Information & Management 40 (2002) 87–114

An innovation—diffusion view of implementation of

enterprise resource planning (ERP) systems
and development of a research model$
Palaniswamy Rajagopal*
Department of Information Systems, School of Business and Economics, Michigan Technological University,
1400 Townsend Drive, Houghton, MI 49931, USA
Received 16 January 2001; accepted 13 October 2001

Abstract

Firms around the world have been implementing enterprise resource planning (ERP) systems since the 1990s to have an
uniform information system in their respective organizations and to reengineer their business processes. Through a case type
analysis conducted in six manufacturing firms that have one of the widely used ERP systems, various contextual factors that
influenced these firms to implement this technology were understood using the six-stage model proposed by Kwon and Zmud.
Three types of ERP systems, viz. SAP, Baan and Oracle ERP were studied in this research. Implementation of ERP systems
was found to follow the stage model. The findings from the process model were used to develop the items for the causal
model and in identifying appropriate constructs to group those items. In order to substantiate that the constructs developed to
measure the causal model were congruent with the findings based on qualitative analysis, i.e. that the instrument appropriately
reflects the understanding of the case interview; ‘triangulation’ technique was used. The findings from the qualitative study
and the results from the quantitative study were found to be equivalent, thus, ensuring a fair assessment of the validity and
reliability of the instrument developed to test the causal model. The quantitative measures done only at these six firms are not
statistically significant but the samples were used as a part of the triangulation method to collect data from multiple sources, to
verify the respondents’ understanding of the scales and as an initial measure to see if my understanding from the qualitative
studies were accurately reflected by the instrument. This instrument will be pilot tested first and administered to a large sample
of firms.
# 2002 Elsevier Science B.V. All rights reserved.

Keywords: Enterprise resource planning (ERP) systems; Process model; Causal model; Contextual factors; Triangulation; Integration and
performance

$
Due to various problems and issues encountered by the author while pursuing doctoral studies, it took lot of time to finalize the
manuscript and submit to the journal. The author is going to continue working on his Ph.D. in Information Technology Management through
distance learning from a different school while working as a lecturer of Information Systems and Information Technology at Michigan
Technological University.
*
Tel.: þ1-906-487-2529; fax: þ1-906-487-2944.
E-mail address: rpalanis@mtu.edu (P. Rajagopal).

