IT- and ERP structures in expansion processes

Principal Investigators: Prof. (FH) Mag. (FH) Martin Samek; DI Peter Weiss

Collaborators: Fulcrum Consulting; Diploma Students 2006
Duration of the project: 6 months
Contact: [email protected]

Point of departure
The focus of this research project was to draw a clear picture of the application of Information Technology and Enterprise Resource Planning (ERP) Systems in corporations expanding into new markets. At the onset of the project, we asked whether such systems have been implemented, adapted and changed in a proactive or in a reactive way, and if such behavior had an influence on the success of the expansion process. The development and adaption of an IT- and ERP system as a reaction to challenges experienced when entering new markets and the anticipatory design of such systems were compared in order to devise solutions for the evaluation of the status-quo of expansion processes. Further suggestions on the preparation for such market entries will be based on the assessment described above.

Research methods
Structured telephone interviews with 70 decision-makers and process managers of corporations, whose headquarters are located in Austria, and which expanded in new geographical markets in the past five years (2004-2009) build the empirical foundation of this research project. The definition chosen for the expansion into new markets encompasses market development with the means of own subsidiaries or joint ventures. The extension of business with the help of distribution partners has, however, not been taken into consideration in this study, as the responsibility for and control over IT- and ERP systems is mostly associated with the distribution partners.
In our study, the sample was drawn by means of a stratified random method to ensure the whole band of size of corporation and branch/industry has been covered. Computer-assisted telephone interviews have been conducted, whereat the sequence and wording of the questions could not be altered or modified by the interviewers. The majority of the questions were assigned pre-determined answer categories. Supplementary questions, among others intended to clarify the challenges encountered in different departments within the corporation, were designed as open ended questions. The analysis, which had a special focus on regression and cluster analysis, produced the survey results listed below.

Results and findings
First, three types of expansion could be identified, based on similar characteristics and behavior displayed by the corporations during the research process:

E1) Planning or Implementation/Roll Out /// Own subsidiary in the respective market /// High employment of resources in the area of finance, marketing, logistics and human-resource management

E2) Operative phase /// Own subsidiary in the respective market /// High employment of resources in the area of procurement, logistics, marketing, production and controlling

E3) Operative phase respectively consolidation /// Joint Venture /// High employment of resources in the area of procurement, controlling, marketing, logistics and production

Second, these problem areas as well as related solutions and recommendations in the departments/areas listed below were analyzed:

P1 Procurement

P2 ERP-systems and other IT-systems

P3 Finance

P4 Research and Development

P5 Logistics

P6 Marketing

P7 Human Resource Management

P8 Production

P9 Sales

P10 Controlling

In the end, 22 scenarios had been developed that were subsequently tested for their influence on the overall result of the expansion project.

An example of such a scenario would be:
Expansion type E2
Problem area P5 Logistics
Explicit problem “Compatibility Supplier – Company”
Potential solution “Adaption of Interfaces, Redesign of Systems)
Effect of the problem on the overall success (moderately negative)

Eventually, the approach to the expansion initiative regarding the adaption of the IT- and ERP systems was examined. Particular emphasis was placed on the employment of resources, sustainability and adaption input in these expansion processes. Moreover, the contribution of investments in IT- and ERP-systems has also been assessed.