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18th Australasian Conference on Information Systems 5-7 Dec 2007, Toowoomba

The Role of ERP in Mergers & Acquisitions Grainger

ERP: More than Just a System The Role of ERP in Mergers and Acquisitions
Nick Grainger, Judy McKay Faculty of Information and Communication Technology Swinburne University of Technology Hawthorn, Victoria, Australia Email: ngrainger@ict.swin.edu.au jmckay@groupwise.swin.edu.au

Abstract
Company takeovers continue to be a common corporate practice. Where these involve the acquisition of similar businesses the speed of integration is regarded as a contributory factor to the success of the acquisition. In this paper the contribution of the implementation of the acquirer’s ERP system to integration is explored. ERP implementation may impose the acquirer’s business procedures, processes, data formats, values and underlying culture and has the potential to be a powerful tool to drive the level of integration being sought. In this qualitative study the authors explore a series of ERP implementations in the Asia Pacific region that appear to have successfully contributed to the integration of a global company’s business in this region, and contrast these findings against other conflicting outcomes reported in the literature. Implementation strategies that are considered to have contributed to this success were developed. These strategies were based on an appreciation of the cultural dimensions predominant in the region, and included emphasis on the strategic aim, sharing leadership between Head Office and the local business, project teams comprising a mix of Head Office analysts and regional business people, and strong communication practices in which a sense of community was developed.

Keywords Mergers and Acquisitions, ERP, Culture

Introduction
In the current competitive and increasingly global business environment, mergers and acquisitions abound as deliberate strategies by which companies achieve certain corporate goals and objectives such as rapid entry into a new market or region, building barriers to entry, achieving efficiencies through economies of scale and reduced costs of operations, and the like (Hubbard 1999). However about 66% or more of takeovers fail or disappoint for one reason or another (Lewis et al. 1999). Failure is defined as the non-achievement of the goals and objectives of the merger, often a failure to deliver increased shareholder value in both the short and long term. Common causes of failures include poor timing, flawed logic and ill-conceived analysis, poor alignment with the acquirer’s intended business strategy, poor planning and attention to detail, cultural issues, a failure to quickly meld the two companies and hubris (Perry & Herd 2004). Recognising the value of a merger and implementing actions so that a fully integrated, profitable and sustainable new enterprise emerges, is arguably a complex, risky, and challenging undertaking. In a study conducted between 1977 and 1982 of 152 takeovers, Hubbard (1991) identified nine possible relationships between acquirer and acquired. Hubbard (1991) proposes that if the acquisition is an absorption, one involving very similar types of firms in the same industry, where the major rationale for the acquisition is to create economies of scale, increase barriers to entry, reduce costs or increase market power, then there is a high strategic interdependence between the businesses and a low need for organisational autonomy. In other words the aim will be for the target business to be quickly absorbed, so the customer quickly sees just one business, and benefits in purchasing and marketing can be realised as soon as possible (Hubbard 1999). In such cases strategies will be pursued that attempt to remove all traces of the target’s previous (separate) existence, and seek to switch employee affiliation to the acquirer. According to Hubbard (1991:260) this is done by ‘introducing acquirer systems, procedures and policies’. Since Hubbard’s 1991 study, much in the business landscape has changed. Today there are fewer mergers being pursued and they are much riskier because of the increase in the number of cross-border mergers and acquisitions (a function of globalisation and increasing competition), and increasing expectations that the merger will realise not just cost reductions, but also will deliver on growth in new markets and capabilities, and the like (Perry & Herd 2004). At the same time the ability to impose the acquirer’s systems, procedures and policies has also increased, through improvements in the ability to integrate business processes and systems using a range of

