Darshana Sedera IT Professional Services Queensland University of Technology Brisbane, Australia

Darshana SederaIT Professional Services

Queensland University of TechnologyBrisbane, Australia

Does Size Matter? Enterprise System Performance in Small,

Medium and Large Organizations

InformationTechnologyProfessionalServices

Presentation outline

• Study Background

• Focus of this paper

• Literature Review– Organizational Context– Size as a determinant– Information System Success

• Data collection

• Results and analysis

• Discussion

• Research outlook with 3gERP


Study Background

• Substantial resource requirements in Enterprise System implementation and maintenance have traditionally restricted such product suits to large organizations, prompting some researchers and practitioners to claim that ES are only suitable for large corporations (Hillegersberg and Kumar 2000).

• The aforementioned and the recent changes in ES market, wherein the demand for Enterprise Systems from large organizations has plateau, has prompted ES vendors to focus on Small and Medium Enterprises (SMEs) with scaled-down ES (Piturro 1999; Everdingen, Hillegersberg et al. 2000). • Such changes have renewed discussion on the suitability of conventionally large packaged Enterprise System for Small and Medium Enterprises.


From Yesterday…

• Focus is on SMEs – Kirill et al.• Small – does not mean a scaled-down large company –

Sarker• Cost of implementation and maintenance – Nolan• Knowledge Management and ERP – Nolan • Competitive advantage and IS investment – Newman• Implementation methodologies – Johansson • Etc,• Etc.


We are interested in…relationships between

• Enterprise Systems (Client, Consultant and Vendor)• The size of the organization and ES-performance (given that it is the same ES)…• The antecedents of ES-success (e.g. Knowledge Management) and organization

size…• Change Management procedures and size…• Requirements analysis procedures / requirements and size…• Implementation issues size…• Training needs of small, medium and large organizations…• Industry sectors differentiations and size…• Organizational cultural differences and size…

This paper is a high level overview of the 1st preposition. A full discussion paper will appear soon.


Focus of this PAPER….

The main Objectives• Using the four dimensions of the IS-Impacts model (Gable,

Sedera 2008), this study seeks to determine the purported differences in performance across the small, medium and large organizations.

• To determine a repeatable classification to categorize organizations according to the ”organizational size”.• It is noted that many researchers have employed IT budget, # of

employees and similar indicators to classify organizations.

The Research Context and the Survey Instrument


The Organizations

• 27 SAP using public sector organizations QLD, Australia– Before SAP,– Implemented in late 1990, several millions per application,– World’s first public sector SAP implementation, – Similar versions of SAP,– Same consultants,– Many success stories, – Dissatisfaction from Small organizations (CAA ~ 240 users),

• Management and maintenance structure– QLD Treasury to fund each installation.– Citec to provide support and maintenance.– Shared Services with MyERP with 5 large clusters.


The Survey

• The data was collected using the 48 survey items– Evaluation of success,– Knowledge Management, – Training,– User expertise,

• Demographic details were gathered from each respondent (e.g. duration at the public sector, department, education, training received, etc).

• More objective data were collected from organizational reports (e.g. SAP version details, architecture, user licenses of each agency).

• 319 responses, leading to 310 valid responses.• Strategic, Management, Operational, Technical respondents.


The instrument for measuring success

• Overall, the impact of SAP on me has been positive.• Overall, the impact of SAP on the agency has been positive.• Overall, SAP is satisfactory

• The items are “Formative” in nature…

System Quality Information Quality Individual Impact Organisational ImpactSQ1 Ease of use IQ1 Availability II1 Learning OI1 Organisational costsSQ2 Ease of learning IQ2 Usability II2 Awareness / Recall OI2 Staff requirementsSQ3 User requirements IQ3 Understandability II3 Decision effectiveness OI3 Cost reductionSQ4 System features IQ4 Relevance II4 Individual productivity OI4 Overall productivitySQ5 System accuracy IQ5 Format OI5 Improved outcomes/outputsSQ6 Flexibility IQ6 Conciseness OI6 Increased capacitySQ7 Sophistication OI7 e-businessSQ8 Integration OI8 Business Process ChangeSQ9 Customisation

(Gable, Sedera 2008)

The Analyses


Organizational Classification

• To determine a benchmark / cut-off that can be employed in measuring ES performance,

– There is some confusion in the literature on SIZE– E.g. Laukkanen, Sarpola et al. (2007), ‘medium’ is defined as enterprises with less than

250 employees, wherein the organizations with less than 50 employees are classified as small. Traditionally, organizations with more than 250 employees are classified as ‘large’ (Chau 1994; Chau 1995).

– Do we use the NUMBER OF EMPLOYEES?, IF SO, WHAT HAPPENS IN HEALTH / EDUCATION SECTORS?

• Using the aforementioned, to assess whether the different organizational sizes have different views on success dimensions, and

• To assess whether certain organizational sizes place a greater emphasis on particular success dimensions when evaluating ES performance.


