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Effectiveness of top management support in enterprise systems success: a contingency perspective of fit between leadership style and system life-cycle

  • Empirical Research
  • Published:
European Journal of Information Systems

Abstract

Top management support has been identified as one of the most important factors in the success of enterprise systems (ES). However, few studies have addressed the issue of what type of leadership is most effective in which phase of the ES life-cycle. Given the different challenges to leadership in the different phases of an ES, a ‘one-style-fits-all’ approach is clearly inadequate. In this study, we analyze the contingent fit between the recognized leadership styles and the phases in the ES life-cycle. The evidence from a multi-case study provides support for our contingency propositions that transformational leadership fits best with the adoption phase, transactional leadership fits best with the implementation phase, and two variations of combined transformational and transactional leadership styles are most effective in the assimilation and extension phases. This study breaks new theoretical ground in information systems literature by highlighting the contingencies of leadership effectiveness in the success of ES at different phases. It also provides prescriptive insights for top executives in terms of who to put in charge and what type of leadership style to look for when considering adopting and implementing new ES, assimilating the implemented systems, or contemplating integrations with business partners.

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Acknowledgements

This research was partially funded by grants from the National Natural Science Foundation of China (Grant No. 71429001, 71301035). The authors would like to express their gratitude to the editors, associate editor, and the anonymous review team for their constructive and insightful comments and suggestions that helped improve the quality of the study and the manuscript. The authors also want to express their gratitude to the executives, managers, and users in the case companies for their time and contribution to this study.

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Authors and Affiliations

  1. Management Science and Engineering, School of Management, Harbin Institute of Technology, Harbin, China

    Zhen Shao & Yuqiang Feng

  2. Supply Chain and Information Systems, College of Business, Iowa State University, Ames, IA, U.S.A.

    Qing Hu

Authors
  1. Zhen Shao
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  2. Yuqiang Feng
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  3. Qing Hu
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Corresponding author

Correspondence to Qing Hu.

Appendices

Appendix A

Background of the case firms

At the beginning of each interview, we asked the respondents to provide an overview of their company and talk about the progression of their ES as they know it. Specifically, we asked them when the enterprise began to use ES and how many different phases they had experienced so far. Most of the interviewees talked about the initial adoption, implementation and subsequent assimilation phases. Then we asked them whether they had any plans for the future of their systems. Of the six firms, two had integrated their ES with suppliers, and three had plans to integrate ES with their business partners in the future. We now provide a brief description of the six case firms based on our interviews and background material collected during our visit.

Firm A

Firm A is one of the three largest shoe-manufacturing enterprises in China. It installed its first financial information system in 1997 (bought from an outside vendor) and developed sales and inventory systems in collaboration with external software companies before 2002. Although the three systems were connected through interfaces, the orders could not be transferred in real time and a manual assistant was needed.

In 2002, the firm had an opportunity to visit Sida, Lenvo and Haier (three leading companies in China that had implemented ERP systems successfully) to learn from their experiences. After the visit, the CEO made the decision to use an ERP system to replace the old systems in the firm, thus realizing the delicate management of business. The system was developed with an external software corporation and a vice president (the CFO) was in charge of the implementation project. The ERP project was initiated at the beginning of 2003 and the implementation process lasted about seven months. The middle managers of business departments were not very cooperative at the beginning since the system is not easy to use. The CEO provided strong support for the implementation and communicated frequently with the CFO on critical decisions.

All the sales, purchasing, inventory, production, finance and distribution modules were implemented in the firm, and the system was officially put into daily use in 2004. At the time of our visit, the distribution system module was integrated with sales, production and purchase modules and the customers could log into the systems at any location to submit the order. The production plans were generated according to the actual orders. The system had received positive feedback from both internal employees and external clients, and it led to an increase in sales of 50–60%.The top management team was planning to extend the system to the suppliers to implement logistics integration.

