Abstract code 008-0052
An Exploration on the Role of Process Orientation
in Enterprise Systems Implementation
Vinod Kumar1, Bahar Movehedi2, Uma Kumar3, Kayvan Lavassani4
Sprott School of Business, Carleton University, 1-613-5202600
1125 Colonel By Drive, Ottawa, Ontario, Canada
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Abstract. There has been relatively little attention in academia to empirically explore the role of process orientation in organizations. In this study we have developed a measurement system for assessing the level of process orientation. Furthermore we have empirically measured the level of process orientation among 275 North American large corporations. The level of process orientation has been measured in three phases of Enterprise System (ES) implementation: before ES implementation, during ES implementation, and after the utilization of ES. Based on the results of measurement of process orientation, we categorized the firms into three main groups: those who were process oriented before implementing the ES, those who became processes oriented during the implementation of ES, and those who became process oriented after utilization of ES. Subsequently we measured the success of ES implementation, challenges of ES implementation, and success of utilization of ES across the three categories of firms.
Traditionally organizations use re-engineering practices – such as Just-In-Time – and organizational enhancement programs – such as Total Quality Management and Process Orientation – in order to increase their competitiveness. However, the application of these methods requires the implementation of adaptive information platforms in the organizations. In the past few decades, organizations have heavily employed electronic platforms to increase and enhance the processes and operations within their organizations. These electronic platforms include electronic data exchange systems, enterprise resource planning systems, and, more recently, web-based applications (McNichols and Brennan, 2006; Movahedi et al, 2008). In this study, we measure the process-orientation (PO) in organizations and explore its effect on enterprise system (ES) implementation in organization. In the first section of this paper, after presenting the definitions of process and PO, we will introduce our proposed measurement system to measure PO. In the second section, we present the definition of ES, followed by the description of our proposed measurement system to assess the four dimensions of ES implementation. Section three includes our research design and data analysis. The final section of this study presents a synthesis of the findings.
In this section we first provide definitions of business process and PO. After that, we explain the concept of measurement of PO and propose a PO measurement system based on our extensive review of the literature. The root of the word process comes from a Latin word meaning movement. A business process generally represents a sequence of works – or what Keen and Knapp (1996) call actions or activities; these proceed in a sequential fashion from one to the next. A business process, if well defined, has distinct boundaries (Ljungberg, 2002) with a connection to its forward and backward linkages, as well as instruction on how to perform the work. Figure 1 displays a business process. Any business process can be in the form of a management process, operational process, and/or support process (Hammer, et al., 1993). The goal of every business process is creating value. This value creation can be through enhanced quality, cost reduction, and/or increased flexibility (McCormack and Johnson, 2002).
In the past two decades, the concept of process orientation in organizations has been introduced and developed as a new form of organizational structure that is based on organizational business processes rather than functions. There is a common theme among the available literature about PO as a notion of process culture with a strong emphasize on customer satisfaction, team-orientation, empowerment of individuals, and outcomes (Balasubramanian and Gupta, 2005; Balzarova, et al., 2004; McCormack and Johnson, 2002; Biazzo, 2002). Process orientation enables organizations to combine organizational assets and skills. There are an increasing number of studies providing evidence that an exceptional competitive advantage results when a firm combines its organizational assets and skills (e.g., marketing capabilities and innovation) with process orientation (Vathanophas, 2007; Regev, et al., 2005; Sara, et al., 2004; McCormack and Johnson, 2002; and Llewellyn and Armistead, 2000). Research also shows that implementing PO can help increase the internal coordination and create stronger team spirit in most companies (Love, et al., 2000; and McQueen, 1999). Moreover, process orientation can dramatically influence the performance of an organization by increasing the employee’s enthusiasm and feelings of devotion to a common cause (Regev, et al. 2005; McCormack, 2002). Furthermore, when jobs become process-oriented in an organization it results in process-oriented authority. This type of authority would persuade employees from different functions to work together toward the common goals of organization. Therefore, implementing a process-oriented structure in an organization does not require a charismatic leader; instead, it can be initiated and developed through organizational dynamics (Shari and Seddon, 2007; Weerakkody, et al., 2003; and McCormack and Johnson, 2002). PO is defined, for the purpose of this study, as the activity of transforming an organization’s structure from one based on a functional paradigm to one based on a process paradigm. PO implies that the procedure of doing tasks in firms should be more cooperative and integrated towards satisfying customer needs. This view is in contrast to the mechanistic functional view of the firm, which emphasizes the division and isolation of functions from each other and from the customers. In this study, we define a process-oriented organization as an organization that, in all its thinking, emphasizes processes as opposed to hierarchies, and also emphasises outcomes and customer satisfaction. In a process-oriented firm, people in different functions – such as marketing, accounting, sales, manufacturing, assembling, new product development, and R&D – are aware of customer needs and are all aligned towards satisfying those needs. In contrast, in a highly hierarchical functional-based organizational setting, the functions are disconnected from the process of satisfying customer needs.
