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ERP Guide : ERP data integration and organisational culture

Tutorial by:Gitika Pandey      Date: 2016-05-20 03:38:27

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An important stream of criticism of ERP stems from organizational developments and the role that ERP plays in those developments. Peters & Pouw [2006] describe modern organizations as human stock farming. They see that the degrees of freedom of employees on the shop floor are systematically reduced, while top management usurps more and more of those degrees of freedom. Attention and esteem for professional expertise is replaced by emphasis on economic growth and rational principles such as profit maximization, quantitative growth and measurement systems.

Information technology in general and ERP in particular are viewed as means to maintain the intensive human stock farming. Especially the data integration characteristic of ERP systems supports the use of instruments like productivity norms, key performance indicators and other measures. This aspect of ERP is considered comparable to Big Brother: the ERP system knows exactly what you are doing.

The criticism of ERP of various authors is very outspoken. Van der Reep & van den Heuvel [2005] are very clear in their judgment of ERP: the disadvantage of ERP systems is that they create exanimate organizations in which people operate in silos. Van der Reep [2007] has not found a single example of a successful implementation of the ERP concept. ERP only gives management a sense of control, and creates dependency on the IT department for the whole organization. He does see a role for ERP, but states that the ERP concept is only suitable for goods low and routine large-volume processes, and not for information technology that is people-centric.

Dillard et al. [2006] also do not see a single positive role for ERP. They design the concept of administrative evil, which they define as administrative behavior that deprives innocent people of their humanity that is dignity, justice, rights, safety, and health etcetera. Administrative evil is created when people can deny all responsibilities because of the absence of individual accountability for the eventual outcome of organizational action. ERP systems are central components of administrative hierarchies, and because of that they are the incarnation of administrative evil. ERP users lose the ability to make their own ethical choices, because human interaction is replaced by interaction with the ERP system. According to the authors, ERP systems are fundamentally intended to maintain and strengthen control over the means of production through enhancing administrative control.

Some milder criticism of ERP is brought forward by Davenport [1999]. He sees two potential and opposite effects of ERP on the structure and the culture of the organization, that both find their origin in the data integration that ERP brings. The first potential effect is streamlining of management layers, which creates a latter, more democratic and more legible organization. The other, opposite effect of ERP is centralization of control over information and standardization of processes, which lead to hierarchical organizations with a uniform culture. The author describes examples of organizations that have used ERP to enforce more discipline by standardization of processes, but also of organizations that have used ERP for breaking down hierarchical structures by giving all employees access to data to foster innovation and creativity.

In my opinion, the ERP data integration characteristic can certainly influence organizational culture, because ERP makes information available for more employees. This gives the organization an opportunity to influence organizational culture. Whether ERP will lead to rigidity or creativity depends on the way in which ERP is implemented. I am convinced that people will always break away from shackles. If the ERP system works as a shackle it will be circumvented. For this reason it is in the interest of the organization to set up both the ERP implementation project and the ERP system in such a way that ERP fosters creativity and innovation.

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