4.2, 4.3, 4.4, 4.5 and 4.6). Axapta is a low-cost leader software among the different ERP system software in the market. It has also differentiated itself from other software in its value proposition (the quality, competitive price and the product and service attributes) and key success factors such as customer value distributors as shown in Walters and Lancaster's value chain below (section 6.2.5.2). These strategic elements constitute the forces that contribute to the MNE's competitive position and that persuade the MNE management to perform the activities differently than the competitors and link those activities in the value chain to craft its strategies for competitive advantage.

    However, behind the cost leadership and differentiation strategies, other strategic elements are associated with Axapta software (section 2.5); elements which could support the MNE's strategy to gain competitive advantage. These are:

    · The niche strategy: Axapta has a niche market with a quality product, low-cost price, fast, multiple databases and other selected key features.

    · The alliance strategy: alliance is achieved through Microsoft SQL server or the Oracle database.

    · The innovation strategy: Axapta has key features to meet the current global ERP system requirements and MNE growth.

    · The locked-in customer or suppliers strategy: Axapta software links customers and suppliers through integrative modules in its module package.

    98


    · The entry-barriers strategy: Axapta has created barriers to prohibit entry to other MNEs.

    In practical terms, Microsoft has increased the switching cost for Axapta software and thus created a barrier prohibiting entry to any competitor. This offers the MNEs the opportunity to expand their business and decrease supply costs, increase cost efficiency, build relationships with suppliers and customers within the MNEs and replace and add applications to meet the organisation's growth and changing partners. In this way Axapta attributes could assist MNE management in crafting strategy accordingly.

    6.2.4 Axapta's software evaluation

    A strategic IT plan is a decision-making process that should be undertaken with care, systematically and within an organisation's understanding of the business context (see section 2.4). Therefore, by applying Axapta software attributes as discussed in chapter 4 through strategic IT plan evaluation, the MNE management could achieve efficiency in the overall management operation in the same context as noted by Peppard (in Corboy, 2002:6), namely by establishing entry barriers which affect the cost of switching operations, differentiating products/services, limiting access to distribution channels, ensuring competitive pricing, decreasing supply cost, increasing cost efficiency, using information as a product and building closer relationships with suppliers and customers.

    6.2.5 Axapta's value chain system

    In chapter 1 (section 1.1.3) it was pointed out that the value chain model can be used to evaluate relative position, identifying an organisation's distinctive competence(s) and directions for developing competitive advantage. In addition, IS has an impact on an organisation's individual value chain and on how the integration between the value systems of the various contributors or activities could be strengthened, as well as on the cost/value of the product (Axapta), users (MNEs), manufacturer (Microsoft) and customers. The value chain can be used to evaluate a company's process and competencies, and investigate whether IT supports add value, while simultaneously enabling managers to assess the information intensity and role of IT. Thus, the value chain approach was positioned as an evaluative tool to assess Axapta's attributes (as the product) and MNEs (as the user), and Microsoft (as the manufacturer) in order to answer the hypothesis formulated in the introduction and scope of this study.

    99

    In chapter 2, the theory behind the value chain system was analysed relating to the different models. This led the researcher to suggest that most ERP systems, including Axapta software, were built on the value chain concept. A value chain assists management in crafting a strategy (section 2.6). It was concluded that the value chain is based on the linkage, co-ordination and interrelationships among the activities within the system. Thus, Axapta could be assessed by means of the value chain approach to test if its attributes and architecture suit the different value chains in the MNE strategy context. The customised value chain (section 2.9) led to the following findings:

    6.2.5.1 Porter's value chain and Axapta's value chain architecture

    The primary activities of Porter's value chain are inbound logistics, operations, outbound logistics, marketing, sales and service. The support elements are procurement, technology development, human resource management and infrastructure (see figure 2.1 in section 2.7.1). The key features of Axapta, namely manufacturing, distribution, SCM, project management, financial management, CRM, human resource management, business analysis, global solution and technology, can be compared with the activities of the Porter value chain (section 4.5), as well as Axapta's generic module activities.

    Figure 6.1: The module activities of Axapta depicted in the Porter value chain

    Secondary activities

    Firm infrastructure

    (Accounting, Finance, General management, Business analysis and tools)

    Technology development

    (Product builder, Web-enabled application, ERP, Internet, Commerce gateway, etc.)

    Human resources management
    (Employee information and registration, recruitment processes, etc.)

    Procurement
    (Supply chain, Electronic information exchange)

    Value

    Inbound
    logistics

    Operations

    Outbound
    logistics

    (Warehouse management, Logistics, Distribution)

    Services

    Marketing and
    sales

    (Master planning,
    Shop floor control,
    Project I)

    (Productions, Manufacturing)

    (Global solution, Service management, Object serve, Distribution)

    (CRM, Sales force marketing, Automation, Customer self-service, websites Sales management)

    Primary activities Primary activities

    Upstream value activities Downstream value activities

    100

    Source: Adapted from Porter ' value chain in Turban et al., (2004a: 11).

    The depiction of Axapta activities shown in brackets in figure 6.1 above proves indeed that Microsoft has incorporated Axapta's value chain system with its different activity processes and modules in Porter's value chain in order to strengthen, support and position the MNE's value chain activities to operate efficiently (see section 4.6).

    6.2.5.2 Walters and Lancaster's value chain and Axapta's attributes

    The reason for assessing the Axapta software value/cost drivers using Walters and Lancaster's value chain model and components (see figure 2.5 in section 2.7.4) was to analyse Axapta's capability, attributes, key features and functionality modules (see sections 4.2, 4.3, 4.4, 4.5 and 4.6). Microsoft as the manufacturer associated Axapta with the key success factors supporting the MNE supply chain integration and co-ordination in an MNE's operation activities. This maximises the customer and distributor values criteria and minimises customer acquisition costs.

    As shown in figure 6.2 below, Axapta software has the value/cost drivers that enhance MNE business processes and integrate the different applications within the supply chain. It co-ordinates and strengthens the different activities in relationships to improve productivity and enable the MNE to operate globally and communicate efficiently. The elements associated with Axapta software are value/cost driver, logistics management, strong integrated company/dealer and supply network, cost management, service (distributors), service (customers), marketing automation, telemarketing, self-service website, Internet, customer and supplier involvement, management knowledge and CRM. Other elements that Axapta software has are global reach and online service, worldwide coverage, technologies applications, time responses and accuracy. Axapta relationship management elements are software support, management and staff development, open communication with providers, suppliers, dealers/company and co-ordination. Thus, Axapta information and relationship management creates the value strategy and positioning, which is linked with the value production and criteria that encompass both Axapta operations and organisation structure management.

    In organisation structure management, the Axapta elements that assist MNEs in operating
    efficiently and effectively are the control of manufacturing and service, the supply chain, staff
    training, the partnerships with customers, suppliers and dealers, the integration of supply, selective

    101

    outsourcing and ongoing customer surveys. In the operations structure and management, both production and logistics play an important role. The Axapta production drives include elements such as maintenance and repair, material requirement planning, the bill of material, capacity planning, job scheduling and sequencing, and IT-driven design and manufacturing. In Axapta logistics drives, the elements are global communication, IRIS information system, and supply chain integration, remote serviceability monitoring and quick response.

    Figure 6.2: Axapta cost/value drivers depicted in Walters and Lancaster's value chain

    Organisation
    structure
    management

    Customer value criteria

    · Brand name

    · Competitive prices

    · Flexible response (languages, time, culture)

    · Reliable, easy to use

    · Module selection,
    customisation

    Customer acquisition costs

    · Easy installation

    · Switching cost

    · Worldwide distribution

    · Servicing, consultant
    possibility

    · Product reliability

    Customer
    value
    (Distributor)

    · Global reach

    · "Online" service

    · Worldwide coverage

    · Technologies applications

    · Time response

    · Accuracy

    · Software support

    · Management and staff development

    · Open communication with providers, suppliers, dealers, company

    · Provider = company, i.e. long-term continuity

    · Co-ordination

    Information management

    Value
    strategy

    and
    positioning

    Relationship
    management

    Value
    production and
    criteria

    · Control of manufacturing, service, and the supply chain

    · Staff training

    · Partnerships with customers, suppliers and dealers

    · Integrated
    supply

    · Selective outsourcing

    · Integrated
    supply

    · Ongoing customer surveys

    · Maintenance and
    repair

    · MRPII, BOM

    · Capacity planning

    · Job scheduling and
    sequencing

    · IT-driven design and manufacturing

    · Global communication

    · IRIS information
    system

    · Supply chain integration

    · Remote serviceability monitoring

    · Quick response

    Operations structure
    and management

    Production

    Logistics

    Value/
    cost
    drivers

    Customer
    value

    Distributor/customer cost
    criteria

    · Customer field

    support

    · Company/distributor/ customer liaison: product and service

    Value proposition
    (product/service attributes)

    · Module differentiation

    · Software customisation

    · Flexibility

    · Product substitution

    · Service/advice

    · Transaction convenience

    · User capacity maximisation

    · Quality, consistent costs and service

    · Speed

    · Integrated CRM

    · Cost leadership

    Distributor/customer value
    criteria

    · Internationally recognised brand

    · Company support: service and sales

    · Worldwide response network

    · Product market development

    Key success factors

    · Vertically integrated
    supply chain

    · Innovation

    · Economies of scale

    · Strong marketing component modules

    · Responsiveness,
    speed

    · Integrated CRM, customer and supplier application strategy

    · Cost-effectiveness

    · Technical expertise

    · Flexibility in manufacturing

    · E-business components

    · Supply chain and logistics management

    · Strong integrated company/dealer and supply network

    · Cost management: IT-controlled manufacturing activities and service

    · Service (distributors): database and business analyses

    · Service (customers): customised software, and low-cost

    service

    · Marketing automation and telemarketing

    · Self-service website, Internet

    · Customer and supplier involvement

    · Management Knowledge, CRM

    "Corporate value"

    · Productivity

    · Profitability

    · Knowledge

    · Cash flow

    Source: Adapted from Walters and Lancaster (2000:163).

    102

    The value proposition of Axapta (product and service attributes) consists of modules of differentiation, which are incorporated in its package, software customisation capability, flexibility, product substitution, service/advice, transaction convenience, user capacity maximisation, quality, consistent costs and service, speed, integrative and the cost leadership. The Axapta corporate value consists of productivity, profitability, knowledge and cash flow. The key success factors (the vertically integrated supply chain, innovation, economies of scale, strong marketing component modules, responsiveness, speed, integrated CRM, customer and supply application strategy, cost-effectiveness, technical expertise, flexibility in manufacturing, e-business components) are the strategic elements enhancing the MNE's strategy. In the Axapta distributor customer cost criteria, Microsoft as the manufacturer and provider could assist the user (MNE) in customer field support and company/distributor/customer liaison. In addition to the Axapta distributor/customer value criteria, Microsoft is one of the top companies worldwide due to its internationally recognised brand, company support in service and sales, worldwide response network and product market development.

    Customer value contributes to the key success factors of Axapta software. Axapta positions itself as one of the top ERP software systems in the market due to both customer value criteria and customer acquisition costs. The customer value criteria element of Axapta include reliance on the brand name, competitive prices, flexible responses (in languages, time and culture), reliability, easy to use, module selection with a customisation option, customer acquisition costs, installation, switching cost and worldwide distribution, servicing, consultant possibility and product reliability.

    6.2.5.3 The customer-centric value chain and Axapta software

    According to Slywotzky and Morrison (1997:17) (see section 2.7.2), customer-centric thinking is based on the identification of customer priorities and therefore constructs business designs to match them. Axapta software incorporates this customer-centric value chain approach. Microsoft has incorporated into Axapta software architecture features such as CRM, SCM, collaboration functionality and the distribution channel capabilities, shown in table 4.1. The Commerce gateway module promotes supply chain solutions and the Enterprise portal framework module allows customers to interact with some of the functions in the organisation's value chain via other modules (see section 4.6). Thus, Axapta software can allow any MNE to apply a customer-centric approach

    103

    due to the Product builder-Web-based product configuration, which allows configuring complex products to meet the customers' wants and needs.

    6.2.5.4 Scott's value chain and Axapta software

    The core elements of Scott's value chain as discussed in section 2.7.3 comprise seven areas: operation strategy, marketing sales and service strategy, innovation strategy, financial strategy, human resource strategy, information technology strategy and lobbying position with government. In the Scott value chain, co-ordination across the value chain is essential. To strategise its plans well, an MNE needs compatible ERP software with the various modules to support its objectives. Axapta software has different modules, as discussed in section 4.6, which can strategically enhance the MNE's business management. These modules are Operation strategy, Production, Logistics, Master planning, Shop floor control and HR balanced scorecard. For the marketing sales and service strategy, Axapta has the Trade and Commerce gateway, Marketing automation and Sales management, sales force automation, Sales marketing and Questionnaire modules.

    To enhance innovation strategy, Axapta software includes Product builder and the financial management module to enhance the financial strategy. To enhance the human resource strategy within the MNE, Axapta has the modules of Human resource management I, II and III, which can help to gather and structure employee information, automate recruitment processes and employee absence analysis and develop resources to meet strategic goals. To enhance the IT strategy within the organisation, Axapta has incorporated HR business process management, which develops and manages business processes by identifying and monitoring actions, as well as the Tools and Enterprise portal framework modules. The modules are co-ordinated through Web applications, Commerce gateway provides an XML interface to the Microsoft BizTalk server, and the integrated e-commerce applications facilitate the relationships between the MNE's value chain activities across its SBUs. Axapta software configuration indeed meets the requirements of Scott's value chain.

    6.2.5.5 Value nets and Axapta software value chain architecture

    According to Bovet and Martha (2000:2-6), a value net forms itself around its customers, who are at the centre. It captures their real choices in real time and transmits them digitally to other net participants. It views every customer as unique and allows customers to choose the product/service attributes they value most (see section 2.7.5). With regard to Axapta software, Microsoft has built

    104

    Axapta software architecture and configuration in such a way that an MNE using it can customise the software in any way it wants, and co-ordinate its departments to work in relationships through digital collaborative system mechanisms due to Axapta key features such as speed, multiple databases, scalability, intercompany trade and electronic information exchange (see section 4.5). Thus, Axapta software is a value net (customer-aligned, collaborative and systemic, agile and scalable, fast-flowing and digital).

    6.2.5.6 The e-business value chain model and Axapta software architecture

    As seen above, the Axapta value chain system meets the requirements of Porter's value chain, its software is a value net and its software attributes and applications as discussed in chapter 4 enable MNEs to extend their value chain to all business partners due to e-business mechanisms. These mechanisms include e-commerce applications, the intranet and extranet, Web-based procurement and the Internet, user portals and supply chain automation. These factors influence the collaboration between organisations through e-marketplaces, in addition to improving SCM and CRM processes. Thus, the Axapta value chain lowers MNE costs and increases value in activity co-ordination and integration due to the adoption of e-commerce strategies. Axapta is therefore a virtual or electronic value chain (see figure 2.7). This strengthens the MNE's value chain system activities and processes due to the Internet-prominent application.

    6.2.6 Summary (sections 6.2.3 to 6.2.4) for hypotheses 2, 4 and 5 (H2, H4 and H5)

    Hypotheses 2, 4 and 5 (H2, H4 and H5) are not rejected and it can therefore be concluded that Microsoft has made Axapta software with all the modules, functionalities and key features discussed in sections 4.4, 4.5 and 4.6. It meets the requirements necessary for the basic foundation of an ERP system as pointed out in sections 6.2.1 and 6.2.2. In addition, the value chain concept architecture with IT mechanisms integrate the different applications as a net value digital system. This means that MNEs using Axapta can align their strategies with organisation management due to the IT capabilities within their value chain. This strengthens the processes and the relationships within the overall value chain locally and globally.

