Enterprise resource planning: Global opportunities challenges

has been conducted on the use of external expertise in information systems and virtually none as it applies to enterprise systems. This paper addresses the issues associated with the use of external expertise in enterprise systems. It looks at the ES implementation life cycle and identifies where in the implementation process external experts are utilized and what roles they fulfill in the implementation project. The paper concludes with a New Zealand case experience illustrating the use of external experts in a major enterprise systems implementation. INTRODUCTION Enterprise systems (ES), a more general and comprehensive term than the more focused enterprise resource planning (ERP) term, are large, complex highly integrated information systems designed to meet the information needs of the organization. Davenport (2000) describes these systems as information systems that integrate information from all functional areas of an organization with the goal of providing a more whole or complete information resource. An extension of prior large-scale integrated systems, i.e., manufacturing resource planning (MRP II), enterprise systems have become essential for large multinational corporations wishing to integrate and standardize their organization’s business processes. Now, small to midsized organizations are adopting enterprise systems to remain competitive in the global marketplace. Most organizations wishing to fully implement an electronic commerce (e- commerce) strategy recognize the need to integrate the Web-based front-end of e- commerce with order fulfillment, logistics, and financial back-end systems supported by the enterprise system (Marchak, 2000). Thus enterprise systems have become the foundation that supports an organization’s eCommerce strategy. Enterprise systems (ES) are large, complex beasts. (See Table 1 for a summary of ES implementation characteristics.) Enterprise systems typically require millions of dollars in resources, years of focused commitment, and a large contingent of highly skilled professionals to ensure successful implementations. Most organizations struggle with ES implementation (Baldwin, 2001; Markus & Tanis, 2000; Wagle, 1998). Even with the financial resources and the long-term focused commitment, where do organizations find the required expertise to successfully implement these complex systems? The answer is often to engage external experts, i.e., consultants, to fill this resource void. The use of consultants (also referred to as integration partners) is common in ES implementations (Abramson, 1998; Davenport, 1998; Markus & Tanis, 2000; McCarty, 1999; Ross, 1999). The issue becomes not whether an organization should use external expertise, but rather how to effectively engage and utilize external expertise. Enterprise Resource Planning—Global Opportunities & Challenges -234- Table 1: Summary of ES implementation characteristics Enterprise Systems Characteristics ƒ Large ƒ Complex ƒ Integrated ƒ Expensive ƒ Long implementation cycle Limited research has been conducted on the use of external expertise in information systems and virtually none as it applies to enterprise systems (Brown & Vessey, 1999). Thong, Yap, and Raman (1994) published one of the few empirical studies on the use of external experts in information systems. They studied the level of IS effectiveness in small businesses using a consultant-vendor approach to information systems implementation versus a vendor-only approach. They concluded that small businesses that adopted a vendor-only approach achieved a higher level of IS effectiveness and a higher level of organizational impact than small businesses that pursued a consultant-vendor approach. Their findings were based on input from 57 small businesses in Singapore and did not address the issues associated with complex integrated systems such as enterprise systems. Ironically, virtually everything written in the area of external expertise use is from the major consulting firms and software vendors who are providers of the external expertise. Recent studies (James & Wolf, 2000; Markus & Tanis, 2000) suggest just how significant implementation and consulting services are in enterprise systems implementation (see Figure 1). These studies indicate that total investment in ERP systems was $82 billion in 1999. The largest of four expenditure categories was implementation and consulting services ($38 billion), almost double the cost of hardware or vendor software. Studies suggest that implementation and consulting services are between two and five times ERP licenses’ cost (Markus & Tanis, 2000). Projections are for ERP licenses revenue to increase to $67 billion by 2003. If the relationship between software license revenue and implementation and consulting revenue continues, the projected cost of implementation and consulting services for enterprise systems implementation will be between $138 billion and $335 billion by 2003, a huge number! Enterprise Resource Planning—Global Opportunities & Challenges -235- Figure 1: Summary of ERP investment This paper addresses the issues associated with the use of external expertise in enterprise systems. It looks at the ES implementation life cycle and identifies where in the implementation process consultants are utilized and what roles they fill in the implementation. The paper concludes with a New Zealand case example illustrating the use of external experts in a major enterprise systems implementation. EXTERNAL EXPERTISE ISSUES The decision to engage external experts in the ES implementation project is significant. (Often, it is the external expert who first proposes the use of an enterprise systems approach–but more on that later.) The selection of an external consulting partner is a long-term commitment to the consultant’s philosophy, methodology, and culture. The relationship generally spans 5 years or longer and cost millions of