7.1 Introduction
While the previous chapter described both the qualitative and
empirical results of this study, this chapter will focus on the main
contribution of this descriptive study. Final conclusions are drawn on the
factors of an ERP software influencing the MNEs' value chain system, as well as
general recommendations for future research.
The overall goal of this study was to assess ERP systems
through the value chain approach in order to link both concepts technically and
strategically, and to equip any MNE or corporation with the necessary knowledge
and skills about an ERP system before its implementation. The different
objectives of this study were achieved qualitatively, through the literature
review of ERP system theory in relation to the value chain approach. This
allowed the researcher to assess Axapta software attributes discussed in the
case study according to the value chain approach and ERP system. The issues
highlighted in the study were supply chain factors which facilitate the
evaluation of ERP software and the positioning of the value chain approach as
an integrative tool to assess ERP software architecture and configuration. It
was found that ERP systems and the value chain approach strengthen and
integrate the business processes of MNEs.
Through this study the value chain system and ERP systems
were linked. This empowered the researcher with the knowledge to compile a
methodical approach of ERP system requirements in order to achieve objective 5
of this study, as discussed later in this chapter. The value of this study is
that it will assist any organisations that are migrating towards ERP system
software with a technical assessment during the selection and evaluation phases
of ERP systems. This methodical approach will allow organisations to obtain
compatible and suitable ERP system software that relates to their objectives,
structure and type before the ERP system life cycle (adoption decision,
acquisition, implementation, use and maintenance, evolution and retirement)
starts, as discussed in section 3.9 by Esteves and Pastor (in
Bernroider & Tang, 2003:5). The empirical study was conducted to test the
knowledge of the employers and employees of ERP software, strategy and the
value chain. The conclusion reached relating to the self-administered survey is
that the employees and employers of the organisations in this study were aware
of ERP systems due to education programmes and sufficient funding being made
available for the training.
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7.2 Achievement of the objectives
7.2.1 Primary objective
The primary objective was to determine the extent to which
ERP software could facilitate integration in the MNE value chain process. This
was achieved through the assessment of an ERP system, i.e. the Axapta software
value chain system as an integrative IT tool relating to the value chain
approaches in accordance with ERP system theory. The elements that were
investigated as part of the primary objective include:
· An ERP system that relates to the value chain system
architecture and configuration;
· Integration, multifunctionality and modular
capability;
· E-business components; and
· ERP system characteristics and database server.
From the findings, it can be concluded that all the elements
mentioned above are very important in order for ERP system software to
integrate an MNE's value chain. Thus, ERP systems, i.e. Axapta software,
conform to the different value chain approaches discussed in sections
6.2.5.1 to 6.2.5.6. Moreover, in accordance with the overall approach
of the value chain discussed in chapter 2, the various elements of ERP system
theory discussed in chapter 3 were linked under sections 3.5.1, 3.5.2,
3.6.2 and 3.7.1. This constitutes the basis of the outcome of this
study as shown in sections 6.2.1 and 6.2.5,
and answers the hypotheses 1, 4, 5 and 6 (H1, H4, H5 and H6) of this
study.
In light of the above, MNEs considering implementing an ERP
system should seriously consider the statements below:
· ERP software architecture and configuration selected for
the adoption must be built on the MNE's strategy, thus allowing the
organisation to align its strategy with the ERP system.
· The ERP system selected must be multifunctional,
flexible, open and modular.
· The ERP system selected must be a value chain system,
which encompasses within it the generic modules and activities of the different
value chain approaches. These could be tailored, customised and parameterised
to suit the organisation structure, objectives, type and value chain.
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· The ERP system selected must have a programming
language and client/server architecture.
· The ERP system adopted must be incorporated with the
e-business components, such as the Internet, to allow the organisation to
collaborate and connect with customers, vendors, partners, or employees and
SBUs via the Web, Windows, WAP, Wireless, VAN, LAN and XML.
· The ERP system selected must have multiple databases,
it must be an all-in-one product and have foreign language and foreign currency
capabilities. These could position an organisation to operate in any of the
geographical areas.