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Popovich (2001) advocates using the acquirer’s system. but may also reduce the independence the local business previously had. Ciborra & Braa 2001) and may in fact run counter to achieving closer ties between the various business units. Ciborra & Braa 2001). to some degree or other. with standardised interfaces and cites a number of large US based corporations that have developed and implemented standard methods and techniques to deal with acquisitions. and hence its information systems. but perhaps in other countries. Previously acquired businesses may also be being brought closer into the corporate fold. and the potential ability to do all of these through an integrated ERP system. based on an Action Research intervention. The role that differences in national culture may play in an international implementation is then considered. can have on the process of mergers and acquisitions.18th Australasian Conference on Information Systems 5-7 Dec 2007. decide that this closer integration is very desirable. such as the case of Norsk Hydro (Hanseth. language. leading to better utilisation of resources. This may lead to the need for integration of formerly independent businesses into the company’s single system. which may prejudice chances of the success of the implementation (Hanseth. Integrating these businesses through ERP consolidation may bring the desired corporate benefits. and considers the need for further empirical research to further substantiate such a claim The Importance of IT in Mergers and Acquisitions Gaining the full commercial benefits of an acquisition is already known to be problematic and when the business acquired is in another country it may be even more difficult (Perry & Herd 2004). There may be a negative response to this amongst the local staff. is then outlined and the implementation strategies that contributed to integration proposed. policies and procedures on the acquired. An alternative view however. as a form of packaged software whose functionality can meet the majority if not all an organisation’s needs and allow the 718 . the more frequently reported scenario is ERP implementations in mergers and acquisitions actually resulting in fractures and problems rather than in building social and relational capital. and specifically ERP systems. It will almost inevitably lead to changes in processes and practices in the formerly relatively independent business. enhanced chances of synergy developing between the acquirer and acquired. then ERP systems with their focus on standard data formats and integrated processes would seem potentially to be a most valuable tool. IT may now be regarded as one of the most critical aspects of integration and successful implementations (Popovich 2001). Arguably. may have the potential to not only bring together the technical aspects of the relationship. In today’s business environment. and faster integration. This paper is structured as follows. Of interest to this paper is the impact that modern technologies and architectures. Bartlett and Ghoshal (1998) suggest that firms operating in global markets can be at a disadvantage if they fail to gain control over their operations worldwide. we will briefly discuss the importance of IT in mergers and acquisitions before going on to consider the nature of ERP systems and their potential to promote integration between businesses. policies and politics may all work against deriving the expected benefits. including enterprise resource planning (ERP) systems. this potentially reduces the risk of a failed merger. and manage them in a coordinated fashion globally. but also to improve the social and management relationships between people in both businesses. such as the potential to reduce costs. culture. They may have left them to run fairly independently. but may now for a number of reasons. increase market knowledge and power. Writing about critical success factors that have the most effect on the success or failure of mergers and acquisitions. In the next section. and the adoption of common business processes throughout. a perceived need to present a consistent face and supply chain to global customers. The paper concludes by considering whether the proposition outlined in this introduction can be supported. There is scant attention to this possibility in the existing literature on ERP systems. For instance ERP may be defined from a technology perspective. Business practices. However. would be that the work required to implement an ERP system. as in the integration of systems and the flow and management of data. or one long held but previously independent. The Nature of ERP Systems and their Potential in Mergers and Acquisitions To understand just how ERP can play such an effective role it is useful to gain an understanding of ERP from a number of different perspectives. If one of the underlying required contributors to a successful acquisition is control. It would now be becoming increasingly common for an acquiring business to expect the acquired to become fairly quickly integrated into its existing business processes. A series of successful ERP implementations/integrations in the Asia Pacific region. For example. in the past a company might have acquired a number of businesses in the same industry. this would surely imply implementing standardised business processes worldwide and using IT as a means of both control and managing consistency worldwide. In fact. and in imposing the acquirer’s systems. be it in a newly acquired business. Toowoomba The Role of ERP in Mergers & Acquisitions Grainger technologies. of the acquired business.