dollars. Mistakes in the selection of external experts are difficult and expensive to correct. External Expertise Fit With Organization A key issue in the selection of ES consultants is a strong cultural fit between the organization and the external experts. Where does the expertise reside, with the organization or with the consultant? How accommodating is the consultant in adapting to the ways of the organization? Or, must the organization adapt to the methodology of the consultant? Does the consultant propose a “proven” methodology that is acceptable to the organization? What is the position of the organization relative to project involvement? Hands-off–let the consultants do everything and tell me when we’re finished–or, active involvement with the organization, having a strong need to understand the processes and be directly involved in the decision process. Fit is critical to the success of the relationship between the organization and external experts. It is also a key ingredient for overall ES success (McCarty, 1999). Alternatives for Engaging External Experts There are various alternative strategies to engaging external experts in an ES implementation project. These alternatives are outlined in Table 2. When and in what role external experts are initially involved in the ES implementation process varies widely. It depends on the needs and internal expertise of the organization. Most organizations follow one of two dominant strategies in engaging external experts. The Enterprise Resource Planning—Global Opportunities & Challenges -236- organization either initially selects the ES software vendor or initially selects an ES consulting firm to provide guidance and early direction for the project. Table 2: Alternatives to engaging external experts Alternatives to Engaging External Experts ƒ ES Software Vendor, Integration Partner ƒ ES Consultant, ES Software Vendor ƒ ES Consultant, ES Software Vendor, Integration ƒ Partner ES Consultant, ES Software Vendor, Integration ƒ Partner, ES Auditor In the first strategy, the organization selects the ES software vendor and then chooses the external experts, i.e., integration partner. The organization has recognized the need for an ES solution, evaluated the marketplace, and chosen a primary ES software product. This decision drives and influences the need for engaging external experts. The primary role of the external expertise is to support the implementation of the selected ES software. In this mode, the ES software vendor often recommends (or influences the decision on the use of) the external experts to the organization. The ES software vendor may fill the role of external expert itself by providing implementation expertise and support. The second strategy is where the organization first selects the ES consulting firm and involves these experts in the review and adoption of the ES software vendor. In this mode, the external experts have a much more significant role in ES decision processes. They not only impact the implementation of the ES but also key decisions relating to business processes, organizational objectives, and change management. Organizations that adopt this strategy may recognize a need for an ES solution but lack the internal expertise to evaluate alternatives and make informed business decisions without the support of trusted partners. A third strategy becoming more prevalent is a hybrid that involves the use of multiple sources of external expertise. The firm engages an ES consultancy to assist in ES vendor evaluation and selection. It then, with the assistance of the ES consultant, chooses the ES software vendor. The selection of the ES software drives the organization to select a different integration partner to assist in the ES implementation. The organization must now manage multiple sources of external expertise. This arrangement can lead to conflict and confusion if the roles of the various external resources are not clearly defined and managed. This multi-resource strategy recognizes the specialized needs of a complex ES implementation and facilitates the overall ES change process. A fourth strategy is an extension of the third, adding an additional source of external expertise to conduct post-ES-implementation review. The role of ES auditor is becoming more common, especially in large ES implementation environments. These external experts seek to evaluate the business value of the ES implementation, determine if goals and objectives were accomplished, and verify/ validate the outcomes of the implementation. Where used, they are virtually always an independent resource that was not engaged in the ES decision process or the implementation. There is very little Enterprise Resource Planning—Global Opportunities & Challenges -237- role conflict between the ES auditor, the ES consultant, or the integration partner. The ES auditor generally reports to the chief executive officer or board of directors of the organization and provides an objective evaluation of the ES project. EXTERNAL EXPERTISE USE IN ES IMPLEMENTATION The utilization of external expertise varies across the implementation process. Figure 2 provides a model of the use of external expertise in the ES implementation process. This model breaks the ES implementation into four distinct phases: pre-ES, early ES, mid-ES, and post-ES. Each phase will be discussed separately. Figure 2: Use of external expertise model Pre-ES Phase The pre-ES phase involves the use of external expertise prior to ES being considered by the organization. Generally, this is in the form of strategic management consulting or strategic IS planning. As organizations review and prepare their strategic IS plans, it is common to engage external experts. These consultants provide a valuable resource that often identifies the need and makes the initial suggestion that the organization should consider an ES as a possible solution to organizational information needs. Another role of external experts in