Computers in Industry 56 (2005) 573587

www.elsevier.com/locate/compind

A classification for better use of ERP systems

Valerie Botta-Genoulaz a,*, Pierre-Alain Millet b
a
b

Laboratoire PRISMa, INSA de Lyon, INSA-GI, bat Jules Verne, 19 Avenue Jean Capelle, 69621 Villeurbanne Cedex, France
Laboratoire PRISMa, INSA de Lyon, INSA-IF, bat Blaise Pascal, 7 Avenue Jean Capelle, 69621 Villeurbanne Cedex, France
Received 29 March 2004; received in revised form 14 December 2004; accepted 13 February 2005
Available online 14 July 2005

Abstract
Companies have invested considerable resources in the implementation of enterprise resource planning (ERP) systems. The
results initially expected have rarely been reached. The optimisation (or efficient use) of such information systems is nowadays
becoming a major factor for firms striving to reach their performance objectives. After presenting a synthesis of several studies
on ERP projects, we build on the findings of a French investigation into the assessment and optimisation of ERP performance. A
classification of company positions regarding their ERP use, based on both software maturity and strategic deployment
directions, and an improvement process are proposed. Industrial cases allow validation of this approach.
# 2005 Elsevier B.V. All rights reserved.
Keywords: Integrated information system; ERP; Improvement; Survey; Benchmarking

1. Introduction
During recent years, companies have invested
considerable resources in the implementation of
enterprise resource planning (ERP) systems. ERP is
a software package that attempts to integrate all
departments and functions of a company onto a single
computer system that can serve all different departments needs. Once the system is going on, the
question of measurement of the operational results
obtained remains. But it becomes apparent that
nowadays, results do not live up to managers
* Corresponding author. Tel.: +33 4 72 43 60 74;
fax: +33 4 72 43 85 38.
E-mail address: valerie.botta@insa-lyon.fr (V. Botta-Genoulaz).

expectations: 85% of companies consider the ERP

as an investment for more than 5 years, 70% expect no
more than 25% of return on investment and 50% did
not even try to estimate the ROI.
Pressure over deadlines due to the year 2000 or
Euro introduction, need for revision of initial
ambitions to maintain an acceptable rhythm of
change, difficulty of integration with the peripheral
applications, obligation to match daily work with the
required project workload . . .. There are many brakes
on initial objectives. Yet, companies still claim more
value in their tools, in their processes and in their
human resources. At the same time, new needs as well
as new ERP features arrived at maturity: management
and optimisation of the global supply chain (SCM),
customer relationship management (CRM), business

0166-3615/$ see front matter # 2005 Elsevier B.V. All rights reserved.
doi:10.1016/j.compind.2005.02.007

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V. Botta-Genoulaz, P.-A. Millet / Computers in Industry 56 (2005) 573587

intelligence. They point to other performance opportunities.

The optimisation of the information system (which
is based on the ERP) becomes a major target for the
company in reaching its performance objectives. By
optimisation of the information system, we understand efficient use of the available technical, human
and organisational resources mobilised around the
integrated information system. Naturally, there are
also resulting projects, which are often new application implementation projects. This raises several
questions:
 How does an ERP implementation contribute to
make the organisation more effective?
 Does the company make the most of the potentials
of the ERP?
 Is coherence ensured between the information
system, the business processes, the management
rules, the procedures, and the competency and
practices of the users?
 Are activity-data and master-data reliable and
relevant?
 Is the ERP well positioned in terms of information
system urbanisation?
Despite the wide ERP systems base installed,
academic research in this area is relatively new. Like
many other new information technology (IT) areas,
much of the initial literature in ERP consists of articles
or case studies either in the business press or in
practitioner focused journals. More recently, several
academically oriented papers have dealt with various
aspects of ERP.
The first publications dealing with ERP and their
implementations date from the 1990s; they emanated
mainly from consulting groups. Since then, numerous
academic researchers have gradually taken an interest
in this phenomenon that in the main impacts
companies [113]. They mainly deal with the
management of ERP implementation projects, their
impact and success factors. There are also case-based
studies [1416]. Somers and Nelson [17] were
interested in ERP project lifecycle including some
post-go-live phases. Hunton et al. [18] compare
business performance of adopters and non-adopters
from the economic aspect; they suggest that ERP
adoption helps firms gain a competitive advantage.

Calisir and Calisir [19] evaluate specially end-user

satisfaction factors from the human computer integration point of view. Neither company satisfaction nor
the efficiency of the use of the new information system
is subjected to particular study. The aim of this paper is
to study objectives, which correspond to the post-golive phase of ERP implementation.
In Section 2, we present a synthesis of three recent
French surveys and put in light important features
about returns of experiment and management issues in
ERP implementation projects. These first conclusions
are completed by the results of some other national
studies (USA, Canada and Sweden). In Section 3, we
present the findings of a new qualitative investigation
undertaken in 2003 on optimisation and assessment
of the ERP, within a workgroup made up of
academics, manufacturers and consultants and lead
by the Pole Productique Rhone-Alpes (France).
Thirty-five firms were interviewed about their IT
optimisation strategy concerning ERP. Analysis of the
qualitative answers (indicators and good practices
identified) allows us to propose, in Section 4, a
classification of company positions regarding their
ERP use. The two axes considered to evaluate the
efficiency of the information system use (software
maturity and strategic deployment) reveal three stages
of optimisation: operational, tactical and strategic.
Section 5 introduces some industrial cases that allow
validation of the proposed classification.

