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The barriers in the stage of ERP Post-implementation in SOE and
Private enterprise of China
A study submitted in partial fulfillment
of the requirements for the degree of
Master of Science in Information Management
at
The University of Sheffiled
by
Kangkang Lin
September 2012
2
Acknowledgement
In this study, I would like to express my sincere thanks for all the persons who give me
the stronger help during the dissertation period.
First, I would give the many thanks for my tutor Dr. Alex Peng; he helped me much
more in this study, and gave me more efficient support for my research.
Second I would like to thank my uncle，he help me to find the SOE and Private
company.
Third, I would like to thank the manager of SOE and Private; they gave me much more
help for my research.
Finally, thanks for my family; they gave me the chance for study in UK and gave me the
support to finish the degree.
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Abstract
Background: With the global economic integration, the enterprises of the China found
their competitiveness faced big challenge; they want to find an efficient way to solve the
problem. The product of ERP can centralize the internal and external information in
order to help the manager make a better decision to face the challenge and enhance
enterprises‘ competitiveness. However ERP implementation will meet lots of barriers,
all the barriers will affect the system implement success and fail.
Aims: The research aimed to explore the SAP system on Chinese SOE and Private
enterprises, find the barriers on the phase of ERP post-implementation. And it showed
the potential solution.
Methods: This study used the inductive approach and qualitative method.
Semi-structured interview was used to collect the data from seventeen interviewees who
daily work with the ERP system. The interviewees came from two participant
companies, one is SOE another one is Private Company.
Finding: From the data analysis, 9 main codes of barriers on ERP post-implementation
were found. They were found from the cultural, organizational and system aspect. The
research discussed the reasons, causes and consequences of each barrier.
Conclusions: The 9 codes were existed in current time in both SOE and private
company on the stage of ERP post-implementation. The enterprise want to adopt the
SAP system better need to consider more things relate to culture, organizational and
system areas. These barriers have the common characters when companies adopt SAP
system. Furthermore, the recommendation and further research presented at the last.
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Table of Contents
CHAPTER 1 :
Introduction ...................................................................... ................................................6
1.1 Background and Research context...........................................................................6-7
1.2 Research Question ......................................................................................................7
1.3 Research aim and objectives ...................................................................................7-8
1.4 Structure of the dissertation ........................................................................................8
Chapter 2
2. Literature Review .........................................................................................................9
2.1 Introduction ................................................................................................................9
2.2 Brief history of ERP ...................................................................................................9
2.3 The definition of ERP ............................................................................. ..................10
2.4 ERP life-cycle......................................................................................................10-11
2.5 Benefits of using ERP system..............................................................................12-13
2.6 China economic environment...............................................................................13-14
2.7 China ERP market...............................................................................................14 -16
2.8 SOE and Private enterprise ............................................................................ .....16-17
2.9 Barriers of ERP Post-implementation .................................................................18-19
2.10 Conclusion Chapter........................................................................................... .....19
Chapter 3
3.1
Introduction.....................................................................................................................20
3.2 Inductive & Deductive...............................................................................................20
3.3 Qualitative research method......................................................................................20
3.4 Research context..................................................................... ...................................21
3.5 Case companies.. .......................................................................................... ..... 21-23
3.6 Data collection.. ............................................................................................ ...........23
3.7 Data analysis............ .................................................................................................24
3.8 Ethical aspects.......................................................................................................... 24
Chapter 4
4.1
Introduction....................................................................................................................25
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4.2 Cultural Barriers........................................................................................................25
4.2.1 ―Guanxi‖ ...........................................................................................................25-26
4.3 Organizational Barriers..............................................................................................27
4.3.1 ERP fund...........................................................................................................27-28
4.3.2 ERP training......................................................................................... .............27-28
4.3.3 In-house IT expert............................................................................................ 28-29
4.3.4 Top management support....................................................................... ..........30-31
4.4 System Barriers..........................................................................................................31
4.4.1 System design............................................................................................ .......31-32
4.4.2 System speed...................................................................................... ...................32
4.4.3 System inflexibility........................................................................... ....................33
Chapter 5
5.1
Introduction................................................................................................. ...................34
5.2Discussion...................................................................................................................34
5.2.1 Analyzing cultural barrier............................................................... ................ 34-35
5.2.2 Analyzing organizational barrier.......................................................... ............35-36
5.2.3Analyzing System barriers............................................................... .................36-37
5.3 Conclusion............................................................................................................37-38
Chapter 6
6.1 Introduction. .............................................................................................................38
6.2 overall conclusions... ...........................................................................................38-39
6.3 Recommendation............ .........................................................................................39
6.3.1 Culture barrier.................. ................................................................................39-40
6.3.2 Organizational barriers...........................................................................................40
6.3.3 System design barriers.................... ...................................... .................................40
6.4 Limitation.................................................. ...............................................................40
6.5 Recommendation for Further research........................................................... .......... 41
Appendix 1......................................................................................................................42
Appendix 2.................................................................................................................43-50
References…..............................................................................................................51-57
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Chapter 1 Introduction
1.1 Background and Research context
Over the past few decades, following the economic developed rapidly in China, more
and more foreign country want to do the business with China. After 2001, China entry
into the WTO, the domestic enterprises faced big challenge for their products. The
customers demand for product and services higher than before (Nah et al. 2001).These
leaders of enterprises want to enhance their competitiveness to face these challengers.
On the other hand, the life cycle of products become short than before, enterprises want
to establish an effective information processing mechanism. At that time, adopting
Enterprise Resource Planning (ERP) system is a good choose for these enterprises. It
will increase their competitiveness, and it will give the information reflect about
customers‘ needs and suppliers rapidly. The efficient information system can help
organization deal with the business problems better (Genoulaz and Millet,
2005).Application ERP system successful will help companies centralize internal and
external information and help the managers to make their companies‘ strategic decision
better.
ERP system is coming from America; it is developed base on the MRPII (Koh and
Simpson, 2005). It use advance technology to deal with the information which collect
from customers or suppliers or other areas, and translate them for useful information for
leader. Leader according these information to make efficient decision for enterprise
enhance their competitiveness (Peng and Nunes, 2010). ERP system apply successful
have many benefits, for instance: ―reduction of unit labor costs and inventory levels,
enhancement of customer services and operations efficiency, and improvement of an
organization‘s capability for panoptic control.‖(Kayas, Mclean, Hines & Wright, 2008).
In addition, from the research of Jacobson et al. (2007), the global market for the ERP
to be US$47.7 billion in 2011. The system vendors of SAP holds a 32% global market
share (liang et al. 2004). Because of the China take the main parts of global ERP market,
these biggest vendors pay more attention for China market. But with the research of
Deep et al. (2008), the ERP system implement success is low rate of China. So the topic
relate to the ERP application is heated topic for researchers. ERP used in enterprise
include there phases, pre-implementation phase, implementation phase and
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post-implementation phase (Barki and Pinsonneault, 2002). Post- implementation is the
phase of ERP when it is implemented and running. From the research of Esteves and
Bohorques (2007), only less research articles are focus on the phase of ERP
post-implementation in organization. Most of the researchers are focus on the success
factor affect the ERP implementation.
1.2 Research question
Most research studies on the ERP implementation are mainly focus on the larger
enterprise in Europe and USA, little are focus on the developing country (He, 2004).
This research questions will divided into four parts. First one is explored the situation of
system used in these companies, the objective is to find the system used for show or for
using. Second one is explored the problems which the companies met on the ERP
implementation. The aim was to find the main barriers of ERP implementation. The
thirdly is based on the main barriers to analyze the reasons. Why these problems will
happen and become the barriers for ERP post-implementation. Fourth research question
looks at the employees‘ satisfaction of the system, and collect their mind for amending
the system running better.
1.3 research aim and objectives
Furthermore, this research pay attention for the phase of ERP post-implementation, it
aimed to provide an in-depth investigation of the ERP post-implementation in
organization of China, especially the SOE(state-owned enterprises) and Private
enterprises which used SAP system. There is little articles address the barriers of SOE
and private companies met on the phase of ERP post-implementation. SOE and Private
companies are the main types of enterprises of China, this research can help they
recognize the barriers when they adopt SAP system in their enterprises, it will help them
avoid some problems on the post phase, and make the whole SAP system running better
after ERP implementation.
In order to achieve the aim, the following research objectives are set up, and want to
find the barriers which affect the ERP on post-implementation phase:
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Do the literature review on the barriers of ERP system implementation.
Use case study approach identifies the critical barriers in SOE and private
enterprise, and do the interviews collect the data.
Explore the cause and consequences to these barriers
Explore the barriers from organizational, technology and culture aspect.
Investigate the potential solution to solve and these barriers.
