ERP Implementation Strategies: The Importance

of Process Modeling and Analysis

Angel Díaz1, Oswaldo Lorenzo1, and Björn Claes2

1
IE Business School, Mª Molina 11-15, Madrid 28006, Spain
{angel.diaz,oswaldo.lorenzo}@ie.edu
2
Cranfield School of Management, Cranfield, Bedford, England MK43 0AL
bjorn.claes@cranfield.ac.uk

Abstract. Despite the existence of a vast body of research and knowledge

related to ERP implementation, the analysis of environmental aspects (e.g. or-
ganizational context, existing business strategies, and implementation strategies)
that influence the implementation success remains under researched. Hence, the
objective of this study was to gain insight of the relation between the ex-ante
business variables (i.e. business characteristics identified prior to the implemen-
tation), the ERP implementation strategies, and the perceived final contribution.
Using survey data obtained from 91 respondents out of a sample population of
549 SAP users in Spain and Latin America (a net response rate of 16.6%) we
find a significant correlation between specific business strategies and particular
ERP implementation strategies. In addition we observe that process mapping and
process-based implementation strategies better explain implementation results
than other strategies such as the use of consultants and previous experience.

Keywords: ERP implementation, process modeling.

1 Introduction
Globalization, market volatility, economic uncertainty and shorter product life cycles
are all part of today’s business reality in which companies need to compete. The
gradual emergence of new information and communication technologies, requires that
organizations make significant investments in the efficient implementation of inte-
grated management systems, known by the acronym ERP (Enterprise Resources
Planning). These tools are essential a crucial facilitator for the integration of informa-
tion and a key requirement for achieving greater efficiency in the use of resources, as
well as greater flexibility and speed of response [1], [2], [3].
Both academic and practitioner studies coincide in their efforts to identify relations
between ERP implementation practices and the implementation results [4], [5], [6].
The vast majority of the studies focus on the performance indicators related to the
implementation process that impact the business results. The analysis of environ-
mental aspects that influence the implementation success, such as the organizational
context, existing business strategies, and the implementation strategies remains under
researched.

J. Barjis (Ed.): EOMAS 2010, LNBIP 63, pp. 95–112, 2010.

© Springer-Verlag Berlin Heidelberg 2010
96 A. Díaz, O. Lorenzo, and B. Claes

The study reported in this paper addresses this gap in the literature. Using cross
sectional survey data drawn from a sample population of 549 SAP users originating
from Latin America and Spain this study sets out to explore relations between ex-ante
business variables (i.e. business characteristics identified prior to the implementation),
implementation strategies, and the perceived contribution of the implementation.
This paper is structured as follows: in the following section we detail the concep-
tual model that guided our exploration, we then elaborate on the data that we collected
to test the conceptual model and the methodology we used to analyze this data. This
section is succeeded by the analysis of the results and a discussion of the findings. We
close the paper with some remarks on the limitations of the study and some sugges-
tions for further research.

2 Model and Variables

The objective of the study reported henceforth was to gain insight in the implementa-
tion processes through an exploration of the relation between the ex-ante business
variables, ERP implementation strategies, and the perceived implementation contribu-
tions to business results. To guide our research we developed the conceptual model
sketched below. In this model, we posit a relationship between the strategies that
companies device to implement ERPs and the ex-ante business variables on one side
and the success of the implementation on the other side. We expected both relations
to be moderated by one or more contextual factors.

Exante variables ERP Implementation ERP performance

related strategies outcomes

Moderating factors

Fig. 1. The conceptual research model

2.1 Ex-ante Business Variables

The ex-ante business variables refer to the antecedents of ERP implementation and
include factors such as the dominant competitive strategy of the organization, any
prior experience in transformation or system implementation projects, the extent to
which upper management participate in these projects, and the process orientation of
the organization. For a detailed discussion of these antecedents and how they relate to
each other we refer to Lorenzo et al. [7]. In the subsequent description, we will limit
ourselves to a brief description of each of the components of the model.
Business Orientation. Following Porter’s [8] categorization, the dominant business
strategies are divided into three main, non-exclusive approaches (non-exclusive be-
cause different product lines can be organized along different strategies within the
same firm). Categories include strategies that strive to have the lowest operational
costs, strategies aimed at having products or services perceived to be unique, and
 ERP Implementation Strategies: The Importance of Process Modeling and Analysis 97