2. Synthesis of ERP surveys

Since 2000, numerous reviews on ERP projects
have been undertaken in Europe or in USA. Some are
quantitative or qualitative surveys, other are based on
case studies. This section presents a synthesis of three
recent French surveys about management issues in
ERP implementation projects. Preliminary findings
are followed up by other investigations conducted in
USA, Canada and Sweden. The objective is to bring
out some relevant elements for the problem of
optimisation of ERP use.
2.1. Survey characteristics
These surveys of ERP implementation in manufacturing firms aimed to analyse the return on

V. Botta-Genoulaz, P.-A. Millet / Computers in Industry 56 (2005) 573587

experiment from the ERP project, to identify critical

success factors and to investigate future developments.
They concerned with penetration of ERP, motives,
implementation process, functionalities implemented,
major obstacles and operational benefits.
The first survey (denoted A) was carried out by
Canonne and Damret [20] from June 2001 to February
2002 among 3000 French companies with more than
100 employees (response rate of the order of 5%). Of
the responses, 54% of the companies have implemented or were in the process of implementing an
ERP, 13% were planning to implement one within the
next 18 months and 33% had no plans for an ERP
system for the near future.
The second one (denoted B) was conducted by
Deloitte & Touche consulting group [21] from
November 2001 to May 2002 among 347 small and
medium-sized companies (mainly situated in the
south-east part of France), which already had an ERP
(response rate of 16.4%).
The third survey (denoted C) was carried out by the
Pole Productique Rhone-Alpes [22], from January to
April 2002 among 400 medium-sized industrial
companies which had implemented (65%) or were
in the process of implementing an ERP in the RhoneAlpes region of France (response rate of 11.3%).
The findings from these three studies will be
completed by three other international investigations.
Mabert et al. [23] between August and October 1999
surveyed, 193 manufacturing companies in the US,
which had adopted an ERP, to study the impact of
organisation size on penetration of ERP, motivation,
implementation strategies, modules and functionalities implemented, and operational benefits from ERP
projects. Kumar et al. [24] investigated critical
management issues in ERP implementation projects
in 2002 among 20 Canadian organisations; they
studied selection criteria (ERP vendor, project
manager and implementation partners), constitution
of project team, project planning, training, infrastructure development, on-going project management,
quality assurance and stabilisation of ERP. Olhager
and Selldin [25] from November 2000 to January 2001
surveyed ERP implementations in 511 Swedish
manufacturing firms, concerned with ERP system
penetration, the pre-implementation process, implementation experience, ERP system configuration,
benefits and future directions (response rate of 32.7%).

575

Table 1
Major companys motives

Solve the Y2K problem

Technical evolution, replace
legacy system
Restructure company
organisation/organisation
model evolution

A (%)

B (%)

C (%)

32
45

88
67

35
45

53

50

n.a.

2.2. Synthesis of survey results

2.2.1. Companys motive to implement ERP
Each survey had its own yes/no questions, which
makes the synthesis difficult. However, the commonly
quoted motivational factors remained: solve the Y2K
problem, replace legacy systems and restructure
company organisation (see Table 1). All companies
had been operating with a patchwork of legacy
systems that were becoming harder to maintain and
upgrade, and the competitive pressures on them
required increasingly more responsive systems with
real-time integrated information that the legacy
systems could not provide easily. We observe also
some arguments linked to the overall improvement of
the information system or to company willingness to
have a system able to improve its performance:
increase performance (B: 67%), simplification and
standardisation of systems (A: 59%), increase
productivity (B: 54%), ease of upgrading systems
(A: 42%), improve interactions and communications
with suppliers and customers (A: 39%). Other factors
had lower priority: gain strategic advantage (A: 19%),
response to market evolution (B: 21%).
Mabert et al. agreed with the former findings:
85.9% (83.3%) of respondents listed replace legacy
systems (respectively, simplification and standardisation of systems) as either important or very
important. On the other hand, they identified gain
strategic advantage in third position. This last factor
showed a significant difference between large (91.8%)
and small firms (70%): this can be explained by the
necessity of strategic financial analysis in large
companies. A surprising result from their survey is
that the Y2K issue was ranked very low (56%) among
motivational factors.
According to Olhager and Selldin, the two most
commonly quoted motivational factors are replace

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V. Botta-Genoulaz, P.-A. Millet / Computers in Industry 56 (2005) 573587

Table 2
Major module implemented

Financial accounting and control

Purchasing and material management
Sales management
Production planning and control
Distribution, logistics

A (%)

B (%)

C (%)

