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Management Accounting Research 15 (2004) 225240

Strategic Enterprise Management Systems:


new directions for research
Stan Brignall a, , Joan Ballantine b
a
Aston Business School, Aston University, Aston Triangle, Birmingham B4 7ET, UK
b
Queens University Belfast, Belfast, UK

Received 21 May 2003; accepted 13 October 2003

Abstract
In a world obsessed with performance, many organisations welcome systems that claim to offer a structured
solution to improving performance, such as Strategic Enterprise Management (SEM). But while much has been
written about how to measure performance, little is known about the interaction between performance measurement
and management (PMM) and the many ways in which organizations strive to improve their performance. This paper
studies the interrelationships among SEM systems, PMM and organisational change programmes within Pettigrews
context, content, process model. The problems of SEM design, implementation and use are explored using the
insights of several theories, following the arguments of Hammersley [Handbook of Qualitative Research Methods,
The British Psychological Society, 1996] that such an approach permits a richer understanding of management
practice. Having also identified potential solutions for the design, implementation and use of SEM systems, we
develop a number of research questions to be explored in future research.
2003 Elsevier Ltd. All rights reserved.
Keywords: Strategic Enterprise Management; Context, content, process; Institutional theory; Complementarities theory;
Performance measurement and management

1. Introduction

In this age of anxiety, performance is an obsession. From schools to universities, businesses to govern-
ment departments we have become an audit society (Humphrey and Owen, 2000; Power, 2000) absorbed
in performance measurement and the assessment of relative success, which can affect the allocation of
resources, and the fates of institutions and individuals.

A previous version of this paper was presented at the MARG Conference, Aston Business School, 1112 September 2000.

Corresponding author. Tel.: +44-121-359-3011x4918; fax: +44-121-333-5708.
E-mail addresses: T.J.S.Brignall@aston.ac.uk (S. Brignall), joan.ballantine@qub.ac.uk (J. Ballantine).

1044-5005/$ see front matter 2003 Elsevier Ltd. All rights reserved.
doi:10.1016/j.mar.2003.10.003
226 S. Brignall, J. Ballantine / Management Accounting Research 15 (2004) 225240

The drivers creating such cultures of continuous improvement are familiar. In the private sector global
competition means that pressures to learn and change are continuous. Managers respond by closing fac-
tories, de-layering and merging (Pettigrew, 2000). In the public sector, league tables (Clatworthy and
Mellett, 1997)and naming and shamingare the order of the day. More positive change agendas aim
to create more agile, knowledge-conscious and creative organisations in the never-ending search for a sus-
tainable competitive advantage (Mohrman et al., 1998). The constant drive for competitive advantage and
performance improvement has created an imitative market for new management techniques (Pettigrew,
1999a), which profit consultants but sometimes de-stabilise sources of competitive advantage. Two such
innovations have been models of multi-dimensional performance measurement and management (PMM:
e.g. Fitzgerald et al., 1991; Lynch and Cross, 1991; Kaplan and Norton, 1992) and the dissemination of
Enterprise Resource Planning (ERP: Fahy, 2000) and, more recently, Strategic Enterprise Management
(SEM) software, whose vendors claim to offer a structured solution to improving organisational perfor-
mance (Fahy, 2001). Such software is changing the way top managers manage and is affecting the roles
and skills of management accountants, who are variably involved in PMM and organisational change
(Chenhall and Langfield-Smith, 1998; Brignall et al., 1999).
While much has been written in recent years about how to measure performance, little is known about the
interaction between PMM and the many ways in which organisations strive to improve their performance,
often under the heading of an organisational change programme. Successful change programmes may
involve many individual performance drivers, such as new leadership, clear objectives, a new strategy,
improved human resource management practices, process changes, IT/IS investment (e.g. ERP or SEM
systems), and so on (Pettigrew, 1999a,b; Whittington et al., 1999). However, the links between PMM and
these change techniques are only now beginning to be systematically studied, yet their alignment may be
crucial to competitive success.
The findings of such studies should be directly relevant to the success or failure of ERP systems
(Scheer and Habermann, 2000) and their strategic offspring, SEM systems (Fahy, 2000, 2001; Gould,
2003). Gould (2003) argues that while precise definitions cannot communicate the full nature of SEM,
a working definition could be: an approach to strategic management which focuses on creating and sus-
taining shareholder value through the integrated use of best practice modelling and analysis techniques,
technologies, and processes in support of better decision making (p. 6). SEM systems (SEMSs) have
a strategic focus, and are designed to sit on top of the operationally focused ERP systems introduced
by so many large companies in the 1990s to replace their previous Materials Requirement Planning
(MRP) systems. SEMSs typically apply a particular set of performance-enhancement techniques (such as
Business Process Redesign, Customer Relationship Marketing, Supply Chain Management, Value-Based
Management, Activity-Based Management and the Balanced Scorecard: Fahy, 2000, 2001) to their cor-
porate purchasers. But even if these techniques are appropriate for all organisations, knowing what sets of
changes need simultaneously to happen (the change content) is only half the performance-improvement
battle. From a policy point of view we also need the answers to a set of questions about the process and
context of changing (Pettigrew, 1985). These questions imply that SEMSs may not only suggest remedies
that are irrelevant to the problems faced by an individual organisation (i.e. wrong content), but that they
ignore important issues of context and process as well. For these reasons, we will argue, SEMSs can only
be regarded as partial solutions to organisational performance improvement.
In what follows we first outline our research objective and identify relevant theories with which to
explore it. We then define what a SEMS is, and describe Pettigrews (1985) context, content, process
model for successful organisational change. In the main body of the paper we go on to explore the
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relationship between PMM and SEM within three sections in which the parts of the model are applied.
These sections on context, content and process identify various potential problems with SEM and PMM,
and in them we develop some research questions to pursue in search for their solution. Our conclusions
with ideas for future research follow.