the pre-ES phase is in the area of business process reengineering. During the past decade businesses have begun to carefully evaluate their business processes and make necessary changes to streamline these processes. As business processes change, so must information systems that support them. Organizational options remain limited; the business either builds totally new information systems to support their new business processes or adopts an ES solution to support the necessary change. Davenport (2000) discusses at length the role of ES in enabling business process reengineering. Many organizations choose to adopt an ES and then adapt their business processes to fit the ES, preferring organizational change to software modification and subsequent software maintenance concerns. Enterprise Resource Planning—Global Opportunities & Challenges -238- Early ES Phase As organizations begin the process of evaluating and adopting an ES solution, the roles of the external experts change. If the organization has opted to engage ES consultants prior to the selection of the ES software vendor, the external experts can provide multiple valuable services. These include, but are not limited to, business process reengineering; business case development; software vendor analysis, review, and selection; and process mapping and redesign. It is apparent from Figure 2 that there is an overlap in the roles of external experts as we move through the ES phases. Business process reengineering (BPR) can occur prior to the ES decision and/or during the ES project, beginning in the early ES phase. Often the ES project is driven by the BPR initiative as previously discussed. Where an ES solution is adopted, there will be process change. The need to map existing processes and then design/redesign new processes is a fundamental requirement of ES implementation (even the socalled technical ES implementations require some business process modification). External experts often fill a major role in the area of process design/redesign. Many organizations lack the internal expertise and experience to complete this critical task without assistance. Another key area of ES consultant involvement is in the development of the business case. In order to ensure business value, the organization should develop a comprehensive business case for the adoption of the ES solution. This business case should provide a statement of purpose, project goals and objectives, project scope, and a cost/benefit analysis of the ES proposal. The business case clearly defines the baseline that will be used to evaluate the success of the ES implementation, as well as metrics to be used in the post-implementation review. Again, organizations often lack the internal resources needed to complete the task independently. The final area we discuss in the early ES phase is software vendor analysis, review, and selection. ES consultants are often engaged to assist the organization in identifying qualified ES software vendors, providing a methodology for analysis and review and assisting in the software vendor selection process. ES consultants often have keen insights into potential software vendor solutions. Gaining experience from multiple engagements, the ES consultant often enjoys a better perspective of what is available in the ES marketplace and which of a variety of software products best meets their client’s needs. A solid relationship with an ES consultant can facilitate the review and selection process and avoid the pitfalls of the novice organization. Most organizations have never dealt with a software purchase decision of this magnitude or complexity. The availability of competent expertise can prove invaluable. Mid-ES Phase Mid-ES is the heart of the implementation process. The ES software vendor has been selected, the hardware requirements have been determined (based on the software requirements), and the database/network infrastructure necessary to support the ES is in place or being implemented. There are substantial needs for skilled resources to accomplish multiple critical tasks, both technical and nontechnical. It is at this phase that most organizations find they lack the internal expertise to complete necessary tasks in a timely manner. Thus organizations often turn to external experts to assist in the ES implementation. Generally the external experts in this phase are referred to as integration partners. They provide unique expertise on the ES software and implementation methodologies. Enterprise Resource Planning—Global Opportunities & Challenges -239- The ES software vendor may provide this resource through its consulting/implementation support organization. Some vendor support will likely be included in the ES software agreement, but it is unlikely to meet all the needs of the organization as the organization works through the implementation process. Most organizations find themselves contracting for additional services from their ES software vendor and/or a third-party ES consulting firm. There are a number of tasks that could, and often do, involve external experts. Process redesign is ongoing and spans the early ES phase. Additionally, organizations seek assistance in configuring the ES to the organization, planning and executing the data conversion, developing and delivering the necessary training, and supporting the overall change management process. There are certainly other roles and responsibilities, but these appear to be the dominant roles that are filled by external experts. The role of the external expert is both technical and nontechnical. ES configuration requires the mapping of the organization’s business processes into the ES software, or the adapting of the organization’s business processes to the ES capabilities. In either case, business processes must be mapped and adjusted to meet the needs of the organization. Business processes, and organizations, must change. External experts often play key roles in business process