This paper focuses on the implementation issues associated with the innovation of enterprise resource planning (ERP) to achieve innovative large-scale change in organisations. If innovation and learning become part of a firm's leading performance indicators, this is sure to have implications for performance management (PM).Innovation management, Change management, Resource planning,Performance management

Laura Tănăsoaica

Marius-Dan Dalotă

English

Research Papers in Economics

Implications of resource planning, innovation and learning for work processes and performance management 
 
 
 
132 
IMPLICATIONS OF RESOURCE PLANNING, INNOVATION 
AND LEARNING FOR WORK PROCESSES AND PERFORMANCE 
MANAGEMENT 
 
Marius Dan Dalotă, Laura Tănăsoaica
* 
 
Abstract 
This paper focuses on the implementation issues associated with the innovation of enterprise 
resource planning (ERP) to achieve innovative large scale change in organisations. If innovation and 
learning become part of a firm's leading performance indicators, this is sure to have implications for 
performance management (PM). 
 
Keywords: Innovation management, Change management, Resource planning, 
Performance management 
 
JEL Classification: L20, M12, M50 
   
1. Introduction 
Innovation  and  change  management  play  an  increasingly  important  role  in 
sustaining the leading competitiveness for organisations in times of rapid change and 
increased competition. A number of issues arise. There is a need to address how both 
local and global issues are influenced by the implementation of a common enterprise 
wide  information  technology  (IT)  application.  In  relation  to  technology  and 
processes many companies model the organisation and its processes, creating new 
process designs on an ongoing basis. 
Enterprise resource planning (ERP) systems have been progressively developed 
over last years. The continual change in organisations and their environments has 
resulted in complex technical organisational, cultural and political issues that have 
made the integration process a very challenging task. The paper focuses on the role 
of technology as either a driver or enabler for ERP induced change.  
The consequences of innovation for performance management (PM) will first 
consider the implications for work processes and the management of these processes 
in general. We will deduce the consequences will be for PM.  
 
2. Organisational innovation and resource planning  
Enterprise resource planning (ERP) is an IT solution to provide a centralised IT 
application  for  business  processes  and  functions  within  a  company  or  group  of 
companies.  ERP  is  a  software  solution  that  integrates  information  and  business 
processes  to  enable  information  entered  once  into  the  system  to  be  shared 
                                                 
* Marius Dan Dalotă is Professor of Management at the Romanian American University in Bucharest. 
Laura Tănăsoaica is Assistant Professor of Management at the Romanian American University in 
Bucharest. Romanian Economic and Business Review – Vol. 5, No. 1 
 
 
133 
throughout  an  organisation.  While  ERP  had  its  origins  in  manufacturing  and 
production planning systems, the scope of ERP is to include other "back office" 
functions such as financial management, asset management, order management and 
human  resources  management.  The  range  of  functionality  of  ERP  systems  has 
further expanded in recent years to include more applications, such as marketing 
automation, electronic commerce, sales and supply chain systems.  
It is not possible to think of an ERP system without a sophisticated IT infrastructure. 
ERP is an expression of the inseparability of business and IT. The original Systems, 
Applications,  and  Products  in  Data  Processing  (SAP)  concept  was  to  provide 
customers  the  ability  to  interact  with  a  common  corporate  database  for  a 
comprehensive  range  of  applications.  Gradually,  the  applications  have  been 
assembled and today many corporations, including IBM and Microsoft, are using 
SAP products to run their own businesses. It attempts to integrate IT with business 
process  re engineering  (Figure  1).  SAP  provides  sample  business  objects  and 
business  processes  that  aims  to  provide  the  best  business  practices  found  in 
successful companies and that can either be used "as is" or extended and customised 
by any company to suit its specific needs.  
 
 
Figure 1   SAP levels of integration 
Source: Rodney McAdam and Alan Galloway, Enterprise resource planning 
and organisational innovation: a management perspective, Industrial Management & 
Data Systems, Vol. 105 No. 3, 2005, pp. 280 290 
 
The specialists found that key organisational issues are: 
- change,  
- project management,  
- monitoring and review,  
- effective communication,  Implications of resource planning, innovation and learning for work processes and performance management 
 
 
 
134 
- teamwork,  
- management,  
- top management support,  
- plan and vision,  
- business process management and development,  
- software development and testing,  
- the role of the project champion and appropriate business and IT legacy systems.  
There are advantages and disadvantages associated with ERP implementation as 
an essential part of a wider change programme. The key research questions emerging 
from the discussion are how can ERP be more effectively implemented in large scale 
applications, where complex organisational change issues are involved? 
 
