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Technical opinion

Cultural Complications of Erp


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Enterprise Resource Planning (ERP) systems have been the subject of considerable research [4] and media attention in the last few years. Much of this literature originates from and describes application contexts in North America, and to a lesser extent Western Europe, where most ERP developers are located and implementations have occurred. However, there are valuable lessons to be learned from implementation experiences in parts of the world with markedly different cultural heritages: for instance, a recent Communications article [9] discussed cultural misfits from a Singaporean perspective.

A university in Hong Kong provides the specific operational context for this "Technical Opinion." A number of cultural consequences associated with the widely held assumption that an ERP system incorporates best practices will be discussedaccess to information, the "real" value of numbers and barriers associated with reengineering and empowerment. These cultural consequences were identified as a result of comparing educational ERP system implementation practices in North America and Hong Kong. While these consequences are specific to Hong Kong and similar Chinese communities, they should stimulate ERP researchers, practitioners, and consultants to take account of cultural impacts on ERP system implementation.

Consultants often recommend to organizational clients that an ERP system be considered to embody best practices in the way it organizes data and processes. The justification for this recommendation is the expense and resource intensiveness needed to modify the way in which an ERP system functions in order to make it fit existing organizational practices. Furthermore, when the ERP system is upgraded, the organization will need to go through all the modifications again. However, accepting the recommendation means an organization needs to change (or reengineer) its internal processes in order to match the processes of the ERP system. In North America and Western Europe, where most ERP developers are located, this may not be very problematic, since the developers build typical organizational processes and practices into their systems. However, in cultural contexts embodying organizational practices different than those encountered in North America or Western Europe, there can be significant problems associated with the reengineering of local practices and processes, as is the case with the Chinese communities of Southeast Asia.

For instance, ERP systems are typically not geared to produce user-specific reports, since they are designed to function in an online, up-to-the-minute environment where reports are a thing of the past. However, such reports are often necessary in the bureaucratic societies of Southeast Asia for government departments and agencies, as well as internal process review and control procedures [9]. In Hong Kong, universities tend to employ more clerical staff in administrative offices than their North American counterpartsin part because of the substantial need to produce reports. Forms exist for every imaginable purpose, as well as many unimaginable purposes, all to be completed in triplicate or more. This paper-ridden and report-driven context provides many opportunities (or challenges) for reengineering: one university noted in its IT strategic plan that "the administrative processes currently practiced in the university [need to] undergo a thorough review" and "any administrative process for which an IT solution is proposed should first be the subject of a reengineering study" [2]. However, cultural preferences and practices make such reengineering problematic at best, because of the implications for organizational change. Examples of these cultural preferences and practices are discussed in the following sections.

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Access to Information

ERP systems are typically designed to be open systems, with all authorized users able to access most, if not all, parts of a system. In an open culture, where employees are trusted to use information responsibly, this works well, but in some cultures a much stricter control of access to information is mandated, often on a need-to-know basis. Changing this component of culture would be extremely difficultfor both end users and management, neither of whom would be comfortable with such a change. For example, in the Chinese business culture, information is often treated as an individual, rather than an organizational resource [8]. Consequently, management information is typically only for managersand may even exist only in their minds. Formal codification of this information inside an ERP system in order that it can be accessed by many people would involve substantial changes to the culture of information and its personal value. Indeed, discretionary power is preserved through the delicate control of this critical information, which is made available selectively to subordinates instead of being distributed widely among organizational members [8].

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HomonymsThe Real Value of Numbers

Homonymswords that sound the same, yet have different meaningsare powerful agents of meaning in societies with tonal languages. ERP systems often generate ID numbers for entries in a system, for example, employees, students, hospital patients, to name a few. Such numbers can have significant associations in the Chinese language. In Hong Kong, it is typical that buildings have multiple floor numbers missing, and certain telephone and account numbers are highly sought out while others will not be used. While a six-digit set of numbers theoretically provides one million unique numbers, the usable number is much fewerfor cultural reasons. Two key numbers serve to illustrate: 4 and 8. In southern Chinese dialects (Cantonese is spoken widely in Hong Kong, as well as elsewhere in Southeast Asia and in overseas Chinese communities), 4 is a homonym for "death," while 8 is a homonym for "wealth" or "riches." In Hong Kong, car number plates with strings of 8s (or even Bs) can sell for a considerable price. But 4s are avoided like the plague. Other numbers, such as 1 (a homonym for "must") and 2 (a homonym for "easy") provide additional opportunities. If an ERP system generated an employee ID of 1224well, the employee would certainly request to have it changedif possible to 1228.