0378-7206/02/$ – see front matter # 2002 Elsevier Science B.V. All rights reserved.
PII: S 0 3 7 8 - 7 2 0 6 ( 0 1 ) 0 0 1 3 5 - 5
88 P. Rajagopal / Information & Management 40 (2002) 87–114
1. Introduction
When met with high levels of competition and
pressure from the industry, most organizations invari-
ably turn to the information systems department to
help them attain advantages in the market by perform-
ing better internally through saving resources and
through becoming adept in responding to these chal-
lenges from the environment. Many manufacturing
and other organizations around the world have been
able to achieve high levels of performance during the
recent turbulent decades because of the application
and usage of various IT tools that automated many of
their routine organizational activities. Implementation
and wide usage of IT tools have helped organizations
to function in an organized fashion, thus, alleviating
many redundancies that were ubiquitous across the
entire organization. Venkatraman [57] recently men-
tioned that ‘‘We are at an interesting turning point in
our business history: the industrial age is giving way
to the information age and the digital infrastructure is
fast replacing the physical infrastructure’’. Similar to
how industrial machinery and tools were used at the
transition from Agrarian to Industrial Economy, cur-
rently we are at a stage where information technology
tools available and the systems developed using those
tools are at infant or premature stages of development
and usage with more room for research, development
and usage. If we take into account the number of users
and how these users utilize these tools, this statement
becomes more valid. The work force is slowly being
transformed from ‘manual and routine task perform-
ing workers’ to knowledge workers because of the
rapid use of IT that involves information processing,
dissemination and data gathering rather than physical
exertion as explained by Zuboff [59].
Information technology application and usage are
associated with many inherent drawbacks that were
opaque to many of the organizational decision-makers
for many years. The changes in the global economy
and the intense competition during the early 1990s
resulted in a ‘rude awakening’ to many industrial
organizations to chart new strategies to be successful
if not at least to survive even in local markets. Infor-
mation technology based tools were seen as one of the
significant enablers of success, and organizations went
on an IT investment binge in the hope that implemen-
tation of IT tools would automatically put them in a
comfortable position where all of an organization’s
activities were expected to be automated resulting in
an ‘efficient’ organization. But they were in for a
surprise. Of the US$ 275 billion spent by US firms
in 1996 in software applications, 53% of the projects
failed [23], and these failures were not because the
software were coded incorrectly, rather the companies
failed to understand the real organizational needs and
systems required to solve their problems to improve
performance. After all there was no shortage in the
brainpower required to code programs and definitely it
was not a laggard to stop US firms from designing an
appropriate system. Based on empirical research,
Quinn and Baily [45] found that the investments made
in IT did not result in any improvements in industrial
productivity. The reason for the inability of the firms
to realize competitive gains even after spending bil-
lions of dollars is that proper usage of IT necessitates
changes in the design and structure of an organiza-
tion as mentioned by Brynjolfsson and Hitt [9] in their
paper about ‘productivity paradox’. Brynjolfsson and
Mendelson [10] found that organizations might not
be able to realize full benefits of a technology unless
they make the necessary changes in organizational
structure, strategies and processes. Many renowned
scholars in MIS including Grover, Teng, Segars,
Fiedler, Henderson, Venkatraman, Scott-Morton, Lucas
and Baroudi have called for changes in business
processes, organizational structures and such man-
agement related issues in order to take full advan-
tage of the implemented information technologies
[25,28, 50,38].
On the technical side of IT, one of the primary
reasons for the inability of many firms to realize the
full potential offered by IT is the incompatibility
among the various computer hardware and software
systems as was found during the case studies and as
reported by Ives and Jarvenpaa [29], Stevens [55] and
others. Individual functions and divisions started
implementing various computer hardware and soft-
ware systems in their respective functions and divi-
sions during the last decade, which eventually resulted
in organizations characterized by a myriad of different
systems that could not communicate with one another.
Individual functions and divisions were able to realize
better performance and efficiency but at an organiza-
tional level they were impeded from performing better
through using all of the available information because
 P. Rajagopal / Information & Management 40 (2002) 87–114
of the systems’ incompatibility. As organizations grew
by mergers and acquisitions and as firms transcended
beyond their national boundaries, the disparity among
their computer hardware and software systems kept
increasing. As mentioned by Ives and Jarvenpaa [29]
such incompatibility among the various computer
hardware and software systems in a global context
only encumbered their performance. Discrete automa-
tion of business processes that would not result in
smooth, continuous and coherent information flows in
the entire value chain only impaired an organization’s
ability to grow and excel. Since the current informa-
tion-age business environment bases its competitive
requirements on knowledge and information, organi-
zations are forced to work together, rather than in
independent functional silos, making available various
dispersed information that were available but left
untapped due to lack of technical adeptness. Many
IT professionals are of the opinion that only a fraction
of the available information is used in organizational
decision-making processes with the other remaining
latent [23]. Because of such incompatibility, informa-
tion is exchanged only at the local units rather that at a
global level. Such automation of only individual func-
tions and divisions that resulted in ‘islands of auto-
mation’ is unlikely to have significant impact on the
productivity of an organization [25]. Hence, an infor-
mation technology tool that could help organizations
alleviate incompatibility issues to make disparate
computer hardware and software systems communi-
cate with one another and at the same time help
organizations shift from a traditional functional mode
to a business process mode and optimize the resultant
business processes to take full advantage of the tech-
nology is likely to help organizations enhance their
performance. Davenport [18] in his paper on new
industrial engineering explained that information
technology and business process redesign are two
vital tools which by ‘‘working together have the
potential to create a new type of industrial engineer-
ing’’. The ERP systems do just that, i.e. besides being
an IT innovation, it is also a business process reengi-
neering (BPR) mechanism and, hence, it enables
organizations to practice new forms of industrial
engineering, a shift away from the traditional forms
where IT functioned independent of the business
objectives [57]. It should be of no surprise that the
sales of the ERP systems was expected to be around
89
US$ 20 billion by the year 2000 and the eventual
market size is projected to be around US$ 1 trillion by
the year 2010 [6].
To overcome the problems associated with incom-
patibility, during recent years many organizations in
the US and other countries have been implementing
enterprise resource planning (ERP) systems, and the
demand for the implementation of these systems is
growing rapidly. Through implementation of ERP,
these firms are able to achieve an ‘‘end-to-end’’ con-
nectivity, thus, bringing various diverse functions and
divisions together. Multinational firms are able to
integrate their geographically dispersed subsidiaries
with headquarters resulting in a single uniform and
coordinated information system and are, thus, able to
coordinate and monitor their performance in real time.
Many of the inherent drawbacks associated with the
materials requirement planning (MRP) and manufac-
turing resources planning (MRP II) systems have been
overcome through implementation of ERP systems,
since ERP systems integrate manufacturing function
with most or all of the functions in an organization
[35]. MRP II systems were used mostly at individual
manufacturing facilities or manufacturing facilities in
isolation of one another and were not so successful
when an organization had multiple and dispersed
production facilities. Such problems became more
pronounced when organizations grew through mergers
and acquisitions, which resulted in higher degree of
disparate systems. Through implementing ERP sys-
tems, organizations have overcome many of the pro-
blems associated with using disparate information
systems. From the shop floor activities to performance
monitoring in the headquarters, a flawless integration
has been achieved through ERP implementation, thus,
making the various computer hardware and software
platforms compatible to one another. Organizations
that implemented ERP systems have made improve-
ments in cross-functional coordination and have
improved business performance at various levels.
No other IT innovated thus far has had such a pro-
found effect across an entire organization, even at the
global level, as did ERP systems, as learned during
case interviews. Since ERP is an IT integration tool
(and a BPR mechanism) that connects all the data-
bases, activities related to a certain business process
occur simultaneously in various functions unlike in
sequential manner where information about tasks
90 P. Rajagopal / Information & Management 40 (2002) 87–114
associated with a business process were ‘passed on’
from one department to another [53]. Since such
activities occur simultaneously much of the related
paper work is alleviated and time taken to complete a
certain task through a certain business process is
greatly reduced as observed at the Owens Corning
Company.
Since there were only a few research works about
ERP implementation reported in the literature when
this research was initiated, the need to conduct an
empirical study in this area became rather obvious. A
research work that would explain ERP implementa-
tion with a theoretical model is likely to benefit both
academics and industry professionals, since such
research is likely to shed more light on this recent
IT innovation. Any technology implementation is best
understood by analyzing and understanding the var-
ious contextual factors both from within and from the
external environment that resulted in implementation
of the technology, the various issues involved during
and after implementation and the resulting perfor-
mance [33,44]. To clearly understand the factors of
influence, issues, barriers, facilitators and perfor-
mance, the stage model was found to be a useful tool,
because this model frames an implementation as going
through certain stages before that technology becomes
widely used in an organization. Various issues such as
facilitators and barriers to implementation and usage
are observed in each of the stages. The reasons for
certain firms to implement and widely use a technol-
ogy compared to some other firms that may have
difficulties could be identified using such approach.
Justification and details for using the stage model is
given in Section 3.
With the background set about the changes in the
business environment, given the details of ERP sys-
tems and the justification to use the stage model to
study ERP implementation, this research aims to:
1. Explain the emerging role of ERP in organizations;
2. Explain the various contextual factors associated
with the innovation and diffusion of various types
of ERP systems using the stage (process) model
proposed by Kwon and Zmud [33] and the
resulting enhanced performance and;
3. Develop a research (causal) model using the case
study findings and based on literature about IT
implementation.
As a first step to form a robust model, an exploratory
research was conducted in six manufacturing firms.
This research paper is part of an ongoing research
project that aims to explore the business processes
both internal and external to an organization due to
implementation and usage of advanced IT. ERP imple-
mentation research is to understand business processes
that are internal to an organization and future research
about Internet based processes is to study about busi-
ness processes that involve elements that are external
to an organization. The uniqueness of this research
paper is that it combines a process model and causal
model, utilizes innovation–diffusion based stage the-
ory to frame implementation of ERP systems and uses
triangulation technique to verify the congruence
between qualitative findings and the quantitative mea-
sures. There are hardly any papers in the IS area that
have used Triangulation technique advocated by
Kaplan and Duchon [30] in their qualitative analyses.
2. Literature review
2.1. Enterprise resource planning (ERP) systems
Laughlin [36] defined ERP as ‘‘software packages
that affect everything from order capturing to account-
ing and procurement to warehousing. They grew out of
the need to plan, manage and account for resources
in predominately discreet manufacturing environ-
ments’’. Slater [54] defines ERP as ‘‘ERP integrates
key business and management processes to provide
a sky-level view of much of what is going on in the
organization. The idea behind ERP is that the software
needs to communicate across functions’’ and that
ERP systems permit efficient exchange of relevant
data regarding the production processes and their
associated administrative tasks.
Minahan [40] explained that ERP systems take into
account every business transaction entered into the
system no matter where the data is input and that ERP
‘‘digitally records’’ all these transactions. Data avail-
able to everyone in the organization at a global level is
always current and not from ancient times. It was
found during interviews at one of the companies, that
executives from corporate headquarters in the US
could monitor performance at production facilities
located in a foreign country, if desired, in real time
 P. Rajagopal / Information & Management 40 (2002) 87–114
and such global coordination and monitoring enable
them to optimize their operations at a global level
since most ERP systems are capable of handling
international currency units and are available in many
languages.
2.2. IT implementation
The literature on information technology imple-
mentation may be classified into process research,
factors research and political research [16,33]. Based
on the definition of these research categories, my
research could be classified into ‘factors research’,
since it addresses only the ‘‘individual, organizational
and technological issues’’ related to implementation
of an ERP system. In a field characterized by rapid
advances where yesterday’s technology becomes
obsolete today, implementation research in IT is likely
to continue to be of interest in the current and coming
years as stressed by Lai and Mahapatra [34].
2.3. Stage model
Premkumar, Ramamurthy and Nilakanta [44] used
the stage model to study implementation of electronic
data interchange (EDI) and justified using the stage
model to study that IT innovation since it helps in
understanding some of the salient issues in implemen-
tation of a technology. Depending on the nature of a
technology, type of organization and the degree of
inertia associated with using a previous technology,
the time between stages may vary as we found during
our case studies. Companies that have numerous
production facilities and complex manufacturing sys-
tems may take a couple of years to implement the
technology compared to an organization with few
production facilities. These stages have been called
by different names by different researchers during the
past few decades. Kwon and Zmud [33] proposed that
IT implementation follows six-stages or phases, viz.
initiation, adoption, adaptation, acceptance, routiniza-
tion and infusion. In this paper, using Kwon and
Zmud’s innovation–diffusion model, various issues
related to the ERP implementation and performance
are addressed. Cooper and Zmud [16] applied this
six-stage model to examine the implementation of
MRP systems. Since ERP is an extension of MRP
systems, using Kwon and Zmud’s stage model is only
91
appropriate. (Langenwalter [35] is a good reference to
understand the differences between the MRP and ERP
systems). The stage model proposed by Kwon and
Zmud [33] is a process or temporal model and the
observations from using such a model helped me to
develop a causal model. In this research, the observa-
tions of the process model formed a basis to identify
meaningful constructs and items to measure the latent
constructs for the causal model.
The six-stage model and the associated issues in
each of the six-stages are shown in Fig. 1. The items
shown in this figure are from Kwon and Zmud [33];
Cooper and Zmud [16]; Cooke and Peterson [15];
Chengalur-Smith and Duchessi [12] and most others
from the case studies conducted in six firms.
During the case studies, the various factors that
influenced these firms to implement an integrated
system like ERP and the important issues in each of
these phases were observed and noted down. The
points noted were found to fall into the constructs
developed by Chengalur-Smith and Duchessi [12],
viz. competitive motives, efficiency motives, technical
motives and operations motives and a construct devel-
oped by Cooke and Peterson [15], viz. strategic
motives. Together these five constructs measure the
predictor variable, ‘‘factors of influence for the firms
to implement ERP systems in their respective orga-
nizations’’. The items proposed by Chengalur-Smith
and Duchessi and Cooke and Peterson together with
those that we identified from our case findings are to
be used for the quantitative analysis. Through ‘trian-
gulation’ (Kaplan and Duchon [30]) technique the
validity of the items to satisfactorily measure the
constructs was verified as explained in Section 3.
Thus, these five constructs form the independent
variables for the model.
One of the useful instruments to study the perfor-
mance of information technology, my criterion vari-
able, is that developed by Mahmood and Soon [39],
which measures the strategic impact of IT in organiza-
tions. Sethi and Carraher [52] validated this model.
Palvia [42] extended this model to study the impact
of IT in a global context to understand the global,
strategic and competitive performance due to im-
plementation of IT. The instrument developed by
Palvia [42] provided the constructs to classify and
group the various manifest variables and their res-
pective items that were observed in our case studies.
 92
P. Rajagopal / Information & Management 40 (2002) 87–114
Fig. 1. Kwon and Zmud’s [33] IT implementation model as applied to ERP implementation (some of the items for stages were adapted from literature and others were from
interviews conducted with respondents).
 P. Rajagopal / Information & Management 40 (2002) 87–114
The items to measure the performance of an ERP
system were found to fall into the manifest variables
of flexible operations, inter-organizational efficiency,
coordination, internal organizational efficiency and
effectiveness, customer satisfaction, human resources
management, end-to-end connectivity, manufacturing
performance, organizational performance and infor-
mation systems performance.
Churchill’s [13] recommendation to conduct
empirical survey research consists of ‘‘specifying
the domain of the construct, generating a sample of
items which capture the domain as specified, purifying
the measure through coefficient alpha or factor ana-
lysis, assessing reliability with new data, assessing the
construct validity and developing norms’’. Segars [51]
explained the steps involved in conducting a survey
research to test and validate a model as shown in Fig. 2.
Segars [51] approach is similar to that recommended
by Churchill but includes the detailed procedures to
test the uni-dimensionality also. The first few steps of
empirical research recommended by Churchill [13]
and reiterated by Segars [51] are being accomplished
in this research. Because of a lack of empirical
research about ERP, which is different from most of
the IT tools, exploratory studies were conducted first
in order to gain knowledge about them. Besides under-
standing the technology, the contextual factors
involved and various issues in implementation ERP
needed to be understood first. Literature about IT
integration issues and IT implementation provided
the basis to develop constructs and a model. The
instrument developed based on case analysis was
validated to some extent through triangulation.
Recently, Benbasat and Zmud [4] in their paper
about ‘‘practice of relevance’’, stressed that research
in information technology should be of interest to
academicians, practitioners and journals and that
researchers in MIS should address those issues that
are likely to benefit all audiences. Nemetz and Fry [41]
stated that very little research about the ‘‘strategic and
organizational implications of a new technology’’ is
reported in the literature. In line with the views of
these scholars and given the following facts:
 Many business entities have been reengineering
their business processes in order to achieve com-
petitive advantages since the 1990s following the
fiasco in both local and global markets.
93
 Information technology tools such as ERP are vital
in their reengineering initiatives.
 There is only a little empirical research about ERP
systems.
It is believed that the findings of this research will
be of most use to both academicians and practitioners,
since they explain the various organizational and
environmental variables and the issues involved in
implementing ERP systems and the resulting
enhanced performance.
3. Research methodology
Two notable IT innovations that are revolutionizing
business activities in the recent years that caught my
attention and are expected to do so in the coming years
are ERP and the Internet. ERP systems are both an IT
innovation and a BPR mechanism and, hence, they are
different from many of the traditional IT tools used.
Hence, an exploratory type research was conducted
first to obtain a clear picture of this technology.
Lai and Mahapatra [34], in their meta-analysis of IT
implementation research, classified the case study as
an empirical study and hypothesized that empirical
research methods such as field experiments, case stu-
dies, field studies and lab experiments are preferred to
non-empirical methods such as conceptual studies and
reviews/tutorials in IT implementation research. Case
analysis is a good starting point in the inductive process
of theory building, in other words, case analysis is the
method of choice for inductive or teleological studies
since it lets the researcher observe and gather informa-
tion about the new subject being studied. Such induc-
tive study is needed to develop a model that can be
tested using deductive methods with quantitative tools
as the basis. Yin [58] explains the relevance of case
type research in MIS field and accentuates the role of
case study research in MIS through the words of a
professor from the Harvard Business School who
mentioned that ‘‘whereas traditional MIS systems were
simply a sub-function of an organization, the newer
MIS could potentially lead to the re-structuring of the
entire organization with the firm in its entirety becom-
ing an MIS, . . ., only the case study method could
capture such dynamic and changing conditions’’. Also
since there was no clear understanding of ERP systems,
94 P. Rajagopal / Information & Management 40 (2002) 87–114

