Enterprise Resource Planning (ERP)

330 Pages·2016·3.96 MB·English

Enterprise Resource Planning (ERP) adoption in a
hybrid service and manufacturing Small and Medium-
sized Enterprise (SME): an action case study

Chinedu Anthony OFOEGBU

Salford Business School
University of Salford, Salford, UK

Submitted in Partial Fulfillment of the Requirements of the
Degree of Doctor of Philosophy, January 2016
Dedication

It is with great pleasure, that I dedicate this thesis to my wife, Lilian Kudzie Kumire-Ofoegbu, my
five years old daughter, Uchechukwu Ruvarashe Audrey Ofoegbu and son Daniel Chinedu
Kudzaishe Ofoegbu who throughout the course of this study patiently supported me. My little
girl, as I call my daughter, always understood that ‘Daddy was doing his research’.
Finally, I also dedicate this thesis to my lovely late mother, Augustina Uchechukwu Ofoegbu,
who would have been very proud to read this work.

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Table of Contents
Dedication …………………………………………………………………………………………………………………………………………….. i
Table of Contents......................................................................................................................................... ii
Acknowledgements .................................................................................................................................... ix
Declaration .................................................................................................................................................. x
Abbreviations .............................................................................................................................................. xi
Definitions …………………………………………………………………………………………………………………………………………. xii
Abstract ……………………………………………………………………………………………………………………………………………. 1
Chapter One: Introduction to the research problem .................................................................................. 3
1.1 Introduction................................................................................................................................ 3
1.2 SME and hybrid service and manufacturing management ........................................................ 3
1.3 Research motivation, context and constraints .......................................................................... 4
1.4 Background and role of the researcher and the KTP ................................................................. 7
1.5 Business process analysis in an SME .......................................................................................... 8
1.5.1 Organisational Information Processing Theory .......................................................................... 9
1.6 Research problem, questions, objectives and contributions to knowledge ............................10
1.6.1 Research problem: Specialist hybrid service and manufacturing industry ..............................11
1.6.2 Research problem: Business process analysis in an SME .........................................................12
1.6.3 Research aim and questions ....................................................................................................13
1.6.4 Research Objectives ................................................................................................................15
1.6.5 Original contribution to knowledge .........................................................................................15
1.7 Thesis structure ........................................................................................................................17
Chapter Two: Literature Review ................................................................................................................19
2 Introduction..............................................................................................................................19
2.1 Information Processing ...........................................................................................................19
2.1.0.1 Technology Acceptance Model (TAM): ...................................................................................20

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2.1.0.2 Diffusion of Innovation Theory: ...............................................................................................22
2.1.0.3 Technological-Organisational-Environment (TOE) framework: ...............................................23
2.1.1 Organisational Information Processing Theory (OIPT) .............................................................24
2.1.2 Information Systems Success Theory (Theory of critical success factor) .................................26
2.1.2.1 Limitation of Organisational Information Processing Theory (OIPT) .......................................28
2.2 Business process analysis .........................................................................................................30
2.2.1 Business Process analysis methods .........................................................................................31
2.2.1.1 Business process analysis using Six Sigma ................................................................................31
2.2.1.2 Business process analysis using Value Stream Mapping (VSM) ...............................................32
2.2.2.1 VSM and other methods for systems redesign ........................................................................33
2.2.2.2 Justification for using VSM .......................................................................................................35
2.3 Specialist issue within the hybrid service and manufacturing industry ...................................36
2.3.1 What is the service industry? ...................................................................................................38
2.3.2 Overview of ERP systems .........................................................................................................41
2.3.2.1 Introduction to ERP systems ....................................................................................................41
2.3.2.2 Evolution of ERP systems .........................................................................................................42
2.3.3 Hybrid service and manufacturing SME motivations for implementing an ERP system .........46
2.3.4 Challenges within hybrid service and manufacturing management SMEs ..............................48
2.3.5 Factors that affect successful identification and adoption of a suitable service management
solution ....................................................................................................................................51
2.3.6 Stages of the pre-adoption and implementation of IS/IT system ............................................54
2.4.1 Organisational Information processing theory and application to present study ...................56
2.4.2 Information Processing Needs ................................................................................................58
2.5 Summary ..................................................................................................................................59
Chapter Three: Research Methodology ....................................................................................................61
3 Introduction..............................................................................................................................61
3.1 Research Approach and Philosophy .........................................................................................61