strategies that focus on a specific market segment. Because the last two strategies
were found to be highly correlated1 a binary split of the main business strategy is
henceforth considered: price strategy and differentiation strategy.
Previously Acquired Capabilities. Specific individual and organizational capabilities
can affect the ERP performance [9], [10]. Parr, Shanks and Drake [11] argue that
organizational members absorb ERP knowledge more effectively if they have prior
knowledge about ERP systems. This more effective absorption allows organizational
members to take more advantage of the ERP benefits after the implementation.
Coordination mechanisms. Coordination refers to the management of dependencies
among activities [12]. One of the benefits of the ERP system after adoption is the
improvement of coordination. The ex ante factor that is key for realizing the benefits
from coordination is the level of previously established coordination mechanisms
within the organization. Process orientation, top management involvement, team
development, and information systems are examples of such coordination mecha-
nisms in organizations.
Organizational and Market context. Some research efforts on ERP systems have been
dedicated to gaining a better understanding of the influence that contextual factors
have on the development and/or the post implementation results of an ERP implemen-
tation. Mabert, Soni and Venkataramaran [13] studied this from the organizational
size perspective and found that the implementation strategies for ERPs varied in
organizations of different sizes. They also found that the benefits realized by the im-
plemented ERPs differed by company size. Everdingen, Van Hillegersberg and
Waarts [14] argue that ERP success in small and medium enterprises relies more on
shorter implementation times than it does in larger companies. Other scholars have
investigated the ERP phenomenon in specific sectors and found different results de-
pending on the investigated sector. Somers and Nelson [15] argue that quality of the
decisions in manufacturing that are related to technology, workforce, quality, produc-
tion planning are important determinants of management perceptions of system value.
Ettlie, Perotti, Joseph and Cotteleer [16] investigated the ERP adoption performance
moderated by the type of industry, in particular manufacturing and services.

2.2 ERP Implementation-Related Strategies

In this section, we describe the variables that represent the strategies and activities
that take place during the implementation process. These variables include process-
system adaptation, support to implementation, vendor origin and temporal and scope
implementation strategies.
Process-system adaptation. The simultaneous adaptation of technology and organiza-
tion is a common topic in the literature on ERP implementation. Brehm, Heinzl and
Markus [17] point out that companies that implement ERP systems have to decide
whether to tailor the system to their organization or to adapt the organization so that it
fits the architecture of the system. The former approach is known in literature as the
“modeling choice” and refers to the process of adapting the software to the company’s
processes. The latter refers to the process of redesigning the company’s processes in

1
Only correlations at the 0.01 significance level are reported.
98 A. Díaz, O. Lorenzo, and B. Claes

line with the architecture and processes of the software (a strategy commonly referred
to in the literature as the “blueprinting” or “vanilla” approach [18]). Some authors
[19] consider blueprinting to be a safe approach that minimizes cost and time
overruns. Compared to modeling, blueprinting does not take into account the organ-
izational needs and requirements and forces the company to adopt to the system.
Blueprinting is a potentially risky approach because no system will fully be able to
meet the needs of the entire organization and implementation my may result in mis-
alignments. Nowadays, blueprinting is being chosen by vendors as a critical part of
their offerings for small and medium enterprises (SME). Blueprinting allows SME to
keep curb implementation costs of enterprise systems (ES) such as ERPs and keep
them in balance with their limited resources.
The modeling option is often strongly discouraged by vendors and consultants.
Tailoring the system may cause problems at different stages of the ES life cycle.
Typically, tailoring the ERP system results in a prolonged implementation process,
increased maintenance costs, and potential difficulties at the moment of upgrading
[20], [21]. On the other hand, authors like Davenport [22] and Lorenzo and Diaz [23]
propose ES implementation models in which organizations can reconcile their process
needs with the system functionalities. These models prescribe an iterative process of
reviewing organizational needs and system functionalities that result in a gap analysis
output. This output facilitates the definition of a mix of initiatives including organiza-
tional changes and system tailoring aimed at bridging the gap. For example, Geneva
Pharmaceutical [24] undertook its SAP implementation by using a modeling choice.
Process modeling. Process modeling is a technique that allows organizations to make
the process knowledge explicit. Process modeling refers to the common task of reen-
gineering methodologies, software development, and quality accreditations. The key
objectives of a process modeling exercise are twofold; to generate an accurate repre-
sentation of the existing processes and to correctly project new processes [25]. This is
also seen as a preparatory phase for process analysis in a process change initiative. A
vast body of literature exists describes the methodologies, techniques and tools used
in process analysis and modeling (e.g. [26], [27], [28], [29]).
Implementation support. Once companies have taken the decision to implement an
ERP system, they have the option to implement that system using the capabilities that
are available in-house or, in their absences, they can obtain the skills externally by
hiring consultants to facilitate the ERP implementation and to capture knowledge
from the experts [30]. Contracting consultants and/or recruiting employees with pre-
vious experience are argued to have a positive impact on the post implementation
performance of the ERP. Evidence drawn from case studies supports this claim [31].
Vendor origin. One of the first and most important decisions to be made at the outset
of ERP implementation projects is the selection of the system vendor. Companies can
either opt for a single system vendor for the entire organization or bring together a
selection of system vendors with expertise in different functions or processes. The
first option is known the “integral choice,” whereas the latter is commonly defined as
the “best-of-breed” or BoB choice [32].
The advantages of the integral choice reported in the literature include simplified
interfaces, an increased leverage with the system vendors, and a single skill set
required by information technology (IT) staff. Many companies recognize that the
 ERP Implementation Strategies: The Importance of Process Modeling and Analysis 99