Fig. 2. Segars [51] theoretical and statistical paradigm for assessing uni-dimensionality.
 P. Rajagopal / Information & Management 40 (2002) 87–114
exploratory studies were conducted first to understand
about the systems, their characteristics, the implemen-
tation issues, various organizational and environmen-
tal factors and the performance through interviews
with the information systems executives. This pro-
vided a starting point to develop casual models, iden-
tify and develop constructs and relevant items to
measure the latent constructs. Conducting case studies
in companies of various sizes that used different types
of ERP systems widened my horizon and enabled me to
obtain a broader and clearer view of various issues
involved in this technology. The generalizability of the
findings will be found out through large-scale empiri-
cal survey to be conducted in the near future.
Benbasat et al. [5] mentioned that case study is
suited for research in information systems, since cur-
rent research interests in information systems involve
study of organizational rather than the technical issues.
As mentioned by Yin [58] case type research helps in
understanding the ‘how’ and ‘why’ aspects of the
research. This is especially true in ERP research since
this technology is still in the pre-mature stages of
development and usage (at the time the research was
conducted). However, the reader should be aware of the
limitations of case studies. Chen and Small [11] have
explained the advantages of case type research in their
paper about implementation of advanced manufactur-
ing technologies. Lee [37] has explained some of the
problems of case studies, which include (1) inability to
make controlled observations, (2) inability to make
controlled deductions, (3) inability to allow for replic-
ability and (4) inability to allow for generalizability.
Some of the drawbacks of field studies include those
that mentioned by Kerlinger [31]—feasibility, cost,
sampling and time. Every organization is different
and unique and there will always be certain ‘unique
factors’ that differentiates a firm from the other. But
case study is useful for initial observations before
developing a research model especially if the subject
is rather new and is never researched about earlier. I am
not a strong proponent of quantitative methods to test
models that were developed using literature alone,
since IT is an area characterized by short product life
cycles where yesterday’s technology becomes obsolete
today. However, once a sound model is developed after
doing good number of exploratory analyses, testing the
generalizability of the model could be done using
quantitative tools.
95
Open-ended questions were asked and the
responses were audio taped. After the interviews were
completed in a company, the written manuscript was
e-mailed to the respondents for their review and
approval, thus, alleviating any mis-interpretation of
the responses. To validate the constructs and items
used to measure the constructs and to make sure that
the responses and the researcher’s understanding of
the respondents’ answers were congruent, it was
decided to do ‘triangulation’, following the recom-
mendation of Kaplan and Duchon [30]. Kaplan and
Duchon [30] stated that ‘‘using multiple methods
increase the robustness of results, because findings
can be strengthened through triangulation’’. Based on
the literature, Kaplan and Duchon defined ‘triangula-
tion’ as ‘‘the cross-validation achieved when different
kinds and sources of data converge and are found to be
congruent’’. Collecting data by more than one-method
gives a clear picture about the subject under study as
suggested by Bonoma [7]. A questionnaire that quan-
tified the constructs developed through the case find-
ings and literature review was e-mailed to respondents
and were requested to fax their responses. Respon-
dents were contacted after a few days through e-mail
reminding them to fax the completed questionnaire;
most of them faxed their responses within 1 week’s
time. This measurement technique was used for a
preliminary assessment of my understanding of the
implementation processes, identification of items for
the constructs and verifying whether the qualitative
data from the interviews matched their quantitative
responses. Case interviews involved discussion about
the various issues but through measuring the con-
structs quantitatively, the confidence in the findings
increased notably. There was a ‘‘convergence’’ of the
findings from the qualitative and the quantitative
analysis.
In this research, three different widely used ERP
systems, viz. SAP,1 Oracle2 and Baan3 were studied.
The web sites of these vendors were visited, to locate
those who were geographically close were chosen due
1
SAP R/31 and R/21 are registered trademarks of SAP
Aktiengesellschaft, Systems, Applications and Products in Data
Processing, Neurottstrasse 16, 69/90 Walldorf, Germany.
2
Oracle1 is the registered trademark of Oracle Corporation,
500 Oracle Parkway, Redwood Shores, CA 94065, USA.
3
Baan1 is a registered trademark of the Baron Van
Nagellstratt 89 AC Barneveld 3770, The Netherlands.
96 P. Rajagopal / Information & Management 40 (2002) 87–114
to limited availability of time. Field trips to Owens
Corning and Viskase Corporation were undertaken to
analyze the SAP system and to Valenite Inc. and
Diebold Inc. to learn about the Baan systems. Oracle
systems were studied at Leeson Electric Company and
Food Processing Company (actual name anonymous
per their request). All companies are located within
about 500 miles of Toledo, Ohio. Detailed interviews
were conducted with the chief information officers or
MIS directors or project leaders in-charge of imple-
mentation of ERP systems in these organizations,
depending on the designation of the person in-charge
of ERP implementation. In some companies, the inter-
views were conducted with their manufacturing
executives and time permitting in some companies I
had an opportunity to see their ERP systems in use.
The first case study interview was conducted at Owens
Corning where interviews were conducted with their
MIS executives followed by interviews with their
manufacturing executives. This initial case study
helped in understanding ERP systems and in devel-
oping the interview questionnaire for other case stu-
dies. An overall picture about the factors of influence
for these firms to implement ERP systems, various
issues such as barriers and facilitators to implementa-
tion and usage and the subsequent performance and
the items for the constructs were obtained after the first
case study at Owens Corning.
4. Results and discussion
Table 1 summarizes the demographics of the firms
interviewed. All the sample firms are in the manufac-
turing sector, is the firm sizes range widely from US$
40 million to 5 billion, and in terms of employment, the
range is from 120 to 6500. Also the number of ERP
users ranged from 20 to 3500. The Food Processing
Company invested only US$ 0.9 million in implement-
ing its ERP compared to US$ 100 million spent by
Owens Corning. Some companies, like Viskase, spent
most of their ERP investments in revamping their IT
architecture, and companies like Owens Corning spent
most of their investments in training people and in time
spent in converting from the Legacy systems to ERP
systems. Four out of the six firms studied have Oracle
as their database systems. Most of these companies
employed outside consultants to assist them in their
reengineering and implementation of ERP efforts. All
of these companies are internationally active and
Owens Corning is ‘‘live’’ with its ERP systems in
many countries. Most of these companies have produc-
tion facilities in multiple countries. Thus, samples
chosen, besides representing a variety of different
widely used ERP systems, also represent samples that
vary in terms of size, sales, investments and number of
users of ERP systems. Such diverse samples provided
comprehensive sample characteristics, thus, increasing
the generalizability of the findings, though not statis-
tically significant. Also such sample variety was help-
ful to understand if the differences in the sample
characteristics have any effect on the implementation
and performance of the ERP systems.
The details of the case findings are given in
Appendix A.
4.1. Modeling ERP implementation after stage
theory—a process model of implementation of ERP
The six-stages proposed by Kwon and Zmud [33] and
various issues related to these six-stages are as follows.
Fig. 1 shows the six-stages and the corresponding
salient issues in each of these stages. The items
indicated in this diagram are from Ives and Jarvenpaa
[29]; Chengalur-Smith and Duchessi [12]; Cooke and
Peterson [15] and Kwon and Zmud [33]. Others were
from the case interviews.
4.1.1. Initiation
The first or the initiation stage is characterized by
the various exo- and endogenous factors that influ-
enced the organizations to implement an integrated
system like an ERP system. At Owens Corning, the
CEO wanted an organization wide integration so as to
meet the rapid changes taking place in the business
environment especially at the global level. At Diebold,
they needed a ‘global product configurator’ that would
enable them to manufacture automated teller machines
(ATM) for their international customers taking into
consideration differences such as language and cur-
rency in various countries. At Leeson, the top manage-
ment wanted to change their business processes and
systems in order to keep up with the changing business
environment at the global level and integrate their
various functions and the newly acquired companies
into a common IS platform. At the Food Processing
Table 1
Demographics of sampled firms

P. Rajagopal / Information & Management 40 (2002) 87–114

Owens Valenite (pilot tested Viskase Diebold Leeson Food Processing
Corning in a single facility) Company

Primary industry Manufacturing Manufacturing Manufacturing Manufacturing Manufacturing Manufacturing

fiberglass food processing banking equipment electric motors food processing
Sales US$ 5 billion NA US$ 450 million US$ 1.2 billion US$ 180 million US$ 40 million
Number of employees 2000 NA 3000 6500 1200 120
Number of total ERP users 3500 NA 800 2500 300 20
Investment in ERP US$ 100 million NA US$ 20 million US$ 34 million US$ 5 million US$ 0.9 million
Investment in hardware US$ 10 million NA US$ 15 million US$ 2 million US$ 2 million US$ 0.1 million
Investment in software US$ 10 million NA US$ 3 million NA US$ 3 million US$ 0.8 million
Remainder of investment People and time NA NA NA None None
Database Oracle NA Oracle Informix Oracle Oracle
ERP consultant Deloitte and Touche NA IBM Global Services Arthur Anderson Greenbrier and Russell NA
Number of IS staff 65 NA 20 160 20 5
Number countries where 45 NA Almost all 150 Global; multiples agents 10
products are sold
Number of countries where 30 NA 7 4 2 1
production takes place
Number of countries ‘‘live’’ 20 NA 7 2 1 1
with ERP