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Reengineering and Empowerment

The reengineering of organizational processes and the subsequent implementation of an ERP system also involves changes in job descriptions and required skills. Clerical employees usually need to be retrained with skills related to knowledge work, not pen-pushing. Furthermore, employees need to be empowered with the responsibility to make decisions. It is critical they understand the system thoroughly, since any mistakes made will be perpetuated downstream with consequent chaos for processes (and people) elsewhere in the system.

However, empowerment is no easy task and culture plays a significant mediating role. People in a low power distance culture (see [7]), for example, those typical of the Anglo-American societies, are likely to be more willing to take on new responsibilities, to accept authority and decision-making powers. In cultures where power distance is much greater (Hong Kong and Singapore are two examples) there is considerable reluctance to accept empowering initiatives [3] with respect to both physical and information-based activities. It is remarkable that many advocates of employee empowerment blindly assume all employees will enthusiastically accept the responsibility for managing their own work, irrespective of local norms or cultural characteristics. However, it is essential that empowered employees develop the requisite skills and knowledge for efficient and effective decision making and accountability [5]. Thus, many clerical staff at the bottom of the hierarchy in a Chinese organization feel much safer if they are told what to do; they know what is expected.

Responsibility and accountability involve status, but status cannot be simply given to a person, particularly in a hierarchically structured context. The widely held belief in Chinese society that "all men are born unequal" [1] clearly contradicts the espoused beliefs of those founding the U.S. and cannot simply be ignored. Thus, status needs to be earned over time; duration of employment in Chinese society is often perceived to be a more reliable indicator of qualification than skills alone, and hence a more reliable basis for promotion [6]. Knowledge workers can be grown internally, but it is not a simple matter of promotion or retraining, as a shift in cultural values is required.

ERP systems have great promise for organizations, large and small. Several Hong Kong small- and medium-sized enterprises are implementing ERP solutions, though they are choosing application service provider-based systems. Awareness of cultural differences and preferences will certainly improve the assessment of ERP suitability and any subsequent implementation. This implies that a one-size-fits-all or one-business-model-fits-all approach is unlikely to be successful. Developers and consultants need to adapt their products and services for different cultural markets.

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References

1. Bond, M.H. The Psychology of the Chinese People. Oxford University Press, Hong Kong, 1986.

2. City University of Hong Kong. Strategic plan for the development of information technology in the University. (1999); www.cityu.edu.hk/itwp.

3. Davison, R.M. and Martinsons, M.G. Empowerment or enslavement: A case of process-based organizational change in Hong Kong. Info. Tech. People 15, 1 (2002), 4259.

4. Esteves, J. and Pastor, J. Enterprise resources planning research: An annotated bibliography. Commun. AIS 7, 8 (2001), 152.

5. Forrestor, R. Empowerment: Rejuvenating a potential idea. Academy of Management Executive 14, 3 (2000), 6780.

6. Hempel, P.S. Differences between Chinese and Western managerial views of performance. Personnel Rev. 30, 2 (2001), 203226.

7. Hofstede, G. Culture's Consequences: Comparing Values, Behaviors, Institutions, and Organizations Across Nations, 2d edition, Sage, London, 2001.

8. Martinsons, M.G. Management philosophy and IT application: The East-West divide. J. Tech. Manag. 18, 3 (1991), 207218.

9. Soh, C., Kien, S.S., and Tay-Yap, J. Cultural fits and misfits: Is ERP a universal solution? Commun. ACM 43, 4 (Apr. 2000), 4751.

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Author

Robert Davison (isrobert@cityu.edu.hk) is a professor in the Department of Information Systems at the City University of Hong Kong.


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