people relationships. within a business into a single one. However. The company being acquired or consolidated may have a very different internal culture to that of the acquirer/consolidator. roles and the like are a feature of an ERP implementation. This is not just from a technical data sharing and supply chain integration point of view. common reporting and the deeper integration of the business strategy. This finding might lead to questions about whether or not culture dimension scores would pre-dispose the likelihood of merger and acquisition success or failure. implying a need for higher level management involvement in the set up and configuration of the ERP system. the authors claim the phenomena are analysed in detail sufficient to transcend the individual case and may reflect the dynamics and many side effects of modernity and globalisation proposed by Giddens (1999). communication processes. (2001) propose that the deployment of ERP in global organisations may be better characterised as a careening juggernaut. If changes to processes. While these findings are clearly important to our understanding of the role of ERP systems in mergers and acquisitions. Krumbholz et al. for instance in this case the lower masculinity index in Swedish organisations compared to British ones which might have resulted in greater acceptance of the ERP in Sweden than in Britain. This may lead to the high level of local senior manager involvement that is so often cited as critical to success in ERP implementations (Brown & Vessey 2003). (2000) study. Cultural measures proposed by Hofstede (1994) were drawn on as a possible explanation of the issues. policies. responsibilities. and may give hope to companies facing 719 . ERPs are argued to be complex constructions with ever changing dynamics which may exhibit erratic behaviour which is the antithesis of that sought in their implementation. This may have far reaching effects in the acquired business. the European fertiliser division of Norsk Hydro between 1995 and 1999 (Hanseth. Toowoomba The Role of ERP in Mergers & Acquisitions Grainger seamless flow of data between different parts of an organisation (Gray 2006). with its software modules focused around processes rather than functions ‘may cut across departmental lines’ and lead away from a functional to a process orientation. all relatively quickly. and more. a run-away engine of enormous power (Giddens 1999). but in terms of the alignment of business structure. However the extent to which this is accepted and allowed to occur might well be influenced by cultural values. far from being an easy solution for companies wishing to globalise their businesses. (2001) write of an integration attempt based on consolidating ERP systems in Europe in 2001 that almost led to the opposite of the desired result and go on to speculate that by its very nature implementing an ERP system may be counter productive to integration. There may be shifts in power and management objectives which may need to be translated into system objectives. proposing that failure to adapt an ERP package to the local culture may lead to projects going over budget and over time. or may be located in another region or country with different cultural values. In the Krumboltz et al. that give much of the potential to drive the change in an acquired organisation that may lead to greater integration and ultimately acquisition success. secondly the improved governance achieved through the integration of data across the organisation. structures. processes. But such a definition ignores many aspects of an ERP system. In such a case the contents of this melting pot of roles and responsibilities are now recast in a framework that is the implicit business model of the acquiring business. Hanseth et al. then surely it can be leveraged and viewed as an explicit strategy to drive the integration of acquired businesses. Hanseth et al. has been very different. In contrast to the technology perspective. with quite different values in Hofstede’s terms. and thirdly through the business process re-engineering which often occurs at the same time in order to enable the businesses processes to run using the existing functionality of the ERP system. often disparate systems. Might such differences not also affect the success of implementing an ERP system. Boersma and Kingma (2005: 125) propose that the implementation of ERP. Boersma and Kingma (2005) note the unintended consequences of ERP. the implementation of ERP packages in a large pharmaceutical organisation in Scandinavia and the UK were considered. Ciborra & Braa 2001).18th Australasian Conference on Information Systems 5-7 Dec 2007. (2000) investigated the impact of culture on ERP implementation. Hanseth et al. quite the reverse in fact. In fact it is these so-called unintended consequences such as the proliferation of standardised business processes and the contribution to the coordination of businesses on a trans-national level. The basis of these arguments is a study of a pan-European ERP implementation undertaken by Hydro Agri Europe (HAE). the experience of the researcher in another company in a different part of the world. together with the view that an acquirer’s ERP system is loaded with their cultural values (Davison 2002). Culture: A Help or Hindrance? From the above it would initially seem that implementing an acquirer’s ERP system in an acquired business would progressively do much to drive the rapid and deep integration of the acquired business in to that of the acquirer. Governance of the implementation may thus become a vital activity involving senior managers and the very core of the business. Whilst acknowledging their proposal is based just on the empirical evidence from the Norsk Hydro case. (2001) acknowledge that potentially an ERP implementation can lead to increased control due to three factors: firstly the integration of multiple. laden as it is with the cultural values of the acquirer? In another example considering the cultural issues associated with implementing an ERP solution.

