Implementation Failure of an Integrated Software Package: A Case Study from the Far East

Implementation Failure of an Integrated Software Package: A Case Study from the Far East

Idea Group Publishing

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Implementation Failure of an Integrated Software Package: A Case Study from the Far East1 Suprateek Sarker and Saonee Sarker Washington State University, USA Suprateek Sarker is an Assistant Professor of Information Systems at the Washington State University. He received his Bachelor of Computer Science and Engineering from Jadavpur University (India), MBA from Baylor University, M.S. in CIS from Arizona State University, and Ph.D. in Information Systems from the University of Cincinnati. Currently, he teaches undergraduate and graduate courses in systems analysis and design and database systems. His research interests include IT-enabled organizational change, virtual teamwork, electronic commerce, IS failures, and qualitative research methodologies. Suprateek can be reached by e-mail at [email protected]. Saonee Sarker is a PhD student at the Washington State University. She received her Bachelor of Arts in English Literature from Lady Brabourne College (India) and MBA from the University of Cincinnati. Her research interests include strategic information systems, international information systems, group support systems, and virtual teams. Saonee can be reached by email at [email protected].

EXECUTIVE SUMMARY The case study describes the process of implementation of an integrated software package at the Thai subsidiary (SMTL) of a Hong Kong-based multinational company (SMHK) engaged in the manufacturing of electronic equipment. Several factors—such as a poor fit between the business process assumptions inscribed in the software and the business processes in SMTL, poor leadership at different levels, cultural clash between the headquarters and the Thai subsidiary, organizational politics, and poor human resource management—contributed to the confusion in the organization, project delays, budget overruns, and ultimately, to the “failure” of the systems implementation project. The case study is likely to be valuable for illustrating issues related to managing IS implementation in a multinational context.

COMPANY BACKGROUND Semiconductor Manufacturing (SM) is a world leader in the design, development and delivery of a broad range of electronic equipment. Its products are used in various business applications, including automobile components, home appliances, power tools, office and industrial equipment. Semiconductor Manufacturing began as a small family-owned business in Hong Kong (HK) in 1962, and today the company employs over 15,000 people and sells more than HK$600 million Copyright © 2000, Idea Group Publishing. Copying without written permission of Idea Group Publishing is prohibited.

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worth of electronic equipment to companies worldwide. Currently, its major manufacturing facilities are located in Hong Kong, China and Thailand, while its R&D, sales, marketing and technical support functions are hosted in Hong Kong, Germany, Switzerland, Japan and the USA. Strategically, Semiconductor Manufacturing focuses on working closely with customers to design and produce industrial electronic equipment. This business strategy enables the company to satisfy and exceed expectations of both immediate customers and product end-users in an efficient and effective manner. Being aware of the potential for growth in the demand for the company’s products, the top management of Semiconductor Manufacturing has investeda huge amount of capital to expand its production capacities and improve its manufacturing facilities, with special attention on auto-assembly lines, high technologies, and IT infrastructure.

SETTING THE STAGE: THE FORMATION & GROWTH OF THE THAI SUBSIDIARY OF SEMICONDUCTOR MANUFACTURING Semiconductor Manufacturing Thailand Ltd. (SMTL) is a relatively new subsidiary of Semiconductor Manufacturing, consisting of one modern integrated plant for assembling industrial electronic equipment. The factory construction started in late 1991 under the supervision of Thailand’s foreign investment promotion board, known as Board of Investment (BOI). The construction site was located on an industrial estate near the capital, Bangkok. Jack Fung, a successful business executive based in the Hong Kong headquarters, was appointed as the Managing Director (MD) of SMTL. Jack had received his engineering education from a reputed technical institute in the UK, and had thereafter earned an MBA degree from a top-rated Canadian university. He had subsequently worked in the U.S. for about 10 years before returning to his “home country” Hong Kong, and joining Semiconductor Manufacturing. As the Managing Director of SMTL, Jack was responsible for the company setup (including plant construction, production setup, and recruitment), as well as all operations and management. In the early stages of the company setup (1991-1992), Jack had ten employees with varied levels of work experience (one to ten years) working for him — a secretary, an import officer, two buyers, two programmers, a financial controller, two technicians, and an engineer. The employees worked as a closelyknit group in a temporary office in Bangkok, with each member of the group involved in problem solving in different functional areas of the nascent organization.