benefits of an ES come from full integration. Despite what the advocates say, the
integral choice does have disadvantages as well. Given the fact that is it difficult, if
not impossible, to design a system that will fit any possible organizational design or
function, misfits are likely to occur between the system and some of the companies’
core processes. For some companies this may result in unacceptable losses of com-
petitiveness [33], [34]. The integral choice conveyed Ericsson Spain, for example, to
delay the implementation of the B2B procurement functionality until SAP added this
module [35]. Although Ericsson assessed other vendors the advantages of the integral
choice strategy were the decisive factor in choosing that [36].
The advantages of the alternative BoB choice are that companies can obtain the
best modules from specialized system vendors for their core processes and so achieve
more flexibility in the business process redesign and facilitate easier supply chain
integration. The interfacing process is facilitated by the development of object ori-
ented interfaces and software known as middleware. The recent development of the
service-oriented architecture (SOA) seems to have encouraged easier adoption of the
BoB choice. A main disadvantage of the BoB choice is the complexity at the moment
of upgrading the system, as the middleware has to be upgraded each time one of the
modules is upgraded [37], [38], [39], [40]. The BoB choice was used by Nestle when
they decided to implement SAP for their back-office processes and Manugistics for
their supply chain processes [41].
Temporal and scope implementation strategies. Aside from the choice of one or sev-
eral system vendors, companies need to decide whether to implement all modules
simultaneously or progressively over time. The arguments for choosing one option or
the other are centered on the urgency of implementation and the need for obtaining
results versus complexity of implementation and risks involve in the process. Parr et
al. [42] describe this strategic decision as the module implementation strategy. Mar-
kus et al. [43] relate this dimension to the scope of the implementation and describe it
in terms of “big bang” approach and of “phased rollout” approach. A progressive
implementation was chosen in a public sector case reported by Ni and Kawalek [44].
Volkoff [45], and Chan and Swatman [46] report other cases of progressive imple-
mentations. On the other hand, some organizations prefer a riskier “burn the ships”
approach that creates commitment in the organization, as in the case of a simultane-
ous implementation described by Brown and Vessey [47].

2.3 ERP Performance Outcomes

Measuring the performance of ERP systems is a difficult task and scholars have taken
different perspectives in their attempts of doing so. Performance could be measured
taking a perceptual perspective whereby final users evaluate whether in their opinion
the implemented system is useful or not. Measures of perceived usefulness, perceived
ease of use, and user acceptance of information technology have been developed by
Davis [48] to explain a system’s success. Second, more traditional operational per-
spectives have been taken to measure the ERP’s performance. Other authors have
used constructs that measure cost reduction, better coordination, quicker response
time, more on-time deliveries, better customer satisfaction, or shorter financial close
cycles to operationalize ERP performance [49], [50], [51], [52]. Still others have
taken a financial perspective considering the effect of the ERP system on the
100 A. Díaz, O. Lorenzo, and B. Claes

company’s long-term financial performance by measuring the ROA, ROI, the return
of sales, the cost of goods divided by sales, among others [53], [54]. Some authors
[55] evaluate the impact of ERP systems by measuring the change in market value of
firms after implementation. Finally, the level of ERP infusion has been the perspec-
tive followed by others such as Rajagopal [56], and Lorenzo and Kawalek [57].