It is commonly based on series of cyclic processes comprising diagnosing. one of the researchers was directly involved in seven and indirectly involved in two. In this research the ‘diagnosing’ stage involved one of the researchers becoming aware that the chemical company wished to implement an ERP system in a newly acquired business and positioning himself to be able to collect data about the implementation process. The authors support the view that IS is a socio-technical discipline (Hirschheim 1985. companies. action taking. The Approach This paper is a qualitative study that takes an action research approach (Checkland & Holwell 2007. The first of these relates to the uncontrollability of the environment being studied with events. it is proposed to briefly discuss the research method adopted for this study. This particular research programme experienced many changes over its course due to the parent company’s emergent approach to translating high level strategy into tactical activities and the influence of global political activity (such as September 11th) and software vendor marketing strategies. utilizing a third (external and independent) researcher which will address this current weakness. Before discussing the outcomes of our experience. again through direct participation or through interviewing participants. Toowoomba The Role of ERP in Mergers & Acquisitions Grainger mergers and acquisitions and wishing to integrate these acquired businesses into their ERP system. action planning. either through direct participation or through interviewing participants. evaluating and specifying learning (Susman & Evered 1978). in this case. and may in fact help an organisation realise the benefits expected from an acquisition more quickly. Nevertheless it is acknowledged that due to the nature of these implementation projects.18th Australasian Conference on Information Systems 5-7 Dec 2007. Specifying learning involved reflection on the outcomes of the evaluation and generating knowledge which was. McKay and Marshall (2007) propose that action research is most suitable for investigating IS due to its integration of problem solving activity and research. over an eight year period between 1998 and 2006. The research here is based on a series of nine ERP implementations conducted by a US based corporation in newly acquired companies or previously acquired but allowed to remain independent. either expected or unexpected. Action taking comprised direct involvement in an implementation. overcome some of the issues and challenges of mergers. Whilst such criticism may be valid in a single action research iteration. to varying degrees. Action planning involved development and consideration of alternative approaches to implementation. in the Asia Pacific region. occurring that are outside the control of the researcher. Due to the emergent nature of most action research (Galliers 1992). then applied to the next implementation. many factors contributed to their relative success or failure and a direct causal relationship between any particular activity and response cannot be made. Indeed action research has been used as a qualitative methodology in IS research since the 1980s (Baskerville 1997). or the interviewing of participants who were directly involved. three areas of potential compromise need to be addressed. Whilst such factors influenced individual implementations. McKay & Marshall 2007) and that considered holistically. 720 . and through this process rapidly integrate the acquired businesses. in some environments. The acquiring company in all cases was a chemical manufacturing company based in the US mid-west and these were ‘absorption’ acquisitions (Hubbard 1991). acquisitions and consolidations. multiple iterations in different environments address this threat to some extent. It is acknowledge that one of the researchers was closely involved in seven of these implementations and thus cannot be regarded as an objective reviewer. patterns of implementation behaviour did appear. Of the nine implementations. Cherry 1999) to developing the argument that the ERP implementation process may. an information system is both historically and contextually situated (Mitev 2003). More in-depth research is underway into these nine implementations and a further three. A second identified threat to the validity of the findings of action research is that of contingency. The third commonly stated threat to action research is that of the subjectivity of the researcher which can come about due to the deep involvement of the researcher in organisation and process being studied (Francis 1991). however the second researcher had only an academic interest in the research. over the course of the nine implementations over the eight years. as in the findings from the research being highly contingent and having little external validity (Cook & Campbell 1976). The evaluating stage involved study of the outcomes of each implementation.