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Soon after the completion of the plant construction in early 1993, all offices and staff moved into the factory premises, and the company started production by the middle of that year. By 1997, SMTL had expanded from 50 employees to about 1,500 employees. SMTL needed to continue its rapid growth in order to fulfill its commitment to BOI of meeting its yearly export targets. The Organizational Structure and Human Resources Under Jack’s guidance and management control, the organizational functions, management roles, and responsibilities were changed to reflect the company’s expansion. The 1997 organizational structure is shown in Exhibit 1. The SMTL employees were classified as: 1) daily-wage workers, who worked on the production line and were paid twice a month, and 2) full-time staff members, who were employed on a monthly salary basis. The composition of the staff in terms of the national origins was quite diverse, and consisted of Thais, Chinese, Indians, Swiss, and Italians. Most SMTL staff had been employed from the local labor market, though few of them had been transferred from Semiconductor Manufacturing subsidiaries in other countries. One of the transferees was Billy Lee, who had more than 20 years experience working in several departments in SMHK, and then in China. Billy had recently been promoted from the position of quality control manager of the manufacturing facilities in China to the position of the operations manager at SMTL. According to the SMTL “grapevine,” Billy had been appointed to the senior position at SMTL not because of his excellent performance, but because of “political reasons” — apparently, Billy enjoyed excellent personal relationships with some members of the top management at SMHK. In addition to the potential complexities arising from political appointments and the cultural differences among staff members (mostly Thai) and managers (especially Jack, a Western educated Hong Kong native), SMTL’s growth since mid-1993 was hindered by the high turnover rates among employees. Unfortunately, Jack or the members of his management team (including the HR manager) did not take any specific steps to lower the turnover rates. Manufacturing Processes The core manufacturing processes of SMTL reflected the need recognized by SMHK managers to be globally integrated yet locally responsive. In addition, lessons learned from over 30 years of manufacturing at Hong Kong and other plant locations were also incorporated into the design of SMTL’s manufacturing processes. Unlike plants in China, all production processes were to be operated under the same roof, and were to report to the same operations manager. Most

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Exhibit 1: Organization Chart in 1997

Chairman (in HK)

Managing Dir.

Operation Mgr

Assembly Pdn

Financial Mgr

Account Mgr

Purchasing

Import/Export

Subassy Pdn

Pdn Planning

External Audit

HR Mgr

MIS Mgr

Quality Control

Warehouse

production facilities were designed based on product families in order to share similar processes and minimize set-up times. Also recognizing the potential for rapid expansion of production capacity, SMHK top management sent several new automatic machines and technical support personnel from SMHK to SMTL. Basically, to produce a piece of electronic equipment, several components were needed, depending on the levels of production processes involved. As depicted in Figure 1, there were three levels of production processes: 1) Subassembly A, which manufactured components from materials obtained from external suppliers; 2) Subassembly B, which assembled components from both purchased items and manufactured items; and 3) Assembly, which produced the final products. Although SMTL did have facilities to produce components, not all of the subassemblies were yet qualified to manufacture and supply components of the equipment that SMTL produced. Thus, SMTL had to import several components from the HK and China plants. The manufactured components were physically stored in the subassembly area, while the inventories were logically updated by the operations personnel.

CASE DESCRIPTION: A CHRONOLOGICAL ACCOUNT OF IS IMPLEMENTATION The IT organization at SMTL Unlike the Electronic Data Processing (EDP) department at SMHK, which focused on computer-based information systems to support the organization’s core business applications, the Management Information Systems (MIS) department at

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Figure 1: Production Process and Material Flow Warehouse

Production Subassembly A

Raw Material Inventory

Process-01 Process-02 ... Process-nn

Component Inventory

Subassembly Inventory

Subassembly B Process-01 Process-02 ...