78
90
84
83
60

83
87
87
62
61

72
100
96
86
62

legacy systems (4.11/5) and simplify and standardise systems (3.67/5), whereas restructure company organisation (2.7/5) and solve the Y2K
problem (2.48/5) had lower priority.
2.2.2. ERP module or functionality implemented
The modules the most frequently implemented deal
with purchasing and material management, sales,
production planning and control, and financials (see
Table 2). To a lesser extent, we find human resources
management (about 40%), quality management (about
45%), maintenance management (about 30%) and
R&D management (about 20%). Other functionalities
were expected but are still absent, such as customer
relationship or customer service management, and
business intelligence.
Surveys show that not all the companies opt for a
unique ERP vendor: according to A, a majority of
companies (85%) opted for a unique software
package; however, about 50% of them keep specific
tools to cover particular business or functional needs.
Mabert et al. reveal that small firms prefer a single
ERP package (56.6%), while large firms add other
systems to the single ERP package. Moreover, survey
A indicates that nearly half the firms had to adjust the
system on the main functionalities, which generated
an additional cost, about 12.3% of the budget.
Olhager and Selldin agreed with these findings.
They added information about the customisation effort
needed to match company requirements: the modules
that are related to the time-to-customer process are the
most frequently implemented but also the most
frequently customised. Kumar et al. clarified that
point: one of the major challenges an adopting
organisation faces while configuring an ERP system
is that software does not fit all their requirements [1].
About 44% were organisation specific, where the
software did not support the way the organisation
worked; for example, limited industry specific

versions (33%), limited reporting capabilities

(25%), some legislated procedures not supported
(15%). In such a case, software was modified (65%),
add-ons were developed (50%) and/or business
processes were re-engineered (30%).
2.2.3. Implementation parameters
The strategy used for the implementation is one of
the most important factors in assessing the impact of
an ERP system on an organisation. Strategies can
range from a single go-live date for all modules (BigBang) to single go-live date for a subset of modules
(Mini Big-Bang) to phasing in by module and/or site.
According to B and C surveys, which more concerned
small and medium-sized firms, Big-Bang is the
most frequent (more than 60%); this ratio is inverted in
survey A, where the presence of large companies is
more important. Both Olhager and Selldin and Mabert
et al. confirmed this finding. The latter authors add that
among the major implemented functionalities, production planning is often delayed until later.
Generally, ERP implementation times are often
under-estimated, and are exceeded in about 50% of the
cases. The real duration corresponds on average to
150% of duration foreseen with one or even two
adjournments of the start-up date. Survey B informs us
about the causes of the delays: customisation
problems (17%), reliability of the tests (16%), data
migration (12%), specific developments not ended
(13%), elimination of bugs (9%), training not
ended (8%), organisation not ready at the time of golive (8%). These findings tend to confirm that while
the Big-Bang approach usually results in the shortest
implementation time, it is also the riskiest approach
because it can expose the entire stability of a company
in case of any problems.
ERP budgets and ERP costs are often confidential
data and it is difficult to synthesis such information in
a representative manner. Moreover, results about cost
drift are generally proportional to implementation
time drift.
2.2.4. Benefits and obstacles
The first survey (A) highlights different rates of
satisfaction according to modules: the users are rather
satisfied (rate superior to 75%) by finance/accounting,
purchasing, materials management and sales management modules. Although they are often the subject of

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Table 3
Synthesis of main benefits

Availability of information/quickened
information response time
Increased interaction across the enterprise,
integration of business operations/processes
Improved lead-time
Improved inventory levels and purchasing
Improved interaction with customers
Improved interaction with supplier
Reduced direct operating costs

A
(%)

B
(%)

C
(%)

55

71

n.a.

37

n.a.

n.a.

24
33
18
11
5

74
74
36
59
42

45
21
n.a.
n.a.
35

specific developments, production planning and

logistics/distribution modules present a rate of weaker
satisfaction. The second survey (B) measures the
appropriation of the system by the users: 26% of the
respondents considered it high, 39% satisfactory and
35%weak.
Main benefits are synthesised in Table 3. Most of
the perceived improvements correspond to the
expectations, which companies had, but not necessarily in the same measure: the improvement of business
indicators (number of backorders, stock shortage and
customer service rate) is far from being reached, and
the surveys do not allow us to deduce the reasons.
Furthermore, the reduction of direct costs (or IT
costs), one of the main objectives of the projects, is not
quoted in the major results obtained. The survey B
points out the improvement in traceability (86%),
which was not one of the more expected results.
Olhager and Selldin agreed with these findings.
In synthesis, ERP improved the global vision of the
company and the collaborative work permitting
master-data harmonisation, considerable reduction
of information redundancy and work in real-time.
The three surveys A, B and C also allowed
identification of problems encountered by companies
during ERP implementation. They are mainly related
to the adaptation of the company to the ERP model
or of the ERP to company specific requirements (about
76%), to the resistance to change (membership of the
users, conflicts and social problems), to the resources
of the project team (user availability, deficiencies
of the integration teams, under-estimation of the
resources) and to the problems of data exchanges
between the ERP and the existing information system

577

(redundancy of information, choice of the data and

messages to be exchanged). It seems that culture
management by objective was not extended to ERP
projects.
Kumar et al. agreed with these findings; they
present major obstacles that companies faced in the
ERP implementation projects such as problems in
transition to new systems (data migration), unavailability of skilled people, high turnover of key project
persons, cost escalations and difficulties in estimating
the project requirements. They highlighted on training
and shakedown challenges.
The first survey (A) investigates further projects;
several developments are operational or planned such
as finite capacity planning (38%), business warehouse
(38%), e-business (29%), CRM (27%) and SCM
(24%). The second survey (B) was interested in the
evolutions planned by companies; after the development of new functionalities (23%), the optimisation of
the use of their system (10%) arrives in second
position, followed by the change of version (7%), the
internationalisation of the company thanks to the ERP
(7%), the development of decision-making and the
participant implication (7%).