2. Research objective and conceptual theorization

The objective of this research note is to explore the relationship between PMM and SEM within
Pettigrews (1985) context, content, process model for successful organisational change and perfor-
mance improvement. This model is felt to be appropriate in the context of SEMSs as it has been applied
to understand successful organisational change (Pettigrew et al., 1992; Orlikowski, 1993), which is what
SEMSs are intended to promote. The three parts of Pettigrews model are used to help identify potential
problems and possible solutions in the areas of SEM design, implementation and use. Given the complex-
ity of the relationships between PMM and SEMSs, we draw on stakeholder, institutional, contingency
and complementarities theories to explore these issues and develop a series of research questions to be
pursued in subsequent research.
Stakeholder theorists advocate a pluralistic approach to performance measurement (Doyle, 1994;
Atkinson et al., 1997) so we use stakeholder theory to explore the context within which SEMSs are
applied, given that SEMSs recognise multiple stakeholders. However, stakeholder theory does not deal
with inequalities of power (Meyer and Rowan, 1977; Scott, 1987; Covaleski et al., 1996) among stake-
holders and their likely impacts in de-coupling integrated systems such as SEMSs. For example, Meyer
and Rowan (1977) propose that externally legitimated, formal assessment criteria such as management
accounting information plays an important but ritualistic role in a variety of settings as organisations grope
to find, conform to, and demonstrate for their internal and external constituents some form of rationality
in order to gain legitimacy (as cited in Covaleski et al., 1996, p. 11). Hence we use neo-institutional
sociology to gain further insights into the internal and external contexts in which SMESs are designed,
implemented and used. We also use the insights of contingency theory as applied to control systems,
with some suggesting that they should be designed bearing in mind the relationships between contextual
factors and structural characteristics (Gordon and Miller, 1976; Waterhouse and Tiessen, 1978). SEMSs
are concerned with strategic control of organisations hence we use contingency theory to study such con-
textual factors. Finally, within the performance measurement literature, the complementarities approach
initiated by Milgrom and Roberts (1995) has emphasised the need to understand that performance may be
improved in many ways involving many disciplines and functions. Indeed, the notion of performance is
multi-faceted and what constitutes good performance will vary from stakeholder to stakeholder. SEMSs
apply various tools and techniques to the improvement of performance, hence a key question is how to
manage the interactions amongst these performance improvement tools and techniques. Complemen-
tarities theory argues that the managers of successful companies will implement multiple performance
improvement techniques simultaneously and in our subsequent research we will wish to investigate this
aspect of the process by which SEMSs are designed, implemented and used.
The theories we cite above are drawn from different research paradigms. For example, contingency
theory is situated within traditional structural functionalism whereas neo-institutional sociology draws on
the interpretive tradition (Burrell and Morgan, 1979). Morgan (1980) theorized that different paradigms
both address different sorts of problems and, where paradigms address common problems, portray them
228 S. Brignall, J. Ballantine / Management Accounting Research 15 (2004) 225240