mapping and change management. Training and education have long been identified as essential to information systems success. Most organizations lack the internal expertise necessary to develop and deliver an effective ES training program. Thus, organizations again turn to external resources. ES software vendors provide courses and training focused on their specific products. Often, however, this training is generic and not adapted to the organization’s business (or even culture). Customized training provided by third-party organizations fills a need in this mid- ES phase by developing and delivering training and education tailored to the organization’s needs. Case studies indicate that training must provide both the detailed functional training and the overall context/framework of the ES (Avital & Vandenhosh, 1999; Hirt & Swanson, 1999; Ross, 1999). If users do not understand their role in the ES, they will not be able to effectively utilize the system. Software installation and conversion is a critical point in the ES implementation process. The methodology used for ES conversion varies with organizational size and complexity. Alternative installation approaches include big bang, phased, incremental, or a hybrid approach (Davenport, 2000; Markus & Tanis, 2000). External experts provide the experienced insights into the overall conversion process. Having gained experience from multiple ES implementations, the integration partner can suggest strategies and techniques to minimize risk and maximize results. A combination of external experts and internal organizational resources offers the best source of knowledge and expertise at this critical stage. Post-ES Phase The final phase of the ES implementation process recognizes the need for ongoing change management, ES implementation review, and value/benefits determination. Though an ES project is never complete, it does reach a point where reflection and evaluation is essential. Given the investment in time, commitment, and resources necessary to implement an ES, business value must be realized and results documented. Post-implementation consultant review provides such an objective analysis. Enterprise Resource Planning—Global Opportunities & Challenges -240- The goals and objectives established in the business case in the early ES phase must be revisited, metrics updated, and business value determined. External experts are best suited for such a review. Reporting to the CEO or board of directors, the ES consultant should be independent of the implementation process itself, not having participated in earlier project phases. The ES audit should identify and document the return on investment of the ES project. ES solutions are business solutions and must provide business value. In order to justify and support ongoing investment in future systems, current systems must deliver value. This value can best be verified though the use of external experts. Another component of the post-ES phase is the ongoing support for and upgrades to the initial ES solution. As ES software vendors offer new releases of their products, organizations must plan and implement, as appropriate, these new releases. Change is constant; the organization operates in a dynamic environment and must continuously adapt to these changes. The ES must continuously change to keep pace with organizational and environmental changes. External experts may be useful in assisting the organization in the continuous change management process. It is important to note that a technical change to an ES without business value is ill-advised. If the change does not provide business value, don’t do it. A NEW ZEALAND CASE EXPERIENCE The following discussion describes the experiences of a major New Zealand organization as it implemented an ES solution. The company made extensive use of external experts during its 5-year implementation project. The organization’s name and certain company information have been altered to protect its identity. Information was collected in 2001 from interviews with key organizational managers and company records. Table 3 provides a summary of the organizational information. Table 3: Major industrial organization Product/Service Commercial/consumer Business Scope International Revenue $1.5+ billion Employees 10,000+ Project Scope Broad, multifaceted Project Focus Comprehensive ERP Project Sponsor CFO Project Cost $75+ million Number of Users 2,500+ ES Vendor SAP ES Consultants Multiple Time Frame 5 years Project Benefits Operational benefits Enterprise Resource Planning—Global Opportunities & Challenges -241- Major Industrial Organization (MIO) is a New Zealand multinational corporation with over $1.5 billion (NZ$) in sales. It manufactures commercial and consumer products for the Australasian market. One of the leading industries in New Zealand, MIO has long played a key role in the nation’s economy. MIO has multiple strategic business units (SBU) exploiting opportunities in targeted market segments. These SBUs operate semiautonomously, having profit and loss responsibility but requiring corporate approval for budgets and major capital expenditures. Prior to the ES, the information systems of MIO were a loose federation of distributed, quasi-independent systems. Consolidation was difficult and required extensive manual intervention. Information was not integrated or shareable across the enterprise and business processes varied widely. Over 35 different financial applications ran on more than 50 platforms spanning Australasia. MIO had a corporate culture of utilizing external experts to aid in strategic decision analysis. A long-standing relationship with their financial accountants made the use of consultants a natural extension to support information systems. Boston Consulting Group (BCG) provided MIO with strategic IS consulting in the early 1990s. BCG assisted in developing strategic information systems plans and reviewing strategic information systems decisions. During