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Abstract
Purpose – The purpose of this paper is to compare the approaches towards implementation of
business process reengineering (BPR), and to provide some evidence as to which approach offers a
greater chance of success.
Design/methodology/approach – A hospital case analysis is used to study where both top-down/
participative BPR and enterprise resource planning (ERP)-driven BPR were used to reengineer its
processes.
Findings – With an ERP-driven BPR, it is easier to define the scope of the project, design of the
process changes, mapping of the new system in the software, and to obtain a realistic preview of
the outcomes.
Research limitations/implications – ERP-driven approach to BPR implementation used in this
hospital represented a holistic rather than a piecemeal approach to an organization-wide change effort.
There is always a tendency for the motivation and support for such change efforts to dissipate.
Research is needed on how to sustain the momentum for such change endeavors.
Practical implications – With ERP-driven BPR it is easier for management to offer a realistic
preview of the expected outcomes, possible changes in the design and scope of the project, and to
guard against unrealistic worker expectations. However, the ERP-driven change approach requires
close cooperation and mutual protocols between all the principal stakeholders, i.e. the executive suite,
ERP system vendor, business process and support teams, and IT department.
Originality/value – The paper offers a rare insight into a company where both approaches to BPR
implementation were tried and provides evidence in support of ERP-driven BPR.
Keywords Resource management, Business process re-engineering, Information,
Technology led strategy
Paper type Research paper
Introduction
One of the constants in most organizations today is change. Management would like to
think that employees of the organization can handle this rapidly changing environment.
However, when change becomes personal, these employees suffer discomfort, less
confidence, reduced competence, and lost control over their own destiny. Severe
emotional changes, increased anxiety and stress levels, and reduced productivity all
contribute to greater conflict between groups and individuals.
One of managements’ strategies to create change through process performance
improvements is business process reengineering (BPR). Management embarks on BPR
in attempts to improve customer service, reduce cycle time, reduce production/service
The current issue and full text archive of this journal is available at
www.emeraldinsight1463-7154.htm
BPMJ
12,5
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Business Process Management
Journal
Vol. 12 No. 5, 2006
pp. 576-587
q Emerald Group Publishing Limited
1463-7154
DOI 10.1108/14637150610691000
costs or to improve quality (Carr and Johansson, 1995). While BPR has achieved some
success (Davenport, 1998), inadequate implementation has caused many of its failures
(Nelson and Ramstad, 1999; Harrington, 1991; Fowler, 1998; Stebbins et al., 1998;
Al-Mashari and Zairi, 2000). Successful BPR implementation requires that the proposed
organizational change occurs through rational planning and the cross-functional
integration of knowledge, skills, and processes. The three major approaches to BPR
implementation include top management driving down BPR, participative BPR or
enterprise resource planning (ERP) systems driving BPR.
We use a hospital case analysis to study where both top-down/participative BPR
and ERP-driven BPR were used to reengineer its processes. Research indicates that
75 percent of all change efforts are not successful because of implementation barriers
(Haines et al., 2005; Williams, 2001). Organization-wide changes must be implemented
through normal organizational lines of authority and responsibility and therefore,
requires a strong coalition of managers at all levels to support the change (Williams,
2001). Furthermore, organization-wide change implementation has a greater chance of
success if both the economic alignment of delivery and the cultural attunement of
people’s hearts and minds to the proposed change effort are dealt with in a specific,
planned fashion. (Haines et al., 2005). Concentrating on alignment or attunement and
not both is a recipe for failure. Literature is replete with examples of BPR failures due
to a fragmented approach to BPR adoption (Hill and Collins, 1998; Al-Mashari and
Zairi, 1999; Stebbins et al., 1998; Cooper and Markus, 1995; Valiris and Glykas, 1999;
Marjanovic, 2000). In this paper we hypothesize that ERP driven BPR provides a
holistic approach to its adoption, and we test our hypothesis with the help of a case
study. The ERP software along with telecommunication networks enables it to
integrate entire business networks; in addition, it provides best of breed industry
practices for motivating process reengineering.
