Change of Scope
As explained in Xue (et al., 2005, p. 288) the Scope of the project was radically changed during the Symix implementation of the ERP system. The original agreement between ElectricCo and Symix was for Symix to implement an ERP system for the original business structure of ElectricCo. At the time the agreement was made ElectricCo had a State-Owned Enterprise business structure. The first part of the ERP implementation proceeded very well until August 1998; until that time Symix had successfully implemented “data collection, Business Process Reengineering (BPR), and logistic organizing” (Xue et al., 2005, 288). In August the ElectricCo became organized as a subsidiary company business structure. The differences between the two business structures are very big. The Scope did not include such a huge change, so the plan for the design of the implementation suddenly became inappropriate. Clearly the company made a big mistake expecting Symix to make such a huge change in the middle of implementation.
Cultural Differences
Yusuf (et al., 2006) researched how Chinese culture has led to failures of ERP implementation. For example, Systems Operating Engineer (SOE) executives are part of the Top Management in Chinese companies. The Chinese senior management enjoys great respect from the employees working in the business hierarchy beneath them. The executives do not become involved in hands-on operations because if they demonstrate that they do not understand something they will lose face in front of the employees. There is also the problem that Chinese SOE executives do not identify ERP as an additional business asset for the company. Instead they regard ERP implementation as just another software package for the computers. (Yusuf et al, 2006, p. 1330) Since top management does not become involved in the daily operations and because they do not understand the advantages of ERP; this may have led to the failure in the ElectricCo case. The lack of communication between the top management and the project management could have been the reason that the change in the structure of the company was not included in the Scope Documentation.
References
Mehrjerdi, Y. Z. 2010. Enterprise resource planning: Risk and benefit analysis. Business Strategy Series, 11(5), doi: 10.1108/175163101180722.
Xue, Y., Liang, H. Boulton, & W.R., Snyder, C. A. 2005. ERP implementation failures in China: Case studies with implications for ERP vendors. Int. J. Production Economies, 97, 279-295, doi: 10.1016j.ijpe.2004.07.008.
Yusuf, Y., Gunasekaran, A. & Wu, C. 2006. Implementation of enterprise resource planning in China. Technovation, 2, 1324-1336, doi: 10.1016/j.technovation.2005.12.003.
