Managing the Risks of Changed Processes with Enterprise Systems Shari Shang Peter B. Seddon Department of Management Information Systems National Chengchi University Taipei, Taiwan sshang@jeack.com.au Department of Information Systems The University of Melbourne Victoria, Australia p.seddon@unimelb.edu.au Abstract This paper examines the risks and the sources of risks of process changes associated with implementation of enterprise systems. Results of in-depth studies of four utility cases reveal that risks of process changes with enterprise systems are mainly associated with the packaged and integrated nature of enterprise system software, particularly its configurability, in-built processes, multiple options, data and process integration, streamlined processes, and standard processes. Organizations need to invest in on-going software exploration, business examination, and process and software changes to align new processes and management responsibilities to eliminate these risks and gain benefits. Keywords Enterprise systems, Process change, Process integration, Packaged software INTRODUCTION Enterprise systems (ES) use packaged and integrated software to support a wide range of organizational processes. Packaged software contains in-built processes, which replace in-house development efforts, and can enable or even drive organizations to change to vendor-claimed best practice. The integrated software provides seamless control of operations at all levels, and streamlines inefficient processes. The advantages of such packaged and integrated software have persuaded many organizations to invest in the software in the expectation of beneficial process changes. However, it is unclear whether these process changes are all effective. Are risks associated with use of this packaged software, and if so, what are they? Risks, in this paper, are defined as the exposure to unfavourable outcomes for the organization, caused by the process changes flowing from ES implementation and use. Rather than estimating probabilities for potential undesirable outcomes (Boehm 1991), this study take the behavioural view (Lyytinen et el 1998, Barki et el. 1993) in identifying and analysing threats to success (i.e. risks) and actions taken to reduce the chance of failure. Process failure is usually reflected in extra workforce or extra cycle time; more errors; low responsiveness; reduced service quality; and user complaints. These problems are linked to negative impact on earnings. They seem to occur with ES software implementation or upgrading. Many studies have identified factors affecting the success of on-time on-budget system implementation and stressed the importance of large and complex project management (Holland et el. 1999, Parr et el. 1999), but few have tried to trace the consequences of process changes after system implementation. Some studies observed performance dips (Shang and Seddon 2002, Markus et el. 2000, KPMG 2000, Gartner Group 1998, Deloitte Consulting 1998, Ross 1999) after system implementation and attributed these to the long learning process and to complex change management, but did not examine the sources of these deficiencies. As such innovative information systems differ in their characteristics from in-house or custom-built systems, it would be reasonable to expect the outcomes of process change with ES to be different as well. The questions we seek to answer are: • • • What sorts of risk are uniquely associated with the changed processes with enterprise systems? What are the sources of these risks? What can organizations do to eliminate these risks and gain benefits? Shang, Seddon (Paper #124) 14th Australasian Conference on Information Systems Page 1 26-28 November 2003, Perth, Western Australia