The three BPR implementation approaches
The first approach, radical top-down BPR, is a strategic process change initiative
sponsored by top management. This approach has the most negative impact on
employees’ levels of comfort, confidence, competence, and control, especially if top
management has not supported it with adequate retraining. The second approach,
participative BPR, involves almost everyone in the company. Here to, the
previously-mentioned employees’ 4 C’s may be disrupted because of consensus decision
making. These two approaches have to reinvent processes and in addition, must deal with
the processes of negotiation and coalition building with employees. Some of the hazards of
these approaches lie in their weaker theoretical and methodological foundations
(Mumford, 1994). Although, the proponents of these two approaches advocate the redesign
of broad cross-functional processes, many a times they lack the tools to enable the new
approach to work. Davenport and Stoddard (1994) report many BPR initiatives, before the
advent of the integrated ERP systems available today, that failed simply because of
managements inability to devote sufficient attention to the dynamics of change between
products, processes, and organizational structures. Later, Koch (2001) makes the point that
the shortcomings of these two approaches can be overcome by applying the three features,
i.e. scope, configurability, and integrative-ness, of an ERP system.
The third approach, ERP-driven BPR, requires that the existing processes be
aligned with the software, a step-by-step implementation plan through cross-functional
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coordination, and addressing issues relating to employee training and culture. Most
ERP systems such as SAP, Oracle, Peoplesoft, and JD Edwards provide functionality
for almost all vital business functions in any industry and in combination with
internet/telecommunications, are capable of covering any business network. Process
activities can be embedded in the software implementations through the choice of
industry standard modules and sub-modules. However, the biggest benefit of ERP
systems stems from the use of a common database for all functional and
cross-functional activities, thus, resulting in data integrity, reduced transactions,
lower cost of management, and most importantly, better customer service.
Information technology (IT) plays a vital role in motivating this process change
approach (Davenport, 1998). The role of IT is to enable new process designs and the
automation of old functions to increase their efficiency and effectiveness through
eliminating delays, administrative intermediaries, and redundant transaction steps
(Grover et al., 1993). Greater success of this implementation approach will come when
its diffusion is harnessed through the joint effort of the company’s IT department and
the process owners.
ERP systems are packaged bundles that are ready for rapid adoption by BPR
adopters. Most of the ERP vendors have packaged and bundled the best-of-breed
industry practices in their software for rapid adoption. In addition, there is a huge
industry that supports these software implementations. It makes the search for the
optimal integrated process for the BPR adopters much easier. The major challenge for
any adopter is to unpack the embedded knowledge in the package and integrate it with
their context-specific organizational processes and routines.
The biggest advantage of ERP-driven BPR lies in the meticulous search process
companies have to go through for the optimal system. Since ERP implementations are
frightfully expensive and time consuming, and users need to accumulate experience
with the new system, companies are obligated to be cautious in adopting ERP. Most ERP
adopters have to go through a universal checklist that must make sure that goals, scope
and expectations are clear at the very outset. Process automation capabilities of the ERP
system can easily make it transparent that its adoption is not just a technology
installation, but rather a business process change effort. In the pre-implementation
phases most companies need to produce a white paper on how to go about the process of
selecting the ERP vendor, piloting the installation, and rolling out the system to all
departments (McAlary, 1999). The selection of the ERP vendor is extremely critical and
to avoid misfits, companies must look for gaps between the functionality offered by the
package and that required by the company. However, most ERP vendors help with
fit-gap analysis, proper sequence of activities for installing the system, mapping of the
existing processes with the software, and selection of the training leaders.
McAfee (2003) and Koch (2001) report a number of ERP-driven BPR implementation
case studies. These studies make it clear that ERP adoption at these companies caused
major process changes and various levels of system integration. In most of these cases,
the ERP-supplied business maps and engagement tools provided a robust platform for
effective knowledge transfer. They allowed project teams, ERP vendors, and ERP
partners and consultants to speak the common language as to how the ERP modules
could support the company-specific business processes. Engagement tools also
allowed the project team to customize the visual content to support the design of the
reengineered solutions. These tools not only helped develop company-specific,
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business maps to document, plan, and design re-engineering projects, they also helped
analyze the potential return on investment in BPR projects. They became even more
powerful in the hands of the IT department when the reengineering efforts were driven
by the process stakeholders. The highly efficient levels of integration reported in Koch
(2001) were the direct result of the cooperation between IT departments and the
business process owners.