3. An investigation on ERP improvement

strategy
The previous results show the wide variety of
situations that may trigger interest in optimisation
of an ERP in the meaning given in Section 1. These
differences can be explained by sample characteristics
such as company size and typology, sector or respondents.
Ross and Vitale [26] compared the stages of an ERP
implementation to the journey of a prisoner escaping
from an island prison. They identified five stages: (1)
ERP design/the approach; (2) ERP implementation/
the dive; (3) ERP stabilisation/resurfacing; (4)
continuous improvement/swimming; (5) transformation. Until now, researchers have investigated the ERP
implementation process up to the stabilisation stage in
order to identify the stage characteristics, critical
success factors of implementation, best project
practices. Fewer authors have worked on the two
latter stages, i.e. optimising the use of the information
system for company development and performance.

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V. Botta-Genoulaz, P.-A. Millet / Computers in Industry 56 (2005) 573587

A project has now been launched in the RhoneAlpes region (France) to identify best practices of ERP
optimisation in companies, and their application
context. The aim is to propose a typology of these
post-go-live situations for small and medium-sized
firms.
3.1. Research methodology
A working group lead by Pole Productique RhoneAlpes has been created bringing together researchers,
consultants, and industry to undertake a qualitative
survey. The study was carried out between January and
March 2003 among 217 manufacturing companies in
the Rhone-Alpes region that have an ERP stabilised
for at least 1 year.
The survey questionnaire asked for information on
ERPimplementationandcurrent usein the company: the
respondents and the companys characteristics, the
ERP project characteristics and their initial contribution (motives, timelines, budgets, functionalities,
benefits, user satisfaction, . . .), organisational characteristics (during and after stabilisation), needs of
improvement/evolution and post-go-live diagnostic.
It was 10 pages long. Most questions in the survey
required multiple responses. The responses were
encoded using a mix of check boxes, open-ended
answers and a binary scale with yes or no responses.
The amount of open-ended questions allowed us
to appreciate numerous details but caused some
difficulties for the analysis.
After the initial development of the survey questionnaire, it was pre-tested with two respondents to
check its validity: the primary objective was to test
whether the instrument provided consistent and
accurate information. The mailing was sent out in the
middle of January 2003 to IT managers or CEOs
(managing director). Fourteen qualitative interviews
were conducted in parallel to guarantee response interpretation. By the end of March 2003, 35 responses had
been received, for an overall response rate of 16%. Given
the length and comprehensive nature of the survey, this
response rate was concluded to be reasonable.
3.2. Enterprise characteristics
The enterprise characteristics are summarised in
Table 4. The majority of the responding firms have an

Table 4
Sample description
No. of
firms
Branch of industry
Metallurgy, mechanics,
construction of machines
Components electric, electronic,
data processing
Manufacture of pieces of furniture,
articles of sports and various
Textile industry, clothing, leather and shoes
Industry of rubber and the plastics
Chemical and pharmaceutical industry
Others

12
6
5
4
3
2
3

Size (no. of employees)

Small (<100)
Medium (100500)
Large (>500)

4
16
15

Typology of production
MTS (make-to-stock)
MTO (make-to-order)
ATO (assembly-to-order)

74 a
74 a
54 a

Percentage of firms.

annual revenue between s15 million and s300

million, and belong to a group (76.7%). The number
of employees ranged from 130 to 1400; however, the
sample also includes large corporations and large
divisions within corporations.

Table 5
Project characteristics depending on implementation strategy
Implementation strategy

Big-Bang

By stage

Average implementation
time (month)

20.56

26.14

Level of satisfaction (%)

Very good
Good
Fair
Insufficient

81
9.5
9.5
0

25
37.5
37.5
0

Process formalisation (%)

Yes
Partially
No

54.5
45.5
0

25
75
0

Recurring IT audit (%)

User documentation (%)
Updated documentation (%)
Existence of user group (%)

50
86.4
68.4
50

25
100
50
75

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579

3.3. Investigation results

Table 6
Differences between installed and used functions

3.3.1. Diagnosis of ERP projects and use

These projects, introduced by the head office in 73%
of the cases, were characterised by an average budget of
s2.57 million, of which s1.37 million of external
services. The average implementation timewas about 22
months, while it was estimated as 17 months: 63% of the
firms under-estimated this parameter. The Big-Bang
strategy was used in 74% of the cases. Several other
characteristics have been studied according to the
implementation strategy (see Table 5).
It emerges that user satisfaction level is better in
case of Big-Bang, as well as the degree of formalisation of the business processes. More than 75% of
companies consider themselves (very) satisfied with
the project.
The main functions installed deal with production,
sales and logistics: sales management, material
management, shop floor management, material requirement planning, dispatching and transportation,
planning and scheduling. It has been noticed that of
the 23 available functions, 12 are not always used (see
Table 6). For 52% of them, the ERP encompasses
more than 75% of their entire information system, but
most have at least one functionality covered by a
specific development: 56% (respectively, 40%) of
the respondents interface their ERP with external
software for the payroll (respectively, human resource
management).