    Axapta assessment through the value chain approach indicates that Axapta value chain activities as
    depicted in figure 6.1 of section 6.2.3 are similar to Porter's value chain approach (see section
    2.7.1)
    . This indicates that Microsoft has positioned Axapta software with components and options

    105

    that are well structured to help MNEs to co-operate efficiently with their separate operating sites, and to integrate its various applications and modules. This strengthens MNEs' value chain processes and means that MNEs can act globally and respond quickly to a demand.

    As seen above (section 6.2.3), value/cost drivers have been incorporated in Axapta software (section 2.7.4). This positions Axapta as a competitive ERP software tool due to its value proposition, and product and service attributes play a big role in terms of software standardisation, operation effectiveness and quality service promotion in the MNE by integrating and strengthening the different activities in its value chain system. Thus, Microsoft has made Axapta software capable of co-ordinating the raw material from supply to the transformation process, and to delivering the product or service to the customers. Axapta is able to integrate the supply chain and automation, and enhance logistics, which contributes to the effectiveness of the procurement and operation system, the knowledge of partnerships and the know-how of the provider. Microsoft also supports MNEs with training support and technical expertise, and substitution components to meet MNEs' changing and growth needs.

    The assessment of Axapta software through Scott's value chain theory discussed in section 2.7.3, along with section 6.2.3 reveals that the software architecture favours the relationship between the MNE's value chain and its SBUs due to its customisation module, which could allow each of the MNE's SBUs to configure its activities.

    A value net begins with customers, allowing them to self-design products and builds them to satisfy actual demand. Thus, Axapta software was positioned as a value net due to its digital, fast and flexible system that is aligned with and driven by customer choice mechanisms. In section 6.2.3, it was demonstrated that Axapta software has been modernised as a truly global ERP system due to the incorporation of the Internet applications within it, with the front-end e-business application for third parties. Thus, the Axapta software value chain will position MNEs to operate in the e-business environment. In addition, Axapta's attributes and requirements allow MNEs to incorporate front-end technology in their business operation, create trading communities through portals and take on joint ventures with Web-based technology in expanding the MNEs' value chain, thus benefiting all global users, suppliers, customers and organisation partners.

    106

    6.2.7 Axapta as an IT integrative tool for MNEs' value chain systems

    Sections 6.2.1, 6.2.2, 6.2.3 and 6.2.4 revealed that Axapta is strategically IT tool, an integrative ERP software system and a value chain system due to its attributes and modules, which have functional and international architecture and configuration. This enables MNEs to integrate and enhance their supply chain operation more efficiently and effectively, resulting in greater value for the end-customer. Consequently, the tangible and intangible benefits of this value chain integration through Axapta software will be enormous for MNEs, as they allow the real-time synchronisation of supply and demand. The benefits will further be to provide support to an MNE in its efforts to become part of an extended organisation, operating beyond the electronic SCM environment. This has the effect of positioning the MNE to develop collaborative business systems and processes that can span across multiple organisational boundaries (Balls et al., 2000:82-4).

    6.2.8 Summary (section 6.2.5) for hypothesis 6 (H6)

    The question asked in section 2.11 was "Is Axapta software a value chain system with IT mechanisms, which facilitate the integration and the co-ordination of other ERP system applications?"

    Hypothesis 6 (H6) is not rejected and it can therefore be concluded that Axapta software is an ERP system, which encompasses the e-business mechanism, as concluded in section 6.2.5.6. MNEs using Axapta software will streamline business processes in vertical markets as pointed out by Zeng and Pathak (in Ming, Fyun, Shihti & Chiu, 2004:690), and harness and tighten global co-ordination (Adam & Carton, 2003:22).

    Because of Axapta's outsourcing application and electronic data interchange, the ability to share information with customers and suppliers and the production of real-time data shared across the organisation, business processes and applications are integrated and automated (Ming et al., 2004:690). Thus, e-business elements are capable of co-ordinating activities within the value chain due to Web-based procurement, Internet and integrated supply chain through B2B e-hubs for supply chain partners and the integration of manufacturing and marketing functions. Indeed, through the e-business mechanism Axapta software facilitates the vertical integration of networks for MNEs' value chains, and through the collaborative mechanism, extends the MNEs' supply chains locally and globally.

    107

    6.3 The findings of the empirical study for hypothesis 3 (H3)

    In this section the findings of the empirical study will be reported, as detailed in chapter 5, in accordance with the research problem, primary and some of the secondary objectives and hypotheses. All tables and statistical summaries used in this section are given in full, in appendices F, G and H.

    6.3.1 Section A: Demographics

    6.3.1.1 Organisation profile

    The three organisations involved in the survey have used SAP software for at least 10 but less than 20 years (100.0%), as is evident from table 6.3. The numbers of full-time employees for those three organisations were 701 employees or more. The MNEs consulted operated mainly in more than 20 countries (33.3% each).

    Table 6.2: Organisation profile

    Demographics profile

    No. of years of SAP software use

    Number

    %

    At least 10 but less than 20 years

    3

    100.0

    Full-time employees

     
     

    701 employees or more

    3

    100.0

    Geographical region

     

    %

    The organisation geographical sites of operation for the first MNE

    20

    33.3

    100.0

    The organisation geographical sites of operation for the second MNE

    25

    33.3

    The organisation geographical sites of operation for the third MNE

    23

    33.3

    Source: Section A: Questions a3, a4 and a5.

    6.3.1.2 CEO/CIO profile

    Three out of three questionnaires were returned, which is a response rate of 100% (see table 5.3: the response rate). As is evident from table 6.2, the respondents were CIOs and they have been operating SAP software for ten years or more (100.0%).

    108

    Table 6.3: CEO/CIO profile

    Demographics profile

    Capacity

    Number

    %

     

    CEO

    0

     

    00.0

    CIO

    3

     

    100.0

    Years of SAP software operation by CIO

     
     
     

    10 years or more

    3

     

    100.0

    Source: Section A: Questions a1 and a2.

    6.3.1.3 Manager profile

    In this study, the total of 61 out of 150 questionnaires were returned, which is a response rate of 46.6% (see table 5.3: the response rate). As is evident from table 6.4, all the respondents involved in this survey were managers from general, senior, middle and junior management level. The managers had been using SAP software at least five but less than ten years (43.7%), at least three but less than five years (28.1%) and at least one year but less than five years (8.9%). Furthermore a few of the managers had used the SAP software for less than one year (5.9%) compared to managers who had used it for at least ten but less than 20 years (13.3%).

    The job levels of the managers in this study were senior and middle (9.0% and 8.2%, respectively). General managers and junior managers constituted 3.0% and 25.3%, respectively. The majority of the MNE managers (39.5%) had a post-school diploma or certificate(s), closely followed by 37.3% of the respondents that had a Grade 12 (Matric) and 15.7% with an undergraduate or equivalent degree(s). Some 1.5% had a postgraduate degree(s) and 6.0% had a high school qualification. The minimum age for the MNE respondents varied from 26 to 30 years (32.6%), 31 to 35 years (27.4%), followed by 36 to 40 years (18.5%), 20 to 25 years (13.3%), 41 to 45 years (5.2%), younger than 20 (2.2%) and 46 to 50 years (0.7%).

    109

    Table 6.4: Manager profile

    Manager profile Number of years of using SAP software

    Number

    %

     

    Less than 1 year

    8

    5.9

    At least 1 year but less than 3 years

    12

    8.9

    At least 3 but less than 5 years

    38

    28.1

    At least 5 but less than 10 years

    59

    43.7

    At least 10 but less than 20 years

    18

    13.3

    Total

    135

    100.0

    Current job level

     
     
     

    General manager

    4

    6.5

     

    Senior manager

    12

    19.6

    Middle manager

    11

    18.2

    Junior manager

    34

    55.7

    Total

    61

    100.0

    Age group

     
     
     

    Younger than 20

    3

    2.2

     

    20 to 25 years

    18

    13.3

    26 to 30 years

    44

    32.6

    31 to 35 years

    37

    27.4

    36 to 40 years

    25

    18.5

    41 to 45 years

    7

    5.2

    46 to 50 years

    1

    .8

    Total

    135

    100.0

    Education

     
     
     

    A high school qualification

    8

    6.0

     

    Grade 12 (Matric)

    50

    37.3

    Post-school diploma(s) or certificate(s)

    53

    39.5

    Undergraduate or equivalent degree(s)

    21

    15.7

    Postgraduate degree(s)

    2

    2.5

    Total

    134

    100.0

    Source: Section A: Questions a1, a2, a3 and a4.

    When respondents were asked how many full-time employees reported to them, an overwhelming

    110

    79.0% of the users (106) responded that no one report to them, compared to 10.0% of the users (13) who responded that between 1 and 10 employees reported to them, as is evident from figure 6.3. Some 4.0% of the users (6) responded that between 11 and 20 employees reported to them, and 2.0% of the users (3) responded that between 21 and 30 employees reported to them. Only 2.0% of the users (2) responded that between 31 and 40 employees reported to them, compared with 3.0% of the users (4) who responded that more than 40 employees reported to them.

    Figure 6.3: Full-time employees reporting

    Full-time employees reporting

    40%

    20%

    80%

    70%

    60%

    50%

    30%

    10%

    0%

     

    Between 1

    B etween

    B etween

    B etween

    M ore than

    0

     
     
     
     
     
     

    and 10

    11 and 20

    21 and 30

    31 and 40

    40

    79%

    10%

    4%

    2%

    2%

    3%

    79%

    10%

    4% 2% 2% 3%

    Per cent

    Source: Section A: Question a5.

    6.3.1.4 End-user profile

    In this study, the total of 73 out of 220 questionnaires were returned, which is a response rate of 33.18% (see table 5.3: the response rate). As is evident from table 6.5, most end-users had been using SAP software for at least 5 but less than 10 years (43.7%), closely followed by at least 3 but less than 5 years (28.1%), at least 10 but less than 20 years (13.3%) and at least 1 year but less than 3 years (8.9% percent). The job level for the employees in this study was end-user (54.1%) and manager (45.9%).

    The majority of the MNEs' end-users (39.5%) were in possession of a post-school diploma or
    certificate(s), closely followed by 37.3% of the respondents who had a Grade 12 (Matric) and

    111

    15.7% with an undergraduate or equivalent degree(s). On other hand 6.0% of end-users had some high school qualification and 1.5% had a postgraduate degree. The minimum age of the MNE respondents varied from 26 to 30 years (32.6%) and 31 to 35 years (27.%), closely followed by 36 to 40 years (18.5%), 20 to 25 years (13.3%), 41 to 45 years (5.2%), 46 to 50 years (0.7%) and younger than 20 (2.2%).

    Table 6.5: End-user profile

    Demographics profile Number of years of using SAP software

    Number

    %

     

    Less than 1 year

    8

    5.9

     

    At least 1 year but less than 3 years

    12

    8.9

    At least 3 but less than 5 years

    38

    28.1

    At least 5 but less than 10 years

    59

    43.7

    At least 10 but less than 20 years

    18

    13.4

    Total

    135

    100.0

    Age group

     
     
     

    Younger than 20

    3

    2.2

     

    20 to 25 years

    18

    13.3

    26 to 30 years

    44

    32.6

    31 to 35 years

    37

    27.4

    36 to 40 years

    25

    18.5

    41 to 45 years

    7

    5.2

    46 to 50 years

    1

    .8

    Total

    135

    100.0

    Education

     
     
     

    A high school qualification

    8

    6.0

     

    Grade 12 (Matric)

    51

    37.3

    Post-school diploma(s) or certificate(s)

    53

    39.5

    Undergraduate or equivalent degree(s)

    21

    15.7

    Post-graduate degree(s)

    2

    1.5

    Total

    134

    100.0

    Source: Section A: Questions a1, a2, a3 and a4.

    112

    6.3.2 Section B: Views of CEOs/CIOs on strategic management, SAP and training

    6.3.2.1 SAP software and training profile

    The CIOs involved in this survey indicated that the SAP computer systems specialists (100.0%) attended training in their organisation and also underwent training on the job with experienced employees (100.0%).

    As is evident from table 6.6, the CIOs believed that SAP software was used to a large extent (100.0%) as a strategic management tool within their organisation. They also indicated that SAP software was customised in their organisations.

    Table 6.6: Views of CEOs/CIOs on strategic management, SAP and training

    View of the CIOs

    Responsible for SAP training within the organisation

    Number

    %

    The SAP computer systems specialists

    3

    100.0

    The training is done on the job with experienced employees

    3

    100.0

    SAP is used as a strategic management tool

     
     

    Large extent

    3

    100.0

    The acquisition of the SAP software

     
     

    The software was customised for my organisation

    3

    100.0

    Source: Section B: Questions b6, b7 and b8.

    In response to question 9, all of the CIOs (100.0%) involved in the survey strongly disagreed that the implementation of the SAP system within their organisation was a waste of money. Furthermore two (67.0%) strongly disagreed that the SAP system hampered internal organisation of processes, and one simply disagreed (33.0%) with this statement.

    When asked if it was complex to implement the SAP software, one CIO (33.0%) strongly agreed and two (67.0%) agreed. However, all three (100.0%) strongly agreed that the SAP system effectively integrates different applications and that the multifunctionality of the SAP software is of strategic importance to any organisation.

    113

    From the overall statements in question 9, it is evident that the issues surrounding the capabilities, characteristics and efficiency of ERP system software rely mainly on the integration status of the different applications, the modular capability and the multifunctionality of the software.

    6.3.2.2 Section C: Strategic management, SAP system and value chain

    All three CIOs (100.0%) involved in the survey strongly agreed with all five statements formulated in question 10.

    From the overall statements in question 10, it is noted that all the CIOs were aware of the role of ERP system software in the value chain, and the importance of a strategic IT

    plan in order to succeed in ERP project implementation.

    6.3.2.3 Section D: General information

    For question 11 (d11.1, d11.2, d11.3, d11.4 and d11.5), all three CIOs (100.0%) involved in the survey strongly agreed that the acquisition of ERP software was valuable to their organisation. Furthermore two (67.0%) strongly agreed that in their organisation the most effective ERP system had been implemented, while one disagreed (33.0%).

    Regarding whether the ERP system was effectively customised for their organisation, all CIOs (100.0%) strongly agreed with this statement. Two of the CIOs (67.0%) strongly agreed that employees in their organisation made effective use of the SAP system and one (33.0%) agreed. To the question of whether SAP software users were knowledgeable about the system, two CIOs (67.0%) involved in the survey strongly agreed and one (33.0%) agreed.

    From the overall statements in question 11, it can be seen that the most important factor of ERP system software is the ability to customise the system to suit the organisation structure and objectives. Furthermore the three CIOs involved in this survey pointed out that the acquisition of ERP software within their organisation was valuable.

    6.3.3 Section B: Views of managers and end-users

    In this study, 76.0% of the managers and end-users involved in this survey rated SAP software as an
    excellent IT tool within their organisation, as indicated in figure 6.4. On other side 17.0% of the

    114

    participants rated the system as good and 5.0% as moderate. Contrary to this only 2% rated the system as very poor.

    Figure 6.4: Views of managers and end-users of SAP software efficiency

    17%

    Excellent Good Moderate Very poor

    5% 2%

    SAP software efficiency

    76%

    Source: Section B: Question b 6.

    When asked how the organisation acquired the SAP software, an overwhelming 69.6% (94 users) pointed out that the SAP software had been customised in the organisation, followed by 11.9% (16 users) who pointed out that the vendor had supplied the software with some modifications. On other side 9.6% (13 users) stated that the vendor had supplied the software with little or no modifications, and 8.1% pointed out that the vendor had supplied the software with major modifications (11 users). See table 6.7.