So far, research findings have provided limited explanatory power concerning the
underlying reasons behind BPR failure. Readers are referred to Bergey et al. (1999) and
Kotter (1995) that provide a good snapshot of the reasons behind BPR failure. Among
the reasons cited, a top-down approach that failed to obtain employee buy-in, a
participative BPR that lacked long-term commitment from top management, workforce
tied to old technologies, a legacy system out of control, and IT architecture misaligned
with BPR objectives stand out as the prominent ones. Paper et al. (2003) note that even
with ERP systems BPR success is not guaranteed. An ERP system can integrate the
enterprise in terms of information sharing, reporting, standardization, and more
effective processes. However, such integration can only be achieved if through process
analysis is performed by teams consisting IT personnel and the process owners, not by
vendors who lack a comprehensive knowledge of the existing business processes.
Our hospital case study
A large Midwestern hospital – where both top-down/participative and ERP driven BPR
was employed – is used in this case study to get a good overview of the challenges of
BPR. The study employs a qualitative case study methodology. A group of executive
MBA students interviewed key BPR/ERP personnel in the hospital. The team members
were familiar with BPR/ERP and the team consisted of two persons who actually
worked in managerial positions within the studied hospital. The team interviewed four
key personnel directly involved with project planning and implementation in the
hospital. Each respondent was visited 1-4 times by the teams over the period of a
semester and was interviewed by all members of the student group in one session.
An open-ended questionnaire was developed as the format to be used in the
interview of hospital managerial staff regarding the BPR project. If verbal responses
were deemed inadequate, students left the question with the respondent for a written
answer to be collected later. Each questionnaire also contained self-report information
regarding the respondent’s degree of knowledge and involvement in the hospital’s BPR
efforts.
The usual cannons or standards by which quantitative studies are judged –
internal validity, external validity, reliability, and objectivity – have been deemed
inappropriate for judging the merits of qualitative studies (Agar, 1986; Guba, 1981;
Kirk and Miller, 1986; Lincoln and Guba, 1985; Merriam, 1995; Sandelowski, 1986;
Strauss and Corbin, 1998). Consequently, most qualitative researchers believe that
these constructs require redefinition to fit the realities of qualitative research (Strauss
and Corbin, 1998) and that more attention should be devoted to responding to the
criteria for the soundness of conducting qualitative research (Marshall and Rossman,
1995). Lincoln and Guba (1985) proposed four alternative constructs that more
accurately reflect the assumptions behind conducting sound, trustworthy qualitative
research. These constructs are (Lincoln and Guba, 1985, p. 290) establishing the “truth
value” of a qualitative study, its applicability, consistency, and neutrality.
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Truth value refers to the researchers’ ability to adequately and credibly reconstruct
the respondents’ reality or meaning of a situation. Lincoln and Guba (1985) stressed the
need to be sure that the findings are reflective of the subjects and the inquiry itself
rather than the creation of the researcher’s biases or prejudices. Various strategies for
controlling bias in data interpretation were included in this study. The data were
checked and rechecked by the respective informants and the principle researcher. The
questionnaire was field tested through a pilot study before allowing the student teams
to administer it to the study hospital. Finally, the principal researcher conducted an
audit of the data collection and analytical procedure via the team’s 50-page case study.
All of these strategies helped to confirm that the data themselves were objectively
interpreted (Marshall and Rossman, 1995). The three criteria of credibility, fittingness
and transferability, and dependability have been adequately met in this study and
consequently, the fourth factor for establishing rigor in quantitative research has
been met.
The hospital felt the pressure to change after it surveyed its customers to determine
the level of satisfaction they had with their products and services. Based on
400 responses the hospital noted that their major weaknesses were inflexibility, poor
service delivery performance, bureaucracy, lack of cross training, and high cost of
services. This led to the organization of an 11 member cross-functional team, labeled
the Enterprise Design Team (EDT), to look into ways to respond to customer demands.
The newly formed EDT immediately recognized that the hospital must move from
functionally managed departments to a system focused on business processes. The
EDT identified four core processes and four management and support processes.