3 Research Methodology
To explore the relation between the ex-ante business variables, ERP implementation
strategies, and the perceived implementation contributions to business results we
devised a survey instrument for collecting data. In this section, we first highlight our
approach concerning the definition of the research population and the sample that we
drew from. We then dedicate some words to the details of the development of the
survey instrument.

3.1 Population, Sampling and Resulting Sample

Our target population comprised of Spanish and Latin American SAP users. Our
specific focus on SAP users is motivated by the fact that SAP is widely considered the
market leader in ERP solutions. Our focus on a single supplier was further driven by
our concern that the wide variety of ERP solutions from a large selection of suppliers
available would cause users of different systems to interpret the terminology used in
the survey differently and thus introduce undesired noise in the data. By limiting our
data collection efforts to the market leader SAP we assured sampling an objective
cross-section of ERP users whilst minimizing the potential noise caused by factors
beyond the specific focus of this study.
Early 2007, we invited 549 SAP users in Spain and Latin America to participate in
our survey. Over the preceding months 105 companies responded positively to our
invitation and returned the filled out questionnaire; providing a respectable gross re-
sponse rate of 19%. We were forced to remove 14 companies from our sample due to
unacceptable levels of missing data, reducing the net response rate to 16.6% (91 valid
responses), still comparing favourably to the response rates reported by Spanish stan-
dards [58], [59]. Geographically one third of the respondents originated from compa-
nies based in Spain; 57% originated from South America (Argentina, 14%; Venezuela,
12%; Colombia, 11%; Chile, 9%; Peru, 5%). The remaining 12% were received from
companies in Central and North America (Mexico, 11%, Guatemala 1%.)
In line with the SAP industry classification, 60% of the surveyed companies are
from manufacturing and 40% from services (including financial institutions, utilities,
insurance companies, distribution, logistics, department stores, media and profes-
sional services). In accordance with the SAP size classification, 10.5% of companies
in the sample are classified as small (1 to 100 employees), 26.3% are medium (100 to
500 employees) and 63.2% are large (over 500 employees). The typical company in
our sample is large, employing on average 3.336 local employees and reporting reve-
nues of €€ 573 million per year.
Figure two provides an overview of the SAP modules that were implemented in the
companies of our sample as well as the degree to which they were implemented (in
%). The finance, purchasing, inventory, asset management and sales modules, for
 ERP Implementation Strategies: The Importance of Process Modeling and Analysis 101

100

89 90
90
84

80 78
76

70 67

60
52 52
50 45 46

40 37

30
23 23
19 18
20
11
9
10

Fig. 2. Business areas and processes where SAP is used

example, were all implemented in over 75% of the companies. Conversely, modules
for product life cycle management, electronic commerce, marketing, maintenance,
projects and human resources were all implemented in less than 25% of the surveyed
companies.
Half the companies used the classic version of SAP R/3 4.6. The vast majority
(83%) of implementations had taken place in the operation environment between two
and six years ago, 11% of the respondents had only recently implemented the ERP
(less than two years of operation) and 6% were using the ERP for more than 10 years.

3.2 Respondents

Questionnaires were addressed to the individuals who, within reason, were expected
to have the best (most relevant) overall picture of the firm; IT directors or general
managers. A comprehensive understanding of the firm’s entire operations was
deemed important because ERP implementations do not tend to focus on one or few
functional areas, but rather have an impact on the processes that are performed
throughout the company. Because the survey was mostly submitted to medium and
large sized companies, it would not be unusual to come across responses from lower
level technicians who would have the knowledge and skills to provide reliable an-
swers of particular parts of the ERP system, yet who lack the overview of the entire
project and its objectives. IT directors or general managers, on the other hand, would
be able to retrieve the required information from his or her subordinates if so needed.

3.3 Questionnaire Design, Pre-test and Administration

To collect data from the selected target population a web base survey instrument was
designed, closely following the suggestions and experiences described in Dillman [60]
Questions on business strategy, implementation results and impact of implementation
on business results were anchored on 5-point Likert scales. The survey instrument
102 A. Díaz, O. Lorenzo, and B. Claes

was pre-tested in five firms representing the different industrial environments that
were included in the population. As a result, changes were made to approximately
20% of the questions.
To enhance the response rate, a panel consisting of Ph.D. students and program as-
sistants were instructed to contact non responding companies to motivate them to fill
out the online survey instrument. All questionnaires have been systematically con-
trolled for missing values and inconsistencies in an effort to ensure data quality and
completeness.

