Enterprise System in the German Manufacturing Mittelstand

Enterprise System in the German Manufacturing Mittelstand

Tobias Schoenherr (Michigan State University, USA), Ditmar Hilpert (Reutlingen University, Germany), Ashok K. Soni (Indiana University, USA), M.A. Venkataramanan (Indiana University, USA) and Vincent A. Mabert (Indiana University, USA)
Copyright: © 2009 |Pages: 17
DOI: 10.4018/978-1-59904-859-8.ch015
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Abstract

Although the research on integrated enterprise systems (ES) is proliferating, the knowledge base about ES implementations, usage and experiences outside the United States is still small. This is also true for Germany, despite the crucial importance of ES in the country, and the potential uniqueness of its ES environment. Most ES research to date has also been focusing on larger corporations, neglecting the challenges and issues that small and medium sized enterprises (SMEs) have been experiencing. Collectively often referred to as the Mittelstand, German SMEs form the backbone of the German economy. This chapter brings attention to these areas by describing observations obtained from eight SMEs in the German manufacturing sector. These findings about ES implementation, usage, and experiences are reported and summarized along nine points of interest.
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Literature Review

Experiences with integrated ES (ERP systems) were first published in practitioner journals (Mecham, 1998) and the popular press (Kirkpatrick, 1998; Diederich, 1998). Shortly afterwards first academic research reports appeared (Davenport, 1998), fuelling interest and excitement among academics. Up to date a multitude of articles have appeared dealing with both the positive (Bradford, Mayfield, and Toney, 2001) and negative (Sumner, 2000) effects of ES implementations, as well as their associated considerable cost (Mabert, Soni, and Venkataramanan, 2000). Mabert (2007) and Jacobs and Weston (2007) provide a comprehensive chronology of the historical development and evolution of these systems.

Key Terms in this Chapter

Standard Packages, modifications, and In-house Developed Applications: This sixth focus area in our chapter reports on whether standard packages supplied by providers were chosen, and if yes, whether and to what extent modifications were carried out. If in-house developed applications were preferred, benefits and challenges, as well as integration possibilities, were discussed. Rationales behind each choice were explored.

ES Implementation and Usage: In our chapter we describe the experiences companies made when implementing and using enterprise systems. Four of our case study firms were in either of these two phases. Crucial preceding stages include the decision and planning phase. Without those two additional phases implementation and usage would not be possible, or only in a very haphazard way. In our chapter we therefore describe experiences of our companies in all of these stages, as illustrated in Figure 1 of the paper. A similar implementation and usage timeline was suggested by Markus and Tanis (2000).

Power of Final Decision: This is the second of our nine issues that we focus on, which deals with who was responsible for the final decision to modify or replace the current ES infrastructure. Change agents can include top management, the owner of the firm, or IT personnel.

Upgrades After Implementation: This final area of investigation in our chapter deals with how upgrades and new releases after the implementation were handled. These upgrades can be quite time-consuming, and usually not every new release is implemented.

Order of Implementation: The fifth of our nine areas we focus on in the chapter. Here we deal with the order in which the different modules or components of the ES were implemented in the company, and the rationale behind the sequence.

System and Provider Selection: The third of our nine focus areas deals with the process or approach taken to select the system and its provider(s). Possible influencing factors include the availability of solutions with good fit, the sustainability of the provider, the capabilities of the system, the preferences of the company, and its internal processes.

Involvement of Employees and Training: With this seventh area of investigation we examine the level of employee involvement and training, and how these tasks were approached. Costs associated were also discussed.

Time Spent in System Selection, Planning and Implementation: In this fourth area of investigation we report on the time spent for selecting the system, planning the implementation, and then finally implementing the ES. The time taken and required can be quite long at times, which however often ensures a sound and thorough process.