97
98 P. Rajagopal / Information & Management 40 (2002) 87–114
Company, their previously used system was unable to
meet their expectations and also had inherent flaws.
At Viskase, they did not have a MRP type system, and
they faced many problems with their previous Legacy
type mainframe system. Because of many changes in
their business environment, they were required to find
all possible ways to better compete. Such factors, from
both within and from outside these firms, necessitated
that they implement an integrated system like ERP.
The details are given in Section 5.
4.1.2. Adoption
Investment decisions and cost–benefit analysis
related to implementation of ERP systems and choice
of brand or vendor were carried out during the second
or adoption stage as suggested by Cooper and Zmud
[16]. Some companies like Leeson spend more than a
year in selecting an appropriate vendor. For companies
like the Food Processing Company, budgetary con-
straints from the top management were a major barrier
to overcome in their ERP selection process. Large
manufacturing companies like Owens Corning found
SAP to be the most suitable type of ERP. For Diebold,
the performance of the product configuration module
of the ERP system was the deciding factor in their
selection of a particular type or ERP. Whereas the
Owens Corning Company spent US$ 100 million in
their ERP implementation process, the Food Proces-
sing Company spent less than 1 million to implement
their ERP system. Conducting case analysis in firms of
various sizes that use different types of ERP provided
a comprehensive picture of the various issues regard-
ing the adoption of a particular type of ERP. Unlike
any other IT tool, firms need to customize the ERP
software to suit the requirements of their organization
and, hence, adaptation of ERP systems follows once a
particular type or ERP is chosen.
4.1.3. Adaptation
The implementation of the ERP system requires
changes in the way business is conducted, and the
companies that were interviewed carried out BPR
before implementing an ERP system. They do a
‘‘self-discovery’’ process where they analyze the
details of the various business processes and look for
improvements or to redesign the same. Some of the
firms, perhaps for the first time, switch to a business
process approach from their traditional functional type
of working in order to complete a certain task. The
business processes need to be redesigned in order to
realize the full benefits of ERP technology. BPR or
business process change (BPC) is defined by Kettinger
et al. [32] as ‘‘an organizational initiative to design
business processes to achieve significant (radical)
improvement in performance through changes in the
relationships between management, information, tech-
nology, organizational structure and people’’. Schnitt
[49] defines a business process as ‘‘an activity in the
organization fundamental to operating the business
that serves an internal or external customer and has a
well-defined outcome or series of outcomes’’. Earl [22]
defines a process as ‘‘a lateral or horizontal form that
encapsulates the interdependence of tasks, roles, peo-
ple, departments and functions required to provide a
customer with a product or service’’. Davenport [20],
Bancroft [1] and Curran and Ladd [17] are some good
sources of references to understand business processes
and the role of ERP in enabling organizations in their
BPR efforts. It should be noted that ERP is a prime
enabler of BPR efforts in the organizations. Had they
not implemented an integrated system like ERP, they
would have only realized marginal or incremental
changes in their business processes and resulting per-
formance. Due to ERP implementation they were able
to see ‘‘radical changes’’ [27] in performance since ERP
implementation necessitates that firms do BPR first.
Unlike any other IT tools, ERP does not just result in
computerization or a mere automation of the existing
business processes but brings about changes that enable
radical breakthroughs in performance, which is the
fundamental purpose of reengineering the business
processes.
The source codes written mostly in Cþþ language are
supplied to customers by the vendors to enable them to
customize the middleware to include their business
logic as determined by the way they organize their
work or the way they want to reengineer their work
processes. Data are transferred from the previously
used Legacy type mainframe systems to the ERP
systems. Once the business processes are redesigned
and the systems are customized, the software becomes
available to the end-users. Training is given to the
end-users during this adaptation stage, and resistance
is observed because of the ‘‘inertia’’ associated with
using the previous system. This adaptation stage
corresponds to the planning and design phase in the
 P. Rajagopal / Information & Management 40 (2002) 87–114
Preece’s model [43]. All of the respondents agreed that
this was the toughest of all the stages since the
business processes need to be understood and struc-
tured appropriately to exploit the full potential of ERP.
Teamwork, revamping of IT infrastructure to a client/
server architecture, a thorough understanding of how
the organizational activities were carried out and how
these will be affected due to ERP implementation, top
management support, cross functional coordination
and consulting help from the vendor and others are
some facilitators that would make this difficult
phase successful. Laughlin [36], Davenport [21] and
Bingi [6] have given recommendations with real world
examples to realize success in implementation of
ERP systems. The complexity of the systems, lack
of top management support, higher levels of inertia,
mainframe-based systems, outdated IT infrastructure
and lack of user support are barriers.
4.1.4. Acceptance
The systems become increasingly available for use
in the organization. The systems are modified in order
to solve the problems reported by the end-users.
Continuous improvements are made to make the
system easy to use and to solve various problems.
Various modules of ERP are implemented in respec-
tive functions and the users become comfortable with
using the ERP systems. The benefits of using the new
system are observed during this stage. The ability of
the system to make the organizational IS ‘‘open’’ by
enabling compatibility among disparate systems is
realized. For example, data entered in materials plan-
ning affects data in accounting in real time and the
accounting databases are current, reflecting the trans-
actions made in the production department. This is
something, perhaps organizational personnel only
dreamt about earlier and yearned for, but could not
realize or do so, because they were constrained by
incapable technologies or did not posses the prowess
to derive information. With an integrated system,
information is available for everyone for easy deci-
sion-making. Brynjolfsson and Mendelson [10]
recommended that in order to make information
needed for decision-making available to the users at
the right time and right place, organizations could
choose either the MIS solution, which is to bring
the information needed to the decision-makers or
organizational redesign solution, which is to redesign
99
the entire organization so that the decision-makers are
there where the information needed for the decision-
making is available. Brynjolfsson and Mendelson [10]
also suggest that the MIS solution is a better strategy to
transfer ‘general knowledge’ about an organization
and organizational redesign solution is a better choice
to transfer ‘specific knowledge’. The implementation
of ERP has given the firms both MIS solution through
making various information systems compatible, thus,
bringing information dispersed in various types of
databases to everyone in the organization as needed,
and since companies do BPR prior to implementing
ERP systems, they are also able to realize the advan-
tages made possible through organizational redesign
solution. Again for such reasons ERP is different than
any IT tool studied, thus, far. The integration of
various functional units is realized during this accep-
tance phase. The acceptance stage is similar to the
Installation stage proposed by Preece [12,43].
4.1.5. Routinization
The users accept the system. At Owens Corning,
one of the customer service representatives when
asked if she or others in the office would prefer the
previously used mainframe based Legacy system over
SAP, the reply was ‘‘absolutely no’’. Various func-
tional units do not have to rely on MIS for information
and reports. The ability of ERP systems to integrate
the vastly ignored manufacturing information with the
popular administrative functions of an organization
are realized. There is one single information about
various business functions in the organization, and it is
available to those needed in real time, unlike in the
past when individual functions were making decisions
based on vastly different information since the systems
were incompatible and, hence, knowledge dissemina-
tion and sharing were rather painful, if not impossible.
The usage becomes a regular day-to-day activity [33].
The users turn-on their systems, the ERP systems is
right there, and they begin to work using ERP systems,
instead of having to navigate many different systems
to acquire and disseminate information and feed
data manually from various files and moving data
and information physically instead of digitally. Also
instead of working with ancient and outdated data,
they work using current data since all the databases are
always current. All information about various activ-
ities related to a customer or a product or a certain
100 P. Rajagopal / Information & Management 40 (2002) 87–114
production unit or about movement of materials and
products are all kept current in the system and such
current information is critical in decision-making
processes. Previously, they did nightly ‘‘batch pro-
cesses’’ to make changes in the various databases to
keep the information current. Preece [12,43] terms this
stage operationalization stage. The data entered by
one person in some location affects or changes the
databases of the entire organization and such connec-
tivity among the systems makes information available
in real time across the entire organization. Similarly,
as mentioned by Bingi [6], if someone makes an error,
and if it is not corrected immediately, it will result in
erroneous information across the entire organization.
As much as the ERP systems have many virtues, the
companies that implement these systems should be
aware of the weaknesses also.
4.1.6. Infusion
The system is used to enhance the performance of
the organization. If there are some problems in a
production facility, the production could be easily
diverted to another facility to utilize its idle capacity
and such, easily since such information is available
readily to the decision-makers. This also applies to
movement of raw materials, production control, inven-
tory management and optimizing the manufacturing
processes at the global level. The cost of implementing
an ERP system was found in most organizations to be
far less than that of maintaining the previously used
Legacy system. Preece calls this the evaluation stage
[12,43]. This stage is expected to be of the shortest
duration of all the six-stages because of the rapid rate
at which the technology is changing in the current
environment. For example, Dow-Chemicals spent
US$ 500 million in implementing the mainframe
based SAP R/21 system, and before it became fully
accepted, they decided to change to the client–server
based SAP R/31 system [6]. Thus, the drawbacks of
the SAP R/21 system became the initiation to imple-
ment the SAP R/31 system.
5. A research (causal) model to understand the
ERP implementation
Various issues identified by us during the field trips
and those reported by Cooke and Peterson [15] in their
survey about SAP were found to fall under the con-
structs developed by Chengalur-Smith and Ducchsei
[12], viz. ‘‘competitive’’—those relating to the com-
petitive forces in the markets; ‘‘organizational’’—
those relating to various problems faced within the
organization; ‘‘technical’’—those related to the draw-
backs in the previously used technology in an orga-
nization and ‘‘operational’’—those related especially
to the manufacturing function within an organization.
In addition, a construct and items proposed by Cooke
and Peterson [15], i.e. ‘‘strategic’’ motives was added
to measure the issues related to the strategic choice of
firms such as the need to standardize company pro-
cesses, support globalization strategy, reduce time to
market, operationalize the vision of the CEO, improve
business processes and satisfy the top management.
The items developed by these authors were also
observed during our case studies, and in addition,
other relevant items were added relating to implemen-
tation of ERP.
The stage model proved to be useful to understand
the various issues in the implementation of an ERP
system. The next step in this research was to verify that
the case findings and the items in the survey instru-
ment to measure the factors of influence, issues and
performance due to implementation of ERP, match
to some extent. Besides our case study findings,
the reported literature on ERP, Davenport [21] and
Bingi [6] for example, provided support to determine
the factors of influence for the firms to implement
an integrated IT. The findings of the case studies and
the literature provided by the ERP vendors about the
success stories of their customers provided a basis
to develop constructs for the performance of the ERP
systems. In any implementation, there are barriers
and facilitators to change and ERP implementation
is no exception, as found during our interviews.
Often, organizational members refrain from switching
to new technologies because they are accustomed to
using a particular system for a prolonged period of
time, (inertia) and this is a commonly observed barrier
in any new technology implementation. Similarly,
to implement a new technology, facilitators such as
top management support, resources and skills are
needed. Based on the factors of influence, facilitators,
barriers and performance, a conceptual model was
developed as shown in Fig. 3. The conceptual model
served as a good basis for us to design the open-ended
 P. Rajagopal / Information & Management 40 (2002) 87–114
Fig. 3. A research model of ERP implementation—factors of influence, barriers, facilitators and performance (the constructs and items are
shown in Appendix A).
questionnaire for the subsequent interviews after the
initial interview. During the interviews, illustration of
Kwon and Zmud’s six-stage model (Fig. 1) was shown
to the respondents and were asked if they observed
such stages in their ERP implementation process and
all of them agreed that implementation of ERP or any
technology indeed happens in stages or phases. Kwon
and Zmud’s model enabled me to clearly identify such
phases and the characteristics associated with each of
those phases. Various issues mentioned by the respon-
dents related to each of the stages are shown in this
figure. These comprehensively cover all of the issues
faced in the six firms where the exploratory studies
were conducted. The initiation or the first stage of the
Kwon and Zmud’s model describes the factors of
influence for implementing an ERP system. The
results observed during acceptance and routinization
stages cover the performance of ERP systems in the
causal model.
Based on the research findings from these six
companies, a research model was developed and is
shown in Fig. 3. Table 2 summarizes the mean values
of the constructs to measure the factors of influence
and performance of an ERP implementation. The
interview and survey responses provided a strong basis
to develop the research model.
The items that measure the constructs for factors
of influence, facilitators and barriers are also shown
in Fig. 3. In all of the firms where interviews were
conducted, the items that scored highest for the
construct ‘‘competitive motives’’ were the expected
growth in sales and competitive pressures. Similarly
101
for the ‘‘efficiency motives’’ salient items were the
need to reduce cycle times and cost. Significant items
for ‘‘technical motives’’ included the need to change
from mainframe to client–server type IT architecture,
to alleviate incompatibility among various database
types and to provide uniform systems across the orga-
nization. Some of the salient items for ‘‘operations
motives’’ were empowering users, re-engineering the
business processes and enhancing organizational
flexibility. For ‘‘strategic motives’’ such issues as
standardizing company processes, supporting globa-
lization strategy, operationalizing the vision of the
CEO and reducing the time to market scored high.
Such factors influenced these organizations to imple-
ment a system like ERP, and the salient characteristics
of an implemented ERP systems are integrated IT,
compatible database types, cross functional coordina-
tion, end-to-end connectivity and uniform systems in
organization. This has been explained in the accep-
tance and routinization stages in the previous sections.
Salient consequences of an ERP implementation are
information diffusion, enhanced manufacturing per-
formance, customer satisfaction, and information
availability for fast decision-making and organiza-
tional integration. At Owens Corning, for example,
after implementing SAP, they achieved 1% improve-
ment in productivity in period costs, efficiencies and
labor with a dollar value of about US$ 15 million
(these data were from a performance chart given to me
by the respondent during the interview). The execu-
tives at the corporate headquarters are able to monitor
the performance of all of their facilities in the US and
Table 2
Issues involved in various stages of ERP implementation based on Kwon and Zmud’s model