their work, BCG discovered that one large SBU was exploring the use of an ES to meet its information needs. BCG evaluated the proposal and recommended that the board of directors support the proposal and that an ES solution be considered as a corporate strategy. Table 4 provides a summary of the use of external expertise during the ES project. The table maps the case use of external expertise into the external expertise use model presented in Figure 2. Table 4: MIO use of external expertise Pre-ES Strategic IS planning Boston Consulting Group Business Case Early ES Vendor review/selection IBM Process mapping/redesign Ernst & Young, Deloitte Mid-ES Systems configuration Ernst & Young, Deloitte Data conversion Ernst & Young Training SAP Change management Ernst & Young Post-ES Implementation review BCG, McKinsey Benefits evaluation Authur Andersen Pre-ES Phase In 1994, working with its primary systems vendor, IBM, a large SBU evaluated the ES marketplace in New Zealand and found virtually nothing. There were no ES software TE AM FL Y TEAM FLY ® Enterprise Resource Planning—Global Opportunities & Challenges -242- vendors with a New Zealand presence. There were no identifiable ES implementations in New Zealand. Australia provided the closest access to this emerging technology. The chief financial officer (CFO) of the SBU championed the investigation and a small evaluation team recommended the adoption of SAP as the ES software vendor. An extensive evaluation was not conducted. IBM provided the initial external expertise and substantially influenced the decision process. BCG’s subsequent review and endorsement raised the scope of the project from the SBU level to the corporate level. With support from BCG, the corporate CFO became the enterprise sponsor for the ES initiative, Spirit. Funding for the project was approved in late 1995. The CFO of the originating SBU was made the project director, reporting to the corporate CFO. A small core project team was organized. Almost immediately, the project director and CFO recognized that they were embarking on a journey with little experience or internal expertise and began to evaluate the use of external expertise. Early ES The ES software vendor selection was completed with no formal ES consulting advisement. MIO adopted the strategy of selecting the ES software vendor and then considering the use of external expertise to assist in ES implementation. Though a common strategy, it often precludes a thorough ES vendor analysis. IBM did provide guidance and input early in the decision process but did not participate in a formal consulting relationship. They did, however, exert considerable influence in the decision process and guided MIO to review and evaluate SAP. Business process inconsistencies across SBUs had created problems for MIO. The enterprise was struggling with consolidated information needs, especially in the financial area. One of the goals of the ES was to standardize many of these business processes. To assist in business process mapping and design, MIO engaged two major consulting groups, Ernst & Young and Deloitte. At the time, there was limited expertise in New Zealand to assist MIO. The decision to engage two major consultancies was based on the need to gain as much expertise as quickly as possible and to evaluate the skill sets and experience base of these two competing firms. Unfortunately, in the mid-1990s neither firm offered substantial experience in ES implementation and had to rely on imported expertise from Singapore and the United States. The experience proved challenging, with conflict arising between the two competing consulting groups. Each group of consultants had its own culture and methodology. Neither was willing to adapt to the other and MIO was caught in the middle. At the height of consultant involvement more than 40 external experts were working at MIO. The consultants would engage other consultants in an attempt to expand their influence and increase their experience base. MIO found itself paying excessively for services it perceived as having limited value. As it moved into the mid-ES phase, MIO reevaluated its strategy for utilizing external expertise. Mid-ES Phase While continuing to map business processes and make necessary adjustments for the new ES environment, MIO began the configuration of the SAP system. Configuration support was received from SAP, Ernst & Young, and Deloitte. Key MIO project personnel attended multiple SAP training sessions and found representatives from their integration partners attending the same training. This knowledge precipitated a change in the scope and utilization of external expertise. As contracts expired, they were not Enterprise Resource Planning—Global Opportunities & Challenges -243- renewed. MIO focused on identifying key expertise and either hiring the individual or contracting specifically for a known resource. They quickly reduced the number of consultants involved in the project to about seven (from five to nine, depending upon the project requirements). External experts became coaches and mentors, assisting MIO staff in completing necessary tasks and providing guidance and insight as the project developed. An extensive multisite environment, MIO used a phased approach to implementing SAP. SBUs were independently configured to meet their specific needs. No standard configuration was imposed. SBUs had considerable latitude on which modules to adopt, though all generally adopted a core set of financial, inventory management, and sales order management modules. The only requirement was they must use SAP and they must support corporate consolidated reporting requirements. Where business processes differed across SBUs, the SBU was required to justify its uniqueness by demonstrating the business value derived. If successful, the SBU could continue the unique business process. Changes to SAP were made at the SBU level to support unique business processes. This created