    Table 6.7: Views of managers and end-users of the acquisition of SAP software

    Vendor supplied the software with some modifications

    Vendor supplied the software with little or no modifications

    The acquisition of the SAP software

    View of the manager and end-user

    Number

    16

    13

    11.9

    9.6

    %

    115

    Vendor supplied the software with major modifications

    12

    8.9

     

    The software was customised for my organisation

    94

    69.6

     

    Total

    135

    100.0

     

    Source: Section B: Question b7.

    Figures 6.5 and 6.6 reflect the training in SAP software in the organisations surveyed (Responded and non-responded). Most of the 119 users (88.0%) responded, while only 16 users (12.0%) did not responded that training was done on the job with experienced employees. On other side 98 users (73.0%) responded, while only 37 users (27.0%) did not responded that training in SAP software was done by the computer systems specialist in their organisation. In addition, 20 users (15.0%) responded, while 115 users (85.0%) did not respond that independent external clients did training in SAP software. When asked who is responsible for SAP training, 2 users (2.0%) responded, while 133 users (98. 0%) indicated `other' for the provision of training.

    Figure 6.5: Responsible for SAP software training (Responded)

    Responsible for SAP training

    b8.4 Other

    b8.3 The training is done on the job with experienced
    employees

    b8.2 The SAP computer systems specialists

    b8.1 Independent external clients

    2%

    15%

    73%

    88%

    0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

    Per cent

    Marked

    Source: Section B: Question b8.

    116

    Figure 6.6: Responsible for SAP software training (Not responded)

    120%

    100%

    40%

    20%

    80%

    60%

    0%

    b8.1
    Independent
    external
    clients

    85%

    b8.2 The SAP
    computer

    systems
    specialists

    27%

    Responsible for SAP training

    Statement

    b8.3 The training is done on t he job with experienced employees

    12%

    b8.4 Other

    98%

    Not marked

    Source: Section B: Question b8.

    Figure 6.7 below relates to question 9. An overwhelming 68.0 % of the users consulted in this survey strongly agreed that SAP software supported the department's objectives. Only 25.0 % of the users agreed, and 4.0 % were neutral, while 2.0 % strongly disagreed and 1.0 % disagreed. When asked if they were consulted regarding the selection of ERP software used in their organisation, 32.0 % of the users, especially the senior managers, agreed, 23.0 % strongly agreed, follows by 29.0 % of them remained neutral, and 8.0 % strongly disagreed and 8.0 % disagreed. For the end-users 29.0 % agreed, 16.0 % strongly agreed, 27.0 % remained neutral, 15.0 % strongly disagreed and 13.0 % disagreed. The majority of respondents, 55.0 % of them (the users) strongly agreed that the implementation of SAP software added value to their customers, 36.0 % agreed, 7.0 % remained neutral and 2.0 % strongly disagreed. 38.0 % of the respondents strongly agreed that sufficient funds were made available to train employees in SAP software usage, 35.0 % agreed and 19.0 % remained neutral. 7.0 % users strongly disagreed and 1.0 % of the respondent disagreed with this statement.

    Respondents were asked about whether a strategic IT plan was followed in their department. An

    117

    overwhelming 47.0 % of the respondents strongly agreed and 34.0 % agreed, follows by 17.0 % respondents, which remained neutral and 2.0 % strongly disagreed that a strategic plan was followed in their department. In the context of the overall organisation, only 45.0 % of the respondents strongly agreed, 34.0 % of the respondents agreed, 17. 0 % remained neutral and 2.0 % strongly disagreed that a strategic plan was followed in their organisation.

    Figure 6.7: Level of agreement

    Level of agr eement

    The IT strategic plan in our or ganisation inf luences the extent to which SAP software
    can be successf ully implemented

    In my or ganisation the IT strategic plan is followed
    In my depar tment, the str ategic plan is followed
    Suf f icient f unds were made available to tr ain employees in SAP software usage
    The implementation of the SAP software adds value for to customer s

     
     
     
     
     
     
     

    47%

    33%

     

    17% 2%01%

     
     
     
     
     
     
     

    45%

    36%

     

    16% 2%01%

     
     
     
     
     
     
     

    47%

    34%

     

    17% 2%0

     
     
     
     
     
     
     

    38%

     

    35%

    19%

    7%1%0

     
     
     
     
     
     
     
     

    54%

     

    36%

    7% 2%01%

     
     
     
     
     
     
     

    16%

     

    29%

    27%

     

    15%

    13% 0

     
     
     
     
     
     
     

    23%

     

    32%

     

    29%

    8% 8% 0

     
     
     
     
     
     
     
     

    68%

     

    25%

    4%2%1%0

    The end-users were consulted r egar ding the selection of the ERP software used in my

    organisation

    Senior manager s were consulted r egar ding the selection of the ERP software used in my
    organisation

    SAP software supports my depar tment's objectives

    0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

    Str ongly agr ee Agree Neutral Str ongly disagr ee Disagree No r esponse

    Source: Section B: Question b9.

    118

    For the question whether the strategic IT plan in their organisation influenced the extent to which SAP software could be successfully implemented, an overwhelming 47.0 % of the users strongly agreed, 33.0 % of the users agreed, follows by 17.0 % of the users remained neutral and 2.0 % strongly disagreed.

    From figure 6.7 it is evident that issues surrounding the success of ERP system implementation and usage in the MNEs relate to strategy management through the value chain approach. The reason is that an ERP system relies heavily on the factors highlighted below:

    · Sufficient funds to train the employees;

    · The involvement of the manager and end-users in the selection of ERP software; and

    · The application of a strategic IT plan.

    6.3.4 Section C: Views of managers and end-users on strategic management, SAP and training Figure 6.8, relates to question c10. An overwhelming 59.0 % of the users consulted in this survey strongly agreed that SAP software facilitates effective decision-making, follows by the 34.0 % agreed, 5.0 % remained neutral and 2.0 % strongly disagreed. When asked if the SAP software being facilitated improved productivity, 61. 0 % of the users strongly agreed, 33.0 % agreed, 4.0 % remained neutral and 2.0 %) strongly disagreed.

    The majority of respondents, 47.0 % of the users strongly agreed that they received sufficient training on the usage of SAP software, 30. 0 % agreed, 16.0 % remained neutral, 3.0 % strongly disagreed and 4.0 % disagreed. 46. 0 % of the users strongly agreed that the value-adding activities were communicated to them, 44.0 % agreed, 6.0 % remained neutral, 2.0 % strongly disagreed and 2.0 % disagreed. Furthermore, when asked if their performance had been evaluated against predetermined criteria, only 50.0 % of the users strongly agreed, follows by 44.0 % agreed, and 4.0 % remained neutral and 2.0 % strongly disagreed with the statement.

    From figure 6.8 below it is evident that the ERP system facilitates effective decision making and improves productivity. In addition, to operate SAP software, users must have sufficient training.

    119

    Figure 6.8: General information/ statement

    Generalinformation/statement

    Disagree

    Strongly
    disagree

    50%

    46%

    Neutral

    Agree

    5%

    2%

    59%

    34%

     

    44%
    44%

    30%
    33%
    34%

     

    6%

    16%
    4%

    4%

    2%

    2%
    3%

    2%
    2%

     

    2%
    4%

     
     

    5%

     

    100%

    70%

    40%

    20%

    90%

    80%

    60%

    50%

    30%

    10%

    0%

    50%

    46%

    47%

    61%

    59%

    Strongly
    agree

    47%

    30%

    16%

    3%

    61%

    33%

    4%

    2%

    44%

    4%

    44%

    6%

    2%

    2%

    2%

    4%

    c10.5Myperformancehasbeenevaluatedagainst predeterminedcriteria.

    c10.4Valueaddingactivitiesarecommunicatedto me.

    c10.3Ireceivedsufficienttraininginthe usage ofthe SAP software.

    c10.2The SAP software facilitatesimproved productivity.

    c10.1The SAP software facilitateseffective

    decision-making.

    c10.2The SAP software facilitates improvedproductivity.

    c10.5Myperformance hasbeen evaluatedagainstpredetermined criteria.

    c10.4Valueaddingactivitiesare communicatedtome.

    c10.3Ireceivedsufficient traininginthe usage ofthe SAP software.

    c10.1The SAP software facilitates effective decision-making.

    Source: Section C, Question c10.

    6.3.5 Results of statistical testing

    Cross-tabulations were performed on each of the variables as indicated in tables 6.8, 6.9, 6.10, 6.11 and 6.12 (Refer to appendix F). The chi-square test was used to test the significance of the stated hypothesis and was significant at the 0.05 level. However, in this statistical testing, the Fisher's exact test value in the exact significance (one-sided) column is assumed as the significance (p-value). Therefore if the p-value was lower than 0.05, the hypothesis was rejected. If the p-value was higher than 0.05, then the hypothesis was not rejected. In the cases where the hypothesis was not rejected, the relationship between the variables was investigated further.

    120

    6.3.5.1 Job level/full-time employees cross-tabulation

    To accurately determine if there is a relationship between employees at the job level surveyed and the full-time employees who report to them, a chi-square hypothesis test as listed in table 6.8 is performed.

    Ho: There is no relation between job level (a2) and the full-time employee's (a5) (i.e. they are independent).

    H1: There is a relation (i.e. they are not independent).

    From table 6.8, since the p-value (Fisher's exact test = .000) is less than 0.05, the hypothesis is rejected and it can therefore be concluded that there is no relation between a2 and a5. This indicates that only managers have the chance that full-time employees will report to them.

    Table 6.8: Cross-tabulation: a2 with a5

    a2: What is your current job level?

    a5: How many full-time employees report to you?

     
     
     

    a5 How many full-time employees
    report to you?

    Total

     

    More than 0

     

    Manager

    Number

    32

    28

    60

     

    53.3%

    46.7%

    100.0%

     

    Number

    73

    0

    73

     

    100.0%

    0%

    100.0%

    Total

    Number

    105

    28

    133

     

    78.9%

    21.1%

    100.0%

     

    Chi-square tests

     

    Value

    df

    Asymp. sig. (two-
    sided)

    Exact sig.
    (two-sided)

    Exact sig. (two-sided)

    Fisher's exact test (p-
    value)

     
     
     

    .000

    .000

     

    121

    6.3.5.2 Departmental objectives/strategic IT plan cross-tabulation

    To accurately determine a relationship between the support of SAP software of departmental objectives and the extent to which a strategic IT plan influences successful SAP software implementation, a chi-square hypothesis test as listed in table 6.9 is performed.

    Ho: There is no relation between SAP software supporting departmental objectives (b9.1) and the extent to which a strategic IT plan influences successful SAP software implementation (b9.8) (i.e. they are independent).

    H1: There is a relation (i.e. they are not independent).

    From table 6.9, the p-value (Fisher's exact test = .013) is less than 0.05, so the hypothesis is rejected and it can therefore be concluded that there is no relation between b9.1 and b9.8.

    Table 6.9: Cross-tabulation: b9.1 with b9.8

    b9.1 SAP software supports my department's objectives.

    b9.8 The strategic IT plan in our organisation influences the extent to which SAP software can be successfully implemented.

     
     
     

    b9.8 The strategic IT plan in our
    organisation influences the extent
    to which SAP software can be
    implemented successfully

    Total

     

    Neutral/disagree

     

    Agree

    Number

    105

    21

    126

     

    83.3%

    16.7%

    100.0%

     

    Number

    4

    5

    9

     

    44.4%

    55.6%

    100.0%

    Total

    Number

    109

    26

    135

     

    80.7%

    19.3%

    100.0%

     

    Chi-square tests

     

    Value

    df

    Asymp. sig. (two-
    sided)

    Exact sig. (two-
    sided)

    Exact sig. (one-
    sided)

    Fisher's exact test

     
     
     

    .013

    .013

     

    122

    6.3.5.3 SAP software selection cross-tabulation

    To accurately determine if there is a relationship between SAP software's support of departmental objectives (b9.1) and whether the senior managers were consulted regarding the selection of ERP software used in their organisation (b9.2), a chi-square hypothesis test as listed in table 6.10 is performed.

    Ho: There is no relation between SAP software's support of departmental objectives and whether senior managers were consulted regarding the selection of ERP software used in their organisation (i.e. they are independent).

    H1: There is a relation (i.e. they are not independent).

    From table 6.10, the p-value (Fisher's exact test = .008) is less than 0.05, so the hypothesis is rejected and it can therefore be concluded that there is no relation between b9.1 and b9.2.

    Table 6.10: Cross-tabulation: b9.1 with b9.2

    b9.1 SAP software supports my department's objectives.

    b9.2 Senior managers were consulted regarding the selection of the ERP software used in my organisation.

     
     
     

    b9.2 Senior managers were
    consulted regarding the selection
    of the ERP software used in my
    organisation

    Total

     

    Neutral/disagree

     

    Agree

    Number

    73

    53

    126

     

    57.9%

    42.1%

    100.0%

     

    Number

    1

    8

    9

     

    11.1%

    88.9%

    100.0%

    Total

    Number

    74

    61

    135

     

    54.8%

    45.2%

    100.0%

     

    Chi-square tests

     

    Value

    df

    Asymp. sig. (two-
    sided)

    Exact sig. (two-
    sided)

    Exact sig. (one-
    sided)

    Fisher's exact test

     
     
     

    .011

    .008

     

    123

    6.3.5.4 Awareness of training cross-tabulation

    To accurately determine if there is a relationship between whether sufficient funds were made available to train employees in SAP software usage (b9.5) and whether they received sufficient training in the usage of SAP software (c10.3), a chi-square hypothesis test as listed in table 6.11 is performed.

    Ho: There is no relation between whether sufficient funds were made available to train employees in SAP software usage and whether they received sufficient training in the usage of the SAP software (i.e. they are independent).

    H1: There is a relation (i.e. they are not independent).

    From table 6.11, the p-value (Fisher's exact test = .000) is less than 0.05, so the hypothesis is rejected and it can therefore be concluded that there is no relation between b9.5 and c10.3.

    Table 6.11: Cross-tabulation b9.5 with c10.3

    b9.5 Sufficient funds were made available to train employees in SAP software usage. c10.3 I received sufficient training in the usage of the SAP software.

     
     
     

    c10.3 I received sufficient training
    in the usage of the SAP software

    Total

     

    Neutral/disagree

     

    Agree

    Number

    86

    13

    99

     

    86.9%

    13.1%

    100.0%

     

    Number

    19

    17

    36

     

    52.8%

    47.2%

    100.0%

    Total

    Number

    105

    30

    135

     

    77.8%

    22.2%

    100.0%

     

    Chi-square tests

     

    Value

    df

    Asymp. sig. (two-
    sided)

    Exact sig. (two-
    sided)

    Exact sig. (one-
    sided)

    Fisher's exact test

     
     
     

    .000

    .000

     

    124

    6.3.5.5 Training/responsible for the training cross-tabulation

    To accurately determine if there is a relationship between whether users received sufficient training in the usage of SAP software (c10.3) and whether the training was done on the job with experienced employees (b8.3), a chi-square hypothesis test as listed in table 6.12 is performed.

    Ho: There is no relation between whether users received sufficient training in the usage of SAP software and whether the training was done on the job with experienced employees (i.e. they are independent).

    H1: There is a relation (i.e. they are not independent).

    From table 6.12, the p-value (Fisher's exact test = .495) is more than 0.05, so the hypothesis is not rejected and it can therefore be concluded that there is relation between c10.3 and b8.3. This indicates that the efficient use of SAP software in any organisation depends on employee training.

    Table 6.12: Cross-tabulation: c10.3 with b8.3

    c10.3 I received sufficient training in the usage of the SAP software. b8.3 The training is done on the job with experienced employees.