Stages SAP Oracle Baan

Owens Corning Viskase Leeson electric Food Processing Company Diebold Valenite

Initiation Expected sales increase, Need for change, aging Changing business Previous manufacturing Need to sell the products Changing business
CEO’s, vision of growth, Legacy system, high environment, need for system not good, need in multiple countries, need environment, Y2K
incompatible systems levels of competition a better system to for a database-based to configure products problems, aging
compete in the markets system and applications Legacy systems
Adoption Vendor screening, Vendor screening, Evaluation of vendors, Oracle database chosen, Vendor screening, Pilot study in
software selection, software selection, pros and cons of various evaluation of vendors, suitability and cost of Canada, vendor
cost–benefit analysis investment decisions software and the performance of Oracle the various programs screening, software
suitability of the at other firms realized evaluated selection
software evaluated
Adaptation SAP chosen, SAP chosen, Oracle was chosen and Oracle applications was Oracle chosen, Baan chosen,
customization begins, customization begins, implemented in phases, chosen and implemented, implementation in customization
training of users, systems become available, training and usage begin, oracle manufacturing modules begin, begins, training for
implementation begins training for users project teams translate was implemented, systems use begins users, systems
the work processes to personnel trust the become available
be carried out in numbers from Oracle
Oracle environment
Acceptance Increasing usage of More training, increasing Use of Oracle becomes Less frustration observed Increasing use of Oracle, More training,
SAP, more training, usage of SAP, higher a regular activity, among the users, still they enhanced performance increasing use of
higher compatibility performance enhanced performance are working batch mode realized Baan, improvements
and are planning to switch realized
to real time mode, in
this stage now
Routinization Users accept the system, Approaching this stage Future plans In this stage now, In this stage now,
flaws corrected, use routine usage of Baan, increasing use of
of SAP is routine users accept the system Baan, constant
improvement, Baan
usage is routine
IT integration realized
Infusion Has not reached this Not reached this stage Approaching this stage Implementation of the
stage, many foreign program at global
subsidiaries, not gone level being planned
live with SAP
 P. Rajagopal / Information & Management 40 (2002) 87–114 103

other countries in real time. They are able to monitor
the various processes across the entire organization
easily, which was something that would have cost
them considerable time with the previous Legacy type
mainframe systems. At Valenite, their customer ser-
vice representatives reported increases in customer
satisfaction after Baan implementation because of
the speed of service made possible by rapid informa-
tion deployment.
The model developed based on the findings of case
studies is validated to some extent by the results of
the survey. As seen from Table 3, almost all of the
constructs developed based on the case findings scored
more than 3 on a scale of 1–5. The constructs corre-
sponding to those issues that were most significant in
each of the firms as reported by the respective respon-
dents during the interviews, scored the highest, thus,
indicating that the instrument developed is good
enough to quantify the findings of the exploratory
study. And this will be confirmed after the large-scale
mail survey using the refined instrument developed
based on the pilot test.
At Owens Corning, the highest scoring variables for
‘‘factors of influence’’ were ‘‘efficiency motives’’ and
‘‘operations motives’’, and due to SAP implementa-
tion, they realized enhanced performance in these
areas as reflected by high scores in the variables
‘‘internal organizational efficiency and effective-
ness’’, ‘‘customer satisfaction’’ and ‘‘manufacturing
performance’’. At Diebold, during the interview, it
was found that one of their primary motives to imple-
ment Baan ERP was to better coordinate their internal
supply chain and at the same time to be flexible
enough to configure their products for their global
customers. Accordingly, the constructs ‘‘efficiency
motives’’ and ‘‘operations motives’’ scored high in
the factors of influence, and correspondingly, on the
performance side, the variables ‘‘flexible operations’’
and ‘‘coordination’’ scored high. Again it shows that
the instrument is good, and the scores and the results
of exploratory studies are congruent. In line with the
views of Kaplan and Duchon [30] who mentioned that
using multiple methods increases the robustness of
results because findings can be strengthened through
‘‘triangulation’’, it was found that using both quali-
tative and quantitative methods provided us confi-
dence that the items measure the constructs
developed satisfactorily. Guha et al. [26] in their study

Table 3
Mean values of the constructs to measure factors of influence and performancea

SAP Baan Oracle

Owens Corning Viskase Valenite Diebold Leeson Comp A

Factors of influence (scores were collected on a scale of 1–5, 1 being very low and 5 being very high)
1 Competitive motives (5) 3.6 3.4 3.8 3.4 4 3
2 Efficiency motives (7) 4 3.7 4.29 3.85 3.31 4.86
3 Technical motives (9) 3.6 2.8 3.8 4 3.57 3.6
4 Operations motives (5) 4 3.6 3.8 3.4 3.8 3.8
5 Strategic motives (8) 3.33 (9)b 3.125 NA 3.125 3.375 3.88
Performance
1 Flexible operations (6) 3.5 3.5 3 4.8 3.0 3.67
2 Inter-organizational efficiency (5) 3.6 3.6 3 3.8 3.8 3
3 Coordination (2) 3.5 4 3 5 4 2
4 Internal organizational efficiency 4 3.7 3.3 3.33 4 4
and effectiveness (3)
5 Customer satisfaction (3) 4 3 3.3 4 3.7 3
6 Information systems functioning (2) 3 3 4 4.5 4 2
7 Human resources management (3) 3 2 3 2.7 3 2
8 End-to-end connectivity (4) 3.5 3 3.5 3.5 4 2.5
9 Manufacturing performance (5) 4.2 2.8 4.2 2.8 3.4 2.83
a
The numbers in parenthesis denote the number of items used to measure the constructs and the bold numbers indicate some of the
constructs that scored high.
b
The respondent of Owens Corning added another item for this construct.
 104
Table 4
Summary of driving forces, technical aspects and other issues related implementation of various ERP systems
Case samples ERP system

SAP Baan Oracle

Owens Corning Viskase Valenite Diebold Leeson Electric Company Food Processing Company