· The ERP system selected must include an outsourcing
application and electronic data interchange.
7.2.2 Secondary objectives
The secondary objectives of this study cover the technical
part of this research, i.e. positioning the value chain approach as a strategic
IT tool for ERP software assessment. In addition to the strategic supply chain,
factors need to be considered in the evaluation of an ERP system that relate to
the value chain's functional activities before adoption and acquisition. To
achieve the secondary objectives of this study, the use of a strategic IT plan
was discussed along with the value chain approach in chapter 2, linking ERP
system theory in chapter 3 with the comparison of Axapta software attributes in
a case study in chapter 4.
The elements that were investigated as part of the secondary
objectives 1, 2, 4 and 5 included:
· The use of a strategic IT plan;
· The cost and differentiation, niche and other strategy
elements of ERP software;
· The strategic capabilities of ERP software as a strategic
IT tool; and
· The value chain approach as a strategic assessment
tool.
From the findings, it can be concluded that all the elements
mentioned above are very important in order to assess ERP software
strategically and technically. This was tested based on Axapta software
attributes in accordance with the theory given in chapters 2 and 3. The
findings were given in sections 6.2.1 and 6.2.2, and 6.2.3,
and answers hypotheses 2 and 4 (H2 and H4) which showed that Axapta is
a low-cost software leader in the market due to its cost-effective
leadership,
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differentiation, niche, alliance, innovation, the lock-in of
customers or suppliers and the entry-barriers strategy as discussed by Turban
et al., (2004a: 16) and Thompson and Strickland (1987:110) in section
2.5. The importance of using a strategic IT plan was discussed in
section 2.4 according to Bakehouse and Doyle (2002:1) and
Peppard (in Corboy, 2001:6). MNEs could use IT or ERP system capabilities,
which would have an enormous impact on them in the areas of transactional
issues, geographical issues, automation, analytical, informational and
sequential matters, knowledge management and disintermediation to gain
competitive advantage (Siriginidi, 2000:376, in section
2.3).
IT plays a vital role in improving co-ordination,
collaboration and information sharing, both inside and across organisational
boundaries. It allows more effective management of task interdependence and
facilitates the creation of integrated management information, while
simultaneously offering new possibilities for MNEs. This concurs with the
different theories presented in sections 6.2.1 and 6.2.5 in
accordance with the overall approach discussed in chapters 2 and 3. Thus, in
view of the above elements, the researcher recommends that any MNE using an ERP
system implement a strategic IT plan. MNEs should also view the value chain
approach as an evaluative tool to assess the activities that will persuade them
to acquire suitable ERP software.
The empirical study was conducted to test the knowledge of
employers and employees surveyed in this study of ERP software, strategy
management and the value chain approach relating to the objective 3, and
answers the hypothesis 3 (H3) of this study. Therefore the elements that were
investigated as part of this study included:
· Demographic profiles of the participants;
· The view of participants on the training in ERP software
within their organisation;
· The view of participants on value chain integration
through an ERP system;
· The use of a strategic IT plan; and
· The beneficial impact of ERP implementation on users,
customers and supply partners.
From the findings in sections 6.3.1.2, 3.4 and 6.3.5,
it can be concluded that the employees and
employers involved in
this empirical study were well trained in using ERP software and had more
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knowledge about the system. Therefore theThe most important
factor emphasised in this empirical section was the customisation of an ERP
system, i.e. SAP software, by most organisations that participated in the
survey.
7.3 The value and the contribution of the
study
The fifth objective of this study was to produce a model that
would facilitate any MNE to assess ERP software technically and strategically
before the implementation. Therefore the main contribution and the value of
this study obviously is to assist MNEs or any other organisation in the process
of migrating business systems towards ERP with a model called a methodical
approach. This approach allows the organisation management to acquire fit and
compatible ERP software, which will enable them to meet their objectives and
growth targets.
7.4 The methodical approach for ERP software
assessment
As figure 7.1 indicates, an MNE in the process of migrating
its business systems toward ERP implementation it has to first formulate its
business objectives, decomposing its value chain modular activities in order to
assess the value chain architecture and configuration. Thereafter, MNE
management have to ask what the motives of the organisation are in investing in
an ERP system implementation project. They need to ask whether there is an
opportunity to expand the business due to organisation growth and whether there
is a competitive challenge to the organisation or simply problems within the
organisation's business systems.