1.4 Structure of the dissertation
The dissertation is divided into six chapters:
Chapter one: this part includes the introduction of the dissertation, give the background
and research context. It describes the research objectives and aims.
Chapter two: this part reviews the current literatures about ERP system implementation,
and analyzes the China economic reform and ERP market. It gives the short
introduction for ERP and gives the definition. At the end of this part, mentioned the
barriers of ERP post-implementation in current research.
Chapter three: this part provides the research methodology and approach which suit for
this study. Furthermore, it also presents the semi-structured interview for this research.
Chapter four: this part show the finding which come from the date collection. The
interviewees give their opinions for ERP post-implementation, and mentioned the
barriers they faced in the current time.
Chapter five: according to the finding, with the help of literature reviews, this part
discusses the problems deeply which found on the chapter four and analyze them.
Chapter six: give the summary for whole article and give the recommendation for
further research. The limitation was present in this part.
Chapter 2 literature review
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2.1 Introduction
In this chapter, there are two sections; one is relate to ERP system, will present basic
knowledge about ERP, like the definition, ERP lifecycle, the history, another one is
describe ERP in China, different country has different ERP features. China is the biggest
develop country in the world and the companies have many types, like the
SOE(state-owned enterprises), private enterprise, joint ventures and foreign-owned
enterprise. They have special characters, according to the characters, ERP is little
different from other countries. The second section is focus on the ERP
post-implementation in SOE and private enterprise of China, also the China ERP market
will be presented in this part.
2.2 Brief history of ERP
The full name of ERP is Enterprise Resource Planning; it was originate in the United
States And developed on the base of MRP (Material Requirements Planning) and
MRPII (Manufacturing resource planning) system. (Koh and Simpson,2005).At the
beginning, the MRP is used for manufacturing inventory management information
processing system, and in order to calculate the material needs more efficiently. (Klaus
et al. 2000). Orlicky 1975 said: ―MRP is the first off-the-shelf business applications
designed in the 50s‖. In Siriginidi‘s (2000) research that the benefits of using MRP
not only enhance the working efficiency but also decrease the material cost. MRPII was
developed basing the main function of the MRP. It integrates each aspects of material
management, like the produce, supply, sales, financial, combined them together, making
each parts running smoothly, using MRPII can make the company obtain the best
benefit. Wilson&Desmond&Roberts (1994) in their article stated that: ―MRPII is a
company-wide, closed- loop manufacturing control system. It combines all parts of
manufacturing-materials control, marketing, finance, requirements planning and shop
floor control. This system can help the manager to control enterprise‘s business running
and deal with changing business environment positively.‖
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2.3 The definition of ERP
There are many definition relate to the ERP. At this current stage, the broadly agreed
definition of ERP is not being achieved. (Klaus et al. 2000). Firstly, ERP system is
computer software; it is a commodity which has huge business value. Chung and
Synder (1999) explained that ERP is the important product which used IT technology to
support for manufacturing, help the manager to control enterprise operation.
Christopher and Ben (1999) in their article mentioned that: ―According the research of
AMR, in 1997 the ERP market was $15.68 billion and in 2002, it will be glowed to
$72.63 billion.‖ ―ERP software market became the one of largest IT investments
worldwide.‖(Shehab et al. 2004). Basing on the large market, so many companies start
to invest in develop ERP system. Especially SAP and Oracle, they are the best vendor
in the world which good at develop ERP system. Secondly, ERP system is a tool which
used for manage company. Alter (1999) gave a definition: ERP system is poorly
implemented databases, but Escalle et al., (1999) mentioned that: ―successfully
implemented, it will links all areas of a company, including human resources,
manufacturing, financial systems, order management, and distribution with external
suppliers and customers into a tightly integrated system, sharing data and visibility.‖
ERP system application successful can help the enterprise to use modern information
technology more efficient and combine the resources from inside or outside to deal the
problem which enterprise faced currently. Shehab et al. (2004) noticed that ERP system
is a software package used for business and integrate each business process and share
information with different departments. Furthermore Markus.et al.(2000) give the same
opinion, they thought ERP systems are commercial software packages and it will help
organization to integration of transactions oriented data.
2.4 ERP lifecycle
Understanding ERP life cycle issues better will help direct the ERP research agenda.
(Chang,2004). According to Law&Chen&Wu‘s research, ERP life cycle have four
phase: adaption, acceptance, routinization and infusion (2010). But from the article
which write by Esteves and Pastor(1999), the framework of the ERP life-cycle process
include six parts: adoption decision; acquisition; implementation ; use and maintenance ;
evolution and retirement.
1. Adoption decision phase: in this phase, the senior managers need to make a decision,
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they need to consider the necessary of new system, and if adopt the new system, which
functions should be included in the new system and what are the advantages this new
system can be taken. Then the manager need analyze what will be affecting the new
system‘s implementation at business level (Esteves and Pastor,1999).
2. Acquisition phase: According the companies‘ business situation, the entire project‘s
cost and the maintenance to select the ERP software because customizing less function
of the ERP software, the cost will be less. So the manager needs to consider this phase.
(Esteves and Pastor,1999).
3. Implementation phase: this phase is according the organization‘s situation,
customizing the ERP system package and adapt for the company. Then usually
consultants will provide the implementation methodologies and training to help the
organization. (Esteves and Pastor,1999).
4. Use and maintenance phase: the content of this phase is the product using and obtain
the expect profits. The users should be acquainted with the system function, know how
to use this system for business process. After the system implemented, the system need
according the actual service condition to maintenance and improved, because usually
there will be many bugs in new system when it running in the entire organization.
(Esteves and Pastor,1999).
5. Evolution phase: ERP vendors want to provide the perfect functions for users, but
after ERP implementation, ERP packages still not meet everything what companies‘
wants. (Esteves and Pastor,1999). So ERP systems need extend its functions and add more
capabilities to provide better business value, like scheduling and advanced planning.
The aim of this phase is obtain collaboration with suppliers, customers and other
cooperators. (stein,1998).
6. Retirement phase. In this stage, new technology comes out or the current ERP system
is not satisfy for organization developed, the managers need to decide consider adopt
new software instead of ERP software which is better than old system and can help
organization over the development of obstacles.(Esteves and Pastor,1999).
2.5 Benefits of using ERP system
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Esteves(2009) claimed that ERP system is critical bridge, it using IT technology and
link each parts of organization together. The benefits of ERP is integrate diverse
business process to simplify operations, in order to obtain information faster, help the
organization making decision better. Furthermore in Genoulaz and Millet(2005)‘s
research, using ERP system can collect information faster, according the information to
make a better decision. Shin (2006) has identified that adopt ERP system will enhance
internal efficiency. ERP system is software used for collecting internal and external
information to help manager make better strategic decision.
Moon(2007) noticed that the advantage of apply ERP system is enhance business
process efficiency. Davenport (2000) mentioned that: ―the benefits are improved
transactional processes and common data appear to precede benefits associated with
improvements in management and decision making.‖ Velcu(2007) give the similar
opinion about the benefits of using ERP system. ―Implement ERP will improved
process efficiency and improved tactical decision making.‖
Holsapple& Sena(2003) stated that managers in companies which adopted ERP system
s considered decision- support as an important character of the system.
Enhancing information quality is other benefits for ERP implementation.( Shang and
Seddon ,2002) The information is collect from departments‘ cooperation, it is accurately.
In addition, Esteves(2009) ,Shang and Seddon (2002) stated five aspects of benefits in
his article include: operational(reduce the cost, improve productivity),
managerial(manage resource better; making decision and planning better),
strategic(build external linkages), IT infrastructure(making business change flexibility)
and organizational.(build common visions).
Furthermore Esteves(2009)mentioned using ERP system will improve customer service
and enhance working efficient. As same as Stefan&Ge(2009) noticed in their article,
ERP system successful implement will reduced manufacturing cost, improve customers‘
service and obtain the better production scheduling. Moreover, Botta-Genoulaz et
al(2005) said: success of ERP system will help the organization‘s operation more
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effectively and it will increase their productivity, enhance organization‘s competitive. In
addition, there are many other significant benefits is not mentioned in this parts, like
organizational integration, improve customer satisfaction.(Rajagopal,2002).
2.6 China economic environment
In recent years, the development of China‘s economy has caught the world‘s attention.
Since economic reform adopted in November, 1978, China enjoyed its 30 years‘ rapid
economic growth and became the third economic entity in the world. (KANG, 192)
China held more than 2 trillion foreign exchange reserve and becomes the biggest trade
state and is also the direction of foreign direct investment in 2007. (Chamon, 2008)
However, after global economic crisis in 2007, global economy has suffered into a
severe situation with world economic environment changed rapidly. In this case, China
faces a more and more complex economic environment now. China‘s current economic
environment can be analyzed in two aspects from both internal and external
perspectives.
On the one hand, China‘s internal economic environment is not in a positive situation.