Assembly

Process-nn Process-01

Subassembly Inventory

Process-02 ... Process-nn

Finished Good Inventory Finished Goods

SMTL was formed as a multipurpose support unit. In addition to designing, developing and implementing SMTL’s information systems, the MIS department was also responsible for the Telephone system, Closed Circuit Television (CCTV), and the Security Access system. Also, in contrast with the large Hong Kong EDP department where the EDP employees were assigned to the functional areas, the SMTL MIS department was purposely kept small and centralized by Jack, who felt that it was critical to retain control over the computing and telecommunications resources. Acquisition of Hardware and Software Based on the recommendation of the Hong Kong EDP department, Jack decided to acquire an IBM minicomputer AS/400 (B series) and selected modules of a UK-based business applications software package called BMS that was also being used in SMHK. The purchase agreement for BMS was signed in the middle of 1991 with TGSystems, a local VAR (value-added reseller) for BMS, who would deliver the software and help in the training and implementation. Around the time that AS/400 was to be delivered to SMTL, IBM (Thailand) launched the new D series replacing the B series. Thus, SMTL received the higher capacity machine as specified in the contract, though it had to pay higher hardware as well as software maintenance charges for the D series. Also, because of a 50% discount being

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offered on BMS around that time, Jack decided to purchase every module of BMS, including Financial, Distribution, Manufacturing and Information Human Resource Management (IHRM) for SMTL (see Figure 2 below). In addition, Jack purchased other Thai printing accessories (software) that he perceived would be required for running the company in Thailand. System Implementation and Development Payroll module Since the payroll was an urgent requirement for the start-up organization, SMTL arranged for TGSystems to assist in the implementation of and to conduct training on the IHRM module first. After a month of testing and trial runs, in February 1993, SMTL teams found that the payroll system was too complex and not flexible enough to produce reports that were needed. To customize the software to the needs of its employees, SMTL would have to buy the source code from TGSystems and modify the programs in-house, or pay astronomical rates for code modification by TGSystems. Thoroughly disappointed with IHRM, and realizing that time was running out, Carol, the senior most MIS person (who was later promoted to the position of MIS manager), decided to develop the system for managing worker payroll using the available database tool, Foxpro. The program was implemented one month later, and featured a significantly friendlier user-interface compared to IHRM, and also included additional functionality such as automatic calculation of Figure 2: BMS Business Applications

Distribution IN PM

Finance GL, AP AR, CM RW

IHRM

Manufacturing MRP, MPS PC, SF

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working hours from barcode readers (where barcode information was transferred through telephone lines). Financial and distribution modules In the latter part of 1993, MIS scheduled several training sessions for SMTL users of Financial and Distribution modules. These training sessions were conducted by TGSystems as well as Hong Kong EDP personnel “specializing” in financial and distribution applications. Parallel to the training sessions, several details regarding the implementation of the financial and distribution modules (e.g., structure of the account codes, structure of the item-codes, and systems procedures) were being discussed and negotiated upon by SMHK and SMTL users. Unfortunately, because of a great deal of turnover of BMS experts at TGSystems around that time, the training sessions turned out to be quite ineffective. SMTL users complained that the TGSystems’ trainers and technical support staff members were new and not trained in applications that they were supposed to teach or support. Due to lack of expertise of TGSystems staff, considerable turnover at SMTL, as well as disagreements with SMHK regarding the accounting structure required for company-wide consolidation of financial statements, the implementation of the financial and distribution (purchasing and inventory) modules at SMTL was delayed by at least one year beyond the scheduled date. Dependencies among modules also compounded the problems, since certain modules required certain other modules to be fully functional. Thus, a delay in implementing a particular module (say, General Ledger) resulted in a delay of the implementation of the Cash Management, Account Payable, and Account Receivable modules. Changes in the IT infrastructure While preparing users for financial applications and doing trial runs, MIS requested (and received) funds to set up a Local Area Network (LAN) in SMTL. Fiber optic media connected the stacked hubs at the Factory Building and the Office Building. An AUI adapter of AS/400 was connected to the network hub. Rather than put dumb terminals on users’ desks, a decision was made to buy PCs that could emulate AS/400 terminals by using PC Support/400, in addition to running other programs such as applications written using Foxpro. Around mid-1994, as the physical IT infrastructure began taking shape, SMTL faced more than 50% staff turnover. Those leaving SMTL included supervisors, trained users, and a very skilled MIS department member. To minimize the effects of the departure of the skilled systems analyst/programmer, Carol hired a young programmer to help in developing and enhancing SMTL’s information systems, including integrated inventory and purchase information system for consumable items, staff payroll,

