Cultural Fits and Misfits: Is ERP a Universal Solution?

Cultural Fits and Misfits: Is ERP a Universal Solution?

April 2000 | Christina Soh, Sia Siew Kien, and Joanne Tay-Yap
The universality of embedded business models in ERP systems is questioned from an Asian perspective. ERP systems, while costly to implement and requiring significant organizational change, often lead to "misfits" between the software's functionality and the organization's needs. These misfits can arise from differences in organizational structure, public sector requirements, or country-specific practices. In Asia, where business models often reflect Western practices, misfits are more prevalent due to differing cultural, economic, and regulatory contexts. In Singapore, seven public hospitals adopted ERP systems to address Y2K issues and improve efficiency. However, they faced various misfits, particularly in patient care systems, where practices vary widely across countries. Misfits were categorized into data, process, and output types, with data and process misfits being the most challenging to resolve. Resolution strategies often involved working around the ERP system's limitations, such as using external ID fields for national ID codes. Customizations were typically done without altering the source code, through add-on modules. Despite these efforts, misfits led to increased data input codes and required additional training for users. ERP implementation also brought positive impacts, such as improved data standardization and increased awareness of IT among hospital staff. However, the process highlighted the need for better communication between vendors, organizations, and users. Vendors should spend more time explaining the embedded data requirements and processes to the organization. Organizations need to develop skills to ask detailed questions about ERP systems. The analysis of ERP misfits shows that the traditional separation of analysis and design phases in ERP implementation is not effective. Instead, a more integrated approach is needed, with key users playing a central role in problem-solving. This requires users to understand the ERP system deeply and to actively engage in the implementation process. Organizations should budget for vendor education, shift training earlier in the process, and plan detailed walkthroughs of data, functionality, and output. Vendors with significant industry knowledge should be selected. Ultimately, users must take a more active role in ERP implementation, moving beyond being passive functional experts.The universality of embedded business models in ERP systems is questioned from an Asian perspective. ERP systems, while costly to implement and requiring significant organizational change, often lead to "misfits" between the software's functionality and the organization's needs. These misfits can arise from differences in organizational structure, public sector requirements, or country-specific practices. In Asia, where business models often reflect Western practices, misfits are more prevalent due to differing cultural, economic, and regulatory contexts. In Singapore, seven public hospitals adopted ERP systems to address Y2K issues and improve efficiency. However, they faced various misfits, particularly in patient care systems, where practices vary widely across countries. Misfits were categorized into data, process, and output types, with data and process misfits being the most challenging to resolve. Resolution strategies often involved working around the ERP system's limitations, such as using external ID fields for national ID codes. Customizations were typically done without altering the source code, through add-on modules. Despite these efforts, misfits led to increased data input codes and required additional training for users. ERP implementation also brought positive impacts, such as improved data standardization and increased awareness of IT among hospital staff. However, the process highlighted the need for better communication between vendors, organizations, and users. Vendors should spend more time explaining the embedded data requirements and processes to the organization. Organizations need to develop skills to ask detailed questions about ERP systems. The analysis of ERP misfits shows that the traditional separation of analysis and design phases in ERP implementation is not effective. Instead, a more integrated approach is needed, with key users playing a central role in problem-solving. This requires users to understand the ERP system deeply and to actively engage in the implementation process. Organizations should budget for vendor education, shift training earlier in the process, and plan detailed walkthroughs of data, functionality, and output. Vendors with significant industry knowledge should be selected. Ultimately, users must take a more active role in ERP implementation, moving beyond being passive functional experts.
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