Although the economic development raised RMB, the currency of China, the
phenomenon of inflation severed and the price of good increased in a quick rate with
wages stay unchanged. According to statistics researched by Xinhua net, one of China‘s
news media, the price of life necessities in China‘s three major economic cities which
are Shanghai, Guangzhou and Shenzhen has been double in one month in August, 2007.
(Aziz, 2007) This increase helped raised famers income and kept social stability which
was good for China‘s economic development. However, the increase of price of
necessities in China‘s three major cities was not appeared occasionally. In the following
7 months, China macro-control hasn‘t stable house price, in contrast, house price has
been raised step by step. Economist warned this situation that the bubble in real state
will lead to inflation and even economic crisis. (Chamon, 2008) In a depth analysis,
China‘s economy has entered into a strange circle. For one thing, the government pays
great attention in investment from developing, infrastructure to real state. For the other
thing, small and medium-sized enterprises focus on oversea market and try their best to
export heavy industry products. (Baizhu, 2000) The phenomenon of investment took
away nearly two generation‘s asset and put huge debt on new generation, and the
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phenomenon of exporting continued to accelerate trade surplus and created lots of trade
conflicts, thus RMB is suffered in a heavy pressure.
On the other hand, China‘s external economic environment shows that China is in a
challenging time. The rapid development of economic globalization and economic
structuring as well as China‘s own economic development bring China three deep
change in its external economic environment. (Naughton, 2007) Firstly, a new round of
industry structure adjustment and transformation are undergoing as well as a new
international division of labor is forming. International division of labor is changed
from traditional trade form to invest-oriented direction. At the same time, new economy
and developing countries are competing to attract foreign investment and expand mutual
direct investment in order to capture foreign markets, thus the competitions are very
furious. Secondly, cross-border mergers and acquisitions increases which accelerating
the formation of global enterprise market and global production system. Cross-border
mergers and acquisitions is the major motive for the growth of direct investment for
developed countries in recent years, and it has vital important role in the scale and
direction of foreign direct investment. Thirdly, regional economic integration is taking
is rapid development and regional diversity model and competitive pattern are changing
in a quick manner. Currently, in the gaps of Free Trade Agreement, countries like Japan,
South Korea and China are actively exploring the possibility of bilateral cooperation
and regional cooperation as well as preparing signing FTA with other Asia countries.
(Baumol, 2007) Therefore, considering China‘s current external economic environment,
China should positively take part in international competition.
2.7 China ERP market
The problem about ERP in Chinese market is hot topic for many researchers pay much
attention. Stefan&Ge(2009) mentioned that ERP can be found before two decades ago.
Since 1981, Shenyang first machine tool plant from Germany engineer association
import the first set of MRPII software, MRPII/ERP application and promotion in China
has experienced nearly 30 years. In the early period, more products used for Chinese
ERP market is from foreign brands, such as the famous German software suppliers SPA
and the world's largest database software company Oracle. When these foreign ERP
software implement in China, people found the foreign system cannot adapt Chinese
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own national condition, and had poor universality, operation complex, cost huge. Liang.
Et al(2004) stated that foreign ERP vendors did not understand their Chinese customer
demand change on flexible ERP solution. So the ERP application in enterprise met
various problems, the anticipated target cannot be achieved. Liang.et al (2004) share an
example in their research, because of different culture, the financial system of foreign
ERP cannot meet Chinese accounting and financial standards. In addition, Guo and
Nunes,(2010) states many Chinese enterprise want to use ERP to enhance their
competitiveness. ―Also china government‘s 863 program is encourage Chinese
companies implementing advanced ERP system for manufacturing systems automation
in such industries as aircraft, machine tools, textiles, air conditioning‖.(liang. Et al,
2004). From 2002 to 2005, the range of ERP market expected to increase 25% annually.
Form the CCID(China Center for Information Industry Development )‘s report, China
ERP market developed rapid between 1988 and 2002. (Xue. Et al, 2005). ―The ERP
market in China grew from $78.4 million in 1997 to $243 million in 2002‖.(liang. Et al,
2004). ― The annual growth rate of ERP implementation was as high as 23%.‖(He.2004).
After china access to the WTO, the economy developed continuously as same as
enterprise informatization, the original management way of organization is not suit for
the requirement of fierce competition. Because foreign ERP vendors according Chinese
special condition change many functions which suit for companies than before. With the
reason of new ERP software has many useful functions than before; many enterprises
want to adopt ERP system in order to manage their organizations better.
In china market, global ERP vendors and local ERP vendor has intense competition of
the market share. (Newman and Zhao 2008). On the market, mainly divided into two
kinds of the circulation of the software, one kind is foreign software, such as SAP and
Oracle. In the global market, from the research of liang. Et. Al(2004), approximately
68% of the market dominate by SAP and Oracle, they hold the global market share 32%
and 14.5%, ; Another kind is local software, like Kingdee, Yongyou, Digital China and
others. Foreign product features is the very rigorous program design, they have twenty
or thirty years of implementation experience, the drawback is the price is expensive and
the follow-up maintenance fee is also a big spending. For instance, applying SAP and
Oracle usually need cost more than five million RMB, (liang. Et al, 2004). So it is
suitable for large and medium-sized enterprise to application. But for small and
16
medium-sized enterprise have not enough support and the implementation of the
success rate is row. Because of the local ERP suppliers know the characters of local
enterprise, after-sales service and product training is easy for achieve. On the other hand,
the application fee is as little as 700,000 RMB(liang. Et al, 2004). So the
implementation successful case is more than foreign ERP system. From the report of
CCID(2008), in the year of 2010, China management software market scale will achieve
34 billion yuan, the domestic independent brand management software like Yongyou;
kingdee; Inspur, digital China hold the market share of 78%.
2.8 SOE and Private enterprise
China‘s State-owned enterprise (SOE) and private enterprise are the main body of
China‘s economy. (Martinsons,2004) With the change of global economic environment,
both SOE and private enterprise in China are facing its challenges.
With 30 years reform, China‘s SOE made some progresses, currently, there are about
five problems to be solved. (Qi, 2000) The first one is about its chaotic system. SOE in
China has many branches throughout most area of China including subsidiaries, holding
company, joint-stock companies and so on. However, because of lack of systemic
thinking, the relation between each branch cannot be treated just, meanwhile, since
understanding and trust between each branch is lacking, when these branches are
founded, a disorder situation emerges in which the leader of different institutions hold
concurrent positions. And because the leader cannot deal with all his positions, he needs
to entrust other agent, with the disorder situation inside these branches, some important
projects are missing. The second aspect is the lack of effective examination system,
entrepreneurs and technology talents. The reason why SOE has facing talent people‘s
missing is also referring to its chaotic system. With chaotic system, the responsibility of
each position is not clear which makes the relaxation of management, and the relaxation
of management greatly hurt staff‘s enthusiasm, so some real talent people leave SOE.
The third one is bad competiveness of its enterprise products. In recent years, the market
share of industrial products produced by SOE continued to decline, and in social
commodity retail sales, the proportion of SOE was also declining. This phenomenon
showed that most parts of China‘s SOE has not yet been the active body in market
competition and its system and performance have not yet connected to marked economy.
Fourth, it is easy for SOE to find capital investment, but its utilization rate is poor with
17
huge loss of SOE assets. The reason of this problem is that SOE does not have a sound
legal system, it is lack of feasibility and its employment system also has shortcomings.
The last one is about SOE‘s poor efficiency. It is a common sense that China‘s SOE is
monopoly, but because of human factor, SOE‘s efficiency is very poor. The root reason
of this problem is also chaotic system. If an enterprise does not have a good and resolute
performance, has no good system and no good execution system, it will face many
drawbacks. (Ma, 2000)
China‘s private enterprises are different from SOEs and also face five problems. The
first problem is the backward of management thinking. There was an old theory adopted
in China‘s economic reform in 1978 which was also processed in current China‘s
private enterprises, but this theory became a severe problem in the management of
private enterprise. The second issue is weak communication. In recent years, most of
China‘s private enterprises take vertical communication pattern, that is, from the top to
the bottom, layer by layer. This form of communication contains a risk that information
from the top will be distorted when it reaches the bottom, so as to make human
relationship nervous and internal friction serious. The third problem is chaotic
management pattern. In many private enterprises, there has management system and
regulations. However, there hasn‘t a unified management mode and system. It is normal
in private enterprise that different departments in one enterprise have different
management modes, different bonus distribution mechanisms and different management
results. Different management modes will easily cause frictions and divergences. The
fourth problem is huge waste caused by improper cost management. An enterprise
without a qualified cost control supervisor, with no proper management between
production department and warehouse, without a clear specific process, its employees
will have poor awareness to save energy and cost and will cause huge production waste.