Along with identification of the processes, EDT also selected the transformation teams
and the team leaders representing the different departments that span each of these
processes.
Six months into this approach and since top management had already decided the
direction and was filtering this information to process teams on a need to know basis
(top-down BPR), it was felt that the EDT did not provide much direction nor had
empowered the process teams. There was considerable disagreement as to how the
implementation should proceed and how the existing functions should be integrated.
This had a direct bearing on organizational preparation. The select few in charge of the
project became so enamored with how the hospital could perform better they forgot to
consider how the affected employees felt about the changes. This resulted in covert and
overt hostility towards the project, extensive political maneuvering and turf battles.
Although the EDT received positive feedback about the new approach from
customer advisory groups, the future of this effort seemed uncertain for several
reasons. First, the project was conceived as an ideological phenomenon that was
subject to the whims of top-management. Second, “organizational amnesia” was not
created so that old process approaches could be forgotten (Case, 1999). Third, the EDT
neither had the support of an integrated software nor the technical background to
launch a large-scale BPR effort. Finally, the hospital was poised for a pending merger
with both the top and the second-in-command executives being interim replacements.
Eventually, the hospital completed the merger and replaced the interim executives.
One of the new executives used to be a member of the hospital’s executive suite.
The new management found that there was considerable dissatisfaction among the
employees, processes that were changed lacked integration with other processes and
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the political front against the older administration was quite strong. Thus, they
dismantled the EDT. The employees felt that the EDT effort was dead on arrival
because top management did not have the needed commitment, lack of communication
precluded widespread employee participation, some integration efforts were misguided
because of unavailable technology, and change was not effectively managed.
ERP-driven BPR
After a careful search, the new administration decided to implement SAP for developing
an integrated system that uses industry best practices. Although SAP does not
automatically reengineer a process, it drives an organization to do it themselves. SAP’s
solution composer and business case builder helped the hospital to develop the
appropriate business maps that drew heavily from the SAP supplied industry-specific and
cross-industry processes. SAP, or any other ERP system, forces an organization to decide
how they want to run their business at a detailed level. The ERP effort was undertaken to
improve the hospital’s administrative and financial system, management called it the
Administrative System Project (ASP). A task force was created that produced a
three-phase plan that started with needs assessment, technology selection, and finally,
implementation of the project. The hospital appointed a project administrator, five process
teams, and three support teams. About 25 technical resources were made available to the
project in support of networking, operations, database application, database server, and
application server. Additionally, several resources provided support by developing
technical programs written in SAP’s programming language ABAP. Other technical
resources were made available to provide basis administration dealing with the
maintenance and security of the SAP R/3 system. A large consulting firm was hired as
the implementation partner for the project. The consulting resources were a necessity for
detailed project planning, initializing and configuring the software, transferring
knowledge of the system, and for testing and documentation.
It is important to recognize that the project was not led by the information systems
(IS) department. Rather IS, in partnership with the hospital business managers, led the
reengineering efforts. Davenport and Stoddard (1994) support this partnership with IS
as opposed to IS led BPR. The business managers of the ASP project had a firm
understanding of the business processes to determine the appropriate technical
architecture for the SAP R/3 system. The need to manage change was recognized from
the very outset and the emphasis on communication and training were effective in
mitigating the resistance to change. The implementation of the project went through
the four phases of preparation, analysis, design, and actual implementation (go-live).
The preparation phase consisted of defining business requirements, assessing
business strategy, performing some business process redesign, and defining the
project’s scope. Team building efforts took place at this stage, most of these team
members had strong IS background resulting in smooth transition to ERP
implementation methodology.
The analysis phase did the detailed examination of the current and future functions
and processes and training of the team members in SAP capabilities. Other major
activities during the analysis phase included the documentation needs and the design
of the end-user training.
The design phase began with the future business functions and the processes
defined in the previous analysis phase and mapped them to SAP functionality
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resulting in a fit-gap analysis. A prototype configuration was developed at this stage
and was demonstrated to the user community, and feed-backs were incorporated into
the design of the system. This phase also included the identification and design of
technical interfaces, conversion programs, and reports.
The final phase included detailed configuration of the final system, finalization of
the technical programs, quality assurance testing, and end-user training. All
preparation were made to make the transition from the old system to the new system
by loading the new system with real data and preparing it for production.