which had expanded largely through acquisition to become a global player with substantial operations now in Europe. and Singapore. largely through acquisitions in Europe and the Asia Pacific region. Such an approach is claimed to enable the alignment of business strategy. ChemOne first explored the possibility of an ERP system in 1995 with an early Oracle application that lacked required functionality and was beset with other difficulties. and had already demonstrated this strong top down approach in the Asia Pacific region with the successful establishment of a centralised accounting function based in Hong Kong. The template was designed and intended to support the Company’s aspiration to have global markets. a research spend of more than US$300M and employed more than 31. Asia-Pacific and South America. led by a locally based Australian project leader drawn from the business (not the IT/IS area). and which may require a strong company culture with top down leadership if it is to be successfully adopted (Marchand 1999). With the company pursuing a growth strategy based on absorption acquisition.000 people globally. In 2005 the company had sales in excess of US$10 billion. One of the researchers became involved in 1998 when ChemOne acquired an Australian business and proceeded to implement a new stand alone version of the Oracle ERP application. Such additions would form a library of applications theoretically available to all businesses using the system. Between 1995 and 2006 one of the larger divisions of the Company grew substantially. Thailand. culture. Taiwan and Vietnam. processes and IS and IT infrastructure worldwide (Marchand 1999). It was anticipated this implementation would be the trial for subsequent implementations in Asia and Europe where further acquisitions were being confirmed. From the researcher’s perspective. running a vanilla ERP (Oracle) application on all sites. and this ultimately resulted in a series of ERP implementation projects being rolled out in different locations across the globe over an 11 year period. The template was applied in the Australian context. A key plank in that strategy was to use the functionality of an ERP system to support the integration of data and business processes across the entire business. In this study it will be referred to as ChemOne. a potential difficulty in the case of a newly acquired company. a net income of nearly US$600M. A local project team was formed in Australia to work with a small team of analysts based in the head office in the US. Whilst a structured benefits management framework (Ward & Daniel 2006) was not applied there were a number of targeted benefits that were achieved. with functionality gaps being filled by small packaged or developed applications being interfaced with the main ERP application. The experience taught key managers in the Company the importance of maintaining a ‘vanilla’ form of the application (meaning plain and unchanged). A possible weakness or limitation of such an approach is that it does demand a level of business uniformity and consistency. Hong Kong. Manufacturing plants were acquired or built in the UK. The plan captured in this template was to have a common global infrastructure. and subsequently the ‘vanilla’ ERP system was successfully implemented by a joint local and Head Office project team. Japan. and additional sales offices were established in New Zealand. Stage 1: The Action Research Study of ERP implementations in Australia. senior IS managers in head office in the USA developed an aligned IT support strategy based on the establishment of a standard information system that could be progressively implemented in each newly acquired business.18th Australasian Conference on Information Systems 5-7 Dec 2007. and of using ‘bolt on’ applications to improve functionality where it was indisputably missing (rather than trying to gain the functionality by changing the core application). The ERP implementation in Australia took nine months and was completed on time and within budget. An attempted implementation in France was eventually abandoned. The project proceeded as follows. Malaysia and China The action research study was conducted in a chemical manufacturer supplying to industry. However. ChemOne is largely unknown to consumers outside the USA. with consistent products and brands. Australia. Italy. China. supplemented by a number of small additional applications directly interfaced with it. France. A configured application template that it was hoped would have universal application within the business. in particular: • The demonstration (to the rest of the organisation) that the business could run on a vanilla version of the ERP application. Malaysia. was proposed by the US team. the framework of ideas (Checkland & Holwell 2007) to be investigated through the implementation project was the view of the PPG managers that ERP implementation could proceed more efficiently if a ‘vanilla’ form of the application was adhered to and where strictly necessary ‘bolt on’ applications were used to add missing functionality. project sponsors were confident that this challenge would not prove to be insurmountable. but does now have a significant business in Europe and Asia-Pacific. as ChemOne was a large enterprise. Toowoomba The Role of ERP in Mergers & Acquisitions Grainger Multiple iterations of the action research cycle are regarded as an effective antidote to these three areas of weakness in the action research methodology (Kock 2007). 721 . based in the midwest USA. and consistent business processes globally.