Measurement of PO
The literature shows that very little work has been done to provide measurement systems for assessing PO in organizations. Moreover, there exists a gap in the literature on developing and empirically testing a measurement system to assess PO (McCormack and Johnson, 2002). In 2005, Balasubramanian and Gupta proposed an eight-dimensional measurement system. However, this measurement system was not tested empirically. Based on the literature review and the available measures of PO, we developed a measurement system including 19 measures of PO. Table 1 displays the measures that we used in our empirical study to assess the level of PO in organizations.
Measures of PO1 Existence of a systematic decision making process which is defined based on business rules. / 2 Reconfiguring the physical workspace to facilitate process flows within the company. / 3 Process participants at all levels of the organization have a systematic and effective way of communicating with each other. / 4. The majority of processes being either interactive or automated.
5 Existence of continuity and integration in the execution of activities within a process. / 6 Processes being visible to relevant stakeholders. / 7 Carrying out the majority of processes not dependent on human discretion and human judgment. / 8 Ability of execution of several or more than one activities simultaneously.
9 Delays not creeping in due to frequent intervention of humans in carrying out the processes. / 10 Existence of an effective process in place for identifying and resolving problems within and between processes. / 11 The processes being documented properly and documentation is accessible to employees to be used as a reference. / 12 No misalignment between management’s vision and corporate culture in an organization.
13 Executive managers provide adequate input for designing and implementing processes. / 14 Top management relates organizational strategy and goals to the processes. / 15 Processes to be designed toward satisfying customer expectations. / 16 Top management provides process mapping, in which all sub-processes, information flows, inputs, and outputs together are identified and described.
17 Existence of a measurement system that evaluates the effectiveness of processes across the organization. / 18 Provision of adequate knowledge, skills, and training for all the employees on how to implement a successful process measurement system. / 19 Top management and key stakeholders organization to be committed to and support the change in processes due to ES implementation.
For each measure, respondents were asked to provide the extent to which they agree or disagree with the subject using a five-point Likert scale. The average score of 19 measures creates the Process Orientation Score (POS). This score is a number between one and five. The higher POS indicates the higher level of PO in the organization. Any organization with POS of that equals or is above three is considered to be a process-oriented organization.
ES is the information platform of the organization. ES is one form of Enterprise Resource Planning (ERP) systems. ERP systems have been widely used in businesses and are widely known in academia. However, in our preliminary interviews we identified that many organization do not see themselves to be ERP-equipped, despite the fact that they use several modules of an ERP system. According to definition, ERP systems are integrated information systems that handle all of the activities within an organization. However, as we found out, even many large organizations do not have company-wide information platforms that integrate all of company activities. On the other hand, almost every medium- and large-sized organization – at least in developed economies – uses one or a number of ERP modules. To get around this confusion, in this study we use the term ES. ES is defined as an integrated, customized, and packaged software-based system that handles the majority of systems requirements in all or any of the functional areas of a firm, such as marketing, finances, human resources, and manufacturing. Almost every medium- and large-sized organization has at least a number of ES modules, such as a company-wide accounting software package, a marketing software package, or a manufacturing software package.
