Comparative Analysis of Erp in China & Jordan

ARUN ARYAL

CIS 5280

IS CURRENT ISSUES: ERP PRESENT & FUTURE

FALL 2017

CALIFORNIA STATE UNIVERSITY LOS ANGELES

COLLEGE OF BUSINESS & ECONOMICS

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ERP Implementation Failures in China

VS.

Explaining ERP Failure in a Jordan

Contributors

Bhagyashree Bhagwat, Devashish Nayak, Nikita Shenkar, Ruchita Shinde, Stephens Edge

I. Introduction & Background…………………………………………………………………………….…3

II. The Choice of Western Vendors vs. Culture………………………………………………....3-4

III. The Role of Government and Politics………………………………………………………..…4-5

IV. The inductive Research Approach……………………………………………………………….5-6

V. Conclusion and Inferences……………………………………………………………………..…….…6

VI. Compare Table……………………………………………………………………………………………….7

I. Introduction & Background

Article 1:  ERP implementation failures in China: Case studies with implications for ERP vendors

Article 2:  Explaining ERP failure in a developing country: a Jordanian case study

The Enterprise resource planning (ERP) system is a key component to any developing business. ERP systems have enormous potential to increase productivity and increase a company’s competitive advantage. Implementation of a system is a fragile process containing many variables that could determine success or failure of the project. Although technological elements are very important in a successful ERP system, other variables can greatly affect the outcome of implementation.

Both articles introduce factors outside of technology that have contributed to many costly ERP implementations across multiple companies. Article one researches companies from five separate industries in China, while Article 2 closely analyzes the implementation of a single company in Jordan.

Authors from each article agree that factors including but not limited to culture, objectives and values can have significant influence on ERP implementation. In order to reach a better understanding of these factors and their significance we have conducted a comparative analysis report of the two articles and their respective countries. In this analysis, we focused on common themes that appeared in both articles. The themes and criteria analyzed are the following.

• The Choice of Western ERP Vendors vs. Culture
• The Role of Government & Politics
• The inductive Research Approach

II. The Choice of Western ERP Vendors vs. Culture

As revealed in both articles, there is a trend of management incorrectly choosing western vendors as their preferred partners for ERP systems. It can be inferred that management did not fully consider or comprehend the list of cultural variables that influence ERP implementation. In the case of China & Jordan, the selection of western ERP vendors revealed implementation problems that led to significant delays and cost overruns.  The largest and most popular ERP systems stem from many western countries.

In 1988 and 1990, when ERP giants SAP & Oracle entered the Chinese market, they anticipated great success. However, towards the turn of the millennium, domestic ERP vendors dominated the market. Among other factors, researchers agree that misunderstanding foreign cultures values and objectives was a critical element in implementation failures.

Chinese society is based on a network of relationships. They’re more likely to adapt to the environment rather than seek a scientific solution.  As mentioned in the text, the Chinese tend to be past-oriented, reactive and reluctant to undergo massive organizational transformation. Paternalism, personalism, and high- context communications are embedded into the Chinese way of living. On the contrary, western culture is centered with individualism, impersonalism, and formal communications. Additionally, radical changes associated with business process reengineering (BPR) is accepted much easier in western society. These discrepancies amongst China and the west led to following three broad issues.

1. Incompatibilities between organizational requirements and the ERP package in terms of data format
2. Incompatibilities in processing procedures required
3. Incompatibilities in the presentation format and the information content of reports

Whether management of these companies understood consequences of these cultural differences in unsure. However, it can be inferred that this can turn a trivial technical problem into a major concern. These issues translate into many of the problems that faced a Jordanian company in ERP implementation.

In Jordan, the design of the western ERP vendor eMAG assumed best practices including cross-organizational data flows, cost reduction, increased revenue, better management decision making and faster, more accurate transactions. The reality was the assumption was widely inaccurate and few company and project stakeholders sought these “best practices. Most senior management saw only limited need for the stated objectives, and were resistant to the project, while most employees viewed eMAG as a threat to their workload or job. Additionally, the company chosen as the service provider (Omega), was primarily concerned with finishing as soon as possible, receiving payment and moving on to the next contract.

III. The Role of Government & Politics

Similar to most areas of business development, government and political factors had significant roles in ERP implementation in China and Jordan. Although their roles differed in many respects, the examples provided in both articles serve as the following reminder. “In modern society, the business and political realms continue to intersect and complement one another, producing financialization and economic policies that shape society”.

In the year 2000, as an effort to increase trade incentives, the United States signed a free-trade agreement with Jordan. Free trade agreements have two common impacts on countries.

1. Exports to the US increase
2. imports from the US increase.

The Jordanian company (Beta) saw this as an opportunity to sell goods to the US but also as a threat from competition arriving from the US. In order to fulfill the new needs resulting from the change in policy, Beta Company adopted an ERP system. In an effort to maximize their competitive advantage they chose to introduce an American ERP system that was used by many of their new western competitors.

A common issue among the Chinese companies researched was the incapability of the ERP software to generate financial reports that complied with Chinese accounting regulations. Accounting and financial reporting laws and regulations can vary significantly by country. These regulations are the direct result of political policies unique to each country and uniformity amongst regulations was rare at this time.

Government policies required the Jordanian company (Beta) to form a new developmental strategy with ERP systems. The increase of western competitors resulting from that policy influenced the ERP system decision process. Had the free-trade agreement not existed Beta company might have chosen a domestic vendor. In the case of China, American ERP developers designed their systems to consider US regulations but were unable to produce the reports required by the Chinese government. If the political and economic circumstances had been different, the discrepancies in the financial reports might had not been a significant issue.