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import/export, and production databases. Implementation continues Due to considerable turnover among experienced staff, SMTL faced a severe shortage of functional personnel who could help in the implementation of the systems. Meanwhile, the MIS staff took over several responsibilities regarding BMS implementation processes, including training, data input, and transformation of business processes to the IT-enabled versions, in addition to developing other applications to support the rapidly expanding business. By 1995, all materials, subassembly items, and finished goods were completely implemented in Inventory Management (IN). In early 1996, General Ledger (GL), Cash Management (CM), and Accounts Payable (AP) were also integrated with the other modules. By the end of 1996, the Purchasing Management (PM) module was implemented, and invoice matching (the linkage between PM and AP) was operational soon after. Also, around the end of 1996, the Hong Kong EDP group helped the SMTL MIS group install a new server for Lotus Notes to facilitate the communication among the headquarters and the subsidiaries of the Semiconductor Manufacturing group. Manufacturing modules The Manufacturing modules, including Master Production Schedule, Material Requirement Planning, Shop Floor, and Production Capacity Control, needed to be implemented next. In the first few years of operations, SMTL production planning had used a spreadsheet to calculate the material requirements based on the bill of materials (BOM) and the daily targets for each model. Planners manually scanned the common parts used among products to be manufactured, and combined this information with quantity requirements in order to issue purchase requisitions (PR) for items. Later, MIS developed a batch processing system that would consider the critical success factors of production planning and provide a material requirement report for each item, drawing on information from inventory, purchasing, master production schedule and the BOM. By using this system, planners could centralize the version of BOM used, reduce the number of human errors, and automatically generate the MRP reports. Purchase requisitions (PR) could also be generated and categorized into manufactured and purchased items using this application. The flow of the Production Planning and MRP process is shown below in Figure 3. As the MIS staff of SMTL embarked on the implementation of manufacturing modules of BMS, it became very apparent to them that these modules were not compatible with SMTL’s manufacturing business processes. This view was further confirmed by discussing the difficulties encountered by SMTL with other BMS

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customers and TGSystems’s customer support personnel. Even the SMHK EDP staff admitted that the headquarters used a version of BMS manufacturing modules of which 70% of the code had been modified. SMTL could not make changes to the system without purchasing the source code. In fact, MIS staff at SMTL did not think that it would be easy to modify the source code even if they had the code. Given that the source code was quite expensive, and that SMTL did not have in-house expertise to customize the code, it was not purchased. Another option was to copy the modified version of the code being used in Hong Kong. Unfortunately, because SMTL had implemented related BMS modules, especially IN and PM, without modification, while SMHK had significantly customized these modules, the MRP module from Hong Kong would not be compatible with the other modules implemented in Thailand. This put Carol, the MIS manager, in a difficult position. Jack wanted Carol to implement the BMS manufacturing modules. Yet, the Hong Kong experience reflected in statements such as “the systems in HK are not as good as you think and Figure 3: Production Planning and MRP Sale Order

Production Planning

Resource Planning

Sale Forecast

Master Production Schedule

Capacity Planning

Manpower Requirement Planning

Material Requirement Planning

Capacity Requirement Planning

Manufactured Items

Job Order

Human Resources

Purchased Items

Purchase Requisition

Purchase Order

Vendors

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many different requirements keep our programmers busy all the time” seemed to indicate that the route of modifying BMS code would not be a productive one. Also, with the rapidly increasing types and quantities of products being manufactured at SMTL, it was virtually impossible to keep track of the material requirements manually or by using a spreadsheet—an integrated MRP system was needed. Under considerable pressure from Jack, who wanted to see BMS implemented, Carol agreed, against her own professional judgement, to go along with the implementation of the BMS MRP module. However, it soon became clear to the implementation team that the MRP module was not compatible with the company’s manufacturing process. In addition, the MRP module required inputs from the Inventory module, the Purchasing module, and the Sales module. At SMTL, sales were still being managed informally, and thus the Sales Information System had not been implemented yet. Finally, because of the differences in manufacturing processes between Thailand and Hong Kong or China, the BOM was to be set up differently. However, SMTL did not have any “specification engineer” who had expertise in setting up a new BOM consistent with the actual production at SMTL. After six months of experimentation, Carol felt certain that the BMS path would not lead anywhere and abandoned the implementation. She later recalled that the software required many prerequisite modules to be operational, involved too many steps of transaction processing, and generated “horrible reports” which would not show the users necessary information on the same page. Consequently, she and other MIS staff started developing in-house an MRP software that would allow manual sale entry and read input from the Purchasing and Inventory modules of BMS. While this in-house developed software incorporated the basic MRP functionality required at SMTL and is currently being used, it can at best be considered a short-term fix. Recognizing the need for a more long-term solution, SMTL has initiated the process of evaluating systems such as SAP for future implementation.