     
     
     

    b8.3 The training is done
    on the job with
    experienced employees

    Total

     

    Marked

     

    Agree

    Number

    12

    93

    105

     

    11.4%

    88.6%

    100.0%

     

    Number

    4

    26

    30

     

    13.3%

    86.7%

    100.0%

    Total

    Number

    16

    119

    135

     

    11.9%

    88.1%

    100.0%

     

    Chi-square tests

     

    Value

    df

    Asymp. sig. (two-
    sided)

    Exact sig. (two-
    sided)

    Exact sig. (one-
    sided)

    Fisher's exact test

     
     
     

    .754

    .495

     

    125

    In this empirical section, the aim was to test hypothesis H3, which stipulated that users, managers and CEOs/CIOs were positive about ERP system matters relating to strategic management and the value chain concept. Regarding the outcome of the self-administered survey conducted, given in sections 6.3.1, 6.3.2, 6.3.3 and 6.3.4 involving the CEOs/CIOs, the managers and the end-users, it can be concluded that hypothesis 3 (H3) is not rejected. Therefore the employers and employees are knowledgeable about, trained in and aware of the ERP system in their organisation.

    6.4 Conclusion

    In this chapter the qualitative study was reported on. Responses from those surveyed in this study were organised by demographic profile of the participants (CEOs/CIOs, managers and end-users), the organisation's (MNE's) profile, and the various issues relating to the value chain integration through the ERP system, IT strategic plan and strategy management. Frequency distributions were analysed, interpreted and graphically represented where appropriate. The results of the statistical tests, which included significance and association testing, were reported.

    In chapter 7 the conclusions and recommendations of this study will be discussed.

    126

    CHAPTER 7: CONCLUSIONS AND RECOMMENDATIONS FOR FUTURE RESEARCH

    7.1 Introduction

    While the previous chapter described both the qualitative and empirical results of this study, this chapter will focus on the main contribution of this descriptive study. Final conclusions are drawn on the factors of an ERP software influencing the MNEs' value chain system, as well as general recommendations for future research.

    The overall goal of this study was to assess ERP systems through the value chain approach in order to link both concepts technically and strategically, and to equip any MNE or corporation with the necessary knowledge and skills about an ERP system before its implementation. The different objectives of this study were achieved qualitatively, through the literature review of ERP system theory in relation to the value chain approach. This allowed the researcher to assess Axapta software attributes discussed in the case study according to the value chain approach and ERP system. The issues highlighted in the study were supply chain factors which facilitate the evaluation of ERP software and the positioning of the value chain approach as an integrative tool to assess ERP software architecture and configuration. It was found that ERP systems and the value chain approach strengthen and integrate the business processes of MNEs.

    Through this study the value chain system and ERP systems were linked. This empowered the researcher with the knowledge to compile a methodical approach of ERP system requirements in order to achieve objective 5 of this study, as discussed later in this chapter. The value of this study is that it will assist any organisations that are migrating towards ERP system software with a technical assessment during the selection and evaluation phases of ERP systems. This methodical approach will allow organisations to obtain compatible and suitable ERP system software that relates to their objectives, structure and type before the ERP system life cycle (adoption decision, acquisition, implementation, use and maintenance, evolution and retirement) starts, as discussed in section 3.9 by Esteves and Pastor (in Bernroider & Tang, 2003:5). The empirical study was conducted to test the knowledge of the employers and employees of ERP software, strategy and the value chain. The conclusion reached relating to the self-administered survey is that the employees and employers of the organisations in this study were aware of ERP systems due to education programmes and sufficient funding being made available for the training.

    127

    7.2 Achievement of the objectives

    7.2.1 Primary objective

    The primary objective was to determine the extent to which ERP software could facilitate integration in the MNE value chain process. This was achieved through the assessment of an ERP system, i.e. the Axapta software value chain system as an integrative IT tool relating to the value chain approaches in accordance with ERP system theory. The elements that were investigated as part of the primary objective include:

    · An ERP system that relates to the value chain system architecture and configuration;

    · Integration, multifunctionality and modular capability;

    · E-business components; and

    · ERP system characteristics and database server.

    From the findings, it can be concluded that all the elements mentioned above are very important in order for ERP system software to integrate an MNE's value chain. Thus, ERP systems, i.e. Axapta software, conform to the different value chain approaches discussed in sections 6.2.5.1 to 6.2.5.6. Moreover, in accordance with the overall approach of the value chain discussed in chapter 2, the various elements of ERP system theory discussed in chapter 3 were linked under sections 3.5.1, 3.5.2, 3.6.2 and 3.7.1. This constitutes the basis of the outcome of this study as shown in sections 6.2.1 and 6.2.5, and answers the hypotheses 1, 4, 5 and 6 (H1, H4, H5 and H6) of this study.

    In light of the above, MNEs considering implementing an ERP system should seriously consider the statements below:

    · ERP software architecture and configuration selected for the adoption must be built on the MNE's strategy, thus allowing the organisation to align its strategy with the ERP system.

    · The ERP system selected must be multifunctional, flexible, open and modular.

    · The ERP system selected must be a value chain system, which encompasses within it the generic modules and activities of the different value chain approaches. These could be tailored, customised and parameterised to suit the organisation structure, objectives, type and value chain.

    128


    · The ERP system selected must have a programming language and client/server architecture.

    · The ERP system adopted must be incorporated with the e-business components, such as the Internet, to allow the organisation to collaborate and connect with customers, vendors, partners, or employees and SBUs via the Web, Windows, WAP, Wireless, VAN, LAN and XML.

    · The ERP system selected must have multiple databases, it must be an all-in-one product and have foreign language and foreign currency capabilities. These could position an organisation to operate in any of the geographical areas.

    · The ERP system selected must include an outsourcing application and electronic data interchange.

    7.2.2 Secondary objectives

    The secondary objectives of this study cover the technical part of this research, i.e. positioning the value chain approach as a strategic IT tool for ERP software assessment. In addition to the strategic supply chain, factors need to be considered in the evaluation of an ERP system that relate to the value chain's functional activities before adoption and acquisition. To achieve the secondary objectives of this study, the use of a strategic IT plan was discussed along with the value chain approach in chapter 2, linking ERP system theory in chapter 3 with the comparison of Axapta software attributes in a case study in chapter 4.

    The elements that were investigated as part of the secondary objectives 1, 2, 4 and 5 included:

    · The use of a strategic IT plan;

    · The cost and differentiation, niche and other strategy elements of ERP software;

    · The strategic capabilities of ERP software as a strategic IT tool; and

    · The value chain approach as a strategic assessment tool.

    From the findings, it can be concluded that all the elements mentioned above are very important in order to assess ERP software strategically and technically. This was tested based on Axapta software attributes in accordance with the theory given in chapters 2 and 3. The findings were given in sections 6.2.1 and 6.2.2, and 6.2.3, and answers hypotheses 2 and 4 (H2 and H4) which showed that Axapta is a low-cost software leader in the market due to its cost-effective leadership,

    129

    differentiation, niche, alliance, innovation, the lock-in of customers or suppliers and the entry-barriers strategy as discussed by Turban et al., (2004a: 16) and Thompson and Strickland (1987:110) in section 2.5. The importance of using a strategic IT plan was discussed in section 2.4 according to Bakehouse and Doyle (2002:1) and Peppard (in Corboy, 2001:6). MNEs could use IT or ERP system capabilities, which would have an enormous impact on them in the areas of transactional issues, geographical issues, automation, analytical, informational and sequential matters, knowledge management and disintermediation to gain competitive advantage (Siriginidi, 2000:376, in section 2.3).

    IT plays a vital role in improving co-ordination, collaboration and information sharing, both inside and across organisational boundaries. It allows more effective management of task interdependence and facilitates the creation of integrated management information, while simultaneously offering new possibilities for MNEs. This concurs with the different theories presented in sections 6.2.1 and 6.2.5 in accordance with the overall approach discussed in chapters 2 and 3. Thus, in view of the above elements, the researcher recommends that any MNE using an ERP system implement a strategic IT plan. MNEs should also view the value chain approach as an evaluative tool to assess the activities that will persuade them to acquire suitable ERP software.

    The empirical study was conducted to test the knowledge of employers and employees surveyed in this study of ERP software, strategy management and the value chain approach relating to the objective 3, and answers the hypothesis 3 (H3) of this study. Therefore the elements that were investigated as part of this study included:

    · Demographic profiles of the participants;

    · The view of participants on the training in ERP software within their organisation;

    · The view of participants on value chain integration through an ERP system;

    · The use of a strategic IT plan; and

    · The beneficial impact of ERP implementation on users, customers and supply partners.

    From the findings in sections 6.3.1.2, 3.4 and 6.3.5, it can be concluded that the employees and
    employers involved in this empirical study were well trained in using ERP software and had more

    130

    knowledge about the system. Therefore theThe most important factor emphasised in this empirical section was the customisation of an ERP system, i.e. SAP software, by most organisations that participated in the survey.

    7.3 The value and the contribution of the study

    The fifth objective of this study was to produce a model that would facilitate any MNE to assess ERP software technically and strategically before the implementation. Therefore the main contribution and the value of this study obviously is to assist MNEs or any other organisation in the process of migrating business systems towards ERP with a model called a methodical approach. This approach allows the organisation management to acquire fit and compatible ERP software, which will enable them to meet their objectives and growth targets.

    7.4 The methodical approach for ERP software assessment

    As figure 7.1 indicates, an MNE in the process of migrating its business systems toward ERP implementation it has to first formulate its business objectives, decomposing its value chain modular activities in order to assess the value chain architecture and configuration. Thereafter, MNE management have to ask what the motives of the organisation are in investing in an ERP system implementation project. They need to ask whether there is an opportunity to expand the business due to organisation growth and whether there is a competitive challenge to the organisation or simply problems within the organisation's business systems.

    The second step will be for the organisation to compile a benchmark list of the different ERP software on the market. The third step involves two processes: Firstly, to assess and display the organisation's value chain modular or functional activities and secondly, to assess and display the value chain of the ERP software selected through its modular or functional activities. This allows the MNE to compare its value chain activities with the pre-adopted ERP software functional and modular activities. Once these have been matched, the next step will be to evaluate the selected ERP software through the supply chain factors, ERP characteristics and global requirements. The assessment will result in the MNE adopting suitable and compatible ERP software with a value chain system architecture and configuration that suits the organisation's value chain activities, architecture and configuration, thus positioning the organisation to customise and meet its objectives and growth targets.

    131

    Assess and decompose the organisation's
    value chain modular activities

    Figure 7.1: The methodical approach

    Step 1

    Set the business objectives

    Organisation

    Assess and display the value chain of
    the ER!' software through its modular
    and functional activities

    Assess and display the organisation's
    value chain modular or functional
    activities

    Are motives, opportunities, competitive challenges, or problems behind the reason for the
    organisation implementing an ER!' project?

    Set a benchmark list of the ER!' software selected

    Adopt the ER!' system if its software value chain functional and modular activities,
    architecture, and configuration are compatible with and suitable for the
    organisation's value chain functional and modular activities, architecture, and
    configuration

    If the answer is Yes

    Compare the organisation's value
    chain activities to the selected ER!'
    software's functional and modular
    activities

    Evaluate the selected ER!'
    software through the
    supply chain factors

    Step 2

    Step 3

    The role and influences of ER!' software in and on the organisation's value chain will therefore be:

    · The integration and strengthening of the different applications in the one system (total enterprise integration)

    · The availability of the necessary information and data across the entire organisation's systems

    · The relationships and co-operation of the users, partners, suppliers and customers across the different sites of the organisation

    · Accurate information, quick access to information, business analysis, product development and service efficiency

     

    Source: Compiled by the researcher of this study.

    Consequently the ERP software adopted will have the following influence on the organisation's value chain:

    · The integration and strengthening of the different applications, activities and business processes in the value chain system (total enterprise integration);

    · The availability of the necessary information and data across the entire organisation's systems;

    132


    · The relationships and co-operation of the users across the different sites (locally and

    internationally) of the organisation, the partners, the supplies and the customers; and


    · Accurate information, quick accesses to information, business analysis, and product

    development and service efficiency.

    7.5 Conclusion and recommendation

    This study highlights the importance of the value chain integration through ERP software as a strategic tool that will support the MNE to extend its value chain globally and operate efficiently and effectively for competitive advantage. Furthermore it highlights the use of ERP software as a tool to support decision-making. In this regard, ERP is considered as a powerful competitive weapon, especially when its adoption is aligned with MNE strategy. Consequently, organisations using ERP systems must have a strategic IT plan in order to derive the benefits from it.

    The attributes, specifications, architecture and configuration of an ERP system, i.e. Axapta, were evaluated through the strategic, technical planning of the value chain models. They were compared to the general theory on ERP systems, especially the supply chain factors for ERP software evaluation. This exercise proved that Axapta solution software is a strategic IT tool, with an e-business mechanism capable of integrating the different applications in the organisation's value chain in order to operate globally. Thus, Axapta solution software has been positioned as a value chain system and modern ERP system software.

    Based on the discussion of the different issues associated with the implementation of an ERP system in this study, it is advisable and recommendable to any MNE that wants to implement ERP software to seriously consider the critical success factors affecting the implementation process as discussed in section 3.9.1. The two strategic approaches of ERP implementation, namely the re-engineering of the business process to accommodate functionality, and the customisation of the software to fit the existing process as discussed in section 3.9.2 must be also considered. It is also recommended that MNEs apply the methodical approach of this study as discussed in section 7.2.

    7.6 Areas for future research

    Finally, some possible issues to be studied in the future are highlighted next.

    133

    It would be biased for this study to conclude that Axapta software is generally really good ERP software for all MNEs without testing and applying it in an MNE practically. In this study, the researcher assessed Axapta software value chain modular activities in comparison with the different value chain approaches, along with ERP system theory. The findings show that technically Axapta's architecture and configuration fundamentally meet the requirements of the value chain system and those of global ERP system characteristics, architecture and configuration. Therefore Axapta is a value chain system and truly ERP software. However, the question to be asked is whether ERP software can integrate a multinational enterprise's value chain. More research is needed to answer the above question. In this context the methodical approach formulated by the researcher in this study could be applied as a tool to assess the requirements of a selected ERP software value chain together with the organisation's value chain in order to test both compatibility and suitability.

    134

    REFERENCES

    Adam, F. & Carton, F. (2003). Analysing the impact of ERP systems rollouts in Multinational Companies. Electronic journal of information systems evaluation. Vol. 6 Issue 21-32 [Available on Internet:] http://www.ejise.com [Data of access: 2005-20-05].

    Aladwani, A. (2001). "Change management Strategies for successful ERP Implementation" Business Process Management Journal, Volume numbers 3 pp 266 - 275. [Available on Internet:] http://www.emerald-library.com/ ft [Data of access: 2005-20-10].

    Axapta Microsoft software base study [Available on Internet:]

    http://www.Microsoft.com/BusinessSolution «Axapta». [Data of access: 2005-15-04].

    Baatz. E, Koch. C., & Slater, D. (1999). "The ABCs of ERP: ", CIO Magazine, [available on Internet:] http:// www.cio.com/research/erp/edit122299=erp.htm [Date of access: 10/ 07/ 2005]. Baki, B. & Cakar, K. (2005). Determining the ERP package-selecting criteria. The case of Turkish Manufacturing companies, Business Process Management Journal vol. 11 No 1 [Available on Internet:] http://www.emeraldinsight.com/1463-7154.htm [Data of access: 2005-20-06].

    Bakehouse, G., & Doyle, K. (2002). A generic framework for developing an IS strategy. [Available on Internet:] http:// accaglobal.com/publications/studentaccountant/773059 [Data of access: 2005-60-06].

    Balls, J.D., Dunleavy, J.R., Grant, N., Hurley, J.R., & Hartley, K. M (2000). E-Business and ERP «Transforming the enterprise» Price W.H Coopers Published by John.W & sons, Inc Canada. Bernroider, E., & Tang, N. (2003). «A preliminary empirical study of the diffusion of ERP systems in Australian and British S M E ». Working paper (research in progress) Vienna. Austria. [Available on:] http:// emeraldinsight.com/research register [Data of access: 2005-25-04].