considerable differences among SBUs and a major support challenge as more SBUs came online. A core implementation team was formed to aid SBUs through the conversion process. The team was composed of corporate Spirit staff, external experts, and SBU staff. An SBU implementation required approximately 6 months. Core financials could be live in half that time. Each implementation phase required configuration, training, data conversion, go-live, and support. The greatest challenges were in the massive data conversions necessary to get an SBU operational in a short period of time. MIO used a hybrid implementation methodology developed from its experiences with multiple consulting partners. It included a five-stage approach with a focus on quality assurance. Each SBU would verify its readiness for conversion to SAP by demonstrating competencies in more than 30 areas. External consultants played a key role in the quality assurance effort by evaluating the readiness of the SBUs. If readiness could not be demonstrated, the conversion was delayed. Training was an integral component of the implementation methodology. The Spirit team provided most of the training with assistance from SAP. Taking a train-the-trainer approach, each SBU identified key users/champions for each functional area. These individuals received training by the Spirit team and in turn provided training to their SBU colleagues with the support of Spirit staff. The training included both detailed “how to” training and conceptual “why” education so that users would understand how their work fit into the organization’s strategy for an integrated system. Early SBU conversions were understandably rocky. As experience was gained, MIO developed a knowledge base of issues and resolutions. The knowledge base, maintained in Lotus Notes, provided a key resource for subsequent conversions and ongoing support. As the project evolved, later SBU conversions went smoother with fewer surprises. Change was managed internally by the Spirit team and corporate and SBU management. Training was conducted prior to each SBU implementation. Strong corporate support for the ES solution and demonstrated benefits overcame limited resistance. External expertise was used in a limited role, primarily in the quality assurance area discussed previously. Enterprise Resource Planning—Global Opportunities & Challenges -244- Post-ES Phase As the SAP implementation progressed towards successful completion, MIO conducted a number of independent reviews to ensure the project was on track and delivering business value. BCG provided an initial external review in late 1996 when they validated the overall ES deployment. McKinsey reviewed the ES project structure, progress and benefits realization in 1998. Authur Andersen, however, conducted the most comprehensive external review. Andersen conducted a best practices review of the financial functions initially in 1995, pre-ES. They then conducted a follow-up review in 2000, post-ES. Their assessment confirmed the business value of the ES solution at MIO. The following results were confirmed: ƒ Sales/profitability benefits through margin improvements ƒ Production savings through improved yield/less scrap ƒ Purchasing savings through consolidation, pricing, and process efficiency ƒ End-of-month close reduced from 15 to 3 days ƒ Head-count reductions at SBU and corporate levels Summary MIO utilized external expertise extensively throughout their ES project. At every phase they engaged one or more external resources. Though not always a perfect relationship, MIO gained substantial benefits from the use of external expertise. As early adopters of ES in Australasia, MIO pioneered many of the methods required for successful implementation. Their consulting partners were transferring expertise into New Zealand from other areas of the globe and learning along with MIO as the implementation progressed. MIO in turn learned how to effectively engage external experts during the implementation. Lessons learned from the MIO experience include: ƒ Strategic consulting during the pre-ES phase was helpful in defining project scope and promoting corporate acceptance of the ES solution. ƒ Use of multiple consulting groups during early and mid-ES phases caused conflict, proliferation of consultants, and limited value added. ƒ Focused use of external expertise during mid-ES phase added substantial value to the project. ƒ Benefits validation by external experts during post-ES phase confirmed project returns and provides basis for future systems enhancements. CONCLUSIONS This paper has discussed the issues associated with the use of external expertise, i.e. consultants, in the implementation of enterprise systems. It provided a basis for the importance and extent of the use of external expertise in the market. Virtually all organizations implementing an ES use external experts to some degree. Studies suggest that the costs of consultants are two to five times the cost of the license fees for the ES software (Markus & Tanis, 2000) and will exceed $100 billion (US$) by 2003. The paper then explores strategies for engaging external experts. Four alternative engagement strategies are presented and discussed. Alternative ways of utilizing Enterprise Resource Planning—Global Opportunities & Challenges -245- external experts are identified and reviewed. The ES project is broken into four phases and the use of external expertise is discussed for each phase. A model for the effective use of external expertise is proposed. The paper concludes with a New Zealand case experience of a major industrial organization’s ES implementation. The case is mapped into the proposed model and lessons learned from the case are presented. The use of external expertise in enterprise systems is essential for project success. Only in effectively utilizing this expertise can organizations realize their ES goals and objectives. More work must be done in order to more fully understand