Function

No. of firms
who install

No. of firms
who use

Forecasting/marketing
SOP/MPS
MRP
Planning/scheduling
Dispatching and transportation
Warehouse management
Quality
Maintenance
After sales service
Controlling
Business intelligence

17
24
28
27
28
20
18
15
14
27
13

16
22
27
25
27
19
16
14
12
26
12

Companies that implemented an ERP system are

experiencing improved performance mainly from the
information perspective. Information is more easily
accessible and the interaction across the enterprise has
improved, as indicated in Table 7. Even if they were
part of the initial motives, some issues like financial
flows control, lead-time control, cost control and
inventory control have been affected to a lesser extent.
Furthermore, another unexpected benefit emerged: the
clarification of the organisation.
Firms were also questioned about the traps that can
appear during ERP projects. This was an open
question and we collected more than a thousand
responses, which were classified in nine categories

Table 7
Benefits
% Expected

% Realised

% Expected/% realised

Direct benefits
Control of flows of goods
Information flows control
Financial flows control
Services/department opening up
Information reliability
Uniqueness of information
Organisation clarification
Common view across the company

70.0
76.7
73.3
50.0
83.3
86.7
36.7
60.0

70.0
73.3
63.3
50.0
66.7
80.0
43.3
46.7

100
96
86
100
80
92
118
78

Process benefiting from ERP

Cost control
Lead-time control
Inventory control
Customer service improvement
Supplier relationship improvement

76.7
83.3
80.0
70.0
46.7

56.7
43.3
66.7
70.0
40.0

74
52
83
100
86

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V. Botta-Genoulaz, P.-A. Millet / Computers in Industry 56 (2005) 573587

Table 8
Traps in ERP projects

Table 10
Considered evolutions

Traps

Considered evolutions

Lack of re-engineering before

ERP project
Lack of project planning
Gap in the requirement definition
Under-estimation of the
importance of the choice ERP
Specific software development,
too much customisation
Lack of training
Lack of planning post-go-live,
gap in stabilisation phase management
Lack of communication and
implication of the management
Under-estimation of data-migration risk

40

Deployment of new functions

Optimisation of existing tools utilisation
Upgrade of version
Implementation of business intelligence solutions
Geographic deployment on multi-site companies

43.3
20.0
16.7
16.7
16.7

30
30
23
20
19
13
13
13

(see Table 8). It emerges that the major trap is linked

with business process definition or re-engineering.
The survey was not focused on the project phase
but on the post-go-live phase; nevertheless, these
elements may explain the improvement actions that
are undertaken and presented in the following section.
3.3.2. Projected improvement
Ninety percent of the respondents consider it
necessary to optimise the conditions of use and
functioning of their ERP system. Near one on two
have an outstanding project or a project in preparation.
Their motives are presented in Table 9.
The evolutions considered by the respondents are
presented in Table 10. Among new functions, we find
CRM, maintenance (MRO), product lifecycle management (PLM), manufacturing execution system
(MES), quality management (TQM), warehouse
management, engineering change order, . . .. The
optimisation projects mentioned mainly deal with
planning integration, archiving, access security, data
reliability and reporting.
Table 9
Motives for optimisation
Motives

Better use and exploitation of the ERP

Expected results not reached
Insufficient knowledge of the system installed
Evolution of needs
Evolution of the environment

30.0
23.3
16.7
13.3
13.3

The importance of these actions must be underlined

because of the great involvement of top management
in these projects in 65.38% of the cases. After the
implementation of the ERP, the organisation of the
company was adapted by the creation of an ERP centre
of competence (66.7% of the cases), the formalisation
of owners of process (78.3%) and the definition of the
operational roles on the processes (60.9%).
The detailed list of motives and of actions
undertaken leads us to the classification proposed in
Section 4.

4. Company position classification regarding

ERP use
4.1. Analysis of qualitative answers
Reasons for improvement as described in Table 9
are of different kinds. Some arise from the need to
master an application, which does not give satisfaction, when corrective action is required due to
unsatisfactory results on the initial project. Others
arise from internal improvement objectives or consecutive to external changes. This diversity of reasons
for optimisation leads to a classification of companies
according to their ERP use. Existing quantitative
answers are always relative to a situation, a line of
business, a maturity of the company . . . and no
reference norms can be used to compare and segment
these results. On the contrary, qualitative answers like
the reasons for improvement seem to be more
significant in a profile regarding the ERP use.
Whatever the volume of data or the line of business,
when a manager identifies poor data reliability as a
reason for an optimisation project, it identifies clearly
a situation, which can occur in all enterprise
typologies. The current section proposes a typology

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581

Table 11
Classification of identified traps
Traps with ERP as a tool

Traps with ERP as an enterprise model






 Ill defined requirements

 Lack of communication and implication of the management
 Lack of business process re-engineering (BPR) before project
 Confusions between ERP, BPR and management (ERP choice
before/after BPR, change management approach/BPR)
 Under-estimation of the importance of the choice ERP

Too much customisation

Lack of training
Under-estimated work and weak planning method
Lack of planning post-go-live, lack of stabilisation phase

 Purge and make data consistent before migration

Table 12
Classification of expected improvements
ERP tool improvement

Enterprise model improvement

 Version/release migration
 Authorisations control, data archiving,
quality and reliability of data
 Data flow automation: B2B, WebEDI and bar-coding