The final problem is that private enterprises are lack of long-term development
strategies. There is an old saying goes that those who do not plan for the future will find
trouble at their doorstep. (Naughton, 2007) China‘s private enterprises caught some
market opportunities in past few years, so some of them achieved many benefits. In this
comfortable environment, many of problems in the enterprises are not exposed, if
private enterprises continued to be content with things as they are, once those problems
exposed, they will face a severe situation and even go to bankruptcy. (Baizhu, 2000).
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2.9 Barriers of ERP Post-implementation
On the phase of post-implementation, there are many barriers which will cause ERP
carrying out successful in organization.
From the report of Liu&Zhou(2001.), ―On the stage of ERP implementation, the
barriers include weaknesses in IT infrastructure and in human IT resource.‖ If
organizations want to implement ERP system successfully, it need enhance their IT
infrastructure and IT resource that is import factor affect ERP implementation. ERP
system is a complex business system, when companies implement ERP system; they
need prepare to change their internal system to suit for the ERP application. In addition,
on the phase of, organization need special staff to maintain ERP system who called
in-house IT experts to duel with the problem which met on the working process. Lack of
in-house IT specialists was the barrier of ERP post-implementation phase.
Furthermore.(Peng&Nunes,2010)because the system is out coming system, sometimes
the problem in-house IT experts cannot solve, need the help of external expert.
Another one is ―Seamless integration is not achieved between modules of ERP or ERP
is not able to seamlessly integrate with other IS application‖ (Peng&Nunes, 2009). ERP
system includes many functions, each department using different function. If
organization want to obtain the expected target, the entire functions need cooperate
together, any function absent that will cause the target cannot achieve. The functions of
ERP only used 50-75% in organizations (Caldwell & Stein 1998). Furthermore, many
enterprises used some other ERP function before, if the new ERP system and old system
connect together better, it still need a lot of time to practice. The problem is many
enterprises could not wait for the time which can make system better.
The old traditional information system are often isolate and cannot exchange data with
other apartment of organization, which resulting in low efficiency of working but the
maintenance cost is highly. (Peng and Nunes, 2008). So after the organization
implement ERP system which called post-implementation stage, the high maintenance
cost is important barrier affect the ERP implementation carry out continuously.
He(2004) stated that in the post-implementation stage, the maintain cost of system is
still huge, it will be underestimated by 20%. Some companies could not accept the
maintain cost, they thought the benefits are lower than the high cost.
19
In addition, ―Inefficient communication between functional divisions‖ is the barrier of
ERP post-implementation. (Peng&Nunes, 2009). ERP system include many functions,
they are suit for different department. However, for some companies, each functional
division could not communicate with others better, the information cannot share in the
entire organization，it will cause the problem on the phase of ERP post-implementation.
Spending high cost but cannot obtain better results.
Top manager not give strong support to ERP is another barrier.( Peng&Nunes,2009).
This kind of phenomenon could be found in SOEs, according to China specific culture,
top managers of SOE lack awareness and have a short-term thinking. (Zhang 2004 cited
in Peng&Nunes,2009). ERP system need long time to obtain the better results. The top
managers of SOEs, their position change usually, so they pay more attention for short
time, want to gain good performance rapidly in order to help them going better on the
way to high level authority. So it will cause them do not give more support for ERP
implementation which need long time to get the better result.
2.10 Conclusion
With the help of literature of previous researches, the details about ERP system and
barriers on ERP post-implementation were showed. The Chinese economy environment
and Chinese companies‘ situations also introduced. According to these literatures, the
ERP products of China market divide into foreign products and domestic products, SAP,
Oracle, Kingdee, yongyou take the main market of China. Next part will show the
research method of this study.
Chapter 3 Methodology
20
3.1 Introduction
In the chapter, the methodology and research approach will be described which used for
this research.
3.2 Inductive & Deductive
The research approach have two types, qualitative and quantitative.(Myers,2009).
During the research, choosing a suitable methodology will help the researcher to collect
information better and improve the credibility of the article. Silverman (2005).
Inductive approach is used for researcher do research from some individual things or
particular problem to general principles and common things. The research data are
collected from observations and interviews. In addition, inductive approach is beginning
from data collection, and then according these data to have a depth study in order to find
the relationships between events and people. (Sanders,2003)
On the other hand, deductive approach is beginning form the theory, and then gives a
hypothesis. According the hypothesis to establish a stated situation and use observations
to check these hypothesis right or wrong (Sanders,2003). This approach use
experiments, surveys and observations to collect the data. (Hayes, 2000)
3.3 Qualitative research method
Quantitative and qualitative method are two kinds of research method, Hyde(2000)
stated that: ―Both qualitative and quantitative researchers demonstrate inductive and
deductive processes in their research practices." Myers (2009) mentioned qualitative
method is developed in the social science in order to support researcher in the study
included culture and social phenomenon. In this study, the method of using is inductive
approach and qualitative method. The reason is that this research is focus on the kind of
particular enterprise: SOE（state-owned enterprises）and Private enterprise. Form the
approach of interview, quality data can be collect, using the data in order to gain the
barriers of ERP post-implementation in SOE and Private enterprise. The two research
method will help me to understanding the situation deeper and obtain results more
21
quality and reliably.
In addition, the main approaches of data collection are interviews, questionnaires and
observations. (Sanders,2003). This research is focus on one particular project, so
interview is the import method.
3.4 Research context
This research is going on two big cities of China. First one is the Hanghou, Hangzhou is
the Provincial Capital of Zhejiang Province, with the reason of economy and invest
environment, and many enterprise establish in these area, according to the current fierce
competition, these enterprise want to use ERP system to help their enterprise develop
better. Another one is Shaoxing, the highest income towns of Zhejiang Province and
important transport hub of east China， private economic develop faster. Over the past
few years, ERP system implements more and more enterprises of Shaoxing.
3.5 Case companies
The interviews were started in the middle of July with the people who working with
ERP implementation in SOE and Private enterprise.
Two Chinese enterprise, located in the HangZhou and Shaoxing area, were involved in
the study.
Following content is describe the two Chinese companies:
Company A is a state-owned enterprise, which belong to TOP500 enterprise in the
world. This company‘s registration capital is 350 million Yuan (RMB), it is a large-scale
state-owned modern logistics corporation founded in 1996, and is also an operation
organization directed by the Government of Zhejiang Province to manage state assets.
This company has around 170 hundreds employees but the annual revenue is around
260 billion yuan (RMB).
Company B is a Private enterprise, which is the large industrial enterprise in China, it
was only established for nearly 20 years, but now it is the largest aluminum wheel
22
production base in Asia. It has around 7000 employees, the annual revenue is around 68
billion yuan(RMB).
The participants of this research include both SOE and Private enterprises‘ top managers,
they have the experience of using ERP system, can give the efficient opinions for my
research. Then IT manager, sales and marketing manager, accounting manager, human
resource manager and administrative office director will followed. After that, the staff of
each department will join this interview. These staffs have experience of using ERP
system in their working position every day. Furthermore, both of the two enterprises
choose SAP for implementation.
―Top manager‖ who manages the entire enterprise operation and manager the
department managers. Give a support for ERP implementation is their responsibility.
―IT manager‖ who is give the technology support for each function of ERP system.
―Sales and marketing manager‖ who using ERP system for business operation.
―Accounting manager‖ who using ERP function for financial parts of enterprise.
―Human resource‖ who using ERP function, in order to manage staffs‘ working positon
better.
―Administrative office director‖ who coordinate all departments work and deal with the
daily affairs.
In addition all the managers took part in the whole process of the implementation of
ERP.
Table 1. Position of interviewees
Company A Company B
Top manager 1 1
IT manager 1 1
Sales and marketing
manager
1 1
Accounting manager 1 1
Human resource director 1 0
Administrative office
director
0 1
System User
IT department 1 1
23
Sales and marketing 1 1
Accounting 1 2
Total 8 9
3.6 Data collection
Punch(2007) stated that ―Interview method has three main types, structured,
unstructured, and semi-structured.‖ In this research, semi-structured interview is the
suitable approach for collecting high quality data. 20 semi-structured interviews were
carried out in order to collect useful information relate to barriers of ERP
post-implementation. In addition, face to face interview and telephone interview are the
main approaches to conduct interviews. Telephone interview have the advantage of cost
reduced, easy time approval and no distance limitation (Holbrook & Green & Krosnick,
2003). All most participants prefer face to face interview than telephone. Because face
to face interview can communicate better both researcher and participants, the data have
high quality. However the drawbacks of face to face interviews are distance limitations,
time limitation and environment limitations. Saunder(2003) mentioned that research
themes need prepare better before the interviews. Because of the research focus on the
ERP post-implementation, so the themes were set as following:
(1) The understanding of ERP
(2) The situation of current ERP system.