were directly controlled by Head Office. Only the high level objectives concerning the overall timetable. Through this process and subsequent reflection (Boud. In reality many operational issues arose in the first few months of this first implementation largely resulting from the lack of experience of the implementation team and software scale up issues. processes and procedures came into use. This appeared to encourage communication from Australia. Nevertheless in the organisation’s and Hubbard’s (1999) terms. the integration was a success in that with the implementation process new terms. infrastructure and the deployment of Head Office resources. The process was subsequently successfully repeated by the Head Office and Australian team in conjunction with a local project team at a manufacturing site in north east China. Cohen & Walker 1993). the Head Office-based project sponsor allowed the implementation of this first installation to proceed with a flexible informal project plan that relied heavily on local leadership within the project team and close cooperation between local and Head Office members of the project team. This enabled the team to build new knowledge and understanding as the implementation proceeded and respond quickly to specific local requirements. had not. These three implementations. A Shared Approach to Leadership Despite Marchand’s (1999) proposed need for strong top down leadership to implement a global system. not just for Australia. all regarded as successful by ChemOne. at least within this organisation. data requirements and best practice. During these projects. Following the implementation there were few traces left of the previous separate existence of the Australian business. whilst the previous project which had tried to customise and implement an earlier version of the application. the researcher met frequently with their Sponsor and members of the project to learn about progress and the perceived contributors to successful implementation and integration of the businesses. The development of knowledgeable and experienced project team members able to support ERP implementations in other parts of the organisation. the time required being reduced to 4 months. From the researcher’s viewpoint it could only really be stated that this implementation of a ‘vanilla’ version of the application. Toowoomba • • • The Role of ERP in Mergers & Acquisitions Grainger The development and documentation of a believed to be repeatable implementation process. but also for subsequent implementation in other businesses in the Asia Pacific region and Europe. The development of an internationally accessible ERP simulation environment and supporting training documentation enabling future users in other parts of the organisation to use and learn about the application. This led to project members thinking more deeply about appropriate processes. In both cases the same strategies (discussed in the following section) were employed to promote the integration of these businesses into the increasingly global business of the acquirer. However opportunities to study further iterations of the implementation process arose as the Australian implementation experience and project process became the base for subsequent consolidation implementations across the Asia Pacific region in 2001 following a number of (absorption) acquisitions. overall budget. This appeared to lead to a high level of local responsibility and ownership being taken in Australia for the success of the project. Malaysian and Chinese businesses were as follows: Adoption of a Template for Implementation The core members of the project team were asked to plan and implement an ERP system. demonstrate some degree of replicability. Communication with Head Office was generally in the form of a dialogue and advice. (above and beyond their own immediate needs) and to the development of a repeatable implementation process which was subsequently followed in Malaysia and China. initial theory emerged regarding the implementation strategies that may have contributed to these perceived successful outcomes.18th Australasian Conference on Information Systems 5-7 Dec 2007. by this team. policies. 722 . rather than authoritative direction. A team drawn from Australia and the US Head Office worked in the first instance with a local Malaysian project team to implement a stand alone ERP system at a manufacturing plant in Kuala Lumpur. had been judged by the organisation as ‘successful’. ERP Implementation Strategies Contributing to Integration The ERP implementation strategies which appeared to contribute to the successful integration of the Australian. at this time.

The presence of these pre-existing relationships appeared to help to solve many problems. this was recognised by head office. one an Operations Planner at a major US manufacturing site. Two were IS analysts based at Head Office in the US. policies and procedures. This was a gruelling on them and expensive for the company. This built relationships between sites. Toowoomba Integration of the Project into the Local Business The Role of ERP in Mergers & Acquisitions Grainger With the exception of the local project leader who was assigned to the project full time. structure to the plan and timetable and provided opportunities for future local users and future project members (from Europe and Asia) to use the application. strongly supported by the region-wide project team. its processes. 723 . A long term strategic approach was taken to resolving the many issues relating to data and system configuration and a ‘can do’ attitude prevailed.18th Australasian Conference on Information Systems 5-7 Dec 2007. Local project members from sites where implementations were planned for the near future participated in simulations and implementations at other sites before the implementation was commenced at their own site. They spent approximately two weeks per month at the Australian site over a period of nine months. Communication Skill Development In order to involve non-Australia based project members in project meetings. The underlying process however still basically followed the template developed some years previously and the key ideas of vanilla implementation and add-on applications to fill functionality gaps. This team was known by many of the staff in the region. fastest and most trouble free implementation and integration. Experienced and Knowledgeable Staff Members from Acquiring Company Involved Supporting the ERP implementation were four internal consultants from the acquiring company. Some discreet competition developed between senior site managers vying for the smoothest. Involvement of Future Users in Simulations A series of organised business simulations of growing complexity integrated the testing of functionality. however they greatly assisted integration by bringing in and living their company’s practices. its culture. Due to the very spread out geography and the considerable personal toll of extensive travelling in the stage 1 study. and knowledgeable individuals became a regional resource