PROBLEMS/CHALLENGES FACED BY THE ORGANIZATION There is widespread recognition and acknowledgment of the failure of the BMS software among different stakeholders at SMTL. Lack of use, sluggish implementation that was way over-budget, the turnover of critical stakeholders, and the ongoing evaluation of other systems are all indicative of the “failure.” While we believe that the readers should identify the lessons that are uniquely applicable to their own contexts, in this section we explore some of the possible causes of failure. We hope that a sensitivity to the issues discussed below would help an implemen-

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tation manager in recognizing similar symptoms and proactively addressing underlying problems in their own contexts. Leadership and Cultural Issues It has been shown time and again, that effective leadership is essential for successful IT implementation (Klenke, 1994). An effective leader needs to have a vision for the organization he/she is leading (Hammer and Champy, 1993). A leader must also have cultural sensitivity, communication skills, creativity, ability to delegate, and the ability to develop and retain human resources (Luthans, 1994). There was general agreement among SMTL employees that Jack was knowledgeable, creative, confident, and decisive. In fact, his management style reflected his Hong Kong upbringing as well as his 10-year work experience in the U.S. Unfortunately, he was perceived by many SMTL employees as dominating, and setting unreasonably high performance targets. He was always introducing new and creative ideas to managers and supervisors. Often, such creative thoughts were beyond the capability of the managers or were infeasible, given the existing resources. Whenever Jack saw that any initiative was not being implemented in a way that he would like, he would step into the related supervisor’s role and direct operational employees personally. This not only caused ambiguity in the chain of command and in departments’ goals, but also discredited the concerned supervisors/managers. Because of his affinity for a certain Westernized management style, Jack disliked hierarchical organizational control and inflexibility in procedures. For example, in 1993, when a financial manager started having an authorization conflict with an account manager, she wanted to know precisely what her job description was, and where she was on the organizational chart with respect to the account manager. She recalled that: ...you will never get any answer from him (Jack) and he will give you long explanation how managers should work... he will ask you why people here like such diagrams and why managers need others to tell them what to do...if managers need such a thing, then why would he hire managers? Jack had extraordinary ability, but he did not trust others. He did not fully delegate responsibilities to managers or empower them sufficiently to effectively perform their jobs. Neither did he foster an organization characterized by crossfunctional cooperation, but instead, promoted a “competitive” environment. Also, whenever he was dissatisfied with the actions of a particular manager, rather than

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provide constructive feedback to the manager, he would tell other managers what he wanted done, or personally direct employees under the “erring” manager. Consequently, organizational problems arising from ill will and interpersonal conflicts among SMTL employees continued to accumulate. His imposition of his will on the organization was also apparent in the way he finalized the hardware/ software acquisition without seeking enough input from SMTL personnel or without considering the unique local conditions. While Jack was seen as “dominating” and opinionated, Billy, the operations manager, was perceived as a “housekeeping person” rather than as a “driver” of the operations functions. Billy’s subordinates were not impressed by his management style since they could not get substantive guidance on any problematic issue that they encountered, though they did recognize that Billy had a detailed understanding of the quality control and inspection processes. Even though Jack recognized that Billy was more an “analyst” than a “manager,” he did not confront him or remove him from his position, since Jack was aware that Billy had strong ties with top management at SMHK (headquarters). Instead, Jack would try to motivate Billy by introducing him as “captain of our ship” and would get personally involved in directing operations (formally Billy’s responsibility) whenever he could. Further complications in leadership arose from SMHK’s efforts to keep tight control over SMTL policies as well as IT investments. In fact, there was a feeling among SMTL members that the managers at the headquarters were insecure due to the phenomenal growth of SMTL, and tried to curtail the success of the Thai subsidiary. A sales manager at SMTL commented: SMTL is still very much controlled by SM headquarters [SMHK] and will be more and more in control because of the internal competition... personnel in HK are very afraid and feel insecure. If subsidiary could perform better, it will be a big trouble for them... In late 1996, SMHK started reengineering its organizational structure and many top managers were replaced and organization-wide policies were changed. An impact of these changes on SMTL was inevitable. The sales manager mentioned that: ...there are quite a number of changes in SM. Work is tougher but the communication and relationships have deteriorated. Everybody seems to be more selfish and not very open because of the more competitive environment... although my personnel record is under SMTL, I report directly to SM’s Sales Director [at Hong Kong]... Even as unpredictable changes were occurring in the entire organization, SMTL’s production was still running as normal. However, because the SMTL top