Firm B

Firm B is one of the largest tyre manufacturing enterprises in Weihai and its average annual sales revenue is 14,000 million RMB. The firm had developed sales, purchase, inventory, and production modules in-house and bought its finance module from external software suppliers before 2000. However, the original systems could no longer support the business operations around 2000.The top management team proposed to adopt an integrated ERP system instead of the original multi-vendor systems. After thorough market research and comparison of different ERP systems from different vendors and in-house IT units, the top management team selected the Oracle ERP system because it was more flexible for supporting future business growth.

The ERP implementation process began soon after the system was selected. The sales, purchase, inventory, and production modules were implemented successfully but the finance module failed since the financial operational principles of the Oracle system were quite different from the financial system in use. This had created significant issues in consistency and traceability of data throughout the firm. In 2003, the firm began its second implementation attempt, and the finance module was eventually integrated with the other modules of the Oracle system. This time the CEO designated a vice president (CFO) to be completely in charge of the implementation. With the mutual effort of the CFO and ERP key users, the second implementation was successful and the integrated ERP system was put into daily use in 2004.

Since then the system has gone through several revisions and upgrades, and it is now playing a significant role in managing and controlling business processes, and has realized real-time information sharing by integrating sales, inventory, production, and finance modules. At the time of our second visit, the firm had integrated SRM and Sales B2B systems to manage its suppliers’ and clients’ information and transfer orders between the headquarters and the sales subsidiary in real-time, and this had greatly increased its procurement and sales order processing efficacy.

Firm C

Firm C is engaged in glass manufacturing and has achieved independent intellectual property. It has a long history of using information technology for managing its business operations. It implemented the materials management system, sales management system, and financial management system in a step-by-step manner in 1989, 1994, and 1996. With the growth of the business, the original systems became inadequate, and a major problem was the disconnection between the finance, sales, and inventory systems. Then in 2003, the firm decided to adopt an integrated ERP system. The firm investigated both domestic and international ERP software vendors such as Ufida, Kingdee, and SAP. They found that Ufida and Kingdee could not satisfy the special requirements of their products, while SAP was more complicated and expensive for the firm. In the end, the top management team decided to develop an ERP system in-house with the help of outside software suppliers.

The CEO had a strong background in finance and paid great attention to the implementation process. The company’s CFO was designated to take charge of the implementation project. The CEO and CFO frequently engaged in systems training processes to make the employees know the importance of ERP systems for their business. The implementation began at the end of 2003 and lasted about one year. Finally, an integrated ERP system including sales, purchasing, product, inventory, and financial management modules was implemented and put into daily use in 2005. Small improvements were made based on the new requirement proposed by the business units, and in 2007 the firm added the function of bar code management. At the time of our visit, the firm had largely achieved the intended goals for the ERP system. In the future it also has plans to integrate the system with its suppliers and clients to realize real-time information sharing in the supply chain.

Firm D

Firm D is a famous carpet manufacturing enterprise in China. It implemented its first purchase-inventory-sales system in 1998. However, each subsidiary of the firm needed to make separate data entries using the system and then transfer the results to the headquarters. In 2004, the top management team demanded better information systems support for its growing business operations. With this mandate, the firm conducted a thorough evaluation and selection process. It was confronted with the choice between buying a commercial packaged ERP system and developing an integrated ERP system in-house. Eventually the top management team decided to develop an integrated ERP system in-house in collaboration with a local university since the commercial ERP systems required extensive reengineering of the business processes and were considered high risk.

The firm implemented modules of sales, purchasing, inventory, and production management step by step to avoid the high risk of all-in-one implementation, and the employees experienced a gradual learning process during the implementation. The system went live in 2005. At the time of our second visit, the production module had been upgraded to realize the function of material requirements and instant data transfer between headquarters and each branch plant. About 90% of the products could be scheduled based on the orders with the ERP system, and the firm realized the gradual improvement of its business process by learning and assimilation of the system functionalities over time.