    Bhatt, G. (2000). An Empirical examination of the effects of information system Integration on business process improvement. International journal of operation and production management vol. 20 No 11 pp 1331-1359. [Available on Internet:] http://www.emerald-library.com [Data of access: 20-04-24].

    Blasis, J.P., & Gunson, J. (2002). implementing ERP in multinational companies: their effects on the organisation and individual at work Article». [Available on Internet:] http://www.emeraldlibrary.com/research registers [Date of access: 2005-25-04].

    135

    Bovet, D., & Martha, J. (2000). " Value Nets: breaking the supply chain to unlock hidden profits " Published by John Wiley & Sons, Inc Canada.

    Bless, C., & Higson-Smith, C. (1995). "Fundamentals of social research methods: An African Perspective" 2 Ed. Creda Press Cape Town. Juta & Co.

    Buckhout, S., Frey, E., & Nemec Jr, J. (1999). " Making ERP Succeed. Turning Fear into Promise". IEEE Transactions of Engineering Management, 27(3), 116-123.

    Burgelman, R., Maidique, M., & Wheelwright, S. (2001). " Strategic Management of Technology and Innovation", International Edition, 3 Ed. McGraw-Hill.

    Cant, M., Gerber-N., Nel, D. & Kotze, T. (2003). Marketing Research. Claremont; New Africa Books.

    CIS: (Commercial intelligence service). "List of the Foreign Companies in S A" Yearbook 2000/2001.

    Chin-Fu Ho, Hsiung Wu & Ming Tai. (2004). "Strategies for the adaptation of ERP system", Industrial Management & Data Systems. Volume 104 Number 3-2004 pp. 234-251, [available at Internet: ] www.emeraldinsight.com/0263-5577.htm [Data of access: 2005-20-10].

    Clemons, S. & Simons, S.J. (2001). "Control and Co-ordination in global ERP configuration" Business Process Management Journal, Vol.7 number 3 pp. 205 - 215. [Available on Internet:] http http://www.emerald-library.com/ ft [Data of access: 2005-20-10].

    Corboy, M. (2002). «Strategic planning model». [Available on Internet:] http:// www.accaglobal.com/publications/studentaccountant/256280 [Data of access: 2005-06-06]. Davenport., T. (1998). " Putting the Enterprise into the Enterprise System", Harvard Business Review, July/August, 121-131.

    Day. R., George, Resbstein & David J. (1997). " Wharton on Dynamic Competitive Strategy " John Wiley & Sons, Inc. New York.

    Dewet, T., & Jones, G.R. (2001). "The role of information technology in the organisation: A review model and assessment" Journal of Management 27 (2001), 313- 346, Department of management, Texas A & M University, College Station TX77843 USA.

    Diana, K., & Judith, D. (2003). "A Strategy - based model for e - commerce planning" industrial Management and data systems 103/4, 238 - 252, [available on Internet:] http://www.emeraldinsight.com/0263-5577.htm [Date of access: 10/ 03/ 2006].

    Dillon, W.R., Madden, T.J., & Firtle, N.H. (1993). " The Essentials of Marketing Research." Homewood: Richard and Irwin.

    136

    Dunning, J. (1992). Multinational enterprises and the global economy, Addison-Wesley. Woking hams p3-4 [Available on Internet:] http: www.emeraldinsight.com/0955-534X.htm «On foreign direct investment in a digital economy ». [Date of access: 2004-15- 11].

    Evans, P.B., & Wurster, T.S. (1997). " Strategy and the new economics of information" Harvard Business Review, 76 (3): 149 - 162, May-June

    Financial Mail - Multichoice Africa «Dedicated to relationship management » Financial mail survey 22 Nov 2002.[Available on Internet:]
    http://www.free.financialmail.co.za/Report/multichoice/multig.htm [Data of access: 2004-09-14] Ghosh, S. (1998). " Making business sense of the Internet " Harvard Bus Review, 76 (2): 126-135, Mar-April.

    Gupta, A. (2000). " ERP: The Emerging organisational value systems industrial management and data systems "100/3 114 -18 [Available on Internet:] http://www.emerald-library.com [Data of access: 2005-20-10].

    Hair, J.F., Buch R.P., & Ortinau D.J. (2003). Marketing Research within a Changing Information Environment. New York: McGraw-Hill Irwin.

    Hooft, F. & Stegwee, R. (2001). "E-business strategy: how to benefit from a hype" Logistics Information Management, Vol 14. Number 1/2. pp 44 - 53 [Available on Internet:] http: www.mcbup.com/research registers [Data of access: 2005-25-11].

    Horwitt, E. (1998). " Enduring a global rollout and living to tell about it, Computerwolrd, march 1998, 1- 5."

    Ho C. F., Wu W-H., & Tai Y-M., (2004). "Strategies for the adaptation of ERP system", Industrial Management & Data Systems. Volume 104 Number 3-2004 pp. 234-251, [available on Internet:] http://www.emeraldinsight.com/0263-5577.htm [Date of access: 10/ 11/ 2005].

    Hyung, R., Nam-Kyu P., & Sang W. L., (2003). " An ERP approach for container terminal operating systems". Maritime Policy & Management., July-September, Vol 30, No. 3, 197-210. Available at http://www.emerald-library.com/ft [Data of access: 2005-15-05].

    Johnson, G. & Scholes, K.. (2002). " Exploring corporate strategy", 6 Ed Prentice Hall.

    Keen., Peter, G., & Morton, M., (1978). Decision support systems "an organisational Perspective, reading, and MA: Addison-Wesley .

    137

    Kirchmer, M. (2004) "E-Business process networks - Successful value chains through standards" Journal of Enterprise Information Management. Vol. 17. Number 1. pp 20 - 30 [Available on Internet:] http: www. Emeraldinsight.com/ 1741 - 0398. htm [Data of access: 2005-25-11].

    Koch, C. (2001). Enterprise Resource Planning: Information Technology as a Steamroller for management Politics. Journal of Organisational change management, 14 (1), 64-78.

    Kruger, S.J., & Welman, J.C. (2002). "Research Methodology for the business and Administrative Sciences" 2 Ed Oxford University Press Southern Africa, Cape Town.

    Laudon, K.C., & Laudon, J.P. (2002). Managing the digital firm. MIS, 7th Ed. USA: Prentice Hall.

    Leedy, P. (1997). Practical research, planning and design, upper saddle river: Prentice-Hall. Mabert, V.A., Soni, A., & Venkataraman, M.A. (2003). " The Impact of organisation size on ERP Implementation in the U.S. Manufacturing Sector. Omega, 31 (3), 235-246."

    Madapusi, A., & D'souza. D., (2005). Aligning ERP system with international strategies. ISM journal winter 2005. [Available on Internet:] http:// www. ISM - Journal.com [Data of access: 2005-15-06].

    Malhotra, N. (1996). Market research: An applied orientation, upper saddle river: Prentice - Hall. Markus, M.L., Tanis, C., & Van Fenema, P.C. (2000). Multi-Site ERP Implementations. Communications of the ACM Journal, 43 (4), 42-46.

    MBA group Assignment study report document (2002). ERP system and Multichoice company. University of Johannesburg. Johannesburg, South Africa.

    McAdam, R., & McCormack, D., (2001). Integrating business processes for global alignment and Supply chain management. Business process management journal. Vol. 7 No 2 pp 113-130 [Available on Internet:] http://www.emerald-library.com/ft [Data of access: 2005-15-05].

    McAdam, R., & Galloway, A. (2005). Enterprise resource planning organisational innovation: management perspective, Industrial Management & Data Systems, Vol. 105 No. 3, 2005, pp 28 [Available on Internet:] http:// www.emeraldinsight.com/0263-5577.htm [Data of access: 2005-15- 06].

    Melville, S., & Goddard, W. (1996). "Research Methodology: An Introduction for Science and Engineering Students", Kenwyn: Juta & Co.

    Ming, H., Fyun. C.W, Shihti, Y, and Chiu.C.C, (2004). "Value-added ERP information into
    information goods: an economic analysis". Industrial Management & Data Systems. Vol. 104 No 8

    138

    pp. 689-697 [Available on Internet:] http:// www.emeraldinsight.com/0263-5577.htm [Date of access: 10/11/2005].

    Mouton, J. (2001). How to succeed in your Masters & Doctoral Studies. A South Africa guide and Resource book. 1st Edition; Van Schaik; Pretoria.

    Multichoice Africa base study. [Available on Internet:

    http://www.Multichoice.co.za/ourbusiness/default.asp? [Data of access: 2004-09-14].

    Neves, D., Fenn, D., & Sulcas, (2004). "Selection of ERP System" SA Business Journal Management. 35 (1). Pp 45-52.

    Normann, R., & Ramirez, R. (1998). " Designing Interactive Strategy: From value chain to value constellation "John Wiley & Sons Ltd England.

    Parr, A.N., & Shanks, G. (2000)" A Taxonomy of ERP Implementation Approaches. Proceedings of the 33 rd Hawaii International Conference on System Sciences, 1-10".

    Petroni, A. (2002). "Critical factors of MRP implementation in small and medium-sized firms" International Journal of Operation & Production Management, Vol. 22 No. 3, pp. 329-48.

    Porter, M.E (1985): "Competitive Advantage" New York: Free Press.

    Porter, M.E., (1990) "The Competitive advantage of nations", London: MC millan Press.

    Porter, M.E., (1998) " The Competitive advantage: Creating and sustaining superior performance", 2 Ed, New York: The Free Press.

    Porter, M.E., & Millar, V.E., (1985). " How Information gives you competitive advantage " Harvard Business reviews 64 (4): 126 - 135, Jul - August.

    Rojas, L., & Serpa, F., (Not dated). Questionnaire design: An introduction. [Available on Internet:] http://www.pitt.edu/-super1/lecture/lec0971/002.htm [Date of access: 2006-06-15].

    Sarkis, J. & Sundarraj, R.P. (2000). Factors for strategic evaluation of enterprise IT, Information journal of physical distribution and logistics management, vol. 30. No 3/4 pp. 196-220. MCB University Press. [Available on Internet:] http://wwww.emerald-library.com [Data of access: 2005- 20-06].

    Scott, M.C. (1998). " Value drivers: The manager's framework for identifying the drivers of corporate value creation" John Wiley & Sons Ltd England.

    Shehab, E.M., Sharp, M.W., Supramaniam, L. & Spedding, T.A (2004): ERP an Integrative view. Business process management journal, vol. 10. No 4 pp: 359-386. [Available on Internet:] http://www0docserver.emeraldinsight.com.raulib.rau.ac.za/deliver/cw/mcb14637154/v10n4/s1

    139

    [Data of access: 2005-20-06].

    Siriginidi, S.R. (2000). Enterprise resource planning in reengineering business. Business process management journal, vol. 6 No 5, pp. 376-391. MCB University Press, [Available on Internet:] http://www.emerald-library.com [Data of access: 2005-15-06].

    Slywotzky, A.J., & Morrison, D.J. (1997). " The profit zone: How strategic business design will lead You to tomorrow's profits" Library of congress, Random House, Inc. New York.

    Somers, T. M. & Nelson, K. (2001) " The Impact of critical success factors across the stages of ERP implementation", Proceedings of the 34th Hawaii International Conference on System Sciences, Mavis, HI, pp. 2936-45.

    Stirling, M., Petty. D., & Travis, L. (2002). " A methodology for developing integrated information systems based on ERP packages", business process management journal. Vol. 8 No. 5. pp 430 - 446 http: emeraldinsight.com / 1463 - 7154. htm.

    Thompson. A., & Strickland III, A.J. (1987). "Strategic Management: Concepts and Cases" 4. Ed Business Publications, Inc. Plano, Texas.

    Turban, McLean. & Wetherbe (2004a). "Strategic Information Systems for Competitive Advantage " 4 Ed, lecture slides by A. Lekacos, stony brook University, John Wiley & Sons Inc. Turban, E., King D., Lee J., & Viehland, D., (2004b) " E-Commerce: A Managerial Perspective " International Edition, Pearson Prentice Hall.

    Unilever SA base case study. [Available on Internet:

    http://www.applyit.co.za/customers/case studies.htm [Data of access: 2005-04-07].

    Verville, J., & Halingten, A. (2002). "An Investigation of the Decision Process for Slecting an ERP Software": the Case of ESC. Management Decision, 40 (3), 206-216.

    Wah, L., (2000). Give ERP a chance, Management review article, pp 20-24 [Available on Internet:] http://www.cio.com/archives [Data of access: 2005-10-05].

    Walters, D., & Lancaster, G. (1999). Value and information - concepts and issues for Management. MCB University Press. Management decision 37/8 pp 643-656. MCB University press [Available on Internet:] http://www.emerald-library.com [Data of access: 2005-20-05]. Walters, D., & Lancaster, G. (2000). " Implementing value strategy through the value chain" Management Decision 38/3 160 - 178, MCB University Press. [Available on Internet:] http://www.emerald- library.com [Data of access: 2005-20-05].

    140

    Zekos, G., (2005). Foreign direct investment in a digital economy, European business review Vol. 17 No 1, pp 52-56. Emerald group publishing limited [Available on Internet:] http://www.emeraldinsight.com/0955-534X.htm [Data of access: 2005-13-05].

    Zeng, Y., Chiang, H.L., & Yen, D. (2003). Enterprise integration with advance information Technologies: ERP and data warehousing. Information management and computer security 11/3 pp 115-122 [Available on Internet:] http:// www emeraldinsight.com/ 0968-5227 html

    [Data of access: 2005-15-05].

    141

    APPENDIX A, B, C, D, E, F, G and H:

    Appendix A: Self-administered survey for CEOs/ CIOs
    Appendix B: Self-administered survey for managers and the end-users
    Appendix C: Cover letter for questionnaires to MNEs
    Appendix D: List of organisations consulted in preliminary telephonic survey
    Appendix E: List of organisations included in the self-administered surveys
    Appendix F: Statistical analysis
    Appendix G: Frequencies and descriptives data for the CEOs/CIOs
    Appendix H: Frequencies and descriptives data for the end users and managers

    142

    APPENDIX A: SELF-ADMINISTERED SURVEY FOR CEOs/CIOs

    This MBA Dissertation conducted at the University of Johannesburg attempts to evaluate the perceived technical and strategic influence of an ERP system on the value chain process of multinational enterprises (MNEs).

    Please complete each of the following questions by ticking the box corresponding to your answer or by filling in your response. The questionnaire will be treated as strictly confidential at all times. Neither your name nor that of your organisation will in any way be connected to the findings of this study. We only wish to establish your views on various issues on the strategy part of IT, the value chain concept, and implementation of the ERP System i.e. SAP software under utilisation within your organisation.

    SECTION A: Demographics

    Please answer each question by crossing (X) the number corresponding to your response

    1. Specify in which capacity are you completing this questionnaire.

    CEO

    CIO

    1

    2

    2. How long have you been operating the SAP software?

    Less than 1 year

     

    1

    At least 1 year, but less than 3 years

     

    2

    At least 3 years, but less than 5 years

     

    3

    At least 5 years, but less than 10 years

     

    4

    10 years or more

     

    5

    3. How long has your organisation used the SAP Software?

    Less than One year

    At least one year but less than 3 years

    At least three but less than 5 years

    At least five but less than 10 years

    At least ten but less than 20 years

    Twenty years or more

    1

    2

    3

    4

    5

    6

    4. How many full-time employees are in your organisation?

    1 to 200 employees

    201 to 700 employees

    701 employees or more

    1

    2

    3

    5. In how many countries, excluding South Africa, is your organisation operating? Please enter the number.

    143

    SECTION B: Your view on the SAP Software and Training

    6. Who is/was responsible for SAP training in your organisation? Please mark all applicable

    Independent external consultants

    The SAP computer systems specialists.