(3) The problems which met in the implementation process.
(4) The reasons and impact of these problems
(5) How to solve these problems
In the data collection parts, four types of question can be used: initiating questions,
follow-up questions, trigger questions, and closed questions. Initiating questions are
used to let participants going to research themes. Follow-up questions are used after
initiating question in order to obtain deeply data from simple information. Trigger
questions are used when the interviewees could not answer the questions properly. They
can help the interviewees thinking more and give the suitable answers. Closed questions
are used for understanding some specific questions.
24
3. 7 Data analysis
―In this study, the data of interviews are video records, so it need translate to text format,
then analysis these data. Thematic analysis approach is suitable approach which use for
analyzing qualitative data‖ (Fereday & Muri-Cocharane, 2006). The first stage of thematic
analysis is getting familiar with the data, it means read the data carefully and understanding
these crucial content. The second is coding the data; it means make keys point as code from
the interviews. The third is connecting codes and themes; it is find the relationship with
each theme. The fourth stage is reviewed the codes and draw concept maps to present the
themes.(Peng&Nunes,2010) Concept maps can easy show the relationship with each data.
The final one is report the finding, considered the concept map to report the finding. Rice
and Ezzy(1999) stated that: the data collect from participant need read carefully in order to
indentify the themes. With the help of record, the content of interviews can review easily
and researcher can understanding participant‘s reactions better. Furthermore it will help the
researcher enhance the quality and reliability of the data. On the other hand, it is benefit for
the participants, they do not need waste time wait for researcher to record with notes.
3.8 Ethical aspects
In this study, there are many issues which refer to the ethical aspect. First issue is relating to
the participants. This research is focus on the barriers of ERP post-implementation of SOE
and Private Company, if I want to interview these companies‘ managers, I must obtain their
approval. They allowed me to be the interviewees. The second issue is the questions setting,
some question may be related to the secret information or other aspect, and they have the
right to refuse to answer my questions. On the stage of interview, because this interview
will record by electric products，maybe many people want to be the anonymities.
On the other hand, the manager of these two companies, maybe do not have the enough
time to meet me. I could not blame them，because they do not have the responsibility to help
me finish this interview.
Chapter 4 Findings
25
4.1 Introduction
In this chapter, interviews data will review to find some barriers which will affect the
ERP post-implementation. The multi-case study also will be presented and discussed.
The chapter will divide into three themes and eight sub-sections belong to them.
Table 2: Final Coding Scheme with themes
Theme Code of barrier Definition
Cultural barrier Guanxi The relationship between
people
Organizational barriers ERP fund The money used for ERP
maintenance and
enhancement
ERP training Giving training for system
users
In-house IT expert The expert of organization
owned
Top manager support Top manager give the
strong support for ERP
system implement
System Barriers System design The system design for
customers‘ using
System speed The speed of response
when ERP system running
System inflexibility The aspect of inflexibility
4.2 Cultural Barriers
4.2.1 ―Guanxi‖
Martinsons and Westwood in 1997 said that culture is the one reason which will affect
ERP implementation. In Avison&Malaurent(2007)‘s research, they thought culture
environment is a important aspect in ERP implementation, such as language, legal
issues, governances and political. As mentioned before, China has many specific
cultural characters; ―Guanxi‖ is the main character.
26
The problem about the ―guanxi‖ is a very common phenomenon in Chinese
national condition, it is a special characters. I am stay in this position for many
years, personnel transfer and recruitment is my duty of job. Many employees
have the relationship with some high-level leaders, maybe their friends or
relatives. The reason allow them to coming to join the job is not they have the
work experience or good ability，just because they have good relationship with
leaders. Every year, some staffs are coming by this way, they distribution in
each department. ERP system implementation requires the staffs serious treat
every data input. One time, a staff made a mistake of the data input, it cause the
result delay for many times and that branch lost many moneys, in that case, that
person will not allow to working again obey our company‘s rules. However, the
person has good relationship with one top manager, so the punishment is just
transfer him from one department to another department (Human resource
director, Company A).
As the Human resource direct said, ―guanxi‖ has huge power in Chinese SOE
companies. Because of the ―guanxi‖, many staffs that do not the ability to do the job,
but their position could not be changed. This phenomenon could be found not only the
SOE but also the Private companies.
Many staffs are come from other companies which have the ―guanxi‖ with
some leaders. From my aspect, they do not have the ability to do these jobs
better, but because of the relationship of leaders; we could not able to recruit
more suitable talents to replace them. When our company adopts SAP system
in order to enhance our competitiveness and make the work process more
efficiently, some staffs need to spend more times to training. Their abilities
could not correspond to high salary (Administrative office director, Company
B).
As the consequence, in China, the culture character of ―guanxi‖ is a complex problem
relate to many areas and it will affect ERP system of post-implementation phase.
27
4.3 Organizational Barriers
ERP system is used for managers to control enterprise better, so the main barriers are
refer to organization. According to the interview data, five aspects have impact for ERP
implementing on post phase.
4.3.1 ERP fund
The first one is the ERP fund. Implement ERP system need huge cost, after successful
implement it, enterprise still need prepare large ERP fund to treat tothe ERP system‘s
maintenance and enhancement.
Implement ERP system is important decision for our company, we all know
SAP is the best product in this aspect, and it has high request of capital.
Especially, our business processes changer usually, so the system need update
following the business needs. Our company is not simply manufacturing
enterprise; we also do the trade circulation, so in terms of ERP piece of our
enterprise, the fund for the ERP improvement and development is prepared
specially. (Accounting manager, Company A).
In addition, the money of investing for SAP update is large, SOE Company prepare a
special ERP fund to face the cost of maintenance and enhancement. From the aspect of
Private Company, these cost need to consider, and then make a decision.
Our company considers this problem before, with the reason of main strong
stock holders, now our system is carrying on the second update. When we
adopt the SAP, according to other company‘s implement experience, we
thinking about the maintenance fees, our financial department will make a
system maintenance budget. Without the budget, I think SAP maybe failed after
implementation (Accounting manager, Company B).
As the sentence of both two accounting managers, the investment for ERP system
maintenance and update is huge, when company implements new ERP system, they
need to consider it.
28
4.3.2 ERP training
The third one is training. ERP system is a software, it involve advanced technology
inside, so it require the users join the training in order to know how to use it on the work.
Specifically, tanning users is necessary process for using inherent complexity of ERP
system.(Bingi et al. 1999).First of all to certain is that users must know some computer
knowledge. In whole system, the data is through the computer for input and output, if
the users do not know how use it, the ERP system cannot carry out successful.
To the training of the staff, every year we will have a training plan, to
implement the training plan, or according to the actual standard budget and
business development condition and the needs of employees to do the staff
training. If users meet many problems on the implementation phase, we will
invite expert to training them again to solve these problem (IT manager
Company A).
The expert of ERP system will be invited when we met problems on the using
process, this is complex systems and data input need step by step, we need to
remember the steps, if make mistake, everything will return back to do again.
At the beginning, we order the expert to stay with us, teaching us how to use
(Sales and marketing user, Company A).
As well as the Company B, they pay more attention for staff training.
We will invite the experts to explain how to use this system; the experts may be
stay in company for many weeks for training. After that, they will choose the
staff who doing better. Then these staffs will be the seeder user, teaching them
more. When these users know how to use, let them to help other staffs. Usually,
training will take a period of time (IT manager Company B).
At the beginning, everyone who use this system need to join the training, then
the expert will choose some worker who understand better, pay more attention
for them, when one colleague understand how to use this system, he or she is
responsible for teaching other staffs who working in same position (Accounting
29
user, Company B).
Each company‘s IT manager has their approach to solve the training problem; in terms
of help staffs understand the system quickly and know how to use it. Training is
important process through the ERP implementation phase.
4.3.3 In-house IT expert
The fourth is In-house IT expert. SAP system is come from Germany, it is foreign
software, it is not suitable for every types company, and so many companies have the
In-house IT experts, who have better ability of ERP system used and maintenance.
Our company set up information firm for the subsidiary. That respond of that
firm is help organization to maintenance ERP system, and it also will deal other
aspect of information. So we have the In-house IT expert, some problem can be
solve by ourselves, it can help company save many money. On the other hand,
if the problem we meet is hard for us to solve, we will call the SAP headquarter,
let headquarter send their expert to solve problem (IT manager Company A).
SOE Company has the support from the government, and the registered capital is more
than Private Company, they set up subsidiary to deal with problem met on the process of
ERP implementation. The private company‘s IT manager said:
In my department, only have several colleagues, for ERP this area, we do not
well at, so our enterprise put the ERP system maintenance to an information
company, outsourcing this responsibility. When the system operation processes
have problems, we will collect the problem and ask them to solve. Only one
time we gave the call for SAP corporation ask them to send experts (IT
manager Company B).