in fundamentally different ways and thereby offer differing insights into their nature. Thus, what is called
for is . . . paradigmatic pluralism as a way of enhancing our understanding of issues in the social sciences.
Consequently, we offer the various paradigms . . . as alternative ways of understanding the multiple roles
played by management accounting in organisations and society (as summarised in Covaleski et al.,
1996, p. 24). In so doing we are following the triangulation, facilitation and complementarity arguments
of Hammersley (1996), in the belief that such an approach permits a wider and richer understanding
of management accounting practice than a singular approach. The supporters of a mixed methodology
in social science research claim that one of the primary benefits of such an approach derives from
triangulation. The term triangulation was originally used in psychological research by Campbell
and Fiske (1959) and developed for wider application in social science by Denzin (1970). The concept
refers to the extent to which research findings can be confirmed by the simultaneous application of
multiple methods, multiple investigators, multiple data sets or multiple theories (Denzin, 1970). The idea
behind triangulation is that, subject to the resolution of paradigmatic conflict, empirical evidence may
be strengthened by the use of different approaches to the same problem. In particular, in this research
note we will show how different theories may be applied to create a wider set of plausible explanations
for phenomena that may be observed in later empirical research. Many eminent writers across the social
sciences (such as Giddens, 1984; Bhaskar, 1989, 1994) or in the accounting literature (Berry et al., 1991;
Laughlin, 1995) now dispute the idea that the researcher is forced to choose between opposing views
of reality. Paradigm fixation among researchers may just be a function of habit and fear of change as
much as belief in a particular paradigm. It could be argued that greater flexibility in approach would lead
to a better fit between research problems and the methods chosen to investigate them (Burgess, 1984;
Brannen, 1992). A more flexible approach to the use of theory in the research process may result in the
development of richer theories, more closely related to the extant conditions studied. Finally, following
Weaver and Gioia (1994), we reject possible charges of paradigm incommensurability. Using Giddenss
(1984) structuration theory, Weaver and Gioia suggest that paradigm incommensurability is as much a
socially constructed device as any of the other frameworks within which researchers attempt to classify,
model and understand the social world. In this context, paradigm incommensurability is seen as a socially
constructed barrier to inter-disciplinary research communication, which is difficult to justify on theoretical
grounds.

3. What are Strategic Enterprise Management Systems?

The vendors of ERP systems claim they provide an integrated solution for planning, executing, and
controlling business processes horizontally across the value chain. . . . SAP R/3 (the market leader)
integrates processes such as sales and materials planning, production planning, warehouse management,
financial and management accounting, and HR management (Norton and SEM, 1999, p. 38). SEM
. . . will extend these principles vertically to support strategic management processes, such as strategic
planning, risk management, performance monitoring and value communication (ibid.). Its vendors claim
that It allows a two-way flow of information: corporate strategists can monitor performance continually
using feedback from the business execution systems, and adjustments to the strategy can be driven down
to the operational level via new targets and KPIs (Norton and SEM, 1999, p. 38).
Fahy (2001) argues that the SEM approach seeks to effectively link performance measurement and
control to strategic objectives, in an attempt to ensure that operational decision-making is fully focused
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on delivering strategic objectives (p. 173). SEMSs are similar in concept to earlier executive decision
support software such as executive information systems. However, SEMSs improve on earlier systems
in two ways: first, the technology itself has vastly improved, and second, they have drawn on the unsuc-
cessful implementation lessons with earlier technologies by recognising the primacy of the executive
and relegating the technology to a supporting role (p. 5).
For a system to qualify as an SEM system we believe that it should have the following attributes. First,
it should be built on an ERP system, that is, a common database that integrates management information
across all functions and disciplines in the organisation. However, ERP systems have been more concerned
with transaction processing than decision support. In order to provide this functionality, a series of other
attributes are required. Thus, a second attribute is that SEMSs rely heavily on the use of data warehousing
tools, where the data warehouse acts as a repository and data transformation tool to perform company
or activity specific consolidations such as activity-based management cost pools. It also acts as the
delivery point for external data such as market share and competitor information and supports the need
for multi-dimensional analysis of such data. Third, SEMSs have a range of integrated applications and
tools including activity-based management; profitability, planning and simulation; workforce analytics;
customer relationship management; shareholder value analysis; the balanced scorecard and reporting and
analysis tools. Fourth, they have both an internal and an external market focus. Finally, they are intended
to support executive strategic decision-making.
SEMSs are sold by many leading suppliers of ERP and other software, which at the time of writing
include PeopleSoft, Hyperion, Gentia, Corvu and Oracle, as well as SAP. For example, the market leader
in ERP systems, SAP AG, is currently offering an integrated Strategic Enterprise Management System
(SEMS) with mySAP.com that has five main applications and associated tools:

Business Planning and Simulation (BPS), which integrates strategic and operational planning, with
modelling, simulation and scenario planning facilities. Activity-based management is used to add a
process view to the functional view of an organisation, which is reflected in resource planning.
Business Consolidation (BCS) for financial reporting internally and externally, including value-based
accounting.
Corporate Performance Monitoring (CPM), providing support for the definition, analysis, visualization
and interpretation of key performance indicators, both financial and non-financial, internal and external.
The Balanced Scorecard (Kaplan and Norton, 1992) is a key tool here, together with associated chains
of cause and effect among multiple performance dimensions (Kaplan and Norton, 1996, 1997) useful
during the planning process.
Business Information Collection (BIC), which collects structured and unstructured business informa-
tion from internal and external sources.
Stakeholder Relationship Management (SRM), which supports the stakeholder communication process.

Fig. 1 illustrates how SAPs version of SEM (which we will take as representative of such systems)
supports strategic change management and integrated management processes aligned with strategy, based
on the core concept of the Balanced Scorecard.
Experience to date indicates that many SEMS implementations have been treated as technology projects
rather than as means of managing strategic change (Fahy, 2001). However, successful SEM adoption
requires a wider perspective with a well-designed and executed implementation process that recognises
the needs of the particular organisation. Some aspects of this wider change perspective follow.
230 S. Brignall, J. Ballantine / Management Accounting Research 15 (2004) 225240

Fig. 1. SAPs Balanced Scorecard solution for Strategic Enterprise Management (Source: Norton and SEM Product Management,
1999).

4. Pettigrews context, content, process model for successful organisational change

Pettigrew (1987) has criticised the acontextual, atheoretical and aprocessual nature of mainstream
managerial approaches to the study of organisational change and proposed that instead theoretically
sound and practically useful research on change should explore the context, content, and processes of
change together with their interconnectedness through time (p. 268). Pettigrews model for successful
organisational change was developed during his seminal longitudinal study of radical strategic change
at ICI plc (Pettigrew, 1985). Since that time this model has been applied by various researchers, for
example, Pettigrew et al. (1992) and Orlikowski (1993). Pettigrew et al. (1992) define context as the why
and when of change, and differentiate between the inner and outer contexts. Outer context refers to
aspects such as prevailing macro economic circumstances, the particular competitive environment faced
by an organisation and social and political environments, whereas inner context is concerned with internal
influences such as organisational resources, capabilities, structure, culture, and organisational politics.
Content is defined as the what of change and is concerned with the areas of transformation and the tools
and techniques used to effect change. Finally, process is described as the how of change and refers to
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actions and interactions of the various stakeholders as they negotiate proposals for change. The model
reminds those who seek to effect change successfully that it is important to consider the complexities of
organisational life, and to have regard for the characteristics of an organisations internal and external
environment. We will examine a variety of issues relating to SEMS design, implementation and use using a
range of possible explanatory theories under the three parts of Pettigrews context, content, process model.