Measurement of four dimensions of ES Implementation
The goal of this study is to explore the role of PO in four dimensions, or constructs, of ES implementation, as follows: the ES implementation practice, the success of ES implementation, challenges of ES implementation, and the success of utilization of ES. Each construct is assessed using a number of measures. These measures are based on an extensive literature review and on our preliminary interviews. For each measure, the survey participants were asked to provide their responses on the Likert scale of 1 to 5. In this section, the description of each construct and the measures that have been used to assess those constructs are presented. The ES implementation practice is measured using the following four measures: Variable1, Clear and well-communicated master plan for implementing ES; Variable 2, Following the master plan during the process of ES implementation; Variable 3, Implementing the ES within the planned timeline; and Variable 4, Implementing the ES within the planned budget. This construct assesses the extent to which organizations were committed to their ES implementation master plan. The average score of these four measures creates the ES Implementation Practice Score (ESIPS). This score – similar to POS – is a number between one and five. The higher ESIPS indicates the higher level of communication and commitment to the master plan for implementing ES.
The second construct is the success of ES implementation. This construct measures the extent to which the ES is successfully implemented in organizations. Success of ES implementation does not deal with the outcome of the implemented ES, such as organizational performance, etc. Rather it is concerned with the appropriate implementation of ES. For addressing this issue, the critical success factors of ES implementation were the center point of proposing measures. Fourteen measures of success of ES implementation are displayed in Table 2. The average score of these 14 measures creates the Success of ES Implementation Score (SESIS). A higher SESIS is interpreted as better success in implementing ES.
Measures of Success of ES Implementation1 Use of project management practices that effectively support the ES implementation / 2 Training most employees to understand and use end-to-end business processes using the ES / 3 Existence of systems to support, encourage, and reward teamwork and team development / 4 Existence of uncertainty among the employees about their involvement and role in the change process due to ES implementation / 5 Readily shared information for decision making within the company
6 Provision of clear vision and well-defined roles by management in order to eliminate resistance to change / 7 Enhanced access to organizations, suppliers, and customer information post deployment of ES / 8 Existence of ambivalence on how organization manages IT investments / 9 Redesigning processes in conjunction with the ES implementation / 10 Paying enough attention by the management to restructuring reward and incentive systems subsequent to ES implementation
11 Enough attention to people-based factors that would support the successful use of the deployed processes / 12 Enough attention has been paid by the management to understand and apply industry best practices for managing the deployment of ES infrastructure / 13 Providing opportunities for continuous learning about ES functionality in the organization / 14 Allocation of sufficient time by the organization for the implementation of ES
The next construct – challenges of ES implementation – assesses the challenges that organizations face during ES implementation. Based on our literature review, 13 commonly reported challenges were identified (see Table 3). The respondents had the option to provide any other challenge that they had faced during ES implementation. Some respondents provided more explanations of some of the challenges they had faced during ES implementation, but they did not report any new challenges that were not already on our list of challenges. This issue validated the comprehensiveness of the proposed list of challenges. The average score of these 13 measures creates the Challenges of ES Implementation Score (CESIS). The higher CESIS is interpreted as higher level of challenges that an organization faces during ES implementation. Any single measure that received a score of three or more is interpreted in this study as a significant challenge.
Measures of Challenges of ES implementation1 The organization not making the right strategic choices needed to configure the systems and processes while implementing ES / 2 ES adoption decisions have not been viewed in terms of their strategic importance by top management / 3 In-house resource constraints / 4 High costs of ES implementation / 5 Significant resistance from staff during ES implementation
6 Existence of significant resistance from managers / 7 Lack of commitment from top leadership / 8 High turnover of key project persons / 9 Lack of a clear vision for the use of ES / 10 Significant knowledge gap between implementers and users of ES
11 Lack of sufficient training organized to provide employees with skills to use and maintain ES / 12 The chosen ES is inconsistent with organizational processes and does not complement organizational processes and policies / 13 Difficulties in estimating ES project requirements
The last construct that is measured in this study is the success of utilization of ES. This construct assesses various dimensions of the outcomes of utilization of ES. The 13 measures that assess success of utilization of ES are displayed in Table 4. The average score of these 13 measures creates the Success of ES Utilization Score (SESUS). The higher SESUS is interpreted as the higher level of success (in terms of outcomes) that an organization gains as a result of utilization of ES.