 New applications: MRO, CRM, TQM, PLM/PDM

 New ERP modules: analytics accounting, engineering
change order, master plan schedule
 Decision-making support: supply chain planning,
performance indicators, business intelligence

of ERP use situation built on a classification of

qualitative answers to this survey.
Regarding traps identified in the survey, some are
clearly related to the application as a tool, which has to
be appropriate to enterprise users. Others are related to
the application as a model of the enterprise, embedded
standard business processes inside the application, as
an implicit model of running the enterprise. Table 11
summarises the proposed classification.
The improvements planned by the respondents can
also be differentiated between technical improvements/
complements and functional extensions to meet enterprise needs, as presented in Table 12. ERP project are
generally long journey and in a majority of enterprises,
deployment in other subsidiaries or on other sites are still
planned even after 2 or 3 years of ERP use.
Regarding the reasons for optimisation, some are
typically relevant to malfunctioning; some, on the
contrary, mark efficient use, allowing working for
better results; others result from technical or contextual evolution, as indicated in Table 13.

Finally, as is noted in Table 7, the achievement rate

for direct benefits is better than that for process related
benefits, which allows us to differentiate maturity of
software mastery from process control.
4.2. Proposition of a two-axis classification
All of this leads us to identify two axes to measure
perfect command and control of the information
system; each is split into three levels. The first axis
entitled software maturity relates to the good use
of these systems from the point of view of their
proper efficiency, and is separated into software
mastery, improvement and evolution. The second,
entitled strategy deployment, relates to the
contribution of the information system to the
performance of the company itself, to its global
efficiency; it is separated into master-data control,
process control and strategic support. Fig. 1 illustrates the different possible stages depending on the
two axes.

Table 13
Classification of optimisation reasons
Malfunctioning

Improvement

Evolution

 Insufficient knowledge of the system installed

 Incapacity in the definition of the working procedures,
the roles
 Incapacity in the definition of needs/specifications

 Better use and exploitation of the ERP

 Expected results not reached

 Evolution of needs
 Technical evolution
of the ERP

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Fig. 1. Improvement process matrix.

Table 14
Axis of software maturity
Level

Alerts

Actions

Software mastery

 Non-appropriation of the system by the users

 Unsatisfactory operational execution
 Insufficient speed/ability to react

 Additional training of the users

 Create a competence centre
 Empowerment of the users on their role and
on their duty (users charter, quality indicators)
 Stabilisation of the execution (indicators with
follow-up of objectives)

 Insufficient system response time

 The users create parallel procedures
 No documentation on parameters, data,
data management procedures
Improvement

Evolution

 The full ERP potential is not used

 Results not reached, expectations unsatisfied
 The standard system installed does not fit
all requirements
 The number of office automation
utilities increases
 The procedures are too heavy
 Context multi-activities, international firm
 Reorganisations, technological changes
 Need of (analytics) reporting





Outside integration: B to B
Bar-code integration
Version upgrade
Software maturity depreciation

 Definition of performance indicators, business indicators

 Improvement and automation of the reporting
 Rethink the roles to simplify the procedures
 Implement the functions that are not yet used

 Standardisation on several sites/activities

 Version upgrade
 Address the ERP/environment technological
evolution (EAI)
 Develop business intelligence systems
 Implementation of enterprise architecture
(application mapping)

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583

Table 15
Axis of strategy deployment
Level

Alerts

Actions

Master-data control

 Numerous erroneous technical data

 Messages of ERP not relevant (stock shortages,
rescheduling in/out MRP, purchase proposals)
 Numerous manual inventory corrections

 Cleaning of the migrated data

 Define responsibility for data

 Product lifecycle not improved,

not integrated in the IS (revision . . .)
Process control

Strategy support

 Assert the uniqueness of the data in the

whole company
 Indicators of data control
 Maintain a business project team with
a plan of action to master-data

 Conflicts between services on procedures

 Contradictions between local and
global indicators
 Results not reached, needs unsatisfied
 Demands for improvement, for roles
redefinition by the users
 Higher expectations of customers and
top management
 No return on investment calculated

 Revise management rules in the company

 Verify the appropriateness of the tool to
the organisation
 Rethink the roles to simplify the procedures
 Define responsibility for processes

 Business objectives not reached

 Higher expectations of customers and
top management
 Changes of markets, of customer expectations
 International extension

 Modelling and optimisation of the supply chain

 External integration: B to B

 Management expectation concerning

follow-up consultancy

We propose on this matrix a synthetic vision of the

process of optimisation. It underlines the constraint of
coherence between both axes. The information system
cannot support company strategy without being
mastered as a tool. Certain situations are consequently impossible (control of the processes without
mastery of the software). Every level is defined by
alert criteria allowing recognising it, and by the typical
actions of improvement to be implemented at this
level. These alert criteria and improvement actions are
presented in Table 14 for the software maturity axis
and in Table 15 for the strategy deployment axis.
4.3. Towards a guideline for ERP use
improvement
On this basis, we can bring out a process of
optimisation (in the sense of a better use of the
information system) in three stages, which produce an
information system contributing to the strategy of the
company (situation number 3 on the matrix, Fig. 1).