5. The context of change

5.1. Institutional stakeholders

Various authors have argued that to manage performance strategically and so ensure continuous
improvement the multiple dimensions of performance recognised by the various PMM models (e.g.
Fitzgerald et al., 1991; Lynch and Cross, 1991; Kaplan and Norton, 1992) and SEMSs should be used at
both the planning and performance measurement stages. This means recognising that alternative strategic
plans have differing interactions and trade-offs among the performance dimensions, that choosing among
the plans requires the tracing of their likely chains of cause and effect across multiple performance di-
mensions, and that appropriate PMs and targets must be developed and monitored for the chosen strategy
within the SEMS. However, the tracing of such chains of cause and effect is problematic (Norreklit,
2000; Brignall, 2002), even at the level of a performance measurement system, and these problems may
be enhanced when such systems are operated within a SEMS.
It has been argued that the use of a contingent approach to information systems design (Brignall,
1997) may help performance measurement systems (PMSs) meet the needs of multiple stakeholders
(Kanter and Summers, 1987; Doyle, 1994; Brignall and Ballantine, 1996; Atkinson et al., 1997), such as
shareholders, customers and employees (Heskett et al., 1994). While SEMSs recognise the importance
of a range of organisational stakeholders, perhaps more important from the point of successful systems
implementation and performance management is the fact that most recent advances in the PM, ERP
and SEM literatures originating from private sector practices have neglected the insights of institutional
theory. Unlike stakeholder theory, institutional theory (in its neo-institutional sociology form) explicitly
recognises the importance of relative bargaining power in determining whose interests will predominate
in an organisation and the consequent effects on what aspects of performance are measured, reported and
acted upon (Di Maggio and Powell, 1983; Meyer and Zucker, 1989; Powell, 1991; Brunsson, 1994). This
has important implications for balance and integration in PMSs, and hence for the possibility of finding
an easy implementation process for SEMSs.
Following the influential criticisms of Johnson and Kaplans (1987) Relevance Lost, the upsurge
of interest in the early 1990s in multidimensional PM in the management accounting literature was
dominated by efforts to design effective systems for this purpose (e.g. Fitzgerald et al., 1991; Lynch
and Cross, 1991; Kaplan and Norton, 1992). The resulting PM models generally adopted a rational
actor approach in which the co-operation of managers and employees in performance measurement and
improvement on behalf of a (small) range of stakeholders was assumed to be un-problematical. Industry
literature on SEM also assumes that stakeholders can be managed straightforwardly by managers via
Corporate Communications or Investor Relations departments. Potential clashes of interest among internal
and external stakeholders are implicitly ignored in both the PM (e.g. Otley, 1999) and SEM industry
literatures. Some of the academic PM literature has been informed by contingency theory (Fitzgerald et
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al., 1991; Brignall and Ballantine, 1996; Atkinson et al., 1997; Brignall, 1997) in which such variables as
the business life cycle (which affects the competitive environment and competitive strategy) and process
type are seen as relevant to the design of an organisations PMS. However, comparatively little attention
has been paid to the social processes whereby PM (and SEM) systems are implemented (Otley, 1980;
Ittner and Larcker, 1998) or how they come to be used in the way they are. The approach guiding previous
PM research and SEMS design is mainly one of instrumental rationalism. As a result, power relationships
and political bargaining processes among managers and stakeholders, studies of which would enhance
our understanding of PM and SEM systems implementation and use (Markus and Pfeffer, 1983; Baier
et al., 1986), have largely been ignored.
In a recent paper, Brignall and Modell (2000) examined the impact of institutional pressures exercised
by different groups of stakeholders on the use of performance information in organisations. Writing in
the context of PMM in the new Public Sector, Brignall and Modell expanded the traditional two-party
institutional analysis (funders, service providers: Scott, 1995) to include the institutional purchasers intro-
duced by recent purchaser:provider splits. The three parties also correspond to the three key stakeholders
identified in much private-sector PM literature, notably the employees, customers and shareholders in
the service-profit chain (Heskett et al., 1994; see also Lynch and Cross, 1991; Kaplan and Norton,
1992). Consequently, their arguments should also apply in the private sector. Brignall and Modell (2000)
focus on the way that interrelationships among the three direct institutional stakeholders may influence
the balance and integration of performance information in an organisation, or lead to its de-coupling.
While balance and integration have several possible meanings, they are clearly separate but linked
conceptual constructs. The link between them would seem to be that some degree of integration is
necessary to secure a balanced approach to realising the differing interests of the various stakeholders.
However, there may be considerable problems associated with achieving balance and integration in
PM/SEM system design and use, not least because the rational instrumentalism informing most research
on PM offers few insights into issues of power and institutional processes which might prevent balance and
integration and cause some PMs to be de-coupled. Applying this reasoning to SEMSs, difficulties may be
expected in integrating the various parts (such as activity-based management, value-based management
and the Balanced Scorecard) and in balancing the interests of the key stakeholders across the parts. The
arguments developed above led us to suggest the following research question.

Research question 1. What insights do institutional and stakeholder theory offer to the issues of inte-
gration and balance of PMSs when designing and implementing SEM systems? We shall return to this
question in a later section.