Firm E

Firm E is a foreign-owned enterprise that focuses on printed circuit manufacturing. Its products are mainly applied in computers and digital cameras, and Samsung is its biggest client. The firm’s headquarters in South Korea has its own in-house-developed ERP system to manage its production, inventory, and quality management, and the Chinese subsidiary was integrated into the system in 2001. There were many problems with the ERP system during the integration, such as issues related to code translation from Korean to Chinese. In 2006 a new CEO was hired at the headquarters and this person pushed for the implementation of an SAP ERP system within the headquarters and all of the subsidiaries, since SAP can realize the instant and accurate data transfer from subsidiaries to the headquarters. The implementation process was not smooth and encountered resistance from employees. The CEO was very insistent and invited professional external consultants to train the employees with regard to the logic of the SAP system and the benefits that the system would bring to the firm.

Because of the complexity of the SAP system, the implementation process lasted for about 2 years and some employees were dismissed because of the noncooperation with the consultants. The system finally went live in 2008. After 2 years learning and adaptation, at the time of our visit, the firm could use the SAP system to make production plans and schedules, to monitor and control the quality of the products, and to use the information for forecasting and decision support. The system had been indispensable for the firm ever since.

Firm F

Firm F is one of the leading pump manufacturers in China and was founded in 1952, with more than 50 years experience. There are 1300 staff and workers, including 150 technicians. The firm developed a purchase-inventory-sales system in-house before 2002. However, the system could not support the business requirements of the firm’s ‘small batch and multiple variety’; thus, in 2003 the top management team decided to adopt an integrated commercial system package within the organization. After detailed selection from among suppliers of Oracle, SAP, UFIDA, and DigiwinSoft, the top management finally decided to invest in DigiwinSoft since it is more professional in the manufacturing industry and is suited to Firm F’s business requirements.

The system implementation lasted about one year and encountered strong resistance from the finance department. The top management team played a significant role in pushing forward the implementation process. After the system was put into daily use, the manager of the information center was promoted to the position of CIO to take charge of the system utilization and upgrade within the firm. At the time of our visit in 2014, the financial module had been integrated well with production, sales, procurement, and warehouse modules, and the firm had also integrated the ERP system with PDM (Product Data Management) and OA (Office Automation) to build an integrated information platform.

Appendix B

Interview questions

The following questions were developed to ensure coverage and consistency of the semi-structured interviews. However, the interviewers were encouraged to ask follow-up questions if new and interesting information emerged and to skip certain questions if the information solicited was already provided in prior conversations.

For members of top management team

1) What is the vision and strategy of your company regarding competition and success in the marketplace?

2) What is the role that enterprise systems play in your company?

3) Do you have a clear vision of enterprise systems in support of your business? How do you communicate that vision to other members of the top management team and the employees?

4) In your view, what would be a full life-cycle of an enterprise system? From its birth to its maturity or death, what are the main phases you have to manage?

5) In discussion about adopting a new enterprise system, what was the dominant attitude toward the system among the top management team members? And how was the top management team convinced about the decision?

6) What do you see as the most critical leadership qualities a top manager must have in order to initiate successful adoption of enterprise systems? Can you provide a few examples?

7) When did you start to implement your first enterprise system? How much did it cost you to complete the implementation projects and how long did it take?

8) How much were you and other top management team members involved in the implementation phase?

9) What were the main challenges and obstacles you encountered in the enterprise systems implementation phase, and how did you and other top management team members solve them?

10) What do you see as the most critical leadership qualities a top manager must have in order to promote the successful implementation of enterprise systems? Why?

11) What were the main challenges and obstacles you encountered in the enterprise systems assimilation phase, and how did you solve them?

12) What did you or other top management team members do to ensure a high level of assimilation? Can you give us some examples?

13) How did you encourage employees to better assimilate system functionalities? Please give us some examples.

14) What do you see as the most critical leadership qualities a top manager must have in order to foster the successful assimilation of enterprise systems? Why?

15) How much are your enterprise systems connected with your partners either upstream or downstream of the supply chain? In what ways? Can you give us some examples?

16) Who is the main driver behind system integration with partners? How much are you or your top management team involved in this effort?

17) What are the major challenges and obstacles you encountered in the extension phase? How did you or your top leadership team overcome these challenges?