Driving forces Needed a system to cope with
the increasing sales, needed a
system to enable them
perform better rather than
being an impediment
in growth and expansion
Needed change, needed Need to change the IT for
to enhance manufacturing competitive reasons, Need
performance to enhance manufacturing
performance
Need for a better product Need to change, utilize Systems not performing
configuration, need to Internet capabilities, to meet the needs in
enhance performance of increasing functionality the market, need for a
manufacturing function, better system
the old systems based on
mainframe was not useful
for the changed environment

P. Rajagopal / Information & Management 40 (2002) 87–114

Issues in Outsourced maintenance
implementation of previous system to
H-P, employee turn over
Employee turn over,
resistance to change because
some modules of the previous
systems were better than ERP
Need to change all of the
old systems into Baan,
need to shift to client–
server environment, increased
work load in order entry
Loss of staff, over run of
estimated budget, increased
work load in order entry
function, need to convert the
various processes into Baan
Data translation, beta Cost, lack of top management
testing, user resistance, support, training
employee training

Performance Reduction in inventory Enhanced manufacturing Low inventory Increased Alleviation of Y2K, better Integration, connectivity, Reliable data, reduction
performance, better availability of information, manufacturing cycles, reduced less paper work, less manual in inventory, reduction in
coordination among the alleviation of Y2K, inventory, information work, organizational, WIP, information diffusion
various facilities information diffusion diffusion across the entire visibility, reduction in
across the firm, organization, better global inventory
increased profitability positioning using the Baan
product configurator, better
internal supply chain
management

Cost US$ 100 million US$ 15 million US$ 2.5 million US$ 34 million US$ 3.5 million US$ 0.9 million

Modules used Manufacturing and details
of other modules NA
Manufacturing and details
of other modules NA
Manufacturing, finance Manufacturing, sales, finance Oracle manufacturing, Oracle
and sales and product configurator financial and Oracle human
resources (only to some
extent) (source: Oracle
web page)
Oracle manufacturing (GL,
payables, purchasing,
inventory, BOM, MRP, WIP
and cost) Oracle discoverer
(OLAP like system that helps
in data warehousing) (source:
Oracle web page)

Consulting SAP SAP and Coopers and Baan only Arthur Anderson and Baan None None
services Lybrand