4 Analysis of Results
Tables 1a, 1b and 1c show the variables in the conceptual model were operational-
ized, as well as the descriptive resulting from the survey data.

Table 1a. Operationalization of the ex-ante implementation variables and descriptive

Ex-ante implementation variables Anchors Ave. Std.

Business Orientation - Low Cost Not imp-V. imp 4.02 0.96
Business Orientation - Unique Product or Service Not imp-V. imp 3.92 1.19
Business Orientation - Specific Market Segment Not imp-V. imp 3.73 1.11
Top Management Support for IT Efforts Low-High 3.81 0.97
Process Orientation Low-High 3.45 0.67
Use of Consultants Prior to ERP Implementation Low-High 3,94 1.15
Prior ERP implementation Experience Low-High 2.07 1.23
Prior Process Modeling Experience Low-High 2.49 1.31

Table 1b. Operationalization of the implementation variables and descriptive

ERP implementation strategies Anchors Ave. Std.

Use of Consultants During the Implementation Low-High 4,42 0.75
Use of Consultants After The Implementation Low-High 3,48 1.2
Pre-implementation modeling of process Low-High 3.46 1.18
Origin of Modules (Single / Multiple System Vendor) Single-BoB 1.74 0.95
Temporal implementation strategy (Progressive/ All At Once) Slow-Fast 3.48 1.47
Scope Implementation Strategy (Single Modules or The Entire Organization) Single-All 4.11 0.77
Process-System Matching (Blueprinting: Adjust Process to ERP) Low-High 3.86 1.04
Process-System Matching (Modelling: Adjust ERP to Process) Low-High 3.03 1.1

4.1 Ex-ante Variables

Business orientation. Parity was observed in the approach that companies take
concerning their competitive strategy. Two thirds of the companies consider a low
operational cost strategy as important or very important. At the same time, 68.2% of
the companies considered a strategy focussing on having unique products or services
to be important or very important (note that a company could follow both strategies
for different product lines.) Those companies that follow a dominating cost strategy
 ERP Implementation Strategies: The Importance of Process Modeling and Analysis 103

Table 1c. Operationalization of the ERP performance outcomes and descriptive

ERP performance outcomes Anchors Ave. Std.

ERP Implementation On Time Less- More 3.34 0.9
ERP Implementation Within Budget Less- More 3.56 0.86
ERP implementation Within Scope Less- More 3.16 0.72
Short Term Increase in Income Not-A lot 1,94 1,02
Short Term Reduction of Inventory Not-A lot 2,52 1,11
Short Term Reduction of Employees Not-A lot 2,01 1,12
Short Term Reductions in Cycle Times Not-A lot 2,95 1,06
Short Term Improvement on Customer Service Not-A lot 2,69 1,14
Short Term Improvement in Supplier Relations Not-A lot 2,82 1,08
Short Term Improvement of Capacity to Accommodate Changes Not-A lot 3,11 1,15
Short Term Improvement in Decision Making Capacity Not-A lot 3,21 1,11
Short Term Improvement in Coordination Between Areas Not-A lot 3,35 1,03
Long Term Increase in Income Not-A lot 2,33 1,03
Long Term Reduction of Inventory Not-A lot 3,07 1,11
Long Term Reduction of Employees Not-A lot 2,32 1,26
Long Term Reductions in Cycle Times Not-A lot 3,39 0,90
Long Term Improvement on Customer Service Not-A lot 3,16 1,08
Long Term Improvement in Supplier Relations Not-A lot 3,41 0,99
Long Term Improvement of Capacity to Accommodate Changes Not-A lot 3,74 1,00
Long Term Improvement in Decision Making Capacity Not-A lot 3,78 0,90
Long Term Improvement in Coordination Between Areas Not-A lot 3,79 0,84
Perception of Implementation Utility Little-Much 3.93 0.6
Perception of User Satisfaction Little-Much 3.55 0.6
Perception of Degree of System Adjustment to Company Processes Little-Much 3.59 0.69

do not show a dominating implementation strategy; however, correlation was found

between companies that follow a differentiation strategy and modelling implementa-
tion strategies.