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3.1.0 Research Paradigms .................................................................................................................62
3.1.1.0 Positivism.................................................................................................................................63
3.1.1.1 Criticisms of Positivism ............................................................................................................64
3.1.2.0 Interpretivism ..........................................................................................................................65
3.1.2.1 Criticisms of Interpretivism .....................................................................................................66
3.1.3.0 Critical Pluralist ........................................................................................................................67
3.1.3.1 Criticisms of Critical Pluralist ...................................................................................................68
3.1.4 Philosophical review ................................................................................................................68
3.2 Justification of research paradigm ...........................................................................................69
3.3 Research Methodology ............................................................................................................71
3.3.1 Laboratory Experiment.............................................................................................................72
3.3.2 Case Study ................................................................................................................................73
3.3.3 Action Research ........................................................................................................................74
3.3.4 Action Case ...............................................................................................................................75
3.3.4.1 Single case justification ............................................................................................................78
3.3.5 Interpretive Action Case description – Alpha overview ...........................................................79
3.3.6 Action Case protocol ................................................................................................................83
3.3.6.1 Action Case Description ...........................................................................................................84
3.3.7 Data collection and analysis .....................................................................................................89
3.3.7.1 Data Analysis ............................................................................................................................98
3.3.7.1.1 Qualitative Data Analysis .........................................................................................................99
3.3.7.1.2 Quantitative Analysis..............................................................................................................105
3.3.8 Data sources ...........................................................................................................................107
3.4.1 OIPT and Interpretive contextualism .....................................................................................110
3.4.2 Analysing empirical material ..................................................................................................110
3.4.3 Research Integrity ..................................................................................................................114

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3.4.4 Research limitation ................................................................................................................116
3.4.5 Ethical Consideration .............................................................................................................117
3.5 Summary ................................................................................................................................118
Chapter Four: Data Analysis and Findings ...............................................................................................119
4.0 Introduction............................................................................................................................119
4.0.1 Action Case description: Introduction to Alpha .....................................................................119
4.1 Phase One: Study of the development organisation – Alpha ................................................120
4.1.1 The case of Alpha ...................................................................................................................121
4.1.2 The need of an efficient ERP system in this hybrid service and manufacturing Organisation
...............................................................................................................................................123
4.1.2.1 Alpha service business process overview ..............................................................................137
4.1.3 Risk assessment of adoption and implementation of ineffective service ERP system ..........143
4.1.4 Reflection on Phase One ........................................................................................................146
4.2 Phase two: Analysis of available hybrid ERP systems and suppliers ......................................147
4.2.1 Overall ERP system selection process ....................................................................................148
4.2.2 ERP service management functionality evaluation and vendor mapping process ................153
4.2.3 Vendor evaluation and selection ...........................................................................................157
4.2.4 Value Stream Mapping (VSM) ................................................................................................158
4.2.4.1 Current state ..........................................................................................................................161
4.2.4.2 Evaluation of current state map .............................................................................................164
4.2.4.3 Value Stream Mapping (VSM) of future state ........................................................................164
4.2.4.4 Cost impact of waste on business using VSM data ................................................................168
4.2.5 Reflection on Phase Two ........................................................................................................170
4.3 Phase three: Application of the re-engineered business process ..........................................171
4.3.1 Project scoping .......................................................................................................................171
4.3.2 SAP Business One Analysed ....................................................................................................173
4.3.3 Reflection on Phase Three .....................................................................................................175

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4.4 Benefits expected from the implementation of a most suitable service management solution
...............................................................................................................................................175
4.5 Summary ................................................................................................................................178
Chapter Five: Discussion ..........................................................................................................................179
5.0 Introduction............................................................................................................................179
5.0.1 Adaption of Organisational Information Processing Theory (OIPT2.0) ..................................181
5.1 How does business process analysis using Value Stream Mapping impact the implementation
and customisation of an ERP system in a hybrid service and manufacturing SME? .............184
5.1.0 Business Process Analysis and Process Improvement ..........................................................184
5.1.1.1 VSM is helpful for hybrid service and manufacturing SMEs ..................................................184
5.1.1.2 Customer centricity in BPR .....................................................................................................190
5.1.1.3 Role of customer satisfaction in VSM....................................................................................191
5.1.2 Business Process Analysis and Value Stream Mapping ..........................................................191
5.1.2.1 VSM is suitable for hybrid organisation .................................................................................194
5.1.2.2 VSM is vague, imprecise and uncertain .................................................................................195
5.1.2.3 Comparison with the SAP Business One’s implementation model ........................................197
5.1.2.4 RQ1 summary .........................................................................................................................199
5.2 How can an SME benefit from the use of OIPT in an ERP implementation for an SME? .......200
5.2.1 SME’s and Organisational Information Processing Theory (OIPT) ........................................200
5.2.2 Interdependence and OIPT ...................................................................................................201
5.2.3 SME’s Information requirement during ERP implementation ..............................................202
5.2.4 SME’s information processing during ERP implementation .................................................203
5.2.5 Management trust in hybrid service and manufacturing SME .............................................204
5.2.6 RQ2 summary ........................................................................................................................204
5.3 How does business process automation affect a hybrid service and manufacturing SME? ..205
5.3.0 Hybrid service and manufacturing SME ................................................................................205
5.3.1 ERP Systems and hybrid service and manufacturing functionality ........................................205