    The training is done on-the job with experienced employees

    Other. (specify)

     
     
     
     
     

    7. To what extent, do you believe the SAP Software is used as a strategic management tool in your organisation?

    4

    No Extent

    Small Extent

    Moderate Extent

    Large Extent

    1

    2

    3

     
     

    8. How did your organisation acquire the SAP Software?

    The software was customised for my organisation

    Vendor supplied the software with some modifications

    Vendor supplied the software with little or no modifications

    Vendor supplied the software with major modifications

     

    1

    2

    3

    4

     

    9. Please indicate to what extent you agree/ disagree with the following statements. 1 = Strongly Agree (SA), 2 = Agree (A), 3 = Neutral (N), 4 = Strong disagree (SD), 5 =Disagree (D).

    IN MY

    ORGANISATION

    SA

    A

    N

    SD

    D

     

    The implementation of the SAP system was a waste of money.

    1

    2

    3

    4

    5

     

    The SAP System hampers internal organisation of processes.

    1

    2

    3

    4

    5

     

    It is a complex to implement the SAP System software.

    1

    2

    3

    4

    5

     

    SAP System effectively integrates different applications.

    1

    2

    3

    4

    5

     

    The multifunctionality of the SAP software is of strategic importance to my organisation.

    1

    2

    3

    4

    5

     

    The modular capability of SAP software is of strategic importance to my organisation.

    1

    2

    3

    4

    5

    144

    SECTION C: Strategic management, SAP system and value chain

    10. Please indicate to what extent you agree/ disagree with the following statements. 1 = Strongly Agree (SA), 2 = Agree (A), 3 = Neutral (N), 4 = Strong disagree (SD), 5 =Disagree (D).

     

    IN MY ORGANISATION

    SA

    A

    N

    SD

    D

     

    In our organisation the SAP Software is integrated in the supply chain.

    1

    2

    3

    4

    5

     

    In our organisation the SAP Software adds value in the supply chain.

    1

    2

    3

    4

    5

     

    The SAP System supports the objectives of our organisation.

    1

    2

    3

    4

    5

     

    The IT Strategy plan in our organisation influences the extent to which SAP Software can be successfully implemented.

    1

    2

    3

    4

    5

     

    In my organisation the IT Strategic plan is followed.

    1

    2

    3

    4

    5

     

    SECTION D: General information

    11. Please indicate to what extent you agree/ disagree with the following statements. 1 = Strongly Agree (SA), 2 = Agree (A), 3 = Neutral (N), 4 = Strong disagree (SD), 5 =Disagree (D).

    IN MY

    ORGANISATION

    The acquisition of ERP Software is valuable to my

    SA

    A

    N

    SD

    D

     

    organisation.

    1

    2

    3

    4

    5

     

    In my organisation the most effective ERP System was implemented.

    1

    2

    3

    4

    5

     

    The ERP System was effectively customised for my

     
     
     
     
     
     

    organisation.

    1

    2

    3

    4

    5

     

    Employees in my organisation make effective use of the

     
     
     
     
     
     

    SAP System.

    1

    2

    3

    4

    5

     

    SAP Software users are knowledgeable about the system.

    1

    2

    3

    4

    5

    Your participation in this research is appreciated.

    145

    APPENDIX B: SELF-ADMINISTERED SURVEY FOR MANAGERS AND THE END

    USERS

    This MBA Dissertation conducted at the University of Johannesburg attempts to evaluate the perceived technical and strategic influence of an ERP system on the value chain process of multinational enterprises (MNEs).

    Please complete each of the following questions by ticking the box corresponding to your answer or by filling in your response. The questionnaire will be treated as strictly confidential at all times. Neither your name nor that of your organisation will in any way be connected to the findings of this study. We only wish to establish your views on various issues on the strategic management and operational, and the usage and training, awareness of the ERP System i.e. SAP software under utilisation within your organisation.

    SECTION A: Demographics

    Please answer each question by crossing (X) the number corresponding to your response

    1. How long have you been using the SAP Software?

    Less than One year

    At least One year but less than 3 years

    At least three but less than 5 years

    At least five but less than 10 years

    At least ten but less than 20 years

    Twenty years or more

    1

    2

    3

    4

    5

    6

     

    2. What is your current job level?

    3

    General Manager

     

    Senior Manager

    Middle Manager

    Junior Manager

    End user

    1

    2

     

    4

    5

    3. What is your age group?

    Younger than 20

     

    1

    20 to 25 years

     

    2

    26 to 30 years

     

    3

    31 to 35 years

     

    4

    36 to 40 years

     

    5

    41 to 45 years

     

    6

    46 to 50 years

     

    7

    Older than 50 years

     

    8

    146

    4. What is your highest level of education?

    No formal schooling

     

    1

    Some Primary School

     

    2

    Some High School

     

    3

    Grade 12 (Matric)

     

    4

    Post School Diploma (s) or certificate (s)

     

    5

    Undergraduate or equivalent degree (s)

     

    6

    Post Graduate Degree (s)

     

    7

    5. How many full time employees report to you?

    0

    Between
    1 and 10

    Between 11 and 20

    Between 21 to 30

    Between 31 to 40

    More than

    40

    0

    1

    2

    3

    4

    5

    SECTION B: Strategic management, SAP operational, and training

    6. How would you rate your SAP Software efficiency?

    Excellent

     

    1

    Good

     

    2

    Moderate

     

    3

    Poor

     

    4

    Very Poor

     

    5

    7. How did your organisation acquire the SAP Software?

    Vendor supplied the software with some modifications

    Vendor supplied the software with little or no modifications

    Vendor supplied the software with major modifications

    The software was customised for my organisation

    1

    2

    3

    4

    8. Who is/was responsible for SAP training in your organisation? Please mark all applicable

    Independent external consultants

    The SAP computer
    systems specialists

    The training is done on-the job with experienced employees

    Other. (specify)

     
     
     
     

    9. Please indicate your level of agreement with each of following statements using the scale as indicated?

    1 = Strongly Agree (SA), 2 = Agree (A), 3 = Neutral (N), 4 = Strong disagree (SD), 5 =Disagree (D).

    147

     

    IN MY ORGANISATION

    SAP Software supports my department's objectives.

    SA 1

    A

    2

    N

    3

    SD 4

    D

    5

     

    Senior managers were consulted regarding the selection of the ERP Software used in my organisation.

    1

    2

    3

    4

    5

     

    The end users were consulted regarding the selection of the ERP Software used in your organisation.

    1

    2

    3

    4

    5

     

    The implementation of the SAP Software adds value for our customers.

    1

    2

    3

    4

    5

     

    Sufficient funds were made available to train employees in SAP Software usage.

    1

    2

    3

    4

    5

     

    In my department, the strategic plan is followed.

    1

    2

    3

    4

    5

     

    In my organisation the IT Strategic plan is followed.

    1

    2

    3

    4

    5

     

    The IT Strategy plan in our organisation influences the extent to which SAP Software can be successfully implemented.

    1

    2

    3

    4

    5

    SECTION C: General information

    10. Please indicate your level of agreement with each of the following statements using the scale as indicated?

    1 = Strongly Agree (SA), 2 = Agree (A), 3 = Neutral (N), 4 = Strong disagree (SD), 5 =Disagree (D).

    IN MY ORGANISATION

     

    SA

    A

    N

    SD

    D

     

    The SAP Software facilitates effective decision-making.

    1

    2

    3

    4

    5

     

    The SAP Software facilitates improved productivity.

    1

    2

    3

    4

    5

     

    I received sufficient training on the usage of the SAP

    1

    2

    3

    4

    5

     

    Software.

     
     
     
     
     
     

    Value adding activities are communicated to me.

    1

    2

    3

    4

    5

     

    My performance has been evaluated against predetermined criteria.

    1

    2

    3

    4

    5

    Your participation in this research is appreciated.

    148

    APPENDIX C: COVER LETTER FOR QUESTIONNAIRES TO MNEs

    From: Folo - Ralph Bosombo
    Student Number: 809505439

    P.0 Box: 1887

    Rosettenville

    Johannesburg, 2130

    To MNE

    Johannesburg

    South Africa

    06 June 2006

    Application for permission to conduct a self-administered survey in your organisation

    To Whom It May Concern:

    I am writing to you to solicit permission to conduct a self-administered survey in your organisation concerning my research dissertation on ERP system I.e. SAP software as part of my MBA dissertation at the University of Johannesburg entitled " The influence of an ERP system on the value chain process of multinational enterprises (MNEs) ".

    Primary, the research involved a qualitative study, which focused on an analysis of ERP systems based on a literature study. It is the objective of the empirical study to assess the general view of the employees in selected companies about the ERP system i.e. SAP software.

    You have been selected as a multinational enterprise (MNE) operating in the Gauteng province through the preliminary telephonic interview conducted by the researcher, during which it was confirmed that your organisation used SAP software. Your participation in this study is critical in order to determine the influence of ERP software such as SAP on the value chain process of MNEs.

    Your response to the questionnaire will be treated as strictly confidential at all times. Neither your name nor that of your organisation will in any way be connected to the findings of this study.

    I look forward to hear from you and appreciate your willingness to participate in this research. Please write, or e-mail me, should you have any questions. My e-mail address is [visionkisang.zaco @ webmail.co.za]

    Yours sincerely H.B Klopper

    Folo - Ralph Bosombo Study supervisor

    149

    APPENDIX D: LIST OF ORGANISATIONS CONSULTED IN PRELIMINARY

    TELEPHONIC SURVEY

    Table1: List of organisations consulted in preliminary telephonic survey.

    Organisation

    Telephone

    Email address

    Category

    Size

    Software

     

    Anchor Yeast

    011 474 2430

    www.anchor.co.za

    Multinational

    Medium

    ERP (other)

     

    KMPG

    011 647 7111

    joinus@kpmg.co.za

    Multinational

    Large

    Oracle

     

    Ingwe

    011 376 9111

    webmaster@ingwe.co.za

    Multinational

    Medium

    SAP software

     

    ABSA

    011 507 8301

    groupsec@absa.co.za

    Local

    Large

    SAP & Oracle

     

    Standard Bank

    011 636 9112

    carreers@standardbank.co.za

    Local, Mult

    Medium

    SAP & Oracle

     

    Pick'n Pay

    011 856 7000

    fvdwalt@pnp.co.za

    Local

    Large

    (Migrating) SAP

    in

    Toyota SA

    011 444 6182

     

    Multinational

    Medium

    SAP

     

    Sasol Ltd

    011 441 3111

    jacques.gouws@sasol.com

    Local, Mult

    Medium

    SAP

     

    Philips

    011 471 5000

    www.philips.com

    Multinational

    Medium

    SAP

     

    Oracle Corpor

    011 266 4000

    jgroenew@za.oracle.co.za

    Multinational

    Medium

    Oracle

     

    Nordberg Ltd

    011 484 5931

    leon.chnonin@nordberg.com

    Multinational

    Large

    ERP (other)

     

    KSB Pumps SA

    011 828 8950

    Ksbsales@global.co.za

    Multinational

    Medium

    SAP

     

    JD Edwards SA

    011 236 6500

    www.jdedwards.com

    Multinational

    Medium

    JD Edward

     

    Eskom SA Ltd

    011 800 8111

    PAIA@eskom.co.za

    Local

    Large

    SAP

     

    Dell Computer

    011 709 7700

    www.dell.com

    Multinational

    Large

    Oracle

     

    ABI Ltd

    011 456 6700

    www.abi.co.za

    Multinational

    Medium

    JD Edward, SAP

     

    SAB Miller

    011 881 8111

    Janice.hallot@za.sabmiller.co

    Multinational

    Medium

    JD Edward, SAP

     

    Adcock-Ingram

    011 709 9300

    mail@adcock.co.za

    Multinational

    Medium

    JD Edward, SAP

     

    150

    APPENDIX E: LIST OF ORGANISATIONS INCLUDED IN THE SELF-ADMINISTERED

    SURVEYS

    Table1: List of organisations included in the self-administered surveys.

    Organisations

    Telephone

    Email address

    Category

    Size

    Software

    1. Ingwe

    011 376 9111

    webmaster@ingwe.co.za

    Multinational

    Medium

    SAP software

    2. ABSA

    011 507 8301

    groupsec@absa.co.za

    Local, Mult

    Large

    SAP & Oracle

    3. Standard Bank

    011 636 9112

    carreers@standardbank.co.za

    Local, Mult

    Medium

    SAP & Oracle

    4. Toyota SA

    011 444 6182

     

    Multinational

    Medium

    SAP

    5. Sasol Ltd

    011 441 3111

    jacques.gouws@sasol.com

    Local, Mult

    Medium

    SAP

    6. Philips

    011 471 5000

    www.philips.com

    Multinational

    Medium

    SAP

    7. KSB Pumps SA

    011 828 8950

    Ksbsales@global.co.za

    Multinational

    Medium

    SAP

    8. Eskom SA Ltd

    11 800 8111

    PAIA@eskom.co.za

    Local

    Large

    SAP

    9. ABI Ltd

    011 456 6700

    www.abi.co.za

    Multinational

    Medium

    JD Edward, SAP

     

    10. SAB Miller

    011 881 8111

    Janice.hallot@za.sabmiller.co

    Multinational

    Medium

    JD Edward, SAP

    11. Adcock- Ingram

    011 709 9300

    mail@adcock.co.za

    Multinational

    Medium

    JD Edward, SAP

    151

    APPENDIX F: STATISTICAL ANALYSIS
    a2

     
     

    Frequency

    Percent

    Valid

    Manager

    61

    45.2

    End user

    73

    54.1

    Total

    134

    99.3

    Missing

    System

    1

    .7

    Total

    135

    100.0

    a5

     
     

    Frequency

    Percent

    Valid

    0

    106

    78.5

    More than 0

    28

    20.7

    Total

    134

    99.3

    Missing

    System

    1

    .7

    Total

    135

    100.0

    Please indicate your level of agreement with each of the following statements

     
     

    Agree

    Neutral

    Disagree

    Total

    b9.1 SAP Software supports my department's objectives.

    Count

    126

    6

    3

    135

    %

    93.3%

    4.4%

    2.2%

    100.0%

    b9.2 Senior managers were consulted regarding the selection of the ERP Software used in my organisation.

    Count

    74

    39

    22

    135

    %

    54.8%

    28.9%

    16.3%

    100.0%

    b9.3 The end users were consulted regarding the selection of the ERP Software used in your organisation.

    Count

    61

    36

    38

    135

    %

    45.2%

    26.7%

    28.1%

    100.0%

    b9.4 The implementation of the SAP Software adds value for our customers.

    Count

    123

    9

    2

    134

    %

    91.8%

    6.7%

    1.5%

    100.0%

    b9.5 Sufficient funds were made available to train employees in SAP Software usage.

    Count

    99

    25

    11

    135

    %

    73.3%

    18.5%

    8.1%

    100.0%

    b9.6 In my department, the strategic plan is followed.

    Count

    110

    23

    2

    135

    %

    81.5%

    17.0%

    1.5%

    100.0%

    b9.7 In my organisation the IT Strategic plan is followed.

    Count

    110

    22

    3

    135

    %

    81.5%

    16.3%

    2.2%

    100.0%

    b9.8 The IT Strategic plan in our
    organisation influences the extent to
    which SAP Software can be successfully
    implemented.

    Count

    109

    23

    3

    135

    %

    80.7%

    17.0%

    2.2%

    100.0%

    152

    Please indicate your level of agreement with each of the following statements

     
     

    Agree

    Neutral

    Disagree

    Total

    c10.1 The SAP Software facilitates effective decision-making.