Previous Organizational Capabilities. Fifty five percent of surveyed companies had

little, or very little, previous experience in implementing similar projects. This
percentage is reduced in the case of service companies. Previous ERP implemen-
tation experiences and previous process modelling experiences are strongly corre-
lated and load into a single factor (Previous experiences), with a Cronbach alpha
of 0.783 [61], [62], [63]. Although this factor was found to have no effect on
implementation results, it shows a negative correlation to blueprinting implemen-
tation strategies, suggesting that those with more extensive previous experiences
avoid this strategy.
Coordination mechanisms. Sixty five percent of companies surveyed indicated that
the involvement of top management and decision processes related to information
technology is high or very high. Upper management participation was found to be
correlated to a process orientation, and to modelling implementation strategies (but
not to blueprinting implementations), suggesting that those implementation that
require organizational change (as implicit in the modelling effort) do require top man-
agement involvement.
104 A. Díaz, O. Lorenzo, and B. Claes

Organizational and Market context. The data analysis was controlled for possible
effects of context variables such as size or industry sector. Size was evaluated by the
number of employees and the revenue at the local facility (i.e., at the site of the im-
plementation) and at the national level. Following SAP’ standards respondents were
classified into one of three sectors: Finance and public sectors, manufacturing and
services. Three variables used to measure size, number of employees at the local
level, at the national level, and revenue at the local level loaded into a factor with a
Cronbach alpha of 0.780, that was used to control for size. No effect of size or indus-
try was found on the observed results. We acknowledge that this may be due to sam-
ple bias, as the majority of the companies in the sample were large multinationals.

4.2 ERP Implementation-Related Strategies

Process-system orientation: Figure 3 shows that 69.3% of companies made major

efforts to align their processes to the management system (blueprinting strategy). On
the other hand, efforts to adapt the ERP to the business processes (modelling strategy)
were reportedly smaller (right graph). As mention above, business differentiation
strategies were found to be correlated to modelling-based implementations. While no
relation was found between blueprint strategies and implementation results, there
exist a significant correlation between modelling implementation strategies and im-
plementation results, both in economic contributions and in completing the implemen-
tation within budget.

39,6
40

30,8
29,7 29,7

22
18,7
20

11
7,7

5,5
3,3

0
Degree of adjustment of business processesto ERP: Degree of adjustment of ERP to business processes
Blueprinting Modelling
Scale : 1: very low - 5: very high

Fig. 3. Blueprinting and Modelling implementation strategies

Process modelling. Pre-implementation process mapping effort was high to very high
in 50% of all cases. Process mapping was found to be correlated to long term eco-
nomic and strategic implementation contributions to business results, both for blue-
printing and modelling implementations, suggesting that implementation efforts
should focus on this activity.
Implementation support. External consultants were widely used in all phases of the
ERP implementation (pre, during and after), although with less intensity in the plan-
ning and in the post-implementation phases. No significant evidence of relationship
between the use of external consultants and implementation success was found [64].
 ERP Implementation Strategies: The Importance of Process Modeling and Analysis 105

Vendor origin. A high percentage of companies surveyed (81.3%) opted for a single
ERP supplier (little or no mix of applications from different providers). We acknowl-
edge that the fact that the survey was aimed at users of SAP may influence this result.
However, Best of Breed (modules from different vendors) implementations were
positively correlated to Supply chain results, suggesting that inter-organizational
applications may require functionalities beyond those provided by a typical ERP im-
plementation (e.g., Manugistics or i2.)
Temporal and scope strategies. Fifty four percent of respondents followed a big-bang
implementation strategy (shock, or rapid) and 80% a global scope implementation
strategy (comprehensive implementation in the entire organization). Although these
two strategies are correlated (suggesting that they tend to go together: fast and com-
prehensive implementation), no relation to implementation results was found.