German Mittelstand (German SMEs): The German Mittelstand refers to small and medium sized enterprises (SMEs) in Germany, which form the backbone of the country’s economy. Numbering over one million companies, the Mittelstand employs over 20 million people, is responsible for almost 40 percent of total German gross investments and accounts for 30 percent of the exports (Hauser 2000). These enterprises are often highly innovative and entrepreneurial, and are frequently very competitive international market leaders. The primary focus of these German SMEs is usually on highly customized and specialized products and services, resulting in information systems becoming a key competitive weapon (Taylor, 1999; Voigt, 2001). The companies can rely on a highly skilled and flexible work force, which is supplied by Germany’s exceptional vocational training system. This leads to a very loyal and stable workforce, with a turnover rate of only about 3 percent. Overall, German SMEs provide a unique setting to study the design and complexity of enterprise systems. The Mittelstand companies in our sample ranged in size between 593 and 1,200 employees, with annual revenues between 64 and 378 million Euros.

Impetus for a New System: One of our nine areas of investigation reported in the chapter. Here we explore who or what was the driving force behind the ES implementation, i.e. what ultimately led the company to their current or future system. This can include functional departments, but also changes in the marketplace, increased competition, changing demands by customers, etc.

Implementation Success and Satisfaction: In this eighth issue we investigate in our chapter we describe the success and satisfaction companies reported with their ES planning, implementation and usage. While it can be difficult to quantify hard performance measures, also intangible benefits are realized.