    Count

    126

    7

    2

    135

    %

    93.3%

    5.2%

    1.5%

    100.0%

    c10.2 The SAP Software facilitates improved productivity.

    Count

    128

    5

    2

    135

    %

    94.8%

    3.7%

    1.5%

    100.0%

    c10.3 I received sufficient training on the usage of the SAP Software.

    Count

    105

    21

    9

    135

    %

    77.8%

    15.6%

    6.7%

    100.0%

    c10.4 Value adding activities are communicated to me.

    Count

    123

    8

    4

    135

    %

    91.1%

    5.9%

    3.0%

    100.0%

    c10.5 My performance has been evaluated against predetermined criteria.

    Count

    127

    6

    2

    135

    %

    94.1%

    4.4%

    1.5%

    100.0%

    Further Recoding
    Please indicate your level of agreement with each of the following statements

     
     

    Agree

    Neutral / Disagree

    Total

    b9.1 SAP Software supports my department's objectives.

    Count

    126

    9

    135

    %

    93.3%

    6.7%

    100.0%

    b9.2 Senior managers were consulted regarding the selection of the ERP Software used in my organisation.

    Count

    74

    61

    135

    %

    54.8%

    45.2%

    100.0%

    b9.3 The end users were consulted regarding the selection of the ERP Software used in your organisation.

    Count

    61

    74

    135

    %

    45.2%

    54.8%

    100.0%

    b9.4 The implementation of the SAP Software adds value for our customers.

    Count

    123

    11

    134

    %

    91.8%

    8.2%

    100.0%

    b9.5 Sufficient funds were made available to train employees in SAP Software usage.

    Count

    99

    36

    135

    %

    73.3%

    26.7%

    100.0%

    b9.6 In my department, the strategic plan is followed.

    Count

    110

    25

    135

    %

    81.5%

    18.5%

    100.0%

    b9.7 In my organisation the IT Strategic plan is followed.

    Count

    110

    25

    135

    %

    81.5%

    18.5%

    100.0%

    b9.8 The IT Strategic plan in our organisation influences the extent to which SAP Software can be successfully implemented.

    Count

    109

    26

    135

    %

    80.7%

    19.3%

    100.0%

    153

    Please indicate your level of agreement with each of the following statements

     
     

    Agree

    Neutral / Disagree

    Total

    c10.1 The SAP Software facilitates effective decision-making.

    Count

    126

    9

    135

    %

    93.3%

    6.7%

    100.0%

    c10.2 The SAP Software facilitates improved productivity.

    Count

    128

    7

    135

    %

    94.8%

    5.2%

    100.0%

    c10.3 I received sufficient training on the usage of the SAP Software.

    Count

    105

    30

    135

    %

    77.8%

    22.2%

    100.0%

    c10.4 Value adding activities are communicated to me.

    Count

    123

    12

    135

    %

    91.1%

    8.9%

    100.0%

    c10.5 My performance has been evaluated against predetermined criteria.

    Count

    127

    8

    135

    %

    94.1%

    5.9%

    100.0%

    Crosstabulations
    a2 * a5 Crosstabulation a2 * a5 Crosstabulation

     
     
     

    a5

    Total

    0

    More than 0

    a2

    Manager

    Count

    32

    28

    60

    % within a2

    53.3%

    46.7%

    100.0%

    End user

    Count

    73

    0

    73

    % within a2

    100.0%

    .0%

    100.0%

    Total

    Count

    105

    28

    133

    % within a2

    78.9%

    21.1%

    100.0%

    Chi-Square Tests

     

    Value

    df

    Asymp. Sig. (2-
    sided)

    Exact Sig. (2-
    sided)

    Exact Sig. (1-
    sided)

    Pearson Chi-Square

    43.151(b)

    1

    .000

     
     

    Continuity
    Correction(a)

    40.389

    1

    .000

     
     

    Likelihood Ratio

    53.987

    1

    .000

     
     

    Fisher's Exact Test

     
     
     

    .000

    .000

    Linear-by-Linear
    Association

    42.827

    1

    .000

     
     

    N of Valid Cases

    133

     
     
     
     

    a Computed only for a 2x2 table

    b 0 cells (.0%) have expected count less than 5. The minimum expected count is 12.63.

    154

    Symmetric Measures

     
     

    Value

    Approx. Sig.

    Nominal by Nominal

    Phi

    -.570

    .000

    Cramer's V

    .570

    .000

    N of Valid Cases

    133

     

    a Not assuming the null hypothesis.

    b Using the asymptotic standard error assuming the null hypothesis.

    b9.1 * b9.8 Crosstabulationb9.1 * b9.8 Crosstabulation

     
     
     

    b9.8

    Total

    Agree

    Neutral / Disagree

    b9.1

    Agree

    Count

    105

    21

    126

    % within b9.1

    83.3%

    16.7%

    100.0%

    Neutral / Disagree

    Count

    4

    5

    9

    % within b9.1

    44.4%

    55.6%

    100.0%

    Total

    Count

    109

    26

    135

    % within b9.1

    80.7%

    19.3%

    100.0%

    Chi-Square Tests

     

    Value

    df

    Asymp. Sig. (2-
    sided)

    Exact Sig. (2-
    sided)

    Exact Sig. (1-
    sided)

    Pearson Chi-Square

    8.170(b)

    1

    .004

     
     

    Continuity
    Correction(a)

    5.860

    1

    .015

     
     

    Likelihood Ratio

    6.383

    1

    .012

     
     

    Fisher's Exact Test

     
     
     

    .013

    .013

    Linear-by-Linear
    Association

    8.109

    1

    .004

     
     

    N of Valid Cases

    135

     
     
     
     

    a Computed only for a 2x2 table

    b 1 cells (25.0%) have expected count less than 5. The minimum expected count is 1.73.

    155

    Symmetric Measures

     
     

    Value

    Approx. Sig.

    Nominal by Nominal

    Phi

    .246

    .004

    Cramer's V

    .246

    .004

    N of Valid Cases

    135

     

    a Not assuming the null hypothesis.

    b Using the asymptotic standard error assuming the null hypothesis.

    b9.1 * b9.2 Crosstabulationb9.1 * b9.2 Crosstabulation

     
     
     

    b9.2

    Total

    Agree

    Neutral / Disagree

    b9.1

    Agree

    Count

    73

    53

    126

    % within b9.1

    57.9%

    42.1%

    100.0%

    Neutral / Disagree

    Count

    1

    8

    9

    % within b9.1

    11.1%

    88.9%

    100.0%

    Total

    Count

    74

    61

    135

    % within b9.1

    54.8%

    45.2%

    100.0%

    Chi-Square Tests

     

    Value

    df

    Asymp. Sig. (2-
    sided)

    Exact Sig. (2-
    sided)

    Exact Sig. (1-
    sided)

    Pearson Chi-Square

    7.436(b)

    1

    .006

     
     

    Continuity
    Correction(a)

    5.666

    1

    .017

     
     

    Likelihood Ratio

    8.132

    1

    .004

     
     

    Fisher's Exact Test

     
     
     

    .011

    .008

    Linear-by-Linear
    Association

    7.381

    1

    .007

     
     

    N of Valid Cases

    135

     
     
     
     

    a Computed only for a 2x2 table

    b 2 cells (50.0%) have expected count less than 5. The minimum expected count is 4.07.

    156

    Symmetric Measures

     
     

    Value

    Approx. Sig.

    Nominal by Nominal

    Phi

    .235

    .006

    Cramer's V

    .235

    .006

    N of Valid Cases

    135

     

    a Not assuming the null hypothesis.

    b Using the asymptotic standard error assuming the null hypothesis.

    b9.6 * b9.7 Crosstabulationb9.6 * b9.7 Crosstabulation

     
     
     

    b9.7

    Total

    Agree

    Neutral / Disagree

    b9.6

    Agree

    Count

    108

    2

    110

    % within b9.6

    98.2%

    1.8%

    100.0%

    Neutral / Disagree

    Count

    2

    23

    25

    % within b9.6

    8.0%

    92.0%

    100.0%

    Total

    Count

    110

    25

    135

    % within b9.6

    81.5%

    18.5%

    100.0%

    Chi-Square Tests

     

    Value

    df

    Asymp. Sig. (2-
    sided)

    Exact Sig. (2-
    sided)

    Exact Sig. (1-
    sided)

    Pearson Chi-Square

    109.792(b)

    1

    .000

     
     

    Continuity
    Correction(a)

    103.897

    1

    .000

     
     

    Likelihood Ratio

    95.444

    1

    .000

     
     

    Fisher's Exact Test

     
     
     

    .000

    .000

    Linear-by-Linear
    Association

    108.979

    1

    .000

     
     

    N of Valid Cases

    135

     
     
     
     

    a Computed only for a 2x2 table

    b 1 cells (25.0%) have expected count less than 5. The minimum expected count is 4.63.

    157

    Symmetric Measures

     
     

    Value

    Approx. Sig.

    Nominal by Nominal

    Phi

    .902

    .000

    Cramer's V

    .902

    .000

    N of Valid Cases

    135

     

    a Not assuming the null hypothesis.

    b Using the asymptotic standard error assuming the null hypothesis.

    b9.5 * c10.3 Crosstabulationb9.5 * c10.3 Crosstabulation

     
     
     

    c10.3

    Total

    Agree

    Neutral / Disagree

    b9.5

    Agree

    Count

    86

    13

    99

    % within b9.5

    86.9%

    13.1%

    100.0%

    Neutral / Disagree

    Count

    19

    17

    36

    % within b9.5

    52.8%

    47.2%

    100.0%

    Total

    Count

    105

    30

    135

    % within b9.5

    77.8%

    22.2%

    100.0%

    Chi-Square Tests

     

    Value

    df

    Asymp. Sig. (2-
    sided)

    Exact Sig. (2-
    sided)

    Exact Sig. (1-
    sided)

    Pearson Chi-Square

    17.752(b)

    1

    .000

     
     

    Continuity
    Correction(a)

    15.834

    1

    .000

     
     

    Likelihood Ratio

    16.228

    1

    .000

     
     

    Fisher's Exact Test

     
     
     

    .000

    .000

    Linear-by-Linear
    Association

    17.620

    1

    .000

     
     

    N of Valid Cases

    135

     
     
     
     

    a Computed only for a 2x2 table

    b 0 cells (.0%) have expected count less than 5. The minimum expected count is 8.00.

    158

    Symmetric Measures

     
     

    Value

    Approx. Sig.

    Nominal by Nominal

    Phi

    .363

    .000

    Cramer's V

    .363

    .000

    N of Valid Cases

    135

     

    a Not assuming the null hypothesis.

    b Using the asymptotic standard error assuming the null hypothesis.

    c10.4 * c10.5 Crosstabulationc10.4 * c10.5 Crosstabulation

     
     
     

    c10.5

    Total

    Agree

    Neutral / Disagree

    c10.4

    Agree

    Count

    122

    1

    123

    % within c10.4

    99.2%

    .8%

    100.0%

    Neutral / Disagree

    Count

    5

    7

    12

    % within c10.4

    41.7%

    58.3%

    100.0%

    Total

    Count

    127

    8

    135

    % within c10.4

    94.1%

    5.9%

    100.0%

    Chi-Square Tests

     

    Value

    df

    Asymp. Sig. (2-
    sided)

    Exact Sig. (2-
    sided)

    Exact Sig. (1-
    sided)

    Pearson Chi-Square

    64.889(b)

    1

    .000

     
     

    Continuity
    Correction(a)

    54.981

    1

    .000

     
     

    Likelihood Ratio

    32.813

    1

    .000

     
     

    Fisher's Exact Test

     
     
     

    .000

    .000

    Linear-by-Linear
    Association

    64.408

    1

    .000

     
     

    N of Valid Cases

    135

     
     
     
     

    a Computed only for a 2x2 table

    b 1 cells (25.0%) have expected count less than 5. The minimum expected count is .71.

    159

    Symmetric Measures

     
     

    Value

    Approx. Sig.

    Nominal by Nominal

    Phi

    .693

    .000

    Cramer's V

    .693

    .000

    N of Valid Cases

    135

     

    a Not assuming the null hypothesis.

    b Using the asymptotic standard error assuming the null hypothesis.

    b9.4 * c10.2 Crosstabulationb9.4 * c10.2 Crosstabulation

     
     
     

    c10.2

    Total

    Agree

    Neutral / Disagree

    b9.4

    Agree

    Count

    122

    1

    123

    % within b9.4

    99.2%

    .8%

    100.0%

    Neutral / Disagree

    Count

    5

    6

    11

    % within b9.4

    45.5%

    54.5%

    100.0%

    Total

    Count

    127

    7

    134

    % within b9.4

    94.8%

    5.2%

    100.0%

    Chi-Square Tests

     

    Value

    df

    Asymp. Sig. (2-
    sided)

    Exact Sig. (2-
    sided)

    Exact Sig. (1-
    sided)

    Pearson Chi-Square

    58.881(b)

    1

    .000

     
     

    Continuity
    Correction(a)

    48.528

    1

    .000

     
     

    Likelihood Ratio

    28.180

    1

    .000

     
     

    Fisher's Exact Test

     
     
     

    .000

    .000

    Linear-by-Linear
    Association

    58.441

    1

    .000

     
     

    N of Valid Cases

    134

     
     
     
     

    a Computed only for a 2x2 table

    b 1 cells (25.0%) have expected count less than 5. The minimum expected count is .57.

    160

    Symmetric Measures

     
     

    Value

    Approx. Sig.

    Nominal by Nominal

    Phi

    .663

    .000

    Cramer's V

    .663

    .000

    N of Valid Cases

    134

     

    a Not assuming the null hypothesis.

    b Using the asymptotic standard error assuming the null hypothesis.

    c10.3 * b8.3 Crosstabulationc10.3 * b8.3 Crosstabulation

     
     
     

    b8.3

    Total

    Not Marked

    Marked

    c10.3

    Agree

    Count

    12

    93

    105

    % within c10.3

    11.4%

    88.6%

    100.0%

    Neutral / Disagree

    Count

    4

    26

    30

    % within c10.3

    13.3%

    86.7%

    100.0%

    Total

    Count

    16

    119

    135

    % within c10.3

    11.9%

    88.1%

    100.0%

    Chi-Square Tests

     

    Value

    df

    Asymp. Sig. (2-
    sided)

    Exact Sig. (2-
    sided)

    Exact Sig. (1-
    sided)

    Pearson Chi-Square

    .081(b)

    1

    .776

     
     

    Continuity
    Correction(a)

    .000

    1

    1.000

     
     

    Likelihood Ratio

    .079

    1

    .779

     
     

    Fisher's Exact Test

     
     
     

    .754

    .495

    Linear-by-Linear
    Association

    .080

    1

    .777

     
     

    N of Valid Cases

    135

     
     
     
     

    a Computed only for a 2x2 table

    b 1 cells (25.0%) have expected count less than 5. The minimum expected count is 3.56.

    161

    Symmetric Measures

     
     

    Value

    Approx. Sig.

    Nominal by Nominal

    Phi

    -.024

    .776

    Cramer's V

    .024

    .776

    N of Valid Cases

    135

     

    a Not assuming the null hypothesis.

    b Using the asymptotic standard error assuming the null hypothesis.

    162

    APPENDIX G
    Frequencies and descriptives data for the CEOs/CIOs

    SECTION A: Demographics
    a1 Specify in which capacity are you completing this questionnaire?

     
     

    Frequency

    Percent

    Valid

    CIO

    3

    100.0

    a2 How long have you been operating the SAP software?

     
     

    Frequency

    Percent

    Valid

    10 years or more

    3

    100.0

    a3 How long has your organisation used the SAP software?

     
     

    Frequency

    Percent

    Valid

    At least ten but less than 20 years

    3

    100.0

    a4 How many full-time employees are in your organisation

     
     

    Frequency

    Percent

    Valid

    701 employees or more

    3

    100.0

    a5 In how many countries, excluding South Africa, is your organisation operating?

