ERP customization failure: Institutionalized accounting practices, power relations and market forces

Purpose: This paper examines a detailed case study of Enterprise Resource Planning (ERP) customization failure in an Egyptian state-owned company (AML) by drawing on new institutional sociology and its extensions. It explains how ERP customization failure is shaped by the interplay between institutionalised accounting practices, conflicting institutions, power relations and market forces. Methodology/Approach: The research methodology is based on using an intensive case study informed by new institutional sociology, especially the interplay between conflicting institutions, power relations and market forces. Data were collected from multiple sources, including interviews, observations, discussions and documentary analysis. Findings: The findings revealed that the inability of the ERP system to meet the core accounting requirements of the control authorities (the Central Agency for Accountability) was the explicit reason cited for the ERP failure. The externally imposed requirements of the Uniform Accounting System and planning budgets were used to resist both other institutional pressures (from the Holding Company for Engineering Industries) and market and competitive pressures. Research limitations: There are some limitations associated with the use of the case study method, including the inability to generalize from the findings of a single case study, some selectivity in the individuals interviewed, and the subjective interpretation by the researchers of the empirical data. Practical implications: The paper identifies that the interplay between institutional pressures, institutionalised accounting practices, intra-organizational power relations, and market forces contributed to the failure to embed ERP in a major company. Understanding such relationships can help other organisations to become more aware of the factors affecting successful implementation of new ERP systems and provide a better basis for planning the introduction of new technologies. Originality/value of paper: This paper draws on recent research and thinking in sociology, especially the development and application of new institutional sociology. In addition, the paper is concerned with ERP implementation and use and management accounting in a transitional economy, Egypt, and hence contributes to debate about exporting Western accounting practices and other technologies to countries with different cultures and different stages of economic and political development. Classification: Research paper/ case stud

The organizational memory mismatch approach in the ERP usage stage

Enterprise Resource Planning (ERP) systems not only have a broad functional scope promising to support many different business processes. They also embed many different aspects of the company’s organizational memory. Disparities can exist between those memory contents in the ERP system and related contents in other memory media, such as the individuals’ memories, and the organizational structure and culture. Such discrepancies, called memory mismatches here, may cause various instances of ERP under-performance, thus triggering the need for coping behavior in the organization. Coping may take place in the form of organizational change, organizational learning, and software maintenance. This paper provides a theoretical framework for this organizational memory mismatch approach. The approach is applied to the ERP usage stage. It integrates the organizational, technological, and cognitive aspects of ERP systems, while combining and elaborating on the underpinning ERP and IS literature

Coupling Performance Measurement and Collective Activity: The Semiotic Function of Management Systems. A Case Study

Theories about management instruments often enter dualistic debates between structure and agency: do instruments determine the forms of collective activity (CA), or do actors shape instruments to their requirements, or are instruments and concrete activity decoupled, as some trends of new institutionalist theory assume? Attempts to overcome the dualistic opposition between structure and activity stem from diverse sources: actors’ networks theory, structuration theory, pragmatism, theory of activity, semiotics. Performance measurement and management systems can be defined as structural instruments engaged in CA. As such they constrain the activity, but they do not determine it. Reciprocally, they are modified by the way CA uses them and makes sense of them. The central thesis of this paper will be that it is impossible to study the role of performance measurement as a common language in organizations independently from the design of the CA in which it is engaged. There is a not deterministic coupling between structure (i.e. management technical tools) and CA (i.e. business processes). The transformation of CA entails a transformation in the meaning of the “performance” concept, in the type of measurement required and in the performance management practices. The relationship between performance measurement and CA is studied here in the production division of a large electricity utility in France. The research extended over several years and took place when two new management systems were simultaneously implemented: a new management accounting system and an integrated management information system (ERP), both in the purchasing process. The new management accounting system was designed by the purchasing department; the new management information system was designed by the operational departments. Whereas the coherence between both projects could have been given by their common subordination to the rebuilding of CA (the purchasing process), their disconnection from concrete CA opened the possibility of serious dissonances between them. Both the new performance management system and the new ERP met difficulties to provide common languages, since the dimension of CA was taken for granted and consequently partly ignored in the engineering of both systems. When CA incurs radical transformations, actors’direct discursive exchanges about it, “collective activity about collective activity”, become necessary to ensure a flexible and not deterministic coupling between CA and new management systems. This reflexive and collective analysis of the process by actors themselves requires the establishment of “communities of process”, which can jointly redesign the CA and its performance measurement system. We conclude that performance measurement can be a common language as far as there is a clear and shared understanding of how CA should concretely take place and should be assigned to the different categories of actors.Business Process; Collective Activity; Community of Process; Management Instruments; Performance Measurement; Semiotics; Theory of Activity

Accounting decoupled : A case study of accounting regime change in a Malaysian company

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The ERP System as a Part of an Organization\u27s Administrative Paradox