Number of 1200 35 35 350 300 75

Oracle users

Hardware Sun Solaris server, many
types of PCs MS office
products WAN connecting
their various facilities
Their data center has been outsourced Sun Enterprise 6000 and DEC Alpha/VMS, Intel
to IBM Global Services, many PCs and 3000, servers running on servers running on Windows
support systems such as Microsoft tools, Sun Solaris (source: NT and PCs using Windows
back office and Lotus Notes were Oracle web page) 1995 (source: Oracle web
purchased and installed, AT&T manages page)
their WAN, Viskase switched from the
AS 400 to a RISC 6000 with 14 servers,
a number of LANs, routers, back office
tools and MS office products
 P. Rajagopal / Information & Management 40 (2002) 87–114
about BPC and organizational performance used such
research methods, as per the recommendation of Yin
[58] who mentioned that triangulation reduces the bias
and, hence, is recommended for case studies. Clark
and Hammond [14] in their study about improving
supply chain performance through reengineering
channel re-ordering process also have used such
research methods. Table 4 comprehensively sum-
marizes the issues, technology and performance of
implementation of various ERP systems in the com-
panies where exploratory studies were conducted.
6. Future research
A robust survey instrument is ready to be mailed to
conduct quantitative analysis following a pilot test of
the same after these case studies. Factor analysis will
be conducted for each of the constructs to purify them
or if needed to develop more constructs. Structural
equations modeling (SEM) will be used after initial
principal component analysis to increase confidence
about the extracted factors. SEM will also be applied
to test the model and hypotheses. An invariance
analysis will be carried out to test the applicability
of the model and the robustness of the developed
instrument to study various types of ERP systems
such as SAP, Baan and Oracle. Such analysis will
provide a foundation to understand those aspects that
are unique and different for different ERP systems
based on which appropriate changes in the model and
instrument could be made to reflect those differences.
If there are no differences then the instrument is
generalizable to study any of the different ERP sys-
tem. The differences in global, competitive and stra-
tegic performance between ERP and non-ERP firms
will be carried out using a simple t-test. Such differ-
ences will elucidate the advantages of ERP systems
because of the IT integration over the fragmented and
incompatible information systems.
7. Conclusion
Kaplan and Duchon [30] based on the research of
Bredo and Feinberg [8] and Van Maanen [56] men-
tioned that ‘‘in qualitative studies, researchers develop
categories and meanings from data through an itera-
105
tive process that starts by developing an initial under-
standing of the perspectives of those being studied and
that particular understanding is then tested and mod-
ified through cycles of additional data collection and
analysis until coherent interpretation is reached’’.
This was realized in our case studies. During the first
case study at Owens Corning there was hardly an
understanding of the ERP systems, its technology and
usage in organizations and the performance enhance-
ment upon implementation. After many interviews
with this company a clear picture was obtained, and
the findings were used to develop interview questions
and an instrument for triangulation for other inter-
views. During the course of the field studies in various
companies, the understanding of these systems
improved and a coherent interpretation of the factors
of influence, issues and performance were realized
after data collection in many sample firms. It may not
have been possible to obtain a clearer picture to
develop theoretical models based on exploratory ana-
lysis of just a few firms, and on the other hand, it would
be totally wrong to develop and test models about a
new area like ERP without doing case studies first.
From the results of the research reported in Table 3,
it is obvious that all of these companies, which differ
widely in many of the organizational characteristics,
benefited more than they anticipated through imple-
menting these ERP systems and that without such an
integrated system in place they could not gain com-
petitive advantages in the current and coming years.
Besides automating the various business processes, the
ERP systems implementation has resulted in new
ways of thinking about the organizational activities.
Various problems faced by the organizations due to the
incompatibility among the computer hardware and
software systems were found to be overcome due to
the implementation of ERP systems. The current
business environment necessitates that an organization
work together as a whole and also integrate to their
organization the external elements such as the custo-
mers and suppliers in order to achieve competitive
superiority. The information technology integration
through implementation of ERP enabled them to
achieve these objectives fairly easily by making avail-
able information needed for decision-making in real
time. Based on the case analysis conducted in these six
firms that have implemented ERP systems, this study
explained the factors of influence for ERP implemen-
106 P. Rajagopal / Information & Management 40 (2002) 87–114
tation, the process of ERP implementation, usage of
the systems in the organization and the enhanced
performance of the organization through implemen-
tation of ERP systems. The ERP implementation
process was found to go through stages as men-
tioned by Kwon and Zmud, and this stage model
was found to be useful in understanding the various
issues associated with the implementation of ERP
systems. All of the constructs were operationalized
based on the field interviews and IT implementation
literature. The case findings and the results of the
preliminary survey were highly congruent indicating
that the instrument developed is good to measure
the factors of influence, issues and performance.
The barriers and facilitators were not measured in
this preliminary survey but will be during the pilot
test.
Since ERP is a recent IT innovation, the research
and reported literature are still in the initial stages.
This paper makes a contribution to the literature by
providing an empirical finding about the various
ERP systems and their role in enhancing perfor-
mance in an organization. Toward developing a
model and an instrument to understand and quan-
tify the ERP implementation process, the first two
steps recommended by Churchill [13] have been
achieved through this research. Future research will
complete the other six steps, and a sound and
robust model about implementation and perfor-
mance of ERP systems will be presented in the
near future.
Acknowledgements
The author is thankful to the Information Systems
and Operations Management Department of The
College of Business Administration at The University
of Toledo for providing the financial support through
an Academic Challenge Grant and to the respon-
dents from Owens Corning, Valenite, Leeson, Food
Processing Company, Diebold and Viskase for giving
many hours of their valuable time to explain about
the implementation and performance of their ERP
systems. I am thankful to Mr. Tyler Frank for all
the help rendered during case interviews. We have
co-authored papers and conference proceedings that
are published elsewhere.
Appendix A. Details of ERP implementation in
firms
The information about the companies studied were
obtained from their respective websites available in
the world wide web. Information was also obtained
from responses from interviews.
A.1. Systems, analysis and products for data
processing or SAP
A.1.1. Owens Corning
A.1.1.1. The company. Owens Corning is a leading
producer of fiberglass-based building materials used
in insulation and roofing and in commercial products
such as boats and automobiles. They are headquartered
in Toledo, OH. The interview was conducted with
their chief information officer, Mr. David Johns. Many
other MIS staff, manufacturing staff and public rela-
tions officers were also present during the meeting.
Following this, individual meetings were conducted
with some manufacturing executives. They use
systems, analysis and products for data processing or
SAP as their ERP system. The details of the factors of
influence and performance of SAP systems in their
organizations are given elsewhere [46,47]. Their
position in the stage model is shown in Fig. 1.
A.1.1.2. Issues and processes. Some of the salient
factors involved in the first or the initiation stage
were the need for a different type of IT that would
enable the organization to meet the challenges related
to the expected increase in sales and growth activities.
The IT infrastructure was expected to provide
competitive advantages to the firm and not be an
impediment in their growth. The disparate systems
were to be made compatible to augment com-
munication within the organization so as to enhance
their performance at the global level. In the next stage
of adoption, various software vendors were screened
to choose the suitable software. As mentioned by
Cooper and Zmud [16] choice of vendors, cost–
benefit analysis and suitability of the chosen ERP
system to the organizational needs were some of
the characteristics observed during this stage.
During the third stage of adaptation, the IS
department started customizing the software to meet
 P. Rajagopal / Information & Management 40 (2002) 87–114
the organizational needs. Given the large size of the
organization, the SAP system needed to be customized
to suit the business processes that went through lot of
changes because of BPR done a few months earlier to
SAP implementation. The implementation of ERP
results in various changes in the design and struc-
ture of an organization indicating that tech-nology
dictates the organizational design and structure.
During the course of SAP implementation, the
Legacy system maintenance was outsourced to Hew-
lett-Packard (H-P). Training activities were started.
The project team comprising of staff from various
functions was formed. The users showed signs of
reluctance to change to the new system because of
the ‘‘inertia’’ associated with using the old system,
which enabled particular functions in a company to do
well but together did not provide any competitive
advantage to the firm. The adaptation stage is the
toughest stage in the implementation process. As
mentioned earlier, SAP and other ERP systems are
business transformation processes, not just an infor-
mation technology tool. Hence, customizing it to fit to
the needs of the organization requires significant
amounts of time and effort by the project members.
During the acceptance stage the users began to accept
the system and the integration of the technology was
realized in the organization. There was increasing
usage of the system. With the Legacy system, the
amount of paper work and the time for processing an
order before an item was shipped to the customer was
high. Since the time a sales order was taken, it took at
least 3 days before the item was shipped. Multiple
copies of the various documents were circulated from
office to office. In every office copies of the same
documents were made and filed before it was passed
onto the next department. But with an integrated IT
through SAP, they are shifting toward a paper-free
environment, where all the transactions are automatic
and digitized instead of being manual with volumes of
documents. There are no routine and physically exert-
ing work, instead they are intellectually stimulating
where everyone’s action affects the entire organization
and the decision-making process is dispersed instead
of concentrated in some part of the organization; in
other words, information is available to make deci-
sions in places where it makes the most impact instead
of being made in some place and trickling down the
hierarchy before making the impact.
107
The company is currently in the fifth or routinization
stage. Various flaws in the system are constantly being
modified and the users realize the benefits of using the
SAP systems. During the visit, the staff mentioned that
SAP has significantly reduced the paperwork related to
the order taking process. The reductions in the inven-
tory level, the on line availability of various data and
other benefits of SAP are realized across the entire
organization. They use PeopleSoft14 for their Human
Resources Management and this module is connected
to SAP using a ‘‘bolt-on’’. Davenport [19] is a good
source of reference for the readers interested is gaining
knowledge about SAP ERP.
A.1.2. Viskase Corporation
A.1.2.1. The company. Viskase is a leading
manufacturer of cellulosic casings for the food
industry. Headquartered in Chicago, IL, they are the
world leaders in this industry. The company faced
many problems due to increasing competition. For
example, within a time span of 3 years they faced
about 50% price cut in the markets. Organizational
members began to feel that there was a lack of focus.
Interview was conducted with their MIS director, Don
Pelka at their corporate headquarters in Chicago.
A.1.2.2. Issues and processes. In 1993, the firm hired
Cooper and Lybrand Consultants to conduct a BPR
analysis. It was found that their sales force was
disorganized and that there was a need to develop
high level teams to contend with the top
management staff of the customers. Viskase’s lead-
time was very high since the systems were non-
integrated. The company did not have any material
resource planning systems such as MRP II. Viskase
produced and held inventory based on the customer
orders in its warehouses for up to 9 months and the
customers were not billed until and as and when the
product was used. The high and sporadic production
tied up their pro-duction capacity and rush orders
were impossible to be processed. These issues and
the inherent problems of the fragmented systems
characterize the initiation stage that prompted them
4
PeopleSoft1 is a registered trademark of PeopleSoft
Corporate Headquarters, 4460 Hacienda Drive, Pleasanton,
CA 94588-8618, USA.
108 P. Rajagopal / Information & Management 40 (2002) 87–114
to implement an integrated IT in their organization. The
CEO wanted changes in the organization and the MIS
department was called on to provide the organization
with possible solutions to overcome the problems. After
many meetings and decision-making processes, the
executives of Viskase decided on implementing SAP
so as to have one uniform, standardized system in the
organization through which various functions and
divisions may be able to access and disseminate
information easily and efficiently. They went ‘‘live’’
with SAP in 1998 and have spent, thus, far US$ 15
million in their implementation process. Their data
center has been outsourced to IBM Global
Services1. This describes the second or adoption
stage and in the third or the adaptation stage of the
process, their IT infrastructure was modified. AT&T
was chosen to manage their WAN. Viskase switched
from the IBM AS 400 system to an IBM RISC 6000
system with 14 servers, a number of LANs, routers,
back office tools, Lotus Notes and MS Office products.
Their archiving and facsimile systems were also
connected to SAP. Thus, the IT integration started
during this stage.
The third or the adaptation stage of the SAP imple-
mentation was the most challenging and difficult part
of the process. This also involved training to the
employees, not just in the IS department but in every
function of the organization. The SAP system needed
to be customized to meet the requirements of the
company. The business processes were redesigned first
and the software was customized to carry out the
various business processes efficiently. The software
became available in the organization. Various business
processes were translated to the ERP system and the
data were transferred to the new system if needed.
The company was just reaching the acceptance
stage and has not entered the routinization stage at
the time of the interview. The staff are realizing the
benefits of IT integration. When information is entered
in one department automatically data are updated in
all the databases that are related to that transaction,
journal entries are made, invoices generated and the
entire business transaction is on-line, thus, making the
data as current as possible. Personnel in different
functions are able to understand the role of other
functions and are able to get a whole view of the
organizational process unlike before when they were
focused only on their respective units or divisions.
One of the drawbacks observed during this stage is
employee turn over. Viskase went ‘‘live’’ with SAP in
January 1998 and by November they had lost 12
people. Retaining experienced, knowledgeable emp-
loyees is a big problem when implementing SAP.
According to a recent global survey by Deloitte and
Touche Company [24], such employee turn over is not
unique to SAP but is invariant among all ERP systems
including Baan and Oracle. The world average
employee turn over in firms that implemented ERP
systems is reported as 10.6 with companies that imple-
mented Oracle having lowest ETO of 8.9. The position
of Viskase in the stage model is shown in Fig. 1.
A.2. Baan systems
A.2.1. Valenite
A.2.1.1. The company. Valenite is one of the four
largest manufacturers of industrial cutting tools in
the world and offers engineering solutions for the
metal cutting industry. Valenite offers the metal-
working industry a complete line of standard and
special indexable-insert turning, boring, milling,
drilling and high-speed steel products under the
Widia Valenite1 brand.
A.2.1.2. Issues and processes. With the changing
business environment, just like any other business
organization they needed to plan on changes
necessary to be competitive in the global market.
One of the areas that needed attention was
information system. The respondent noted that on a
scale of 1 (very low) to 5 (very high), the degree of
compatibility was 1 before switching to Baan. The