this critical element in enterprise systems implementation. REFERENCES Abramson, G. (1998). Their pain, your gain: Managing consultants. CIO Enterprise Magazine, October 15. Avital, M. and Vandenbosh, B. (1999). SAP implementation at Metalica: An organizational drama. Proceedings, International Conference on Information Systems (ICIS), 651-653, Charlotte, NC. Baldwin, P. (2001). Know the six deadly sins of ERP. TechRepublic, May 16. Brown, C. V. and Vessey, I. (1999). ERP implementation approaches: Towards a contingency framework. Proceedings, International Conference on Information Systems (ICIS), 43-46. Charlotte, NC. Davenport, T. H. (2000). Mission Critical: Realizing the Promise of Enterprise Systems.Boston, MA: Harvard Business School Press. Davenport, T. H. (1998). Putting the enterprise into enterprise systems. Harvard Business Review, July-August, 121-131. Hirt, S. G. and Swanson, E. B. (1999). Adopting SAP at Seimens Power Corporation. Journal of Information Technology, (14), 243-251. James, D. and Wolf, M. L. (2000). A second wind for ERP. McKinsey Quarterly, (2), 100- 107. McCarty, C. M. (1999). How to choose and ERP implementation consultant. TechRepublic, July 8. Marchak, S. (2000). Six levels of electronic commerce. InfoTech Research Group. Markus, M. L. and Tanis, C. (2000). The enterprise systems experience–From adoption to success. In Zmud, R. W. (Ed.), Framing the Domains of IT Research: Glimpsing the Future Through the Past, 173-207, Cincinnati, OH: Pinnaflex Educational Resources, Inc. 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Enterprise Resource Planning—Global Opportunities & Challenges -246- Index A absorptive capacity 99 actor 134 administrative systems 29 advanced planning and scheduling (APS) 12 application service provision (ASP) 194 applications service provider 154 artifact evaluation 78 assessment 145 Australian stock exchange 146 awareness model 135 B Baan 182 boundary spanning 99 BSP (business systems planning) 147, 149 business intelligence (BI) 12 business knowledge 123 business process reengineering (BPR) 50, 99 C case studies 63 change management 174 chief knowledge officer 100 CIS (campus information system) 25 client/fat server (C/FS) architecture 8 client/server (C/S) technology 8 collaborative process 134 collaborative resource 134 collaborative semantic concepts 137 collaborative task 134 company-specific knowledge 124 competing values model 78 content analysis 46 CSCW (computer supported cooperative work) 133 CSF (critical success factor) 147, 148 customer interaction 157 customer relations management 154 customer relationship management (CRM) 12 customer-centricity 153 D data access 48 database management system (DBMS) 7 Enterprise Resource Planning—Global Opportunities & Challenges -247- decision making 150, 173 decision-making criteria 173 E e-business capabilities 12 e-commerce 213 early ES 224 economic theory 44 effort 176 electronic data interchange 48 electronic funds transfer 48 empirical study 182 enterprise application systems 117 enterprise resource planning (ERP) 43, 117, 145, 172, 189, 211 enterprise resource planning (ERP) systems 2, 43, 97 enterprise system (ES) 116, 117, 126, 127, 211 enterprise system life cycle 119 enterprise-wide systems 117 ERP 44 ERP adoption 54, 103 ERP adoption in the Philippines 62 ERP compact package 194 ERP implementation 22 ERP justification 47 ERP market 151, 192 ERP outsourcing 194 ERP package 194 ERP process map 135 ERP selection 202 ERP systems 1, 53, 78, 192 ERP trends 191 ES consultant 214, 215 ES consulting firm 215 ES implementation project 214 ES implementation review 216 ES software product 215 ES software vendor 215 ES solution 121, 215 event-driven process chains (EPCs) 177 F flexibility 49 functionality 146 G graphical user interface (GUI) 8 Enterprise Resource Planning—Global Opportunities & Challenges -248- I information systems 22 information technology (IT) 43, 99 integrated campus 31 integrated software packages 47 integrated system 31 integration 51 Internet 46 Internet accessibility 50 interpretive perspective 23 inventory control packages (IC) 4 investment 45 IT infrastructure 102 J J.D. Edwards 182 JAD (joint application development) 147 K key business processes (KBPs) 206 KM strategy 100 KM system 100 knowledge exploitation 104 knowledge life cycle 119, 127 knowledge management (KM) 97, 116, 122, 154 knowledge transfer 127 L legacy systems 26 local area networks 29 M major industrial organization (MIO) 221 material requirements planning (MRP) 4 mid-ES 218 myth of integration 25 myths 19 N Navision 182 Enterprise Resource Planning—Global Opportunities & Challenges -249- O open coding 25 operation engineering division 103 Oracle 182 order management 157 organizational culture 63 organizational effectiveness 78 organizational factors 62 original equipment manufacturing (OEM) P participative evaluation strategy 174 Peoplesoft 182 personal computers (PCs) 48 personal computing 29 Philippine business enterprises 62 post-ES 220 process awareness 137, 140 process model 173 process resource 134, 138 procurement solutions 154 product data management (PDM) 103 product knowledge 124 project management knowledge 124 Q questionable data integrity 51 R rationality 177 rationalized myths 21 real options 183 redundant data entry 51 required level of awareness 136 resource-based view (RBV) 62 role 134 S sales force automation (SFA) 12 SAP 177 shadow systems 51 simplified maintenance 50 small to medium enterprises (SMEs) 1, 144, 173, 189 strategic choice 99 strategic enterprise management 153 strengths-weaknesses-opportunities-threats (SWOT) framework 144, 195 structured query language (SQL) 8 supply chain management (SCM) 12, 154 Enterprise Resource Planning—Global Opportunities & Challenges -250- T task artefacts 140 task dependency 139 technical knowledge 124 template 30 total quality management (TQM) 99 U universities 45 unnecessary restrictions 48 usability 49 V vendors 146 