 Strengthen the transverse responsibilities:

indicators, communication

 Implementation of application mapping

 Business Process Management (modelling,
process performance measure)
 IT associated to business strategies

These three optimisation stages allow us to characterise three situations (numbered 13), which are defined
below.
Situation 1 is described as a result of an operational
optimisation centred on the good use of what exists
(master the tools to master the data). To reach
situation 1, the information system is considered as a
tool of production and broadcasting of data.
Situation 2 is described as a result of a tactical
optimisation centred on the best integration of what
exists to allow a more effective use (improve ERP use
for better control on the processes). To reach this
situation 2, the information system is considered as a
support for the control of company operational
processes.
Situation 3 is defined as the maximal use of the
information system focused on a strategic optimisation leading to modification the positioning of the
existing ERP in the information system strategy. The
information is then a real component in defining the
strategy of the company.

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This approach matches the last three stages defined

by Ross and Vitale [26]: stabilisation, continuous
improvement and transformation. Activities observed
for the stabilisation stage are typically operational
optimisation as defined in situation 1 (cleaning up data
and parameters, resolving bugs in the software,
providing additional training). During the continuous
improvement stage, firms focus on implementing
adding functionality such as bar coding, EDI, sales
automation . . . generating significant operating benefits, which fit with situation 2. Finally, situation 3
corresponds to the transformation stage, which aims to
gain increased agility, organisational visibility and
customer responsiveness. The process of optimisation
proposed agree with the taxonomy designed by AlMashari et al. [8], which illustrates that ERP benefits
are realised when a tight link is established between
implementation approach and business process performance measures.
Some audits, presented in Section 5, have been
realised in several companies on the use of the MRP
modules within the ERP. They allow validation of the
currently proposed classification: optimisation stages
and situations. These elements represent the process of
improvements, which is the core of the proposed
guideline. This process has been checked against an
industrial case, described in Section 5.4.

5. Validation from return of experiments

5.1. Operational improvement
5.1.1. Company C1
International group of electro-technical materials.
Numerous sites of production in the world with
deployment of ERP between 1993 and 1997 always as
Big-Bang.
An audit and a training plan were organised in 1999
after group reorganisation for make-to-order divisions. The audit revealed that the procurement
managers manually size every purchase order because
the MRP and project requirement planning (PRP)
proposals were not reliable. Their decisions were more
often based on a make-to-stock strategy and on
knowledge of the in-progress business orders. The
numerous exception messages and rescheduling
messages in/out from the MRP were not handled.

The technical data were considered as unreliable and

the procurement manager did not understand how the
master plan forecasts, which in theory feed the MRP,
were established.
In that case, we see that the real problem is not to
improve the use of the ERP, nor of course the
performance of the company. In fact, the ERP is used
in a degraded mode. Its full functionality as a tool is
not reached. The possibilities of integration through
the standard processes were gradually abandoned for
the benefit of regulation modes based on the direct
relations between users. In this kind of situation, the
ERP is only used for its transactional functions of
orders follow-up to guarantee their accounting
integration. The stabilisation phase has reduced the
initial perimeter, excluding all functions not mastered.
Obtaining a full function ERP control requires
reviewing initial set-up for planning and control
functions, incorrectly mastered and consequently not
used. This entails first the correction of erroneous data
and then analysis of the causes of those MRP
messages that users find abnormal.
5.2. Tactical improvement
5.2.1. Company C2
Middle size industrial company. Components for
the construction industry. Batch production with
numerous options and variants. ERP project of type
Big-Bang in 19971998. Audit carried out in 2000.
The MRP planned purchase orders are printed and
sent to purchase agents, but they are evaluated as
incomplete and often seized again. The cause
determined by the operators was the absence of full
pegging in the MRP. It should be noted however that
the company is typified by make-to-stock production
with a lead-time two to three times superior to the
average commercial delay, but still does not use a
master production schedule (MPS) nor a sale and
operation planning (SOP). Numerous reporting realised on spreadsheet from the ERP data exist and are
used for planning and control.
5.2.2. Company C3
Medium size industrial company. Parts manufacturer for the automotive industry. Mass production
project of type Big-Bang in 19961997. Audit
carried out in 1999.

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The MRP planned orders are used and generally

confirmed by the procurement agents, but the
production manager considers that the compromise
ability-to-react/productivity do not fit his objectives in
the production program proposed by the MRP. He
underlines a capacity utilisation calculated by the
ERP, which goes up and down, not realistic for
operational activities. Consequently, he is led to
numerous manual modifications.
In case C3, we see that the ERP works and
allows control of the company based on the
information system data. The existence of automated
indicators and reporting to support control decisionmaking differentiates this case from company C2.
However, the ERP project did not allow progress
towards a complete integration of the planning
functions. The causes lie in the difficulties in using
a standard MRPII approach (no MPS in both cases
while the study of total cycle makes it in theory
compulsory).
In these two cases, the improvement requires an
analysis of the business processes to implement a
planning method, which did not succeed in the initial
project. The difficulty did not concern the mastery of
the tool itself but rather the implementation of a
classic MRPII approach in the company.
5.3. Strategic improvement
5.3.1. Company C4
Furniture manufacturing company with strong
image, make-to-order oriented.
The ERP project was positioned as a manufacturing
project with interfaces to a commercial software
(totally specific solution internally developed) and a
financial management software (standard package).
The strategy is more oriented towards a best of
breed solution, but essentially for historical and
organisational reasons. The deployment was made
gradually by activity between 1994 and 1999. All the
flows of goods were then managed in the ERP and
strongly interfaced with the specific commercial
software. The pressure over both the commercial
deadline and the manufacturing efficiency requirement, lead the manufacturing manager to look for a
better integration of commercial and industrial deadlines. He worked to optimise the necessary groupings
for manufacturing efficiency (lot size, machines set-