3. Implications of innovation and learning on performance management 
Firms that have innovation and learning as important performance indicators 
typically operate in highly dynamic environments and have to deal with complex and 
ambiguous  transaction  processes.  To  survive,  such  organizations  often  have 
proactive strategies. They not only deal with environmental demands in a reactive 
way, but they also shape environmental demands and consider innovation as a major 
determinant  for  long term  success.  Organizations  that  opt  for  innovation  have  a 
competitive  advantage  if  they  come  up  with  new  ideas  and  create  services  and 
products  that  are,  at  least  partly,  unique.  The  strategies  they  employ  will  have  a 
substantial impact on the processes of transformation. Such processes will tend to 
become more ambiguous and complex in nature (Figure2).  
 
Figure 2   Theoretical framework 
Source: Eric Molleman, Performance management when innovation and learning become 
critical performance indicators, Personnel Review, Vol.32, N0.1, 2003, p0.93 113 Romanian Economic and Business Review – Vol. 5, No. 1 
 
 
135 
 
·  Non-routine.  When  work  is  non routine,  the  outcome  as  well  as  the 
processes leading to the outcome cannot be specified in detail beforehand. In such a 
situation  it  is  harder  to  find  standard  solutions,  which  can  be  embedded  in 
standardized work processes. The progress and outcome of each processing step may 
vary considerably and the outcome of each action will affect the content and course 
of other processing steps. This means that while work progresses the exact goals 
emerge and that during processing decisions frequently have to be made or modified 
in terms of "what", "how" and "when". Work processes become more dynamic. In 
such a work environment, a hierarchical decisional structure will become inefficient 
and ineffective. Giving workers the opportunity to take such decisions at the local 
level adds value to the overall process and benefits the whole organization, as the 
occurrence of problems requires frequent adjustments to be made on the local level. 
Workers are allowed to analyse or reanalyse the problem, appraise or reappraise the 
best working method and, if necessary, reconsider the required output. This requires 
employees to be able to tolerate high levels of ambiguity, to be able to acquire and 
process information successfully and to have the capability to learn and to develop 
their problem solving capacity. As such, workers will often become the most critical 
production factor in innovative firms.  
·  Complexity. The creation of innovative and highly complex products usually 
requires such a diversity of knowledge and abilities that it is not realistic to expect a 
single worker to have all the required knowledge and to master all required skills. The 
work will be assigned to teams of employees which have to cooperate and adjust 
their  decisions  and  efforts  to  fit  in  with  others  since  the  creative  solutions  one 
member finds will have an impact on the work of others. Cooperation in such work 
settings often goes further than mutual "adjustment" and also implies knowledge 
sharing, finding solutions together, learning from each other and finding synergy in 
innovative  and  creative  processes.  All  this  will  contribute  to  the  creation  of 
knowledge  needed  to  create  unique  products  and  services  and  to  keep  the  firm 
innovative. The creation of knowledge will therefore become another performance 
indicator for the organization. Learning and the creation of knowledge can become 
as important as the processing of the products and services themselves. 
·  Performance  management  (PM).  The  consequences  for  performance 
management of work processes become more non routine and more dependent on 
the activities of peers. PM refers to "processes oriented towards coordinating and enhancing 
work activities and outcomes within an organizational unit". Most performance management 
systems start with a top down process. That is, objectives at the individual level are, 
via intermediate steps at the departmental, unit and/or team level, deduced from the 
objectives of the organization. Ideally these objectives match with individual goals to 
enhance motivation. The goals have to be defined in objective measurable terms to 
make reliable assessment attainable. These assessments must provide feedback on a 
timely  basis  for  the  individual  worker  to  be  able  to  adjust  his  or  her  behavior. Implications of resource planning, innovation and learning for work processes and performance management 
 
 
 