Measures of Success of ES Utilization1 Work has become easier / 2 Employees have more collaboration with other employees in performing their tasks / 3 The implemented ES helps the company to reach and serve more customers than it previously did / 4 Ability of the company to better pursue new business opportunities / 5 Clear financial benefits resulting from deployment of ES
6 Clear cost savings result from deployment of ES / 7 Creation of new sources of revenue resulting from deployment of ES / 8 More flexibility and responsiveness in delivering products and services across the organization / 9 Access to higher quality data and information about customers and suppliers / 10 Access to a more up-to-date and flexible technical infrastructure post-ES deployment
11 Major positive changes in the jobs and roles of individuals / 12 Employees have more autonomy in decision making that is directly related to their work / 13 The jobs are more satisfying for the employees
For understanding the role of PO in ES implementation we proposed the following 4 hypotheses:
Hypothesis (H1): Process-Oriented organizations are more successful in implementing ES based on the master plan.
Hypothesis (H2): Process-Oriented organizations are more successful in implementing ES.
Hypothesis (H3): Process-Oriented organizations face fewer challenges during ES implementation.
Hypothesis (H4): Process-Oriented organizations are more successful in utilizing ES.
Data was collected through a mail survey from 2,500 large North American corporations. The questionnaire was sent to the managers, directors, and vice presidents of the companies. They were asked to participate in the survey if they have had experience with implementing ES in an organization. Through the survey, data was collected to measure the level of PO in organizations, ES implementation practice, the success of ES implementation, the challenges of ES implementation, and the success of ES utilization. During our preliminary interviews, we learned that during the process of ES implementation the level of PO in organization changes. Some organizations are process-oriented even before implementing ES, some organizations become so during the implementation of ES, and some organizations become process-oriented only after implementing the ES. For this reason, the questionnaire was designed to collect the data regarding the measurement of PO before ES implementation, during ES implementation, and after utilization of ES implementation. Another important point that was identified through the survey is that ES implementation is a never ending task. For this reason, the third phase of ES implementation is called ES utilization, rather than post-ES implementation. Figure 2 displays the three phases of ES implementation.
Three Phases of ES Implementation
The PO is measured in three phases: before ES implementation, during ES implementation, and after ES utilization. As was mentioned, some organizations were found to be process-oriented in phase 1, some became process-oriented in phase 2, and others in phase 3. Some organizations never became process-oriented. However, in more than 90 percent of the firms the POS increased from phase 1 through phase 3. In this study, only three categories of firms are independently analyzed: Group 1, Group 2, and Group 3 firms. Group 1 (G1) are those organizations whose POS is equal or above three in phase 1, and their POS increases throughout phase 2 and phase 3. Group 2 (G2) firms became process-oriented in phase 2, and stayed process-oriented in phase 3. In Group 3 (G3) firms, POS was less than three in phase 1. In phase 2 the POS of G3 firms increased but it was still below 3. It was only in phase 3 (after ES utilization) that the POS of G3 firms became equal or above three. About 18 percent of the firms are categorized in G1. G2 firms, with 40 percent of the firms, count for the biggest category of firms, and G3 firms count for about 20 percent of the firms in the sample. In the next two parts – Correlation Analysis and Hypothesis Analysis – the correlation assessment among the five constructs is discussed. Here the analysis of four constructs of ES implementation is discussed. Table 5 displays the score and rank (descending) of measures of ESIPS, SESIS, CESIS, and SESUS. The value of ESIPS, SESIS, CESIS, and SESUS in the total population of the study sample is presented in the bottom row of Table 5.