travelling to other sites to assist with subsequent implementations. increased individual responsibility and was a clear demonstration that active project involvement could lead to career advancement. In all cases the businesses involved were manufacturing or selling similar groups of products in similar ways. accepted procedures and individual skill in participating in such teleconferences. it was decided to run the project largely using virtual communication technology. Stage 2: Action Research Study of the Consolidation of Asia Pacific businesses Between 2004 and 2006 the researcher had the opportunity to further study the application of the growing body of knowledge within ChemOne about implementing ERP and using the process to integrate newly acquired businesses when the ERP project team was again assembled in the Asia Pacific region to implement a major upgrade to the already installed versions of the ERP application and at the same time consolidate the company’s businesses. defined processes and draft documentation. and another an analyst from the Hong Kong regional office. now assisted by Australian. With the template agreed. This led to the project being closely integrated into the day to day business throughout its life. A social programme evolved that led to friendships developing and contributed to the development of trust. As local staff expertise developed on a site.or Hong Kong. gave a focus to project members. all other local project members retained their pre-existing business roles as well as their short term project roles. into a single instance across the entire region. and the like.based up and coming business managers who took regional leadership roles for major business processes. a practice of incorporating international teleconferencing into the regular and frequent project meetings led to the acquisition of suitable hardware. In Head Office the project sponsor who had been responsible for the earlier ERP projects in the region was assigned responsibility and he in turn employed the same project leader in Australia as before. some newly acquired. the application was implemented on one site at a time where a local project team took local leadership. A slightly revised template for the single instance implementation was developed jointly by the same analysts from Head Office as before. All had worked for the company for many years and had deep knowledge of its business. the building of supporting work practices.

providing symbols of membership (t-shirts. Focusing on the building of personal relationships over and above work. Taiwan. but personal relationships as well. by consulting. The virtual communication practices pioneered by the project teams were subsequently implemented by project members back in their normal jobs and became common practice for business management groups and functional groups across the region. The Outcome In this project. and using meetings to engender a sense of belonging. consolidation and ERP implementation plans and activities from a strategic point of view. the USA and Australia tend to score the opposite. it also led to closer relationships and communication both between sites in the region and with Head Office in the US together with the widespread use of virtual communication tools. a comparison has been made of some of the differences between the Norsk Hydro case (Hanseth. Frequent well structured meetings which fostered not just clarity about the project. Building a sense of belonging to an international community. Toowoomba The Role of ERP in Mergers & Acquisitions Grainger Simple virtual communication technologies were used to great effect. listening to and deploying plans through local leaders leading to a high level of responsibility at a local site level for their contribution to regional success (Martinsons 2004). with existing functionality and workarounds being used wherever possible. where individualism scores high as a cultural dimension and long term thinking relatively low. and at a last resort an add-on application being bought or developed to interface with the ERP system and thus provide the required functionality. Siew & Tay-Yap 2000). over a period of time. emphasis was placed on activities that would align with these cultural values including: • • Presenting acquisition. high for individualism. 724 . With this in mind during the ChemOne Asia Pacific ERP implementation project. northern and central China. The project was completed on time. Japan and Singapore. As important as the technology were the communication practices that evolved as experience grew in the effective use of these technologies. ChemOne consolidated onto a single ERP instance its businesses in Australia. emphasising the shared long term benefits of integration. project team or company. being a respected member. Altering the ‘vanilla’ version of the application itself was not considered an option (Soh. relatively low for long term orientation. This has been based on the perceptions gained of the Norsk Hydro case. Apart from the expected benefits of data integration. within budget. enabled new acquisitions to be brought onto the system quickly. Naturally local needs created challenges on individual sites (Soh. and delivered the expected functionality to users. pens. New Zealand. economically and reliably. Loyalty is important. common reporting and supply chain benefits. The European and Asia Pacific Cases Compared In Table 1. • • Had ChemOne’s consolidation project been in Europe. a very different emphasis would appear to have been needed. photos on international web sites). Malaysia. In addition a number of staff took the opportunity to become involved in the project and broaden their network to include staff on other sites and Head Office. whilst ‘Individualism’ is low (Hofstede 1994). teleconferencing combined with online meetings using MS Exchange server. These enhancements became available to all via the ‘library’ previously discussed.18th Australasian Conference on Information Systems 5-7 Dec 2007. Not mentioned are regional cultural differences. European countries. indicating a preference to be a member of a close and committed group. Siew & Tay-Yap 2000). A growing number of middle managers in the region became highly competent with the ERP application and its regional implementation. These were accommodated within a steadily expanding regional template. between late 2004 and early 2006. be that family. and the researcher’s observation of the ChemOne situation. Sharing responsibility for leadership: Respecting local leadership (Hofstede’s Power Distance dimension is high in most of Asia) (Hofstede 1994). Ciborra & Braa 2001) and ChemOne’s ERP consolidations. for instance in Hofstede’s terms the highest ranking dimension for all Asian cultures is that of ‘Long Term Orientation’. But it delivered much more than this. and built a sense of regional community became a normal part of daily operations of these projects. Thailand. This combined with a near standard implementation process that evolved. An MS SharePoint website as a virtual project office.