5.2. Contingent variables relevant to the design of PMSs and SEMSs

Many management writers have recognised the influence of a range of contingent variables on the
design and implementation of management information systems and management accounting systems
(e.g. Otley, 1980; Drury and Tayles, 2000), and the consequent need for system-customisation. However,
if previous experience with ERP is any guide, the design of SEMSs has almost certainly failed to fully
reflect the extensive range of variables that need to be allowed for. For example, ERP systems have
been criticised for adopting a traditional, hierarchical, functional view of organisations (Kumar and
Hillegersberg, 2000), and for assuming that Western business practices and cultures operate universally,
whereas practices and cultures in Asia are different (Soh et al., 2000). They have also been criticised for
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failing to understand that what constitutes an enterprise may be defined differently from organisation
to organisation (Markus et al., 2000).
Brignall (1997) argued that there are two classes of contingent variables that should affect the design
of integrated costing and performance measurement systems. The first of the two classes are variables
related to the product and business lifecycle (e.g. the competitive environment, business mission and
generic strategy typeaspects of Pettigrews outer and inner context). The second class of variables
are those related to a businesss production or service delivery process type (e.g. professional, shop or
mass service: Silvestro et al., 1992). We propose that these arguments also apply to SEMSs. Accordingly,
the nature of the competitive environment and thus the nature of the business mission and appropriate
strategy will tend to vary among organisations at any point in time and within any one organisation over
time as it moves through its life cycle (Govindarajan and Shank, 1992; Adamany and Gonsalves, 1994).
In consequence, SEMSs will need to vary among organisations and change over time as the organisation
and its products/services move through their lifecycle. The customisation of proprietary SEMSs such as
those supplied by SAP is thus necessary to enable each organisation to align the SEMS to its relevant
contextual contingent interacting variables, and may be guided by reference to the variables identified
above.
Our arguments above may be summarised in the following research question.

Research question 2. To what extent are SEM systems customised to reflect an organisations external
and internal contextual variables, such as its competitive environment, business mission and strategy,
process type, and so on?

6. The content of change

The vendors of SEMSs are providing a bundle of tools and techniques (e.g. the Balanced Scorecard
and Activity-Based Management). Whilst SEMs vendors claim they are promoting industry best practice
by providing a bundle of tools and techniques within SEM, their adoption is likely to be problematic
in practice. For example, there are various problems with the chains of cause and effect in Balanced
Scorecard (BSC) Strategy Maps (see, for example, Norreklit, 2000; Brignall, 2002) and the top-down
management style of Activity-Based Costing (ABC) (Johnson, 1992), but more importantly they are
not applicable to all organisations in all circumstances. For example, Brignall et al. (1991) argued that
Activity-Based Costing (and, by extension, activity-based management) is not suitable for all service
delivery process types. The Balanced Scorecard has also been subject to numerous other criticisms, such
as a failure to consider the performance of competitors, or the employee or supplier perspectives, or envi-
ronmental performance (Ballantine and Brignall, 1995; Kennerley and Neely, 2000; Brignall, 2002). But
a more worrying aspect is that the interactions among these tools and techniquesand other performance
drivers which organisations may already be usingare implicitly assumed to be un-problematical. This
may partly be because of the history of management research until recently, which has usually been
conducted along single discipline or single function lines: truly interdisciplinary research has been rare.
In line with the above, we would wish to investigate the following research question.

Research question 3. Which of the various tools and techniques have been adopted by companies, and
why, and what problems or conflicts have arisen when doing so?
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Performance drivers such as information systems like SEMSs or HRM practices such as empowerment
have hitherto usually been studied univariately or unithematically (Pettigrew et al., 1999). An example
of a strong unitheme is the work seeking to link human resource management practices to performance,
which has been studied from economic (Ichniowski et al., 1997), psychological (Jackson and Schuler,
1985) and strategic human resource (Delaney and Huselid, 1996) perspectives. Sometimes such work
focuses on a single HRM variable and its links with performance, for example, appraisal systems (Bricker,
1992) or selection (Terpstra and Rozell, 1993). Later, more sophisticated studies seek to bundle together
various HRM activities and argue that firms with multifaceted HRM strategies perform better (MacDuffie,
1995; Ichniowski et al., 1997). More importantly, Collins and Porras (1994) have argued that such bundles
must embrace not just multifaceted strategies across one theme but multifaceted strategies across multiple
themes, such as strategy, structure, IT systems, HRM practices and BPR. The significance of this argument
has recently been reinforced by the writings of Milgrom and Roberts (1995) and empirical research based
on their arguments.

