Analysing the impact of enterprise resource planning systems roll-outs in multi-national companies

Abstract

Large organisations, in particular multi-national corporations, have been at the forefront of the ERP movement since its origins. They have used these highly integrated systems as a way to achieve greater levels of standardisation of business processes across sites and greater centralisation of IT resources. The most common scenario for an ERP implementation in a large multi-national firm is the phased roll-out, whereby the modules of the application are implemented in all the sites in a series of waves. A standard implementation, as designed by Headquarters, is replicated in each site. This standard implementation uses a base configuration, sometimes referred to as a template or blueprint, which cannot be deviated from in any of the sites. These monolithic implementations can be quite traumatic for individual sites where local practices, sometimes quite well established and rich in organizational learning, must be abandoned. This may lead to large scale organisational problems, which must be ironed out if the full potential of the enterprise-wide system is to be obtained. In an attempt to tease out the issues in the global implementation of ERP systems, we carried out a number of case studies at Irish manufacturing sites of multinational firms where management sought ways to defend their hard won local reputation for excellence and efficiency in the face of changes to the organisation due to a corporate ERP implementation. Our study indicates that local managers are given too little scope and time to adequately adapt the template to their site and that the risk of productivity loss is quite high, at least in the short term. We conclude that mechanisms must be put in place to better understand how to accommodate local specificities whilst enforcing the required level of standardisation.