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Global Development Institute

Success and Failure of ERP Technology Transfer: A Framework for Analysing Congruence of Host and System Cultures

Alemayehu Molla and Ioannis Loukis

Abstract

Enterprise resource planning (ERP) applications are spreading worldwide, including into developing countries. Problems related to cultural mismatches are one of the challenges that affect this global diffusion. Two main sets of culture can be identified in any ERP situation of development, implementation and use. On the one hand, there is a culture embedded in the ERP software reflecting the views of the ERP developers, vendors and consultants. On the other hand, there is a culture reflecting the views of the implementing organisation's project team, managers and users. We refer to the first as the ERP system culture and to the second as the ERP host culture . This paper presents a framework that allows analysis of these two cultures and their impact on ERP success and failure. The paper demonstrates the utility of this framework by applying it to a case study. Overall, we argue that good congruence between ERP system and host cultures can contribute to ERP success both in process and outcome terms. However, lack of congruence can contribute to ERP process and outcome failure.

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Educator's guide

Synopsis questions

  1. Summarise the importance of culture in the global diffusion of information technology. [Introduction]
  2. Summarise the hard, soft and socio-technical conception of information systems generally and ERP systems specifically. [Parts A & B]
  3. What dimensions should be used for cultural analysis of ERP systems and their host organisations? [Part C]
  4. How can we measure ERP success and failure? [Part D]
  5. Summarise the system-host cultural congruence of the case study ERP system, and the impact of that congruence. [Part E]
  6. What must organisations in developing countries that are considering ERP implementation do to draw better value from their investment? [Part F]

Development questions

  1. Evaluate the influence of culture on IT and IT's contribution to development.
  2. Critically evaluate the framework suggested in Figure 1. What are its strengths and weaknesses? How can it be improved?
  3. Identify a real world case organisation that has implemented ERP. Using the framework suggested in this paper, analyse the case to draw out the cultural dimensions and their impact on the process and outcome of ERP. Compare your findings with the example discussed in the paper.
  4. What factors other than culture contribute to ERP success and failure?
  5. What are the broader implications if the failure rate of ERP implementations in developing countries is higher than the failure rate in industrialised countries?