4.3 ERP Performance Outcomes

The ERP implementation outcome was measured with three sets of variables: project
results, customer satisfaction, and perceived contributions to business results.
Project results were measured in terms of time, budget and scope compliance. Forty
percent of respondents exceeded the estimated implementation time, while 52% ex-
ceeding the estimated budget. Compliance in scope performed better, with only 16.5%
below the expected scope. Scope compliance was the only project measurement that
has a positive correlation with contributions to business results, suggesting that is more
important to complete the implementation in scope than in time or budget.
The degree of satisfaction of the companies with the ERP implementation was
measured by asking respondents how the implementation was perceived in terms of
usefulness, user satisfaction, and degree of adjustment to the processes of the com-
pany. A large majority of respondents (81.3%) have a positive perception of the
usefulness of the ERP, although user satisfaction and the adequacy of the ERP to
business processes are markedly lower.
Perceived contributions to business results: Measure Development and Validation.
Given the limited research into the perceived contribution of an ERP implementation,
we were unable to identify any satisfying measures in the literature and hence devel-
oped a set of new measures With that aim in mind we presented a selection of items
describing most common business objectives the sample population (Table 1). Re-
spondents were then asked to indicate to which extent the implemented ERP system
had contributed to achieve each of the different business objectives; (1) no contribu-
tion to (5) large contribution. Separate sets of items were presented for the short-term
effects (up to three months after the implementation) and the medium term (between
three and six months after implementation to allow for testing the effect over time.
We tested the reliability of these measures in the form of internal consistency using
Cronbach’s alpha coefficient. Construct validity in the form of construct univocity
was checked through principal component analysis (see Table 2) whereby all pro-
posed construct complied with the eigenvalue greater-than-one criterion in which only
those factors that account for variance greater than one should be included [65].
In Table 2 the construct Economic Performance (EP) refers to the extent to which
the implementation of the ERP system has contributed to achieving the company’s
106 A. Díaz, O. Lorenzo, and B. Claes

economic business objectives. ECP was operationalized by asking the respondents to

state (both for short and medium term) whether the ERP implementation has contrib-
uted to (1) an increase in income, (2) a decrease in inventory and (3) a reduction of
labour requirements.
The construct Strategic Business Objectives (STP) refers to the extent to which the
implementation of the ERP system has contributed to achieving the company’s strate-
gic business objectives. STP was operationalized by asking the respondents (both for
short and medium term) whether the ERP implementation has contributed to (1) reduce
the product cycle times, (2) improve the company’s capacity to accommodate changes
in the market, and (3) improve the company’s capacity to make better decisions.
The construct Supply Chain Objectives (SCP) refers to the extent to which the im-
plementation of the ERP system has contributed to achieve the company’s supply
chain business objectives. SCP was operationalized by asking the respondents (both
for short and medium term) whether the ERP implementation has contributed to (1)
improve the company’s customer service, (2) improve the company’s supplier rela-
tions, and (3) improve the coordination between the company’s different functional
areas.

Table 2. Performance Construct validity

% of variance
Cronbach 2nd
explained by 1st
Construct Full name / Explanation Alpha # of items 1st eigenvalue eigenvalue
factor
EP Economic Performance 0.828 6 3.263 1.068 54.4%
EP_ST Short-Term Economic Performance
(up to 3 months after implementation) 0.738 3 1.982 0.618 66.1%
EP_LT Long-Term Economic Performance
(3-12 months after implementation) 0.667 3 1.811 0.643 60.4%
STP Strategic Performance 0.841 6 3.355 0.087 55.9%
STP_ST Short-Term Strategic Performance
(up to 3 months after implementation) 0.806 3 2.164 0.440 72.1%
STP_LT Long-Term Strategic Performance
(3-12 months after implementation) 0.769 3 2.055 0.506 68.5%
SCP Supply Chain Performance 0.856 6 3.526 0.852 58.8%
SCP_ST Short-Term Supply Chain Performance
(up to 3 months after implementation) 0.853 3 2.323 0.460 77.4%
SCP_LT Long-Term Supply Chain Performance
(3-12 months after implementation) 0.714 3 1.923 0.619 64.1%

5 Discussion
Based on the analysis presented in this paper we induce some initial conclusions on
business strategies, ERP implementation strategies and business performance. These
are summarized in Table 3 and discussed below.
In our sample we observed a clear divide between pursuing a business strategy char-
acterized by a dominant focus on low cost (price based) competition and companies
pursuing a strategy characterized by product or market differentiation. Intuitively, the
use of transactional modules suggests cost-base competition as the dominant strategy.
However, while companies that follow cost based strategies could adopt either blue-
printing or modelling implementation strategies, companies that follow a differentiation
strategy tend to adopt process-based implementations (modelling). This observation
 ERP Implementation Strategies: The Importance of Process Modeling and Analysis 107

reinforces the proposition by Lorenzo and Diaz [66] of adapting the ERP to the reen-
gineered company business processes in the case of differentiation-based strategies.
Our data shows furthermore that modelling strategies are characterized by a higher
involvement of top management.