From their mentioned content, In-house IT expert is a factor which will affect the ERP
implementation.
4.3.4 Top management support
30
The fifth is Top management support. The decision of adopting ERP system could not
without top manager‘s support, in the literature, this factor is more important than others.
The managers have a better understanding of ERP system and give the better support
that will help the implementation running better. (Ehie&Madsen, 2004). Whatever
SOE or Private enterprise, the top manager‘s support play a crucial role in the ERP
implementation.
The decision of applying ERP system is considered for long times. Our
company wants to enhance working efficiency and competitiveness, but the
ERP system has lots of failed example in China. At that time, the top manager
gives the strong support for this, so ERP can carry out in my company. Now
our company is one of the best in the world, his support could not be ignored.
Furthermore, our company is SOE Company; the top changed usually, each top
manager support company carry on the ERP system (IT manager Company A).
ERP system cost huge money, without top manager‘s support, it could not
achieve expect target (Accounting manager, Company A).
In fact, in SOE Company, according to the achievement of company, the top manager
changed usually. ERP need carry out for long time, some manager has short-term
thinking, it will cause the fail of ERP implementation. However, Private Company is
totally different from SOE. The company is theirs, so their mind can be fully
implemented. The administrative office director said:
Our enterprise‘ top manager controlled the whole company, without special
reasons, they will not change, so their support is a crucial factor for ERP
implementation. Their minds are the way that company forward, so without
their support, there was not ERP system (Administrative office director,
Company B) .
Using one sentence to say, their mind are our mind, we following their mind to
do the things (Sales and marketing manager, Company B).
―The managers‘ supports are the necessary factor that makes a difference between
31
success and failure.‖(Bradley,2008). The organizational structure of two enterprises is
different, but one thing is same, ERP system implementation need the top manager ‘s
strong support. As the mentioned in the literature chapter, it is the necessary factor affect
the ERP implementation successful.
4.4 System Barriers
Holland and Light (1999) in their article noticed that ―when organizations choose ERP
system, they need to understand their current business structure and business process
associated with their existing IT systems.‖SAP is a German company which is good at
ERP product, SAP used for many biggest enterprises in the world, because of it is
foreign software, so the functions are not very suitable for Chinese Companies. There
are three barriers of this part.
4.4.1 System design
As this article mentioned at the beginning, different countries have different cultures,
the organization structure is also different. The ERP system of SAP is come from
Germany, its functions is suit for western countries. When Chinese enterprises use this
system, they feel some uncomfortable of the operation interface. The sale and account
department users of Company A said:
SAP is good software, but unfortunately it is made by foreign country, it is not
suit for Chinese operation habit, just like the operation interface, some many
data need to input, it looks very complex, if not careful about this, so easy
make mistake (Accounting and sale users, Company A ).
In addition, the users of private company also mention this problem, they said:
When we use this ERP system, it needs to input many data. For some people,
they need to maintain 18 user interfaces, it increased staffs‘ workload and it has
higher required for the users. Furthermore, it has its benefit, for instance, when
company want to statistical personnel information, using this system can be
quickly obtained the results (accounting and human resource users, Company
B)
32
It is clearly found that the operation interface problem makes them use the system
uncomfortable and it has potential hidden troubles.
4.4.2 System speed
One reason for enterprises chooses ERP system is that it can enhance working efficient.
On the system design part, the private give a example to prove this system can amend
some working efficient, but it still have problem relate to the system speed. The uses of
company A said:
Now because of the size of the enterprise growing, need to deal with data
quantity is also growing in, in using the SAP system for certain aspects of the
whole calculation, data acquisition time slowly, for us, if you want to carry out
complex operations, the system needs 2-3 days to give us the results. Such
problems will be prompted us to update the system hardware configuration
(Marketing manager, Company A).
The same problem happened in the private company. The user of accounting mentioned
that:
When used the system to obtain organization financial statement, the time of
results come out need spend more than three days, compare the invest money,
this running speed spent inversely proportional (Accounting manager,
Company B).
The system running speed can be affect by hardware configuration, from the interview
record, SAP system running to gain large quantity data, the speed is slow, organization
need amend their system to make sure the results can obtain efficiently.
33
4.4.3 System inflexibility
The system inflexibility is critical barrier on the ERP post-implementation phase.
According to some research mentioned in the literature part, the system inflexibility
problem is common phenomenon in Chinese not only SOE but also other types of
enterprise. Holland and Light (1999) in their article noticed that ―when organizations
choose ERP system, they need to understand their current business structure and
business process associated with their existing IT systems.‖
The users of SOE said that:
Every enterprise has its own characters, on the period of using SAP system; we
found that the flexibility does not conform to the requirements of ours. Some
departments could not cooperate together well; the information also could not
share together immediately. When the data make mistake which come from
department, the final result will be wrong (The sales and marketing manager
and the accounting manager, company A).
In addition, the poor inflexibility will cause user treat the data carefully when they input
data. One small mistake will cause the final result wrong then return back to the
beginning to do the data input again. The users of company B said:
The inflexibility need enhance in the further, our company is a trade company
and the product of energy will change usually. For instance, we sale the carbon
from one company and shipped the goods to another place to sell, at the
beginning the goods are 100 million ton, but on the way, the weather is raining,
the items absorbed the weight of water and becomes heavy than before. The
product is change; the cost is change, so the data will be change on the way.
Furthermore, if we input the data at the beginning, on the way, the data change,
but the information input to systems could not be change, it need input again
from the beginning. So the inflexibility problem is so import barrier in the ERP
post-implementation (sales and marketing manager, Company B).
Look around the findings, both of them met these barriers, how to solve these barriers
will cause the ERP system used in further.
34
Chapter 5 Discussion
5.1 Introduction
According to the finding of chapter four, chapter five is focus on the discussion of these
barriers and evaluation them and potential solutions will provide for these problem.
5.2 Discussion
As showed by chapter four, the problems belong to three parts: cultural barrier;
organizational barriers and system barriers.
5.2.1 Analyzing cultural barrier
―Guanxi‖ is a specific words in China, on other countries it called relationship or
connection. From the interviewees of both companies, the information about some
people are not suitable for their working position, but with the reason of ―guanxi‖, their
position could not be changed. In the article of Yeung and Tung(1996): ―guanxi‖ is
important in Chinese business. These staffs have good relationship with high level
leaders, so they can come to those two companies work without any better skills,
especially the private company (Xin & Pearce, 1996). The SAP system is a design strict
operating system, a small mistake can lead to the final draw the authenticity the data,
the data will unreliable and the operation interface is complex, it is easy make mistake.
It require the staff carefully in the data input process. From the interviewee mentioned
in the chapter four, one person make mistake of the data input and cause the lost of
company, but with the help of ―guanxi‖ that person still stay in the company. It is a
important barrier on the phase of ERP post-implementation.
On the other hand, early years before, the job for SOE is called ―Jinfanwan‖. The staffs
do not need consider the problem of other people have better skills than them. Their
position will not be change until they retire. The people who have the ―guanxi‖ are as
same as the staffs that have ―Jinfanwan‖. The question of ―How to solve this problem‖
35
is a hot topic in China. Comparing with Western Countries, this special cultural
character of China cause lots problems and take many barriers for SAP system
implement. According to the Chinese society characters, this problem will lasts for
many years until the companies carry out the rules ―survival of the fittest‖.
5.2.2 Analyzing organizational barrier
From Standish Group‘s(2004) statistics, when organizations implement ERP system,
more than 70% was failed; the system cannot achieve their predict aim. In the
organization, the internal barriers are crucial barriers for the ERP post-implementation.
In the chapter four, from the help of interviewees, the ERP fund, ERP training, In-house
expert and top manager‘s support are the main barriers they met on the stage of ERP
post-implementation.
ERP fund
The both enterprise are successful implement the SAP system in China, implement the
product of SAP cost huge money. The two companies all prepared the fund before them
implement the SAP. They consider the ERP fund carefully; ERP maintenance and
enhancement still cost a lot of expenses (Nah, Faja, Cata, 2001). Every year, the two
enterprise need dial out special funds for ERP from their financial department, if not it
will affect the overall operation of ERP system. So the potential problem is that if
companies could not provide enough capital for ERP maintenance and enhancement,
ERP system would be met lots problems, may be caused the whole system implement
failed.
ERP training
Ngai.et al. (2008) mentioned that ―Training and education are the important factor affect
the ERP implementation‖ .As people all know the products of ERP are advanced
technology products, without the help of training, most staff could not know how to use
it. So the training becomes the important problem for ERP implementation. On the stage
of ERP post-implementation, with the reason of system update usually, so enterprise
must make sure that every user knows how to operate the new system after it update.
They will invite the expert to training staffs in order to ensure every users know how to
operation. In addition, training can enhance staffs‘ skills.