Y2K problem was another issue faced by them when
using the mainframe systems. Under these circu-
mstances, the company started planning the changes
needed in their information systems. The need to re-
organize and solve Y2K problems were some of the
significant aspects of the initiation stage at Valenite.
During the second or the adoption stage, they
screened various vendors and of the 3 vendors selected
viz. SAP, Baan and Oracle; they chose Baan as their
ERP system. Since SAP company felt that the firm was
not large enough for them to offer their services and
since Oracle did not have some of the modules that
Valenite wanted, Baan was the system of choice at
 P. Rajagopal / Information & Management 40 (2002) 87–114
Valenite. They decided to pilot test this software in
their Canadian subsidiary, before implementing the
system across the entire organization. During the next
stage of adaptation, they began customizing the soft-
ware to suit their business needs. Various business
processes were analyzed, documented and these pro-
cesses were translated to Baan. A team consisting of
representatives from various functions was formed to
understand the intricacies in the Baan system. Various
issues and obstacles because of transformation to Baan
were analyzed and appropriate steps were taken. The
training activities began in this stage. The Baan con-
sulting team spent considerable time at their Canadian
facility to train their employees. Some of the obstacles
faced in the organization were the employee resistance
to change to the new system and the increasing work-
load associated with Baan system in customer order
entry. After considerable training, the employees
began to realize that the benefits because of the
amount of information available once the information
has been entered into the system more than offset
the increases in the workload. The company has
approached the routinization stage and various busi-
ness activities are being done using the Baan system.
At the US facilities, they still use the old mainframe
based system and the performance differences be-
tween the US and the Canadian subsidiary are already
being realized. The systems in the US facilities are
fragmented and the coordination and control require
lot of time and effort. Plans are underway to imple-
ment an ERP system in their US facilities also. For
details of Baan implementation and performance at
Valenite and Diebold, please refer [48].
A.2.2. Diebold Inc.
A.2.2.1. The company. Diebold is one of the leading
manufacturers of ATM. Their annual sales in 1998 was
US$ 1.2 billion. Their customers include banks,
financial institutions and various retail outlets. The
interview was conducted with Mr. Rick Lindenberger,
director of Information Technology Planning was the
respondent and the interview was conducted at
their corporate headquarters located in North
Canton, Ohio.
A.2.2.2. Issues and processes. Their previously used
mainframe based systems was good enough to do the
109
routine work in the company but was not enough to
enable them achieve competitive gains in the coming
years especially in manufacturing ATMs for the global
customers. They needed a global product configurator
that would help them manufacture products for their
customers in various countries taking into con-
sideration the differences in language, currency and
usage. The ‘product configurator’ module of the Baan
was found to best suit their needs. Until a few years
ago, their main market was within the US and they
were distributing their products through IBM. But
recent changes in their global competitive position
necessitated that they produce and sell in various
markets around the World according to the
specifications warranted by the various markets.
Another drawback of their previously used system
was that they were disparate. The systems in various
locations were not communicating with each other and
this would not support their internal supply chain.
These were the factors of influence for them to
implement an ERP system.
In the adoption stage, a committee of staff from
various functions was formed to screen the vendors
and choose appropriate ERP software. Of the various
software available, Baan was found to be the most
applicable to the company’s needs because of the
Baan’s product configuration capabilities and its abil-
ity to meet the needs of the project based manufactur-
ing. Arthur Anderson Consulting helped them in their
BPR efforts.
During the third or the adaptation stage, data was
converted and translated and all of the business pro-
cesses done previously in the mainframe systems
were converted into Baan in the client–server type
architecture. Training was given to the staff and the
user resistance was observed in some areas, especially
in the area of order entry. The design of the Baan is
such that the users need to go from record to record
before getting into the appropriate module and this
is rather a time consuming process. In a time study
conducted to calculate the time taken to process 20
invoices, it was found that it took about 14 min using
Baan compared to only about 7 min using the previous
system. Once data is entered, the amount of informa-
tion available for process analysis and decision is
enormous, but the data entry itself is a laborious
process. The users who expected that the new system
would lessen their workload were disappointed, but
110 P. Rajagopal / Information & Management 40 (2002) 87–114
steps are being taken to overcome this. During the
acceptance stage, the systems became widely used
in the organization and people were able to see the
transactions and information in real time. Previously,
they used to do nightly batch processes so that the
information is updated in all of the databases. With
Baan in place, they need not do any data conversion or
data re-entry since data once entered automatically
touches and affects all of the databases. Beatty and
Gordon [2] in discussing the barriers to implement
CAD/CAM systems mentioned that one of the barriers
to the implementation is systems incompatibility.
Different computers in the manufacturing division
use different software that are incompatible and,
hence, communication among the systems was not
possible. These authors mentioned that much time and
effort is wasted in reentering the same data several
times, which could have been transferred automati-
cally, had the systems been compatible. Beatty [3]
contends that the final aim of the factory automation
is to integrate the entire database, including CAD,
CAM, bill of materials (BOM) and CAPP and that a
sophisticated level of integration would be where such
data could be shared automatically with financial and
accounting systems, i.e. an organization wide inte-
grated IS. She also mentions that one should be able to
transfer data from one system to another easily and
that the users should be able to file, store, back up and
retrieve data efficiently. The issues addressed by these
authors are overcome through implementation of an
ERP system like Baan ERP.
During the routinization stage, the Baan usage is a
routine and day-to-day activity in the organization.
The system has not reached the infusion stage at
Diebold, since they are still working on modifications
to overcome certain issues and on implementing the
system in various countries. For an investment of US$
34 million, Diebold has seen improvements in man-
ufacturing cycles, inventory and many others. The
position of the company in the Kwon and Zmud’s
model is shown in Fig. 1.
A.3. Oracle systems
A.3.1. Food Processing Company
A.3.1.1. The company. This firm is a manufacturer of
food processing equipment and is headquartered in the
Great Lakes area. This company did not want their
name or details to be disclosed in the paper and, hence,
it is referred to as Food Processing Company. Their
products use a patented technology and are considered
to be at the upper end of the market. An interview was
conducted with their MIS director who has been with
the company since the last 10 years.
A.3.1.2. Issues and processes. In 1995, Food
Processing Company realized that their previous
manufacturing system had problems and was not
adequate to meet the needs of the company. During
a trial run in the MIS office, the system worked well
but when put to use on the production floor, resulted in
a total failure. The inventory numbers were always
low and the transaction results had errors. These were
some of the characteristics of the initiation stage at this
company. To overcome these limitations Food
Processing Company decided to switch from a flat
file systems to a database system and out of Oracle
database, Cybase and another database, they chose
Oracle Database because of its suitability to the
functionality of the firm. During the adoption and
adaptation stages, the previous system was replaced
and Oracle manufacturing, consisting of MRP II,
inventory, purchasing, accounts payable, work in
process (WIP), BOM and costing, was implem-
ented. They also purchased the engineering and
order entry modules but have not yet implemented
these modules. The Oracle systems resulted in
immediate performance improvements as outlined
in the following section. The Oracle systems are
Y2K compliant and offer multi-currency func-
tionality to handle future expected international
growth. The Oracle ERP systems made exclusively
for the small and medium sized firms fit their budget
and, hence, Oracle Apps was chosen over other ERP
systems.
The changes in the information were realized and
people started trusting the numbers. During the accep-
tance stage, the inventory numbers became reliable
and the earlier problems in the BOM were alleviated.
The data once entered is always there in various
modules of the Oracle systems and, hence, tracing
back errors and modifying the same have become
easy. They have reached the routinization stage. Since
they are still working on batch mode, they have not
achieved total integration and, hence, have not
 P. Rajagopal / Information & Management 40 (2002) 87–114
approached the infusion stage. They will be switching
to graphical user interface (GUI) in the near future and
are planning to implement various other modules of
Oracle to make the systems tight and integrated.
A.3.2. Leeson Electric Company
A.3.2.1. The company. Leeson is one of the leading
suppliers of ac and dc electric motors in the world.
Their products could be found in pumps, fans, food
processing equipment, data processing machines,
power transmission products, machine tools and
others. Leeson is active in over 35 countries and
sell a diverse range of motors. Unlike the past,
where the customers were content with buying
standardized products, the current market demands
that electric motors be made to suit their needs and,
hence, customization is a key to success in this
industry just as it is in others. One of their core
competencies is their degree of customization of
their products to meet the needs of their customers.
The annual revenue of Leeson is about US$ 180
million and it employs approximately 1200 persons.
The number of Oracle users is currently about 300 but
this is expected to increase.
A.3.2.2. Issues and processes. In 1993, the
respondent, Ms. Mary Fonder was hired as the chief
information officer, which was vacant for 3 years. The
management realized that their information systems
needed to be changed in order to cope with the
changing business environment. The system used
earlier was an MRP II system running on an AS
400 platform. It was in use at Leeson for about 5
years and was customized to meet the needs. That
system was enough to meet the company’s needs then
but was not good enough to meet the future growth and
needs of the company. That system was inflexible and
was not Y2K compliant. The paper work involved was
very high and reporting was done manually. Various
departments relied on MIS for report generation and
frequently the functional units had to call others for
information. They also faced many scheduling issues
in the company. The need to change, the need to meet
the future growth requirements, increasing the
functionalities and the need to utilize the Internet
capabilities were the driving forces for the company
to consider an integrated system like an Oracle system
111
and this forms the initiation or the first stage of the
Kwon and Zmud’s model.
During the second or the adoption stage, a core
group consisting of three staff from MIS and one each
from manufacturing (materials), controller (general
ledger, accounts payable and accounts receivable),
sales (order entry and accounts receivable), scheduling
(MRP and production scheduling) and two from engi-
neering (materials management) were formed to look
into various ERP systems. They screened various
vendors and of the six vendors selected, they chose
the Oracle systems because of its suitability to meet
the company needs, its Internet capabilities and
the financial stability of Oracle. The adaptation or
the third stage of implementation was described as the
most painful process. The data in the previous system
were translated into Oracle system and the reports
generated by the Oracle system were verified for
consistency. The conversion took place in phases
but they followed a ‘‘big-bang’’ approach in final
implementation. For example, the general ledger,
inventory, accounts payable and order entry were done
first followed by other modules and the system overall
was implemented in December 1996. Training to the
end-users and formation of user groups were the
salient aspects of this stage. Before Oracle implemen-
tation, the end-users used the MRP II system in a
routine manner with no understanding of what their
actions did to the various business processes. With
Oracle in place, they need to have a clear under-
standing of their actions and how the system works.
This required enormous amounts of time and effort in
training and they are in a continuous learning process.
During the acceptance stage the systems became
widely used in the organization. Changes to meet the
needs and the various problems were overcome. The
Oracle ERP system was changed from a two-tier
architecture to a three-tier architecture. The two-tier
architecture was highly expensive to operate since all
the client PCs had some module of Oracle and when-
ever a patch was sent from an user, it touched all the
PCs before going into the database. The inquiries
required third party involvement and this process
was time consuming and expensive. At this stage,
when Oracle announced their web based ERP, i.e.
Network Computing Architecture or NCA1, Leeson
decided to change to this new web based ERP. Using
the Applet Viewer supplied by the Oracle or Netscape
112 P. Rajagopal / Information & Management 40 (2002) 87–114
Navigator1 or Internet Explorer1, a user is able to
access the Oracle databases directly. With NCA,
nothing is in the client PCs except connections to
their private WAN. They have a corporate Intranet,
which has all of the current information available in
table format. Data cannot be entered in the Intranet,
but information can be accessed easily.
They have not achieved a complete end-to-end
connectivity yet, since the shop floor activities are
not connected to Oracle. There is only little improve-
ment seen in inventory management and they are still
working on improving the scheduling process. They
are in the routinization stage and are on their way to
the infusion stage of the Kwon and Zmud’s model.
Before Oracle, when MRP II was used, only few were
able to understand the various processes and quite
often various functional staff relied on MIS for data
and reports. The Oracle systems have opened up the
information in the company and various functional
units are able to generate the needed reports by
themselves without relying on MIS department.
Various complex business processes have become
transparent for faster decision-making across the
entire organization. The finance, inventory and trans-
actions are all clean without any flaws. Thus, the
Leeson Electric Company went through the stages
proposed by Kwon and Zmud before the systems
became widely used in the organization.
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Palaniswamy Rajagopal is a lecturer of
Information Systems at Michigan Tech-
nological University, Houghton, Michi-
gan. He recently obtained his graduate
degree in Manufacturing Management
and he is in the process of obtaining a
PhD in Information Technology Manage-
ment also, through distance learning. He
obtained masters degrees in Chemical
Engineering and Chemistry from South-
ern Illinois University, US. His first paper
in MIS appeared in Information Systems Management in summer
2000 and his next paper about Oracle ERP has been accepted for
publication in Information Systems Management recently.
He has co-authored many papers that appeared in various
journals in the area of chemical engineering. He regularly publishes
114 P. Rajagopal / Information & Management 40 (2002) 87–114
in many conferences such as DSI, DSI—International and
Production and Operations Management Society. His research
interests are in Information Systems, Electronic Commerce and
Small and Medium Global High-Tech firms. His teaching interests
include Management Information Systems, IT Strategy and
Policies, Electronic Commerce, Data Communications and
Networking and Enterprise Resource Planning Systems. He is in
the process of completing a comprehensive research proposal
to request a large grant from the National Science Foundation to
undertake various research projects to understand the changes in
organizations due to advances in information technology that have
resulted in sophisticated information systems and to strategize,
based on theoretically tested foundations, how organizations could
utilize advanced information technologies to enhance their
performance and conduct their various activities at optimal or near
optimal levels, thus, saving time and resources. For academicians,
such research will pave way for more research opportunities such
as developing new methods of research and analysis. His research
in ERP systems will become part of the above-mentioned
comprehensive research.