585

up, . . .) and calculate an available-to-promise on the

critical resources justifying such groupings. The
existing ERP allows this feature in a later version
but this functionality supposes a complete integration
of the commercial function in the ERP.
In that case, the ERP functioning is quite optimised
in the perimeter initially defined, but the information
system strategy adapted to a relatively segmented
organisation forbids developing the ERP towards a
complete and efficient integration of delivery time.
More precisely, functions like available-to-promised
(ATP) or capable-to-promised (CTP) allowing definition of a delivery time taking into account manufacturing constraints, actual inventories and work in
progress, cannot be used without considerable reengineering of the software and IT architecture.
A strategic choice is thus proposed to the company:
a first hypothesis is the pursuit of a best of breed
approach (urbanisation) which will necessitate integration tools like enterprise application integration
(EAI) and an advanced planning system (APS)
software dedicated to the planning integration
between source, make and deliver processes. The
second hypothesis defines a wider perimeter for the
ERP by leading a project of ERP extension (using the
new version) integrating the commercial function (at
least for order management). Unlike the cases C2 and
C3, the scope, architecture and aims with which the
ERP was implemented, can be redefined. The choice
arises from a strategic decision. How the information
system could best contribute to the strategy of the
company and specially the type of customer relationship.
5.4. Process improvement validation
The classification proposed seems to be efficient in
characterising a specific case and to orientate actions
of staff involved in ERP optimisation. One of the
qualitative interviews conducted in the survey
represents a direct validation of this proposed process
with a wide experience in a large enterprise.
In this enterprise (nuclear components producer
and distributor), the ERP has been used since 1999
after an important business BPR project. The project
leader was previously an operational manager and
became the group IT Manager. He has conducted a
large number of optimisation actions, which can be

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presented through key performance indicators. The

first generation of indicators were considered as
strictness school and were based on data validation
(quality rules not defined, purchased items without
supplier data, items without lead-time, work-centres
without capacity, manufactured items without cost
price, . . .). These indicators are synthesised in an
ERP quality indicator measuring the rate of
abnormal event per entity and type. Corrective actions
are essentially training complements. The second
generation were based on dynamic data and more
oriented to measuring interaction between functions
(incorrect bill of material noticed in production order
picking, production order released without stock
components checked, . . .). The third generation is
evolving towards process measurement (expected on
actual delivery date, expected on actual inventory
level, stock shortage per item groups, service level
defined as partial on complete delivery). Improvement
actions are based on parameter control in relation to
mean time objectives (waiting time for work-centre,
stock service level, . . .). At this stage, data control
allowed more than 50% of management scorecard to
be determined directly from the ERP.
These three generations of improvement indicators
correspond well to the three stages defined previously.

6. Conclusions
The stakes in control of integrated systems cannot
be limited to the phases of implementation or
deployment. Better use of these information systems
drives companies to new organisations and to
continuous adaptation of company strategy. It should
help in the (re)evaluation of the positioning of the ERP
in the information system to identify relevant
improvement actions in a given situation.
From practices noticed in companies and from
results of various surveys, we propose a classification
of ERP use characterised by three stages of
optimisation described on two axes. This leads to a
three-stage optimisation process: operational (the
information system is considered as a production
and data broadcasting tool), tactical (control of the
operational processes for a better integration between
functions) and strategic (contributing to company
strategy in response to changes and evolutions).

Audits realised within certain companies allow

validation of this approach.
Future trends seem oriented towards a repository of
ERP use and an optimisation guideline intended for
middle-sized companies. Identifying clear causes of
malfunctioning as proposed in Section 4 could help to
offer a benchmarking approach to ERP use. It
supposes to go into alert criteria definitions in depth
with quantitative indicators. The next step could be to
evaluate corrective action priorities depending on the
characteristics of a specific situation. This would lead
to a configurable method for defining a customised
way of continuously improving ERP use.

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Valerie Botta-Genoulaz is Assistant

Professor in the Industrial Engineering
Department of the National Institute of
Applied Sciences (INSA) of Lyon,
France. Her main courses deal with production management and enterprise
information systems. 5 years experience
in industry, PhD in Computer Sciences,
application consultant Production Planning for SAP R/3, her research interests
are oriented on planning and management of supply chains (SCM),
ERP and SCM project management (including process modeling
and organisational dimensions).

Pierre-Alain Millet is Associate Professor in the Information Technology

Department of the National Institute of
Applied Sciences (INSA) of Lyon, France
where his main courses concerned information system and ERP. 20 years experience in industry and services, ERP
consultant since 1991 on SSA solutions
(BAAN), his research interests are
focused on integration in ERP and
SCM systems, enterprise modeling and organisational dimension
of IT.