36
Therefore, staff should be training, avoid the mistake cause. (Stedman,1998).If the
companies could not organize their staffs to join the training, it will affect the ERP
system implementation.
In-house IT expert
SAP is a product, on the stage of using this product, enterprise will met many problems.
However, the In-house IT expert will help enterprise solve this problem better, but most
companies faced the problems of severe shortage of in-house IT experts(Peng and
Nunes, 2010). How to solve the problem is a challenge for enterprise. The SOE
enterprise set up an information company to give the technology support for itself, the
private enterprise outsourcing this part for one information company. The two ways
will solve the barriers of technology aspect, they do not need call the SAP sent the
expert for help, and it reduce the cost on the stage of ERP post-implementation.
It is good experience for most companies which want to implement ERP system.
Top manager support
Top manage have strong power on all the stage of ERP implementation. They make a
decision for implement or not implement. So on the stage of post-implementation,
carrying out the ERP system still need the strong support of top manager. Yusuf. Et al,
(2006) stated at their article, ―Top manager give a strong support is the critical factor
affect ERP system implementation.‖ Both two companies in this study, the top manager
give stronger for ERP system, they thought this system is useful and can enhance their
companies working efficiency and company competitiveness.
Without the support of top manager, ERP system will face the result of failed.
5.2.3Analyzing System barriers
System design
Sheu, Hsiuju and Krumwiede(2003) in their article mentioned that national differences
is a big problem threat to ERP implementation. As this article mentioned before, the
37
both companies used the SAP system, it is foreign products, and the using habit is
different from western country and china, so the system design is not suitable for
Chinese operators using. Especially the old staffs, they had hard to change their
operation habit to suit for this system, they need more training. Because of ERP used
more and more in China market, some big ERP vendors according Chinese people habit
to amend their product, in order to meet Chinese companies‘ needs.
System speed
This aspect will affect the companies which have large data need to running in ERP
system. The both two companies are biggest companies in China, so they met this
problem. If they want to solve this problem, they need to prove their hardware of whole
companies. The new system will faced the speed problem, because the ERP include
many functions, the data running from one department to another department need time
(Koch, 2007).
This is special cost of this system, and the update costs are huge, for many companies,
they do not prepare for this areas. It causes the budget problem of finance. In the further,
the companies want to implement ERP system; they need consider this problem, in
order to help the system carry out better.
System inflexibility
The system of SAP has one character that is when the data input to the system, it could
not be changed on time, if the operations want to change one thing; the whole data need
return back to restart. Both the two companies met the problem in its post-
implementation stage. It will increase the workload of the staff, and have strictly
requirement of their operations. ―Fit between ERP and business/ process‖ is critical
factor which will be affected ERP system implementation.(Ngai.rt al. 2008).It requires
the ERP vendors‘ accord China special culture to make the system operation steps.
These IS applications are very often totally isolated and cannot exchange data with each
other, which resulting in very low efficiency of their use but extremely high
maintenance cost (Peng and Nunes, 2008)
5.3 Conclusion
This chapter discussed the finding from those two companies, which will be the barriers
38
affect the ERP post-implementation. This finding showed many barriers belong to
culture, organizational and system design aspects. Implementing the ERP system of
SAP in China enterprises will meet lots of problems, with the reasons of its design
unsuitable for Chinese enterprise, huge implement and maintenance cost. These are the
common reasons and any types of enterprises will be faced. How to solve these
problems, it still needs system vendors and enterprise cooperate together.
Chapter 6 Conclusion and Recommendations
6.1 Introduction
This chapter gives the conclusion for the whole article. It will divide to three parts, first
part show the overall conclusion, then the limitation will follow it, at the end the
recommendation for further research will describe.
6.2 overall conclusions
This study analyzed the barriers on the stage of ERP post-implementation in two type‘s
enterprises of China: SOE and Private enterprise. They are the main type of enterprise
in China. In this study, seventeen interviewees were involved, by help of them in order
to understand the current barriers of ERP post-implementation in China.
Whole article around the problems of these two companies met on their using stage.
On the part of literature review, it explored the existing literatures which study on this
aspect. Therefore, it introduced the ERP system, its definition and lifecycle in order to
let the reader easy understanding the ERP system means and what are its benefits, as
well as the ERP market of China. At last of this part, the barriers of other researcher
researched were presented.
In the part of the methodology part, entire study used the qualitative and inductive
research method, semi-structured interview and case study approach. They used to
collect the efficient data relate to the barriers of ERP post-implementation of SOE and
private company.
From the finding part, three main barriers affect the ERP system on the stage of
39
post-implementation were described. They were the culture barrier, organizational
barrier and system design barrier. The culture barrier includes the ―guanxi‖. It means the
connection, and it is important in China. Xue.et al.(2005) noticed that in China, the
people do the job depend on the relationship networks rather than scientific solution. It
presented on the ERP post phase were the staffs who do not had the skills to operate
ERP system but their position could not easy change because of their ―guanxi‖. This is a
common phenomenon in China; so many people find the job because of ―guanxi‖.
―guanxi‖ will affect the ERP system carry out better on the stage of
post-implementation. From the organization to analysis barriers, it will include the ERP
fund, ERP training, In-house IT expert and top management support. The four factors
were the main barriers. The interview data prove the four barriers really existed on the
ERP post phase. They are belonging to the internal problems, each enterprise will face
them. These four barriers need enterprise consider carefully before adopt the ERP
system. For instance, ERP training is the important barrier on the post phase, people all
know the ERP product is high technology products, and how to use the system is a
problem for staff. If the organization do not solve the problem of training, staff do not
know how to use the system, it cause the barrier. The last find is the system design
barrier. It included system design barrier, system speed barrier and system inflexibility
barrier. According to the case study, the both companies used SAP system, it is foreign
product, and the operation habit is not suitable for Chinese customers. It will cause
some mistake on the working. Furthermore, the character of SAP system is inflexibility,
so little mistake will affect the final result. It have high requirement for operators.
In addition, the economics of china is developed rapidly, and government support
companies to adopt ERP system in order to enhance their competitiveness. So the result
can easy obtain, China have biggest market of ERP system, the foreign and domestic
ERP vendors had to competitive with each other. The function of these products will
amend better，the barriers of ERP will be eliminated.
6.3 Recommendation
6.3.1 Culture barrier
China has special culture characters, sometimes the relationship is important than the
rules. So the ERP implementation will be affected by these relationships. Because of the
business environment, how to solve the problem is considered by the vendors and users.
40
Then need make rules for them to obey together, in order to establish mature and stable
market.
6.3.2 Organizational barriers
The problems about the ERP fund, training, In-house IT expert and top management
support, the enterprise need consider carefully before they adopt the ERP system.
Enterprise need put these things into their financial budget, when they adopt the system,
make a plan for each step. The top manager‘s support is necessary condition for ERP
carry out. Moreover In-house IT expert is important factor for ERP long period
implement. Enterprises need thinking more about the four things which will be met on
the phase of ERP post-implementation.
6.3.3 System design barriers
This part includes the system design, system speed and system inflexibility. As
discussed, Chinese market has lots of ERP products, the main foreign products are SAP
and Oracle, most SOE and large size companies use their systems. Because they have
the advanced technology and rich experience for ERP implement. However their system
is not meet companies operation, the product need change functions to suit for Chinese
companies. Foreign vendors need accord Chinese customers‘ needs to change their
products. Furthermore, the domestic vendors need to learn the advanced technology of
foreign product, in order to make products have high quality service.
6.4 Limitation
First is that SAP is famous foreign vendors in the world, the implement cost is huge, so
it limited the enterprise size, only large-scale enterprises have the financial budget for
SAP system. So the other sizes of enterprise are not the participants. This study is suit
for large-scale enterprise.
The second is that the data is coming from the interviews; the language need translate
into English. Maybe some interviewees‘ sentence could not translate clearly.
The third one is the participants are only 17, so maybe many other problems which will
affect the ERP post-implementation are not mentioned in this study.
41
6.5 Recommendation for Further research
In this study, the participant of each type enterprises are only one, next time the similar
enterprise need to find more. It will enhance the data collection more reliable. Second
all the two enterprise use the SAP system, in China ERP market, it has other ERP
vendors. Analyzing the reasons of choosing ERP system need do more research in
further
Words account: 11395
42
Appendix 1
Interview question
General questions:
Q1: What is your daily work?
Q2: What do you think about the ERP system?
Q3: What benefits do you perceive ERP system can bring to your company?
Q4: Which things your think are the barriers affect the ERP post-implementation?
Q5: When adopt the RRP system, the business process need to change something?
Q6: What the reasons your company choose this SAP product?
Q7: What about the ERP operation training?
Follow-up questions:
Q1: How satisfied are you with your current ERP system?