     
     

    Frequency

    Percent

    Valid Percent

    Valid

    20

    1

    33.3

    50.0

    25

    1

    33.3

    50.0

    Total

    2

    66.7

    100.0

    Missing

    System

    1

    33.3

     

    Total

    3

    100.0

     

    SECTION B: Your view on the SAP Software and Training

    163

    Who is/was responsible for SAP training in your oraganisation?

     
     

    Not Marked

    Marked

    Total

    b6.1 Independent external consultants

    Count

    2

    1

    3

    %

    66.7%

    33.3%

    100.0%

    b6.2 The SAP computer systems specialists

    Count

     

    3

    3

    %

     

    100.0%

    100.0%

    b6.3 The training is done on-the-job with experienced employees

    Count

     

    3

    3

    %

     

    100.0%

    100.0%

    b6.4 Other

    Count

    3

     

    3

    %

    100.0%

     

    100.0%

    b7 To what extent, do you believe the SAP Software is used as a strategic management tool in your
    organisation?

     
     

    Frequency

    Percent

    Valid

    Large Extent

    3

    100.0

    b8 How did your organisation acquire the SAP Software?

     
     

    Frequency

    Percent

    Valid

    The software was customised for my organisation

    3

    100.0

    To what extent do you agree/disagree with the following statement?

     
     

    Strongly
    Agree

    Agree

    Strongly
    disagree

    Disagree

    Total

    b9.1 The implementation of the SAP system was a waste of money.

    Count

     
     

    3

     

    3

    %

     
     

    100.0%

     

    100.0%

    b9.2 The SAP System hampers internal organisation of processes.

    Count

     
     

    2

    1

    3

    %

     
     

    66.7%

    33.3%

    100.0%

    164

    b9.3 It is a complex to implement the SAP System software.

    Count

    1

    2

     
     

    3

    %

    33.3%

    66.7%

     
     

    100.0%

    b9.4 SAP System effectively integrates different applications.

    Count

    3

     
     
     

    3

    %

    100.0%

     
     
     

    100.0%

    b9.5 The multifunctionality of the SAP software is of strategic importance to my organisation.

    Count

    3

     
     
     

    3

    %

    100.0%

     
     
     

    100.0%

    b9.6 The modular capability of SAP software is of strategic importance to my organisation.

    Count

    3

     
     
     

    3

    %

    100.0%

     
     
     

    100.0%

    Statistics

     

    Mean

    Median

    Std.
    Deviation

    b9.1 The implementation of the SAP system was a waste of
    money.

    4.00

    4.00

    .000

    b9.2 The SAP System hampers internal organisation of
    processes.

    4.33

    4.00

    .577

    b9.3 It is a complex to implement the SAP System software.

    1.67

    2.00

    .577

    b9.4 SAP System effectively integrates different applications.

    1.00

    1.00

    .000

    b9.5 The multifunctionality of the SAP software is of strategic
    importance to my organisation.

    1.00

    1.00

    .000

    b9.6 The modular capability of SAP software is of strategic
    importance to my organisation.

    1.00

    1.00

    .000

    SECTION C: Strategic management, SAP system and value chain
    To what extent do you agree/disagree with the following statement?

     
     

    Strongly Agree

    Total

    c10.1 In our organisation the SAP Software is integrated in the supply chain.

    Count

    3

    3

    %

    100.0%

    100.0%

    c10.2 In our organisation the SAP Software adds value in the supply chain.

    Count

    3

    3

    %

    100.0%

    100.0%

    c10.3 The SAP System supports the objectives of our
    organisation.

    Count

    3

    3

    %

    100.0%

    100.0%

    c10.4 The IT Strategy plan in our organisation

    Count

    3

    3

    165

    influences the extent to which SAP Software can be

     
     
     

    successfully implemented.

    %

    100.0%

    100.0%

    c10.5 In my organisation the IT Strategic plan is

    Count

    3

    3

    followed.

    %

    100.0%

    100.0%

    Statistics

     

    Mean

    Median

    Std.
    Deviation

    c10.1 In our organisation the SAP Software is integrated in the supply chain.

    1.00

    1.00

    .000

    c10.2 In our organisation the SAP Software adds value in the supply chain.

    1.00

    1.00

    .000

    c10.3 The SAP System supports the objectives of our organisation.

    1.00

    1.00

    .000

    c10.4 The IT Strategy plan in our organisation influences the extent to which SAP Software can be successfully implemented.

    1.00

    1.00

    .000

    c10.5 In my organisation the IT Strategic plan is followed.

    1.00

    1.00

    .000

    SECTION D: General Information
    To what extent do you agree/disagree with the following statement?

     
     

    Strongly Agree

    Agree

    Disagree

    Total

    d11.1 The acquisition of ERP Software is valuable to my organisation.

    Count

    3

     
     

    3

    %

    100.0%

     
     

    100.0%

    d11.2 In my organisation the most effective ERP System was implemented.

    Count

    2

     

    1

    3

    %

    66.7%

     

    33.3%

    100.0%

    d11.3 The ERP System was effectively customised for my organisation.

    Count

    3

     
     

    3

    %

    100.0%

     
     

    100.0%

    d11.4 Employees in my organisation make effective use of the SAP System.

    Count

    2

    1

     

    3

    %

    66.7%

    33.3%

     

    100.0%

    d11.5 SAP Software users are
    knowledgeable about the system.

    Count

    2

    1

     

    3

    %

    66.7%

    33.3%

     

    100.0%

    166

    Statistics

     

    Mean

    Median

    Std. Deviation

    d11.1 The acquisition of ERP Software is valuable to my organisation.

    1.00

    1.00

    .000

    d11.2 In my organisation the most effective ERP System was implemented.

    2.33

    1.00

    2.309

    d11.3 The ERP System was effectively customised for my organisation.

    1.00

    1.00

    .000

    d11.4 Employees in my organisation make effective use of the SAP System.

    1.33

    1.00

    .577

    d11.5 SAP Software users are knowledgeable about the system.

    1.33

    1.00

    .577

    167

    APPENDIX H
    Frequencies and descriptives data of end-users and Managers

    SECTION A: Demographics
    a1 How long have you been using the SAP Software?

     
     

    Frequency

    Percent

    Valid

    Less than One year

    8

    5.9

    At least One year but less than 3 years

    12

    8.9

    At least three but less than 5 years

    38

    28.1

    At least 5 but less than 10 years

    59

    43.7

    At least ten but less than 20 years

    18

    13.3

    Total

    135

    100.0

    a2 What is your current job level?

     
     

    Frequency

    Per cent

    Valid Per cent

    Valid

    General Manager

    4

    3.0

    3.0

    Senior Manager

    12

    8.9

    9.0

    Middle Manager

    11

    8.1

    8.2

    Junior Manager

    34

    25.2

    25.4

    End user

    73

    54.1

    54.5

    Total

    134

    99.3

    100.0

    Missing

    System

    1

    .7

     

    Total

    135

    100.0

     

    a3 What is your age group?

     
     

    Frequency

    Per cent

    Valid

    Younger than 20

    3

    2.2

    20 to 25 years

    18

    13.3

    26 to 30 years

    44

    32.6

    31 to 35 years

    37

    27.4

    36 to 40 years

    25

    18.5

    41 to 45 years

    7

    5.2

     

    1

    .7

    Total

    135

    100.0

    168

    a4 What is your highest level of education?

     
     

    Frequency

    Per cent

    Valid Per cent

    Valid

    Some High School

    8

    5.9

    6.0

    Grade 12 (Matric)

    50

    37.0

    37.3

    Post School Diploma(s) or certificate(s)

    53

    39.3

    39.6

    Undergraduate or equivalent degree(s)

    21

    15.6

    15.7

    Post Graduate Degree(s)

    2

    1.5

    1.5

    Total

    134

    99.3

    100.0

    Missing

    System

    1

    .7

     

    Total

    135

    100.0

     

    a5 How many full time employees report to you?

     
     

    Frequency

    Per cent

    Valid Per cent

    Valid

    0

    106

    78.5

    79.1

    Between 1 and 10

    13

    9.6

    9.7

    Between 11 and 20

    6

    4.4

    4.5

    Between 21 and 30

    3

    2.2

    2.2

    Between 31 and 40

    2

    1.5

    1.5

    More than 40

    4

    3.0

    3.0

    Total

    134

    99.3

    100.0

    Missing

    System

    1

    .7

     

    Total

    135

    100.0

     

    a2 What is your current job level? * a5 How many full time employees report to you? Crosstabulation
    Count

     
     

    a5 How many full time employees report to you?

    Tota
    l

    0

    Between 1
    and 10

    Between
    11 and 20

    Between
    21 to 30

    Between
    31 to 40

    More than
    40

    a2 What is your
    current job
    level?

    General
    Manager

    0

    0

    0

    0

    1

    3

    4

    Senior
    Manager

    0

    3

    4

    3

    1

    1

    12

    Middle
    Manager

    3

    6

    2

    0

    0

    0

    11

    169

     

    Junior

     
     
     
     
     
     
     
     

    Manager

    29

    4

    0

    0

    0

    0

    33

     

    End user

    73

    0

    0

    0

    0

    0

    73

    Total

    105

    13

    6

    3

    2

    4

    133

    SECTION B: Strategic management, SAP operational, and training
    b6 How would you rate your SAP Software efficiency?

     
     

    Frequency

    Percent

    Valid

    Excellent

    103

    76.3

    Good

    23

    17.0

    Moderate

    7

    5.2

    Very Poor

    2

    1.5

    Total

    135

    100.0

    How did your organisation acquire the SAP Software?

     
     

    Not Marked

    Marked

    Total

    b7.1 Vendor supplied the software with some modifications

    Count

    119

    16

    135

    %

    88.1%

    11.9%

    100.0%

    b7.2 Vendor supplied the software with little or no modifications

    Count

    122

    13

    135

    %

    90.4%

    9.6%

    100.0%

    b7.3 Vendor supplied the software with major modifications

    Count

    124

    11

    135

    %

    91.9%

    8.1%

    100.0%

    b7.4 The software was customised for my organisation

    Count

    41

    94

    135

    %

    30.4%

    69.6%

    100.0%

    Who is/was responsible for SAP training in your oraganisation?

     
     

    Not Marked

    Marked

    Total

    b8.1 Independent external clients

    Count

    115

    20

    135

    %

    85.2%

    14.8%

    100.0%

    b8.2 The SAP computer systems specialists

    Count

    37

    98

    135

    %

    27.4%

    72.6%

    100.0%

    b8.3 The training is done on-the-job with experienced employees

    Count

    16

    119

    135

    %

    11.9%

    88.1%

    100.0%

    b8.4 Other

    Count

    133

    2

    135

    %

    98.5%

    1.5%

    100.0%

    170

    Please indicate your level of agreement with each of the following statements

     
     

    Strongly
    Agree

    Agree

    Neutral

    Strongly
    Disagree

    Disagree

    No
    Resp
    onse

    Total

    b9.1 SAP Software supports my department's

    objectives.

    Count

    92

    34

    6

    2

    1

     

    135

    %

    68.1%

    25.2%

    4.4%

    1.5%

    .7%

     

    100.0%

    b9.2 Senior managers were consulted regarding the selection of the ERP Software used in my

    organisation.

    Count

    31

    43

    39

    11

    11

     

    135

    %

    23.0%

    31.9%

    28.9%

    8.1%

    8.1%

     

    100.0%

    b9.3 The end users

    were consulted regarding the selection of the ERP Software used in your organisation.

    Count

    22

    39

    36

    20

    18

     

    135

    %

    16.3%

    28.9%

    26.7%

    14.8%

    13.3%

     

    100.0%

    b9.4 The implementation of the SAP Software adds value for our

    customers.

    Count

    74

    49

    9

    2

     

    1

    135

    %

    54.8%

    36.3%

    6.7%

    1.5%

     

    .7%

    100.0%

    b9.5 Sufficient funds were made available to train employees in SAP Software usage.

    Count

    52

    47

    25

    10

    1

     

    135

    %

    38.5%

    34.8%

    18.5%

    7.4%

    .7%

     

    100.0%

    b9.6 In my department,the strategic plan is followed.

    Count

    64

    46

    23

    2

     
     

    135

    %

    47.4%

    34.1%

    17.0%

    1.5%

     
     

    100.0%

    b9.7 In my

    organisation the IT Strategic plan is followed.

    Count

    61

    49

    22

    3

     
     

    135

    %

    45.2%

    36.3%

    16.3%

    2.2%

     
     

    100.0%

    b9.8 The IT Strategic plan in our

    organisation influences the extent to which SAP Software can be successfully implemented.

    Count

    64

    45

    23

    3

     
     

    135

    %

    47.4%

    33.3%

    17.0%

    2.2%

     
     

    100.0%

    171

    Statistics

     

    N

    Mean

    Median

    Std.
    Deviation

    Skewness

    Kurtosis

    Missing

    SAP Software supports my department's objectives.

    0

    1.41

    1.00

    .716

    2.159

    5.796

    Senior managers were consulted regarding the selection of the ERP Software used in my organisation.

    0

    2.47

    2.00

    1.171

    .577

    -.314

    The end users were consulted

    regarding the selection of the ERP Software used in your organisation.

    0

    2.80

    3.00

    1.263

    .294

    -.887

    The implementation of the SAP Software adds value for our customers.

    1

    1.54

    1.00

    .690

    1.164

    1.165

    Sufficient funds were made available to train employees in SAP Software usage.

    0

    1.97

    2.00

    .969

    .759

    -.166

    In my department, the strategic plan is followed.

    0

    1.73

    2.00

    .796

    .715

    -.497

    In my organisation the IT Strategic plan is followed.

    0

    1.76

    2.00

    .805

    .735

    -.306

    The IT Strategic plan in our organisation influences the extent to which SAP Software can be

    successfully implemented.

    0

    1.74

    2.00

    .819

    .762

    -.374

    SECTION C: General Information
    Please indicate your level of agreement with each of the following statements

     
     

    Strongly
    Agree

    Agree

    Neutral

    Strongly
    Disagree

    Disagree

    Total

    c10.1 The SAP Software facilitates effective decision-making.

    Count

    80

    46

    7

    2

     

    135

    %

    59.3%

    34.1%

    5.2%

    1.5%

     

    100.0%

    c10.2 The SAP Software facilitates improved productivity.

    Count

    84

    44

    5

    2

     

    135

    %

    62.2%

    32.6%

    3.7%

    1.5%

     

    100.0%

    c10.3 I received sufficient

    Count

    64

    41

    21

    4

    5

    135

    172

    training on the usage of the SAP Software.

    %

    47.4%

    30.4%

    15.6%

    3.0%

    3.7%

    100.0%

    c10.4 Value adding activities are

    Count

    64

    59

    8

    2

    2

    135

    communicated to me.

    %

    47.4%

    43.7%

    5.9%

    1.5%

    1.5%

    100.0%

    c10.5 My performance has been evaluated against predetermined criteria.

    Count

    67

    60

    6

    2

     

    135

    %

    49.6%

    44.4%

    4.4%

    1.5%

     

    100.0%

    Statistics

     

    Mean

    Median

    Std.
    Deviation

    Skewness

    Kurtosis

    The SAP Software facilitates effective decision-making.

    1.49

    1.00

    .668

    1.339

    1.791

    The SAP Software facilitates improved productivity.

    1.44

    1.00

    .643

    1.495

    2.518

    I received sufficient training on the usage of the SAP Software.

    1.85

    2.00

    1.033

    1.291

    1.360

    Value adding activities are communicated to me.

    1.66

    2.00

    .784

    1.628

    4.125

    My performance has been evaluated against predetermined criteria.

    1.58

    2.00

    .652

    1.020

    1.375

    173