7. The process of change

7.1. The complementarities approach

A recent analytical treatment of performance drivers is the work by Milgrom and Roberts (1995),
whose complementarities approach is being picked up in different streams of research, for example
human resource management (Ichniowski et al., 1997), performance management systems (Abernethy
and Lillis, 1998), and in recent international studies of new forms of organising and company performance
(Whittington et al., 1999). These streams of research have implications for the design, implementation
and use of SEMSs.
The complementarities approach rejects the notion of singular performance drivers, realistically recog-
nising that performance may be improved in many ways involving many disciplines and functions. Indeed,
the notion of performance is multi-faceted and what constitutes good performance will vary from stake-
holder to stakeholder and over time. The complementarities approach recognises the potentially mutually
reinforcing effect of sets of factors in explaining performance differences. Thus in the work on innovation
and performance (Whittington et al., 1999), it is assumed that certain innovations need to happen at a
similar time if the synergies are to be enjoyed. SEMSs follow this thinking in their promotion of multiple
methods of performance improvement (such as the Balanced Scorecard, ABM and VBM) applied simul-
taneously and in an integrated fashion. However, Milgrom and Roberts (1995) argue that such activities
are complementary when changes that increase the effectiveness of some activities in a group promote
the adoption and improvement of other activities. The vendors of SEMSs have yet to demonstrate that this
is the case for their systems, whether in terms of their internal coherence, or in terms of their coherence
(or fit) with the other performance improvement techniques already in place in any one organisation
intending to install a SEMS: hence the need for research in this area. Accordingly, such research would
need to consider the complementarities among the various applications of the SEMS (e.g. BPS, CPM,
SRM) and those performance improvement techniques in place in the organisation but outside the SEMS,
such as improved HRM practices or a new organisational structure.
Milgrom and Roberts (1995) main complementarity propositions, which might be relevant to future
SEMS research, are:
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Higher performing organisations will not just be doing the right kinds of things but combining more
of them and doing so differently.
Superior performance is to be gained not by changing individual parts in isolation, but by simultaneously
combining all the elements together.
Practices associated with positive performance when combined with their complements may be found
to have negative effects when taken individually.

In fact Whittington et al. (1999) show that piece-meal change not only does not deliver higher perfor-
mance, but actually leads to negative performance effects. So system-wide change involving the transfor-
mation of structures, processes and boundaries can deliver substantial performance gains, and might be
aided by the implementation of a new information system such as a SEMS (Pettigrew, 1999a; Pettigrew
and Fenton, 2000). But knowing what sets of changes need simultaneously to happen (the change content,
or what applications and tools should be contained in a SEMS) is only half the battle. From a policy point
of view we also need the answers to a set of questions about the process and context of organisational
change, and how the two should be aligned to ensure a good fit. What can we discover about the learning
and change capacities of organisations that are able to sustain an ambitious change agenda through time
and still improve their competitive performance while implementing a SEMS? Which features of top
management commitment and skill in handling change seem to be crucial to the successful implemen-
tation of a SEMS? If ERP implementation problems are a guide, research indicates that the sheer size
and scale of such implementations may encourage organisations to tackle the layers (e.g. strategic versus
technical) independently, contributing to many failures and partial successes of these complex business
and technical projects (Markus et al., 2000, p. 42). Indeed, research suggests that, because of the size
and scale of these projects, truly enterprise-wide implementations of ERP systems in large, complex
organisations are the exception rather than the rule (Markus et al., 2000, p. 43).
To summarise the above discussion, we know that complementarities theory implies innovating in sets,
but there are many detailed research questions that flow from this. For example, how are the initial sets (in a
SEMS) chosen and why? What follows the initial change sequence in successful SEMS implementations,
and why? Was energy focused on making the initial set of changes work, or was there sufficient foresight
to accumulate the next set of complements and design processes to meet the new set of changes in the
ever evolving context of the organisation? (Pettigrew, 1999b). The foregoing leads us to:

Research question 4. In line with complementarities theory, do successful SEM adopters implement
multiple applications of an SEM system simultaneously as opposed to a modular fashion?