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management was waiting for larger structural changes to occur, they appeared to be less interested/less committed to the BMS implementation plans. As BMS got less attention from the SMTL management, the implementation of the appropriate MRP system was not considered as a high priority. SMTL thus continued to rely on the temporary batch processing MRP. There also appeared to be a “cultural clash” between the Hong Kong version of Westernized management practices and the Thai way of working and being. Even though both countries are located in the same part of the world, and the people and their cultures in the two countries may seem very similar at a superficial level, there are considerable differences.2 According to cultural scholars, there are significant differences between the Thai and the Hong Kong culture. The Thai society is heavily influenced by Buddhism, which emphasizes harmonious human relationships, selfrespect, openness and kindness to others (Mulder, 1996; Wise, 1996). These ideas carry over to the workplace, with Thais having a preference for working in a friendly, cooperative and relaxed social atmosphere. Thai managers have a great deal of concern for creating/maintaining good relations with co-workers and superiors, and for developing a good fit between the employees and the organization (Swierczek, 1998). In contrast, HK professionals, who are “the product of capitalism and Confucianism” (Ralston, Gustafson, Cheung, and Tepstra, 1993) and who are used to working under pressure in competitive environments, prefer to concern themselves with their own duties and individual needs (Grzeskowiak, 1996). They work to survive or to gain wealth rather than to gain “happiness,” which appears to be the fundamental concern of the Thais. Clearly, these differences have implications for championing strategies (Scott, et al., 1993), transferring technology (Shore and Venkatachalam, 1996), and implementing and managing information systems (Deans and Kane, 1992); unfortunately, these issues were not recognized or addressed at Semiconductor Manufacturing. In addition, there were some undeserving “political” appointees such as Billy in the management ranks at SMTL. Finally, there appeared to be no vision or continuity in the commitment to certain systems projects from the top management, and this deficiency appeared to have significantly contributed to delays and abandonment of projects. Communication and Coordination Fundamental to communication is language. The issue of “language barriers” has been identified as crucial in the context of international information systems (Deans and Kane, 1992). Being a Hong Kong-based organization, the most widely used languages in SM were Cantonese and English. In SMTL, however, the majority of employees

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were Thai. Even the management team at SMTL was composed of individuals from multiple nations, and some of the managers did not speak Cantonese and had limited proficiency in English. SMTL meetings were conducted in English, and several organizational members could not express their thoughts fluently or understand proceedings of the meetings precisely. Thus, misinterpretations often occurred, and many SMTL employees felt a sense of apprehension in attending meetings. The management directives were sometimes not conveyed to the lower-level employees accurately. Thus, language barriers led to ambiguity of business practices and goals, which contributed to less effective implementation of systems in many cases. The ambiguous reporting relationships between SMHK and SMTL also caused confusion in coordination. A planner complained that: ...I’m not sure whether I should contact HK planning or shipping about the late or wrong material delivery... HK’s planning, warehouse, and shipping requested the same inventory balance and production plan from me...why don’t they share those reports to each other? ...Even after we placed our PO to them, it seems to me they didn’t follow our request... and they plan for us. Sometimes they send us items that we haven’t requested and sometimes they didn’t send us the right quantity of materials on schedule as specified in PO...why do we need to run MRP then? Lack of coordination existed not only between the subsidiaries and headquarters, but also among the departments in SMTL. Buyers and planners did not have a cooperative relationship. The buyers were often not notified of changes of plans while planners seldom received confirmation regarding the arrival of materials. These conflicts had become deep-rooted since they had been ignored and not addressed by any manager. Warehouse and material control seldom reconciled the accuracy of inventory records. The inaccuracies in the inventory became a major problem during the implementation of the MRP. HR Issues Although SMTL had many career opportunities and its growth outlook was optimistic, its high turnover was a constant problem for the organization since its inception. In 1994, it faced more than 50% employee turnover. Some of the causes cited by the employees included poor training, constant conflict in the organization, poor motivation among employees due to lack of incentive programs, and unrelenting pressure from the management to produce more. Employees also felt that management hardly ever “listened” to their concerns or attempted to address them. Consequently, many employees were eager to leave the company, and did so as soon as they found alternate opportunities in other companies.