This paper argues that ERP systems take the part of an organization’s administrative paradox. An administrative paradox is two sides of the same coin when coordinating organizations – the concurrent striving for flexibility and stability. The analysis of the ERP system is based on an interpretative and qualitative case study of an engineering firm. The theoretical lens used in this paper is structuration theory. One important point in this paper is that information systems can be viewed as a means to formalise coordination from an interpersonal level to a systemic one. This can, for instance, be realised through demands of input, process, and results of actions. In this way information systems can make a contribution to organizing ideals such as reliability and the achievement of sensible outcomes. On the other hand (as part of the administrative paradox) the use of information systems can institutionalize operating procedures and certain patterns of communication and coordination, restrain reorganizing activities and changes in control- and power structures. The information system’s constitutive role (consisting of a set of rules and resources, facilitating and constraining, coordinating, human action) is definitely an important issue when implementing, using, and improving ERP systems in organizations

The relationship between ERP systems and budgeting: Uncovering the limited ERP system impact on budgeting

This paper investigates the relationship between enterprise resource planning (ERP) systems and budgeting to address the limited impact of ERP systems on management accounting. Budgeting is considered as a social phenomenon which requires flexibility for decision-making and integration for management controls. The analysis at the activity level, guided by the concept of ‘conflict’ in structuration theory (ST), suggests that ERP systems impede flexibility in decision-making. However, the systems have the potential to facilitate integration in management controls. The analysis at the structural level, guided by the concept of ‘contradiction’ in ST, concludes that there is a contradiction between them because ERP systems operate in terms of integration alone while budgeting assumes both roles. This research offers three new insights. First it offers a theoretical contribution by employing new theory. Second it offers empirical insights on the limited impact of ERP systems on budgeting. Third it shows how other IS technologies supplement them

The complementary use of IS technologies to support flexibility and integration needs in budgeting

In business controllers’ work on budgeting, considered as a classic decision-making process in organisations, it is consistently indicated that enterprise resource planning (ERP) systems, business intelligence (BI) and spreadsheets are commonly applied to assist the process. An academic research contribution on this topic is few. Most available research concentrates on ERP systems but it mentions neither BI nor spreadsheets. A further review of budgeting literature designates that budgeting characterises both flexibility and integration needs to accomplish decision-making. Given the limited understanding as to how IS technologies are used in budgeting, this dissertation aims to describe and explain how business controllers can complementarily use IS technologies to support the flexibility and integration needs in a budgeting process. Two research questions addressed are: RQ1- how do business controllers perceive IS technologies in relation to the need for both flexibility and integration in budgeting? And RQ2 - why do business controllers use IS technologies to support the need for both flexibility and integration in budgeting? The analysis employs conceptual ideas pertaining to structuration theory. Empirical data was collected through interviews, observations and documentations with twenty-six business controllers in sixteen companies in Thailand. It is concluded that business controllers perceive IS technologies to enable and constrain their flexibility and integration needs in budgeting. Spreadsheets are the main IS technology used in budgeting despite an existent of ERP systems and BI because of the flexibility that spreadsheets offer. Business controllers use spreadsheets to support both the flexibility and integration domains but they use ERP systems and BI to support the integration function alone. It is necessary for business controllers to rethink their IS technology use practice because spreadsheets cause errors and frauds. The insights generated create a framework to describe how the three IS technologies should be complementarily used to support specific budgeting activities in respect of the flexibility and integration needs

Appropriating Enterprise Resource Planning Systems in Colleges of Business: Extending Adaptive Stucturation Theory for Testability

Enterprise resource planning systems are a form of advanced information technology that is quickly becoming commonplace in colleges of business. The nature of software, industry involvement, and academe influences how enterprise resource planning systems are integrated into business education processes. The appropriation of these systems in an academic setting involves a great deal of change, which, if not carefully considered, could result in failure to achieve mutually beneficial outcomes for students, the academic institution and industry stakeholders. Adaptive structuration theory provides a conceptual change model that helps capture the longitudinal change process. In order to provide a better understanding of the periods of routine use at the center of adaptive structuration theory, we introduce theory from the concerns-based adoption model. We integrate aspects of these two theories in the academic setting to provide a theoretical framework that explains the enterprise resource planning systems appropriation process and provide a method for studying the utilization of advanced information technologies for educational purposes. This framework may also be used as a practical means of identifying and considering appropriation issues when planning and evaluating enterprise resource planning systems usage in the classroom

Five Roles of an Information System: A Social Constructionist Approach to Analyzing the Use of ERP Systems

This paper presents a novel way of thinking about how information systems are used in organizations. Traditionally, computerized information systems are viewed as objects. In contrast, by viewing the information system as an actor, our understanding of the structuration process increases. The user, being influenced by the ERP (Enterprise Resource Planning) system and giving it an actor role, thereby also confers agency on the ERP system. Through its very use, it influences actions and thus the structure as well. Based on a case study of ERP use in an ABB company for over a decade, five different roles played by the ERP system were identified. The ERP system acted as Bureaucrat, Manipulator, Administrator, Consultant or wasdismissed (Dismissed) in the sense that intended users chose to avoid using them. The purpose of this approach is not to “animate” the information system, to give it life or a mind of its own, but rather to make explicit the socially constructed roles conferred on the information system by users and others who are affected by it. On this basis, it is possible to suggest how the roles can help us open up new areas of exploration concerning the fruitful use of information technology