136 
Objectives are formulated in terms of control and improvement of performance and 
in  enhancing  the  motivation  and  the  development  of  individual  workers.  Most 
performance  management  policies  primarily  concentrate  on  the  level  of  the 
individual employee and on objectively measurable quantitative outcomes. In most 
systems, the manager primarily controls performance by influencing inputs (e.g. skills 
by training) and by the feedback provided by outputs (assessments).  
If  innovation  and  learning  become  major  performance  indicators,  the 
emergence  of  performance  becomes  much  more  a  dynamic  phenomenon  that  is 
strongly embedded in its social context.  
In  the  case  of  non routine  work,  it  is  difficult  to  define  clear  and  precise 
objectives for individual performance in advance, because these emerge and develop 
while doing the job. For PM the effect is that the formulation of objectives becomes 
much  more  a  bottom up  and  dynamic  process  than  in  settings  where  the 
repetitiveness of work processes is high. To be creative and innovative, workers need 
sufficient problem solving capabilities, and to stay innovative they have to further 
develop these competences. For PM the emphasis should be much more on the 
"throughput stage", the stage in which the focus is on work processes. It generally 
will be difficult to quantify learning and innovation outcomes.  
If  non routine  work  is  done  within  projects  in  which  employees  are  highly 
interdependent,  the  social  context  of  performance  management  becomes  an 
important  issue.  Individual  goal  setting  in  such  a  work  setting  may  inhibit 
performance  and  it  may  make  it  difficult  to  attribute  successes     in  terms  of 
innovation,  knowledge  creation,  learning  and  personal  growth     to  individual 
workers. If individual workers can only control outcomes to a limited extent because 
they are related to, for example, peer performance, a performance system that is 
solely focused on the individual is likely to demotivate workers rather than motivate 
them. If tasks are much more interdependent than outcomes, workers may be much 
more  focused  on  peers  than  on  themselves, which  may  result  in  social  pressure, 
conflict  and,  consequently,  in  inhibition  of  performance.  When  learning  and 
innovation are the leading performance indicators, performance becomes much more 
a team issue than a phenomenon that is solely at the individual level.  
 
4. Conclusions 
Taking into account the last researches in ERP area, an important conclusion is 
that companies need both new innovative business solutions in combination with 
innovative IT solutions. There is a need to combine both business strategy and IT 
tools. Business innovation solutions in the future is likely to be in two parts – the 
strategic vision on the one hand and the detailed work of how to implement the 
vision on the other. 
If innovation and learning become leading performance indicators, work will 
become more non routine with a higher level of interdependence between workers. 
For performance management, this means that the monitoring of collective work 
processes becomes a major issue.  Romanian Economic and Business Review – Vol. 5, No. 1 
 
 
137 
References  
 
Eric  Molleman,  “Performance  management  when  innovation  and  learning 
become  critical  performance  indicators”,  Personnel  Review,  Vol.32,  N0.1,  2003, 
p0.93 113 
Rodney  McAdam  and  Alan  Galloway,  “Enterprise  resource  planning  and 
organisational  innovation:  a  management  perspective”,  Industrial  Management  & 
Data Systems, Vol. 105 No. 3, 2005, pp. 280 290 
Beretta,  S.  “Unleashing  the  integration  potential  of  ERP  systems”,  Business 
Process Management Journal, Vol. 8 No. 3, 2002, pp. 254 77 
Okrent,  M.  and  Vokurka,  R.,  “Process  mapping  in  successful  ERP 
implementations”, Industrial Management & Data Systems, Vol. 104 No. 8, 2004, 
pp. 637 43 
Dalotă  Marius,  “Innovation  management  in  creative  and  learning 
organizations”,  Simpozionul  cu  participare  internaŃională  „România  Europeană”, 
noiembrie  2007  al  FacultăŃii  de  Management Marketing,  Universitatea  Româno 
Americană 

IMPLICATIONS OF RESOURCE PLANNING, INNOVATION AND LEARNING FOR WORK PROCESSES AND PERFORMANCE MANAGEMENT

http://www.rebe.rau.ro/RePEc/rau/journl/SP10/REBE-SP10-A10.pdf

IMPLICATIONS OF RESOURCE PLANNING, INNOVATION AND LEARNING FOR WORK PROCESSES AND PERFORMANCE MANAGEMENT

Abstract

Similar works

Full text

Available Versions

Research Papers in Economics