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The high turnover rate not only led to an absence of cohesion among colleagues since the employees did not really get to know each other, but it also negatively affected the productivity since departing employees took their knowledge and expertise with them. Lack of qualified and well-trained MIS professionals and functional specialists also contributed significantly to the sluggishness and eventual failure of the BMS project. To summarize, an absence of a long-term HR strategy addressing hiring, compensation, training, retention, and quality of worklife issues led to a number of difficulties during the implementation process. IT-Related ssues Last but certainly not the least, there were several issues related to the software package acquired, the expertise of the MIS personnel in-house as well as in TGSystems, and the IT infrastructure of the company/country that negatively affected the implementation. The process of software acquisition was clearly faulty. The MD of SMTL (Jack) decided to purchase the BMS package based on SMHK’s recommendation without any critical examination of the local requirements. The complete absence of a business case of hardware/software acquisition as well as lack of stakeholder participation and involvement in the acquisition process (e.g., Hoffer, George, and Valacich, 1999), further contributed to the difficulties faced at SMTL during implementation. There was also no attempt to investigate SMHK’s experience with the package, which was later discovered to be quite unsatisfactory. The 50% discount rate on the software also (surprisingly!) acted as a significant motivation to acquire and implement all modules, whether or not they were organizationally valid (Markus and Robey, 1983). Even when the package was discovered to be incompatible with SMTL’s processes, the MIS staff was persuaded to “make it happen.” Lack of in-depth understanding at SMTL of the functionality (based on the business practices in the UK) inscribed in the BMS modules, and the lack of competence of the value-added reseller’s staff, further complicated matters. The timing of the AS/400 acquisition also coincided with tremendous gains in the capabilities of PC that could be inter-connected using a LAN. This, along with her own familiarity with software development tools (such as Foxpro), partly explained the MIS manager Carol’s orientation towards developing Foxpro applications whenever a BMS module did not appear to be functioning according to SMTL’s expectations. This approach of development and implementation resulted in a very complex information systems architecture and made integration a nightmare.

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Finally, seamless communication and sharing of data between SMHK and SMTL could not occur since the Communications Authority of Thailand (CAT) had not provided X.25 services to the industrial estate where the SMTL facility was located. All of the above technical issues were contributing to the problems encountered during systems implementation at SMTL. MIS-Related Dilemmas Confronting Jack Currently, the organization is evaluating DBMS packages from ORACLE, Microsoft, Sybase, and other ERP systems (e.g., SAP) for enabling its business processes. Though SAP appears to be suitable for the company, the prohibitive cost of the SAP software is a significant barrier to its purchase and adoption. A sizable portion of the MIS budget is being used to address Y2K issues related to the systems on AS/400, and this has further slowed down the implementation/ enhancement of applications such as MRP. Turnover continues to be a major problem for the organization, and the latest casualty is Carol, the MIS manager, who spearheaded much of the BMS implementation and the development of alternative modules using Foxpro. SMTL is at the crossroads as far as its systems implementation is concerned—should it continue to use the BMS modules in conjunction with the Foxpro modules that had been built in-house? Should it discard the BMS software altogether, and build all the required functionality using Foxpro? Should it invest in an ERP software and its implementation? Should it outsource all its IS functions? Or should it make a serious attempt in hiring and retaining MIS personnel including an experienced MIS manager? The question that seemed to be nagging Jack the most was, “Why did the implementation not unfold as envisioned?” As Jack reflected on the history of the BMS implementation in his organization, he realized that he would have to make some critical decisions about SMTL’s information systems soon, or else the entire manufacturing operations would fall apart.

ENDNOTES 1 This case study has been developed based on the personal experiences and interviews conducted by a graduate student at Washington State University, who has opted to remain anonymous. The authors wish to acknowledge his/her contribution. The names of the organizations and their employees, as well as certain details have been changed in this case study to protect the identities of the informants and the individuals involved in the implementation process. 2 Hong Kong culture has a much higher degree of “Confucian dynamism,” (Ralston, Gustafson, Cheung, and Tepstra, 1993) which leads to a short-term

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orientation and emphasizes the gratification of people’s needs.

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