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Editorial Advisory Board
Table of Contents
Preface
Jatinder N. D. Gupta, Sushil Sharma, Mohammad A. Rashid
Acknowledgment
Jatinder N. D. Gupta, Sushil Sharma, Mohammad A. Rashid
Chapter 1
Nancy Alexopoulou, Panagiotis Kanellis, Mara Nikolaidou, Drakoulis Martakos
Efficient response to change, both upon expected and unpredicted contingencies, is a critical characteristic for modern enterprises. This chapter... Sample PDF
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Chapter 2
Hossana H. Aberra
SAP Business Blueprint is a vital part of SAP implementation exercise. A well-defined business blueprint may set the foundation for successful... Sample PDF
What is SAP Business Blueprint?
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Chapter 3
Rogerio Atem de Carvalho
This chapter introduces the key aspects of Free/Open Source Enterprise Resources Planning systems (FOS-ERP). Starting by related work carried out by... Sample PDF
Free and Open Source Enterprise Resources Planning
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Chapter 4
Brian H. Cameron
Business process modeling (BPM) is a topic that is generating much interest in the information technology (IT) industry today. Business analysts... Sample PDF
The Changing Nature of Business Process Modeling: Implications for Enterprise Systems Integration
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Chapter 5
Alok Mishra
In the age of globalization, organizations all over the world are giving more significance to strategy and planning to get an edge in the... Sample PDF
Enterprise Resource Planning Systems: Effects and Strategic Perspectives in Organizations
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Chapter 6
Gary P. Moynihan
An executive information system (EIS) is a software system designed to support the informational needs of senior management. The EIS is... Sample PDF
An Overview of Executive Information Systems
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Chapter 7
Joseph Bradley
Enterprise Resource Planning systems have proven difficult and costly to implement. Organizations must consider the risks and rewards of embarking... Sample PDF
Enterprise Resource Planning System Risks and Rewards
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Chapter 8
Andrea Masini
After observing that the pervasiveness of IT may soon render it strategically irrelevant, management scholars have recently questioned the value of... Sample PDF
ERP-Driven Performance Changes and Process Isomorphism
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Chapter 9
Ronda R. Henning
The application software life cycle considers the functionality of a given collection of components within the context of a consumer’s requirements... Sample PDF
Application Integration within the Enterprise Context
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Chapter 10
Sanjay Mathrani, Mohammad A. Rashid, Dennis Viehland
A significant investment in resources is required for implementation of integrated enterprise systems as technology solutions while the... Sample PDF
The Impact of Enterprise Systems on Business Value
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Chapter 11
Charlotte H. Mason, Aleda V. Roth
Growing competitive pressures and escalating customer demands have led businesses to sophisticated information technology to manage costs and... Sample PDF
The Right Path to SCM-CRM Integration
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Chapter 12
Euripidis Loukis, Ioakim Sapounas, Konstantinos Aivalis
This chapter is dealing with the alignment of enterprise systems with business strategy and its impact on the business value that enterprise systems... Sample PDF
Enterprise Systems Strategic Alignment and Business Value
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Chapter 13
Sanjay Mathrani, Mohammad A. Rashid, Dennis Viehland
The market for enterprise systems (ES), continues to grow in the post millennium era as businesses become increasingly global, highly competitive... Sample PDF
Enterprise Systems in Small and Medium-Sized Enterprises
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Chapter 14
Kerstin Fink, Christian Ploder
Small and medium-sized enterprises (SMEs) are a vital and growing part of any national economy. Like most large businesses, SMEs have recognized the... Sample PDF
Integration Concept for Knowledge Processes, Methods, and Software for SMEs
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Chapter 15
Tobias Schoenherr, Ditmar Hilpert, Ashok K. Soni, M.A. Venkataramanan, Vincent A. Mabert
Although the research on integrated enterprise systems (ES) is proliferating, the knowledge base about ES implementations, usage and experiences... Sample PDF
Enterprise System in the German Manufacturing Mittelstand
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Chapter 16
Darshana Sedera
Organizations invest substantial resources in acquiring Enterprise Systems, presumably expecting positive impacts to the organization and its... Sample PDF
Size Matters! Enterprise System Success in Medium and Large Organizations
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Chapter 17
Joseph Bradley
ERP implementation projects normally involve a single vendor providing the packaged software for the entire system. Although most companies follow... Sample PDF
Implementing Best of Breed ERP Systems
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Chapter 18
Ganesh Vaidyanathan
Enterprise resource planning systems are complex yet single, integrated software programs that runs off a single database so that the various... Sample PDF
Enterprise Resource Systems Software Implementation
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Chapter 19
Calin Gurau
This chapter considers the importance of business modelling for implementing e-CRM systems. The introduction of e-business models requires the... Sample PDF
Restructuring the Marketing Information System for eCRM: An Application of the Eriksson-Penker Method
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Chapter 20
Albert Boonstra
At the present moment, many hospitals are going through a process of change directed at the integrated delivery of health care. Enterprise Systems... Sample PDF
Analyzing an ES Implementation in a Health Care Environment
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Chapter 21
S. Padmanaban
ERP systems have become key enablers of businesses today. While many organizations wish to adopt ERP for competitive advantage, they find choosing... Sample PDF
Designing to Deploying Customisable ERP Cost Effectively
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Chapter 22
Mateja Podlogar, Katalin Ternai
This chapter introduces the ERP systems, their complexity, and especially their integration in higher education as a significant challenge for many... Sample PDF
ERP Systems in Higher Education from Regional Perspective
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Chapter 23
Valentin Nicolescu, Holger Wittges, Helmut Krcmar
This chapter provides an overview of past and present development in technical platforms of ERP systems and its use in enterprises. Taking into... Sample PDF
From ERP to Enterprise Service-Oriented Architecture
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Chapter 24
ERP and Beyond  (pages 329-345)
Suresh Subramoniam, Mohamed Tounsi, Shehzad Khalid Ghani, K. V. Krishnankutty
Enterprise-wide automation has already transformed the relations among suppliers, purchasers, producers, and customers. Conventional ERP helps only... Sample PDF
ERP and Beyond
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Chapter 25
Gita A. Kumta
The chapter introduces the essence of ERP in government as a tool for integration of government functions which provides the basis for citizen... Sample PDF
E-Government and ERP: Challenges and Strategies
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Chapter 26
Manish Gupta, Raj Sharman
A paradigm shift is occurring in identity management philosophy. User-focused identity management is one the emerging and most promising paradigms.... Sample PDF
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Chapter 27
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From the Knowledge Management perspective, Knowledge distribution is a critical process in organizations. As many of the other Knowledge-related... Sample PDF
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