Implementation Team Full time. Many had worked on earlier ERP implementations in the region. some drawn from previous implementations. with benefits to both acquirer and acquired.18th Australasian Conference on Information Systems 5-7 Dec 2007. A different situation may exist when a US based company located in China is driving the implementation using internationally sourced staff in conjunction with a local project team. When the implementation project team comprises members from Head Office and other parts of the business. In Zhang et al’s study it is acknowledged that in most cases Chinese companies were buying ERP applications from foreign vendors. Whilst the ChemOne experience. (2003) who researched factors influencing ERP implementation success in China (amongst Chinese companies). high level mgmt team and infrastructure mgmt team. Same project sponsor and project leader as on previous ERP projects in the region and know as business and IT leaders in the region. the joint project 725 . policies. The implementation process can involve a deeprooted re-configuration of how a business runs. Zhang et al. a mix of IS and business support. Entirely supported by in-house consultants. cultures. Local network support by local inhouse regional team supported by HO expertise. concluded that overall Chinese organisational culture has a negative impact on local ERP implementation success. Checkland and Howells (2007) and Argyris (1985) Conclusion The motivation to implement the acquiring business’s ERP system across all acquired businesses can be expressed in terms of enabling global competitiveness. Implementation support Appears to be at least partially contracted out to consulting company with some loss of continuity Whilst ChemOne had some success with these strategies. values. Schimitz & Steinfield 1990) social influence model of technology use may further explain ChemOne’s results. Toowoomba The Role of ERP in Mergers & Acquisitions Grainger Table 1: Differences between Norsk Hydro and the ChemOne Asia Pacific case Area Geographical Location Basis of Strategy Leadership Norsk Hydro HAE Pan-Europe HO driven global IT approach HO Brussels based management team and project team ChemOne Asia Pacific HO driven regional IT approach HO US based sponsor. and is hoped will lead to more learning about the contributors to the achieved outcomes. (1993). In such a case Fulk et al’s (Fulk. A further research project to undertake such a study is now being planned. working with a local team on site or virtually. principles and beliefs. with all its complexity cannot be replicated today as such. extent of previous experience in the region or with the other companies unknown Infrastructure Data processing and local network support contracted out to third party. It embodies work practices. Regional based project implementation team Most part time. The ERP application itself is very much more than a configured database with integrated work processes. Also to be considered according to Checkland and Howell (2007) is recoverability by interested outsiders drawing on the ideas and processes that were used. as was the case of ChemOne. it was replicated at the time within the organisation. Data processing all done in house. It is recognised that the initial learning as outlined here is based on a deliberate process of reflective learning within a series of iterations of the implementation and integration process as advocated by Boud. Infrastructure support led by HO but also provided locally in-house. leading to changes in roles and responsibilities aligned with those of the acquiring or consolidating company. Validity of Learning The validity of the learning from action research studies such as this has already been justified. If it is accepted that ERP applications are loaded with cultural values (Boersma & Kingma 2005) then it is not so surprising that local project teams in China have a poor implementation success rate. some from HO.

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