Q2: Do the staff adopted the ERP system?
Q3: Do some of your staff fear about that adopted new system will affect their job?
Q4: What is the stuffs‘ education level?
Q5: Does ERP improve your companies‘ working efficient?
Q6: What are the causes and consequence?
Q7: Could u explain your mind for this system?
Q8: Do your company has the In-house IT expert? How did your companies solve the
technology problem?
Q9: How do you establish this IS planning (e.g. how long the system need
maintenance)?
Trigger questions:
Q1: Has the way that stuff communicate with each other changed when adopted ERP
system?
Q2: What about manager‘s support?
Q3: Did material requirement plan generated by ERP system use to be inappropriate?
Q4: Have some departments need to combine together? If yes, which one?
Q5: Do you trust the data provided by the system?
Closed questions:
Q1: The system speed need to amend?
Q2: what about the culture area affect?
Q3: what about the top manager‘s support?
Q4: what about the In-house IT experts?
43
Appendix 2
Theme
Barrier (code)
Cause (code)
Consequence (code)
Organizational
Barriers
China special
culture characters
Guanxi
Staffs have
low skill
Could not punish
when have mistake
44
Theme
Barrier (code)
Cause (code)
Consequence (code)
Organizational
Barriers
Not consider this
problem before
Insufficient
ERP fund
ERP
implementation
could not going
on
Affect the system
maintenance and
update
Do not have the
enough money
Lack of top
manager‘s support
45
Theme
Barrier (code)
Cause (code)
Consequence (code)
Organizational
Barriers
Do not have the
planning
Lack of ERP
training
Usage
difficulty
Management
difficulty
46
Theme
Barrier (code)
Cause (code)
Consequence (code)
Organizational
Barriers
Inefficient reward
system
Lack of
In-house IT expert
Could not solve
the problem
efficiently
High cost
47
Theme
Barrier (code)
Cause (code)
Consequence (code)
Organizational
Barriers
Short thinking
Lack of Top
manager support
The ERP
implementation
could not accept
Lack of understand
ERP
48
Theme
Barrier (code)
Cause (code)
Consequence (code)
System Barriers
System design
Hard operation Not understand
Chinese enterprise‘
characters
Easy make
mistake
49
Theme
Barrier (code)
Cause (code)
Consequence (code)
System Barriers
System speed
Gain the result
slowly
The large data
analyze together
Could not give
the efficient data
on time
The hardware of the
company not update
50
Theme
Barrier (code)
Cause (code)
Consequence (code)
System Barriers
System inflexibility
Increase the
workload
System design
problem
Data linking
disharmony
51
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63
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Please Turn Over
0
Model Information Sheet
1. Research Project Title:
The barriers in the stage of ERP Post-implementation in SOE and Non-SOE
Is the title self-explanatory to a lay person?
No
2. Invitation paragraph
.
You will be invited to take part in a research project to analyse the ERP system used in your
enterprise. Before you decide it is important for you to understand why the research is being done
and what it will involve. Please take time to read the following information carefully and discuss it
with others if you wish. Ask us if there is anything that is not clear or if you would like more
information. Take time to decide whether or not you wish to take part. Thank you for reading this.‘
3. What is the project‘s purpose?
Following the economic globalization and China entry into the WTO, more and more companies
start to use ERP system in their companies, what will be the barrier ERP system used in the stage
of Post-implementation? The project aim is to find the barriers.
It will take 3 month for this project.
4. Why have I been chosen?
Because my project focus on the SOE and Non-SOE company, so the participants, I will choose
one SOE and one Non-SOE.
Each company I will interview nearly 15 persons.
5. Do I have to take part?
‘It is up to you to decide whether or not to take part. If you do decide to take part you will
be given this information sheet to keep (and be asked to sign a consent form) and you can
still withdraw at any time without it affecting any benefits that you are entitled to in any
way. You do not have to give a reason.”
6. What will happen to me if I take part?
The interview will be taken nearly 1 hour for each person, and for each enterprise, the research
will last 1 week. You just need to join onetime.
In the interview, you just need to answer my questions. We will talk about the ERP system in your
enterprise.
1
[THE FOLLOWING PARAGRAPH IS NEW]
Where a participant is to be interviewed the questioning style should be
explained (e.g. clarify if questions will enable open as well as closed
answers to be given in relation to a particular topic; e.g. clarify which
aspects of the topic participants should be able to discuss in-depth and
which not in-depth).
The participants‘ responsibilities to help me to understand the barriers of ERP system meets in the
post-implementation in their enterprises.
The research methods I use are Inductive, and qualitative research method.
7. What do I have to do?
The interview will be taken in your leisure time.
8. What are the possible disadvantages and risks of taking part?
Any reasonably foreseeable discomforts, disadvantages and risks need to be stated. Researchers
should make known to the participants any predictable detriment arising from the proposed
research process. Any unexpected discomforts, disadvantages and risks to participants, which
arises during the research, should be brought immediately to their attention.
9. What are the possible benefits of taking part?
‘Whilst there are no immediate benefits for those people participating in the project, it is
hoped that this work will help your company to analysis the barrier and overcome the
barrier.’
10. What happens if the research study stops earlier than expected?
If this is the case the reason(s) should be explained to the participant.
11. What if something goes wrong?
The process is I interview the participants and collect the information relate to the ERP. In the first
instance I will inform the top manager, get the support and then obtain the participant permission.
If something goes wrong , the participants have the rights stop the interview.
12. Will my taking part in this project be kept confidential?
‗All the information that we collect about you during the course of the research will be kept
2
strictly confidential. You will not be able to be identified in any reports or publications‘.
[THE FOLLOWING PARAGRAPH IS NEW]
Where, due to the nature of the research, it may not be possible to safeguard the confidentiality of
the data then the reasons for this should be stated here. Furthermore, the consequences to the
participant from data not remaining confidential should be provided here.
[THE FOLLOWING SECTION IS NEW]
13. What type of information will be sought from me and why is the collection of this
information relevant for achieving the research project‘s objectives?
This project tries to collect the information about the ERP system‘s problem, when it carries out in
SOE and Non-SOE. The information type includes the event of ERP carry out, the reflective of
officers.
14. What will happen to the results of the research project?
The results will be published on September 2012, they can obtain a copy of the published results
from me or from the University.
You should be able to tell the participants what will happen to the results of the research (i.e. when
the results are likely to be published, where they can obtain a copy of the published results, I will
announce that who join this project and give the opinions.
15. Who is organising and funding the research?
This research is support by self.
.
16. Who has ethically reviewed the project?
The University of Sheffield.
17. Contact for further information
Finally, the participant will be given a copy of the information sheet and, if appropriate, a
signed consent form to keep.
Further information :
Name: kangkang lin Email: [email protected]
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and remember to thank the participants taking part in the
project.
Question to insert into an information sheet if the research
involves producing recorded media:
Will I be recorded, and how will the recorded media be used?
‗The audio and/or video recordings of your activities made during this research will be used only
for analysis and for illustration in conference presentations and lectures. No other use will be
made of them without your written permission, and no one outside the project will be allowed
access to the original recordings.‘
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Model Participant Consent Form
Title of Research Project:
The barriers in the stage of ERP Post-implementation in SOE and Private enterprise of China
Name of Researcher:
Kangkang Lin
Participant Identification Number for this project: Please initial box
1. I confirm that I have read and understand the information sheet/letter
(delete as applicable) dated [insert date] explaining the above research
project
and I have had the opportunity to ask questions about the project.
2. I understand that my participation is voluntary and that I am free to
withdraw
at any time without giving any reason and without there being any negative
consequences. In addition, should I not wish to answer any particular
question or questions, I am free to decline. Insert contact number here of
lead researcher/member of research team (as appropriate).
3. I understand that my responses will be kept strictly confidential (only if
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true).
I give permission for members of the research team to have access to my
anonymised responses. I understand that my name will not be linked with
the research materials, and I will not be identified or identifiable in the
report or reports that result from the research.
4. I agree for the data collected from me to be used in future research
5. I agree to take part in the above research project.
AILIAN CHE 10/07/2012 AILIAN CHEN
________________________ ________________ ____________________
Name of Participant Date Signature
(or legal representative)
BIN HU 10/07/2012 BIN HU
_________________________ ________________ ____________________
Name of person taking consent Date Signature
(if different from lead researcher)
To be signed and dated in presence of the participant
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_________________________ ________________ ____________________
Lead Researcher Date Signature
To be signed and dated in presence of the participant
Copies:
Once this has been signed by all parties the participant should receive a copy of
the signed and dated participant consent form, the letter/pre-written
script/information sheet and any other written information provided to the
participants. A copy of the signed and dated consent form should be placed in
the project’s main record (e.g. a site file), which must be kept in a secure
location.