The second step will be for the organisation to compile a
benchmark list of the different ERP software on the market. The third step
involves two processes: Firstly, to assess and display the organisation's value
chain modular or functional activities and secondly, to assess and display the
value chain of the ERP software selected through its modular or functional
activities. This allows the MNE to compare its value chain activities with the
pre-adopted ERP software functional and modular activities. Once these have
been matched, the next step will be to evaluate the selected ERP software
through the supply chain factors, ERP characteristics and global requirements.
The assessment will result in the MNE adopting suitable and compatible ERP
software with a value chain system architecture and configuration that suits
the organisation's value chain activities, architecture and configuration, thus
positioning the organisation to customise and meet its objectives and growth
targets.
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Assess and decompose the organisation's
value chain
modular activities
Figure 7.1: The methodical approach
Step 1
Set the business objectives
Organisation
Assess and display the value chain of
the ER!'
software through its modular
and functional activities
Assess and display the organisation's
value chain
modular or functional
activities
Are motives, opportunities, competitive challenges, or
problems behind the reason for the
organisation implementing an ER!'
project?
Set a benchmark list of the ER!' software
selected
Adopt the ER!' system if its software value chain
functional and modular activities,
architecture, and configuration are
compatible with and suitable for the
organisation's value chain functional
and modular activities, architecture, and
configuration
If the answer is Yes
Compare the organisation's value
chain activities
to the selected ER!'
software's functional and
modular
activities
Evaluate the selected ER!'
software through
the
supply chain factors
Step 2
Step 3
internationally) of the organisation, the partners, the supplies
and the customers; and
development and service efficiency.
This study highlights the importance of the value chain
integration through ERP software as a strategic tool that will support the MNE
to extend its value chain globally and operate efficiently and effectively for
competitive advantage. Furthermore it highlights the use of ERP software as a
tool to support decision-making. In this regard, ERP is considered as a
powerful competitive weapon, especially when its adoption is aligned with MNE
strategy. Consequently, organisations using ERP systems must have a strategic
IT plan in order to derive the benefits from it.
The attributes, specifications, architecture and configuration
of an ERP system, i.e. Axapta, were evaluated through the strategic, technical
planning of the value chain models. They were compared to the general theory on
ERP systems, especially the supply chain factors for ERP software evaluation.
This exercise proved that Axapta solution software is a strategic IT tool, with
an e-business mechanism capable of integrating the different applications in
the organisation's value chain in order to operate globally. Thus, Axapta
solution software has been positioned as a value chain system and modern ERP
system software.
Based on the discussion of the different issues associated
with the implementation of an ERP system in this study, it is advisable and
recommendable to any MNE that wants to implement ERP software to seriously
consider the critical success factors affecting the implementation process as
discussed in section 3.9.1. The two strategic approaches of
ERP implementation, namely the re-engineering of the business process to
accommodate functionality, and the customisation of the software to fit the
existing process as discussed in section 3.9.2 must be also
considered. It is also recommended that MNEs apply the methodical approach of
this study as discussed in section 7.2.
Finally, some possible issues to be studied in the future are
highlighted next.
It would be biased for this study to conclude that Axapta
software is generally really good ERP software for all MNEs without testing and
applying it in an MNE practically. In this study, the researcher assessed
Axapta software value chain modular activities in comparison with the different
value chain approaches, along with ERP system theory. The findings show that
technically Axapta's architecture and configuration fundamentally meet the
requirements of the value chain system and those of global ERP system
characteristics, architecture and configuration. Therefore Axapta is a value
chain system and truly ERP software. However, the question to be asked is
whether ERP software can integrate a multinational enterprise's value chain.
More research is needed to answer the above question. In this context the
methodical approach formulated by the researcher in this study could be applied
as a tool to assess the requirements of a selected ERP software value chain
together with the organisation's value chain in order to test both
compatibility and suitability.