7.2. Stakeholders and institutions

Answers to this fundamental process question must recognise that the strategic management of organisa-
tional change and performance improvement involves managerial choices through which they pro-actively
influence their relations to different constituencies (Oliver, 1991; Abernethy and Chua, 1996). However,
such choices are not uncontroversial among members of the senior management team and key internal
and external stakeholders. One way of achieving consensus might be to adopt Interactive Planning (IP)
(Ackoff, 1979) as an over-arching planning and decision-making process, where interactive planning
aims to design a desirable future and invent ways of bringing it about (Ormerod, 1995, p. 278) through
the participation of a range of stakeholders in order to gain consensus.
236 S. Brignall, J. Ballantine / Management Accounting Research 15 (2004) 225240

ERP and SEM systems can be seen as a way of promoting transparency within an organisation, but this
runs counter to de-coupling in institutional theory mentioned in the section on context above. A critical
issue is: transparency to whom? This is where the issue of power comes in: who controls access to the
information in the various parts of the SEMS (or ERPS)? Is transparency always desirable from the point
of view of senior management? Strategic decision-making has long been regarded as a key function and
prerogative of senior management, so the sharing of that information with other stakeholders via a SEMS
could be seen as a serious weakening of senior management power.
It may be that SEMSs are in the process of becoming institutionalised (i.e. standardised and perhaps
ritualised) in their own right, with discernible isomorphic tendencies. This raises the issue of the im-
plications of various modes of SEMS implementation, which may be linked to differing organisational
(Tolbert, 1988) or national (Hofstede, 1983, 1984, 1994) cultures. Are these systems implemented in a
coercive, normative or mimetic fashion? (cf. Di Maggio and Powell, 1983) Outcomes are likely to vary
depending on implementation mode and hence one may see various types of couplings between various
parts of SEMSs. Consequently, how partial the solution to organisational performance improvement is
will depend on the type of coupling (both within the SEMS and between the SEMS and its outer and inner
context). De-coupling will occur if a SEMS is merely used for external legitimacy seeking (Meyer and
Gupta, 1994), but if there is also an element of real (i.e. partial) use by stakeholders other than senior
managers some form of loose coupling (Orton and Weick, 1990) will occur. Tight couplings will only
occur if the SEM system is used in the way its designers intended, permeating all levels of management
and having the kind of significant change impact its vendors claim for it. The above leads us to:

Research question 5. To what extent are the various applications of an SEM system de-coupled and
what are the implications of this for the integration and balance of the performance measurement system?

However, the mode of implementation will often not be determined by senior managers alone (who may
in any event disagree among each other), but will rather be affected by stakeholder power and conflicts and
the organisational culture. A deciding factor here may be the possibility of managers resisting institutional
pressures (Oliver, 1991), which may vary from organisation to organisation. In consequence, the form of
coupling will be affected both by the mode of implementation and managers degree of control over that
decision. Differing organisational (Tolbert, 1988) or national (Hofstede, 1983, 1984, 1994) cultures may
play a determining role in this respect. Future researchers may wish to explore the extent to which those
implementing SEM systems sacrifice integration for balance, and whether this is linked to the incidence
of the three forms of de-coupling mentioned above.

8. Conclusions and research implications

We have argued that the design, implementation and use of SEMSs may usefully be studied using
Pettigrews context, content, process model for successful organisational change and performance im-
provement. We have developed a series of five research questions under the three parts of Pettigrews
model.
The process questions raised above and the complex issues discussed in the earlier context and content
sections imply that future research on what determines the success of SEM initiatives might usefully
combine two research methodologies. Large sample multivariate statistical studies could be used to
S. Brignall, J. Ballantine / Management Accounting Research 15 (2004) 225240 237

identify the what of the complementarities among their component parts while an associated set of
longitudinal case studies might help answer the questions about the process and context of successful
change and performance improvement using SEM. These case studies might be matched pairs (Pettigrew
and Whipp, 1991) of successful and unsuccessful SEM organisations. Until such research has been carried
out, SEMSs are at best a partial solution to the quest for performance improvement, a solution which
implies more questions about the context, content and process of organisational change and performance
improvement than their vendors are currently able to answer.
While this paper has considered a number of issues relevant to the successful implementation of SEMSs,
it has given scant coverage of other issues that have been shown to be relevant to the success of ERP
systems. For example, the paper has not considered the potential problems of integrating ERP, SEM and
other systems, or the problems caused by tight implementation schedules, the need for data standardisation
and the time-consuming and costly nature of systems implementation. A complete analysis of the problems
inherent in SEMS design and implementation would need to consider these issues as well as those covered
in more detail in the main sections of the paper above.

Acknowledgements

Stan Brignall is grateful for ideas generated in previous collaborations with Lin Fitzgerald, Janet Harvey,
Bob Johnston, Sven Modell and Andrew Pettigrew. The authors are grateful for the comments of Sven
Modell and David Otley on a previous version.

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