Table 3. Summary of main findings

Finding one: Companies that focus on differentiation tend to go for process based
implementations (modeling); those that compete on cost don´t have a preferential
implementation strategy

Finding two: The implementation strategies that better explain implementation results are
those of previous process mapping and a modelling implementation strategy (which
requires top management support). Other strategies, such as the use of consultants,
blueprinting implementations, temporal and scope implementation strategies and previous
experiences were found not to have a significant impact on the implementation results

Finding three: Exceptions to the previous were that Best of breed implementation may
be required for SC results, and that companies with previous experiences tend not to go
for blueprinting implementations

Finding four: Most widely perceived benefits of ERP implementations were related to
strategic issues (e.g., capacity to accommodate changes, for decision making and for
shorter cycle times) and to the supply chain performance (improved customer service,
supplier relations and coordination between areas), rather than economics (e.g., inventory
reduction, sales).

Finding five: Completing the scope of the implementation contributes to the

implementation business results (in all dimensions: economic, strategic and supply chain),
while completing it within time or budget does not.

Process modelling as a preparatory exercise before the ERP implementation was

found to correlate significantly with better results in the implementation. Interestingly
no evidence of better results was found for acquiring external expertise (i.e. consult-
ants) in the implementation process. Similarly, neither prior experiences in process
improvement and in ERP implementations nor the use of different temporal and scope
strategies showed any positive relation with the implementation results.
The perceived contribution of the ERP implementation to business objectives can
be categorized in three groups: economic objectives, strategic objectives and supply
chain (or integration) objectives. The greatest perceived contributions were found to
process integration, and the lowest to economic performance. In all cases, the per-
ceived contribution increases a few months after the implementation. These results
reinforce the acclaimed role of ERP systems as a facilitator of process integration, but
also the awareness that the integration requires time to be assimilated by the organiza-
tion [67], [68] and the realization of the anticipated benefits.
108 A. Díaz, O. Lorenzo, and B. Claes

Despite that fact that many ERP implementation projects exceed both the estimated
time frame and budget, the, results of the implementations from the perspective of
user satisfaction and perceived usefulness are generally good.
In sum, our analysis allows us to induce general strategic rules for ERP implemen-
tations. Companies perceive better results from the ERP implementation when proc-
esses are mapped and potential solutions are modelled prior to implementation. Our
data shows furthermore that the exercise of process modelling is positively related to
business differentiation strategies and that top management support is crucial for a
successful implementation (Figure 4). A key learning then to take home from our
analysis is that Process analysis matters.

Differentiation Modelling
Strategy Implementation
Economic
Results
Top Management Prior Process
Support Mapping

Fig. 4. Induced success implementation map

The relations suggested in Figure 4 were tested by running to two regression analy-
sis. The first regression, of dependent variables “Differentiation Strategy” and “Top
Management Support” with independent variable “Modelling Implementation” is
significant at the 0.005 level and results in an adjusted R square of 0.124. The second
regression, of dependent variables “Modelling Implementation” and “Prior Process
Mapping” with independent variable “Economic Results” is significant at the 0.003
level and results in an adjusted R square of 0.130. The results, though significant,
show modest values of R square. We attribute this to the high likelihood that other
environmental factors are influencing the results, as well suggesting the need for fu-
ture extension of the model through further research.

6 Limitations and Further Research

The research described in this paper is principally explorative. As a consequence
threesome limitations to our findings have to be taken into consideration. The data
that was collected for this paper, the instrument that was developed to do so and the
results drawn from them should be considered as stepping-stones towards a more
comprehensive approach of analysing the environmental aspects that influence the
ERP implementation success. This paper provides relevant and valuable insights into
the nature of the ex-ante business variables, internal process orientation, ERP imple-
mentation strategies, and the contribution of ERP implementation to the business
results as suggested in Figure 4. It also makes a contribution to the literature by
developing constructs to measure the (perceived) contributions of an ERP implemen-
tation to business results.
 ERP Implementation Strategies: The Importance of Process Modeling and Analysis 109

Future research should expand the research efforts initiated in this study and apply the
findings to the refine the model presented in this paper into a model that can both clarify
research issues on ERP implementation and offer valuable guidelines to practitioners.
We acknowledge the inherent bias caused by restricting the research sample to
SAP implementations, and to the geographical area of Spain and Latin-America. Fur-
ther research efforts should expand the geographical focus of the sample population to
add strength to any findings that may be drawn for this emergent body of research.

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