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5.3.2 ERP Adoption model in hybrid service and manufacturing SME ...........................................215
5.3.3 Non-hybrid SME ERP Adoption model ...................................................................................218
5.3.4 RQ3 summary .........................................................................................................................220
5.4 Limitations and Strengths of the Research ............................................................................221
5.5 Reflection on Methodology ....................................................................................................223
5.6 Reflections on the research from the interpretive perspective .............................................223
5.6.1 The principle of the hermeneutic circle .................................................................................223
5.6.2 Principle of contextualization .................................................................................................226
5.6.3 Principle of interaction between researcher and subjects ....................................................230
5.6.4 Principle of abstraction and generalisation ...........................................................................231
5.6.5 Principle of dialogical reasoning.............................................................................................232
5.6.6 The Principle of multiple interpretations ...............................................................................235
5.6.7 The Principle of suspicion .......................................................................................................237
5.7 Chapter summary ..................................................................................................................237
Chapter Six: Conclusion ...........................................................................................................................238
6.0 Introduction............................................................................................................................238
6.1 Achieving the Aim and Objectives of the Study .....................................................................238
6.2 Answers to Research Questions .............................................................................................241
6.3 Contributions to knowledge ..................................................................................................243
6.3.1 Scoping ..................................................................................................................................243
6.3.2 ERP system adoption and organisational performance and efficiency .................................246
6.3.3 Business Process Analysis using VSM ....................................................................................247
6.3.4 Theoretical contribution to OIPT ...........................................................................................248
6.3.5 ERP Systems Evaluation vs ERP Vendor Evaluation ...............................................................249
6.3.6 Definition of hybrid service and manufacturing business model..........................................250
6.4 Contribution to Practice .........................................................................................................252

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6.4.1 Business Process Analysis .......................................................................................................252
6.4.2 Value Stream Mapping in service business strategy ..............................................................253
6.4.3 Specialist issues within the case study ...................................................................................253
6.4.4 User involvement during ERP adoption and implementation ...............................................255
6.4.5 SAP Business One and Add-ons ..............................................................................................256
6.5 Suggestions for future work ...................................................................................................257
6.6 Researcher’s Reflection on the Research Process .................................................................258
6.7 Concluding Remarks ...............................................................................................................258
References ...............................................................................................................................................261
Appendices ..............................................................................................................................................280
Appendix 1a: ............................................................................................................................................281
1a: Employee questionnaire ........................................................................................................282
1b: Customer questionnaire .........................................................................................................296
1c: Recorded Supplier Interview ..................................................................................................304
Appendix 2: Research Consent ................................................................................................................305
Appendix 3: System Test script ................................................................................................................308

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Acknowledgements

Thanks to God for giving me the grace required to complete this thesis. This thesis has been an
epitome of a challenging journey which started as an idea but resulting into a five-year-long
study. Many people have provided me with support, motivation and guidance throughout the
process of this study. I am grateful to all those who have contributed in various ways to this
research study.
First I will want to thank my supervisor, Dr. Aleksej Heinze for his immense support,
encouragement and guidance and for providing frequent constructive feedback. It is also with
great pleasure that I extend my gratitude to Prof. John Davies, my Co-supervisor, for his
constructive comments. I will also want to show my appreciation to my external examiners Prof.
Savvas Papagiannidis and Dr. Crispin Coombs for their immense help and detailed feedback
which strengthened this thesis.
My deepest thanks goes to my dear wife Lilian Kudzie Kumire-Ofoegbu, my daughter
Uchechukwu Ruvarashe Audrey Ofoegbu and my son Daniel Chinedu Kudzaishe Ofoegbu for
their support and encouragement when it seemed like the journey was so difficult. I also owe
gratitude to my father (Louis Ofoegbu), my mother-in-law (Elizabeth Kumire), sisters (Chinyere
Rosemary Ofoegbu-Ugen and Chinasa Augustina Ofoegbu) and brothers (Francis Chidi Ofoegbu
and Johnny Uche Ofoegbu) for their encouragement.
Finally, I would also like to thank my former manager and friend Mr Jair Mendoza Vazquez for
his support and the intellectually stimulating discussions, which has contributed immensely to
this study.

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