18) What is your role in negotiating with customers and suppliers during the process of system integration? And how do you coordinate your company’s internal resources and processes?

19) What do you see as the most critical leadership qualities a top manager must have in order to lead a successful extension of enterprise systems? Can you provide a few examples?

20) How does the success of enterprise systems relate to the success of your overall business? By what measure?

For members of middle management team

1) What is the role and job responsibility of your department? Have the role and responsibility been affected by the implementation and use of an enterprise system?

2) What do you think is the role enterprise systems have played in your department? What are some of the specific business processes you rely on for the enterprise system?

3) In your view, what would be a full life-cycle of an enterprise system? And how does your company experience each of these phases?

4) How much were you involved in the discussion about adopting a new enterprise system in your company? Did you know who was primarily responsible for the decision?

5) Did any of the top management team members talk to you about the new system? In what ways?

6) What were the main challenges of having a new system in your department? What did the top management do to address these challenges?

7) What do you see as the most critical leadership qualities a top manager must have in order to initiate the successful adoption of enterprise systems? Why?

8) What were the main challenges and obstacles you encountered in the enterprise systems implementation phase, and how did you solve them?

9) What did your top management team do to ensure successful implementation? Can you give us some examples?

10) How do you evaluate the critical leadership qualities of the top manager in charge of the implementation process? Please give us some examples.

11) What were the main challenges and obstacles you encountered in the enterprise systems assimilation phase, and how did your top management team solve them?

12) Do you have requirements with regard to system upgrade in the assimilation phase? And how does the top management participate in the upgrade process?

13) How do you evaluate the leadership qualities of the top management in charge of the assimilation phase? Can you give us some examples?

14) How much are your enterprise systems connected with your partners either upstream or downstream of the supply chain? If they are not, why not? What are the main obstacles?

15) Who is the main driver behind system integration with partners? How much are you or your top management team involved in this effort?

16) What are the major challenges and obstacles you encountered in the extension phase? How did you or your top leadership team overcome these challenges?

17) What do you see as the most critical leadership qualities a top manager must have in order to lead the successful extension of enterprise systems? Why?

18) How does the success of enterprise systems relate to the success of your department and the overall business? By what measure?

For employees

1) What is your role and job responsibility in your department? Were the role and responsibility affected after using the enterprise systems?

2) What do you think is the role enterprise systems have played in your work?

3) How did the top management communicate the enterprise system adoption decision to you?

4) Were you impressed and convinced about the decision to use enterprise systems? Why or why not?

5) How did top management address your concerns, if they addressed them at all?

6) What were the main challenges and obstacles in the enterprise systems implementation phase, and how did the top management solve them?

7) What did the top management team and your direct manager do to ensure successful implementation? Can you give us some examples?

8) How do you evaluate the leadership qualities of the top management in charge of the implementation process?

9) What leadership qualities do you see as the most critical to lead successful implementation of enterprise systems? Why?

10) What were the main challenges and obstacles you encountered in the enterprise systems assimilation phase, and how did your top management team solve them?

11) How much were the top management team members involved in the assimilation phase? Can you give us some examples?

12) Do you have requirements with regard to system upgrade in the assimilation phase? And how does the top management participate in the upgrade process?

13) Does the top management or middle management team set up any rewards system to assess your assimilation level of enterprise systems? Please provide us some examples.

14) What do you see as the most critical leadership qualities a top manager must have in order to foster the effective assimilation of enterprise systems? Why?

15) How much are your enterprise systems connected with your partners either upstream or downstream of the supply chain? What are the main obstacles?

16) What are the major challenges and obstacles you see in the extension phase? How did your top management team overcome these challenges?

17) What do you see as the most critical leadership qualities a top manager must have in order to lead a successful extension of enterprise systems? Why?

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Shao, Z., Feng, Y. & Hu, Q. Effectiveness of top management support in enterprise systems success: a contingency perspective of fit between leadership style and system life-cycle. Eur J Inf Syst 25, 131–153 (2016). https://doi.org/10.1057/ejis.2015.6

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  • DOI: https://doi.org/10.1057/ejis.2015.6

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