Cluster Analysis

• Using the criterion item on “Organizational Impact” a cluster analysis was conducted…

• This was purely exploratory…• The analysis yielded three classes…• Compared these classes with the demographic details

gathered through the survey and from the objective sources…

• We found the relationship between classes that CITEC and the consultants use for their different charging structures and our three classes (~100% match). – 200 or less SAP user licenses– 200- 999 SAP user licenses– 1000 or more SAP user licenses


Cluster Analysis

• The three classes and the three cluster variables were compared and revealed ~100%* match, yielding the following classification:

• Large (4), Medium (17), Small (6) • * 98% for less that 200 cluster

A B C D E

Cluster N % of Total Mean Values for Criterion Items # of User Licenses

C1 C2 C3

1 – Large 66 21.29 5.00 5.23 4.77 Greater than 1000

2 – Medium 196 63.23 4.36 4.46 4.26 200 - 999

3 – Small 48 15.48 4.67 4.73 4.48 Less than 199

Combined 310 100

The Descriptive Statistics


Organizational Impact

Organizational Impact

Large

Large

Large

Large

Large

Large

Large

Large

Medium

Medium

Medium

Medium

Medium

Medium

Medium

Medium

Small

Small

Small

Small

Small

Small

Small

Small

3 3.5 4 4.5 5 5.5

oi1

oi2

oi3

oi4

oi5

oi6

oi7

oi8

Mea

sure

s

Scale

Overall Productivity

Cost Reductions

Staff Reductions

Organizational Costs


Individual Impact

Individual Impact

Large

Large

Large

Large

Medium

Medium

Medium

Medium

Small

Small

Small

Small

4 4.2 4.4 4.6 4.8 5 5.2 5.4 5.6 5.8 6

ii1

ii2

ii3

ii4

Mea

sure

s

Scale

Individual Productivity

Awareness and Learning

Decision Effectiveness

Individual Productivity


System Quality

System Quality

Large

Large

Large

Large

Large

Large

Large

Large

Large

Medium

Medium

Medium

Medium

Medium

Medium

Medium

Medium

Medium

Small

Small

Small

Small

Small

Small

Small

Small

Small

3 3.2 3.4 3.6 3.8 4 4.2 4.4 4.6 4.8 5

sq1

sq2

sq3

sq4

sq5

sq6

sq7

sq8

sq9

Mea

sure

s

Scale


Information Quality

Information Quality

Large

Large

Large

Large

Large

Large

Medium

Medium

Medium

Medium

Medium

Medium

Small

Small

Small

Small

Small

Small

3 3.2 3.4 3.6 3.8 4 4.2 4.4 4.6 4.8 5

iq1

iq2

iq3

iq4

iq5

iq6

Mea

sure

s

Scale


Relative Emphasis on Success Dimensions

• All three classes of organizations demonstrate a reasonably strong correlation between the success dimensions and overall success.

• The magnitude of the correlation within a dimension decreases with the increasing organizational sizes.

• In other words, the smaller organizations place a relatively greater emphasis on all of the four dimensions compared to its counterparts, when providing an assessment of ES-success.

Small Medium Large

System Quality 0.832 0.806 0.784

Information Quality 0.795 0.696 0.686

Individual Impact 0.839 0.768 0.560

Organizational Impact 0.823 0.806 0.636


Implications and limitations

• Repeatable classification method for system evaluation purposes…CA Triangulation

• The three clusters / t-tests demonstrate significant differences between pairs…

• Practitioners should promote intangible benefits to SMEs, as the net benefits may take a longer time to eventuate.

• Knowledge Management…• Better / different charging and maintenance structure for SMEs.

• Limited to perceptual views,• Could be influenced by party-line responses,


Research Outlook with EgERP

Topic Area Method/s # Country/ies Sector/s Product/s TheoryIS-Impacts Multi-Survey

China 2 Oil and Gas SAP

Malaysia 1 Tertiary Local

Gulf 1 Oil and Gas SAP

Australia 1 Public Oracle, SAP, Local

Appropriate Use Case study, Expe:, Survey 1 India, China, Australia Pharma, IT Consulting, Education SAP, Local AST

CRM, SCM Benefits Case study, Survey 1 Australia Manufacturing SAP TBA

Expert Performance in IS Case study, Survey 1 India, China, Australia Telco, Pharma, Public SAP, Local, Oracle Stake:, AST

Health IS Case study 1 Australia Medical IS ?? AST

Knowledge Mgmt Case study, Survey 2 Australia, Malaysia Public SAP AST

Shared Services Case study 2 Australia Public SAP TBA

Service Quality Case study 2 Australia Banking TBA

Satisfaction Case study, survey 1 Australia Public SAP TBA

Rapid Implementation Case study 1 South Asia Banking and Ins SAP TBA

TOTAL NUMBER OF STUDENTS

17

SME performance evaluation / Comparative study (SAP, Microsoft)SME requirements template for Public SectorSMEs Shared Services Potential

Darshana SederaIT Professional Services Research Group

Queensland University of TechnologyBrisbane, Australia

Does Size Matter? Enterprise System Performance in Small,

Medium and Large Organizations

Documents

Darshana Sedera IT Professional Services Queensland University of Technology Brisbane, Australia