Enterprise Resource Planning—Global Opportunities & Challenges -251- List of Figures Chapter I: The Evolution of ERP Systems: A Historical Perspective Figure 1: ERP systems concept Figure 2: ERP evolution Figure 3: Three-tier ERP systems architecture Figure 4: Web-enabled extended ERP system Chapter II: The Myth of Integration: A Case Study of an ERP Implementation Figure 1: ERP system implementation as myth Figure 2: Structure of CIS project Chapter III: ERP Systems in Universities: Rationale Advanced for Their Adoption Figure 1: ERP adoption model embracing this revised theory Chapter V: The Impact of Enterprise Resource Planning Systems on Organizational Effectiveness: An Artifact Evaluation Figure 1: Comparison of traditional information system development methods and the process of selecting and implementing ERP systems Figure 2: Competing values model (Quinn & Rohrbaugh, 1981, 1983; Rohrbaugh, 1981) Figure 3: Mapping of ERP system capabilities into CVM Chapter VII: Knowledge Management for Enterprise Systems–First Empirical Insights Figure 1: A framework to structure ES-related knowledge Figure 2: The proposed knowledge life cycle Figure 3: Identified knowledge types for ES management Figure 4: Importance of activities throughout the knowledge life cycle Figure 5: Importance of knowledge management in the stages of the ES life cycle Figure 6: Organizational performance vs. importance of knowledge Figure 7: Importance of different types of knowledge TE AM FL Y TEAM FLY ® Enterprise Resource Planning—Global Opportunities & Challenges -252- Chapter VIII: Implementation Management of an E- Commerce-Enabled Enterprise Information System: A Case Study at Texas Instruments Figure 1: Time line of TI’s ERP implementation Figure 2: A conceptual model of the ERP system and linkages Chapter IX: An Object-Oriented Awareness-Based Methodology for ERP Figure 1: An example of an ERP process map with two roles, six simple tasks, and one collaborative task Figure 2: Example of collaborative and non-collaborative processes Chapter X: A Framework for Assessing ERP Systems’ Functionality for the SMEs in Australia Figure 1: The conceptual model of the study Chapter XII: A Framework for the Selection of ERP Packages for Small to Medium and Large Organizations Figure 1: A general purpose decision model Figure 2: An ERP decision-making process model Chapter XIII: A Study of the ERP Selection Process in New Zealand Figure 1: Different ERP strategies for SME and large organizations Figure 2: Stakeholders involved in the selection and implementation of ERP Figure 3: A generic model of the ERP selection process in New Zealand (Shakir, 2000) Chapter XIV: Using Cost Benefit Analysis for Enterprise Resource Planning Project Evaluation: A Case for Including Intangibles Figure 1: What are intangibles? Figure 2: The quantification technique “bridging the gap” Figure 3: Sample items for customer satisfaction survey Enterprise Resource Planning—Global Opportunities & Challenges -253- Chapter XV: Effective Use of External Expertise in Enterprise Systems: A New Zealand Case Experience Figure 1: Summary of ERP investment Figure 2: Use of external expertise model Enterprise Resource Planning—Global Opportunities & Challenges -254- List of Tables Chapter I: The Evolution of ERP Systems: A Historical Perspective Table 1: Advantages of ERP systems Table 2: Disadvantages of ERP systems Table 3: Some of the modules of SAP’s R/3 Chapter II: The Myth of Integration: A Case Study of an ERP Implementation Table 1: Survey responses to open-ended question Chapter III: ERP Systems in Universities: Rationale Advanced for Their Adoption Table 1: A relative cost example Chapter IV: Assessing Enterprise Resource Planning (ERP) Adoption in the Philippines Table 1: ERP experience: Fairchild, ISLACOM, CPPC and Sterling Tobacco Table 2: Views of Fairchild, ISLACOM, CPPC, and Sterling Tobacco on ERP Table 3: Vision/mission and organizational values of selected companies Table 4: Push and pull factors in ERP adoption Chapter X: A Framework for Assessing ERP Systems’ Functionality for the SMEs in Australia Table 1: The SWOT of SAP Table 2: The SWOT of Baan Table 3: The SWOT of J.D. Edwards Table 4: The SWOT of PeopleSoft Table 5: The SWOT of Oracle Chapter XI: Selecting and Implementing an ERP System at Alimentos Peru Table 1: Results of the first evaluation of an ERP system Table 2: Implementation methodology for an ERP system Enterprise Resource Planning—Global Opportunities & Challenges -255- Chapter XIII: A Study of the ERP Selection Process in New Zealand Table 1: Summary of survey results of top 100 companies in New Zealand and their interest in ERP implementations (Mills, 1999; Wells, 1999) Table 2: A review of ERP industry in New Zealand context Table 3: The evolution of ERP systems Table 4-a: A SWOT analysis of the different ERP systems offered by the top 5 vendors: The vendor’s organization Table 4-b: A SWOT analysis of the different ERP systems offered by the top five vendors: The ERP product Table 4-c: A SWOT analysis of the different ERP systems offered by the top five vendors: New ERP product offerings Table 4-d: A SWOT analysis of the different ERP systems: Services, partnerships and community involvement Table 4-e: A SWOT analysis of the different ERP systems offered by the top five vendors Table 5: A sumary of the tasks of internal stakeholders involved in the selection of ERP systems Chapter XIV: Using Cost Benefit Analysis for Enterprise Resource Planning Project Evaluation: A Case for Including Intangibles Table 1: Cost Benefit Analysis (Tangibles Only) NPV($ millions)/IRR Table 2: Cost Benefit Analysis (Tangibles and Intangibles) NPV($ millions)/ IRR Chapter XV: Effective Use of External Expertise in Enterprise Systems: A New Zealand Case Experience Table 1: Summary of ES implementation characteristics Table 2: Alternatives to engaging external experts Table 3: Major industrial organization Table 4: MIO use of external expertise