The actual BPR took place during the analysis phase. The implementation team
spent considerable time to document the current processes and transfer that knowledge
to the consultants. It helped the consultants to map the desired processes to the
processes provided by SAP. Live model software was used to facilitate process
mapping. Although the project moved on as scheduled, the implementation team
identified 14 gaps and 12 of the gaps were related to human resource management
(HRM) that delayed the go-live date by six months. The transition went on smoothly,
however, the real benefits of this implementation may not be apparent for several years
as end-users gradually become comfortable with the system.
Lessons learned
Market pressure today is forcing many companies to implement ERP systems for
achieving efficiency and effectiveness. Many implementers of ERP are finding
themselves in a position to reengineer their existing processes to fit the ERP software
they are utilizing. The ERP-driven BPR implementation reported in this study has
brought about fundamental changes in the hospital’s structure, workforce culture, and
management practices. The hospital’s first attempt to implement BPR failed because
management did not have a defined road map, they could not build a coalition of
participants, and employee disdain for the top-down change effort. The ERP-driven
BPR had many advantages over the other approaches, and are listed as follows:
. With an ERP-driven BPR, it is easier to define the scope of the project, design of
the process changes, mapping of the new system in the software, and to obtain a
realistic preview of the outcomes.
. Most ERP systems have engagement tools such as solution composer, business
case builder, and business maps that can help documentation, planning, and
design of a customized solution for company business processes. These ERP
tools can help foster teamwork between company personnel, ERP vendor,
partners and consultants. One of the first challenges is to produce a custom
checklist of activities that can help navigation of the ERP/BPR effort, wholesale
statements such as: “obtain top management support,” or “get user buy-in,” fail
to produce the desired results in most cases. Only the knowledge base of ERP,
and the expertise of the ERP vendor and the partners, combined with experience
of the process owners, can produce a workable checklist. The chaos during the
first BPR attempt and their eventual success with ERP-driven BPR bears
testimony to this fact.
. With ERP-driven BPR it is easier for management to offer a realistic preview of the
expected outcomes, possible changes in the design and scope of the project, and to
guard against unrealistic worker expectations. Top management must also
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demonstrate that the change effort is institutional, supported by market needs,
and is not entirely IS related. In case of the hospital, the team efforts between
IT department and the process owners were founded on these principles.
. Most ERP vendors offer a carefully crafted education and communication plan
for the users. To capture employee attention, communication must take place
through multiple medium, repeat presentations, and through different channels.
Most ERP vendors offer all these options. Most ERP implementation packages
provide a single point of contact to the project members and employees for access
to information through intranet or corporate portal.
. Identifying the barriers to change can be the first step towards a successful
ERP/BPR implementation. Barriers to change can come in the form of technical
barriers or social barriers. Social barriers can be overcome by obtaining the support
of the politically powerful, the opinion leaders, and the well known individuals in the
company. For overcoming technical barriers, detail planning, effective change
management, and comprehensive training is required. ERP can help on all counts.
. To facilitate implementation and control, the hospital fostered partnership
between IS and process teams, and the vendor consultants moderated these team
efforts. These teams bridged the gaps between management, technical, and
non-technical hospital personnel. In the post implementation phase, the hospital
created super-user groups with support from SAP.
. ERP-driven BPR requires a cultural transformation, new ways of doing things will
not take root unless company makes a systematic effort to establish the new
standard. Companies implementing ERP/BPR projects must remember that it
usually takes a long time for employees to accept any organizational change efforts,
and workforce culture changes only when employees learn new sets of behaviors.
Managerial implications and conclusions
The ERP-driven BRP change this hospital went through and the previously-mentioned
lessons learned surfaces several important managerial implications. One important
implication is that when real and actual approaches to change management follow
academic models and techniques of change management, the ability to develop and
implement organization-wide change progresses more smoothly. While there are
various models of organization-wide change management (Cummings and Worley,
2005; Haines et al., 2005; Kotter, 1996; Williams, 2001), the five major components in
most of these models include:
(1) factors causing the motivation for the change;
(2) creating a vision for the change;
(3) developing political support for the change;
(4) planning and managing the change transition; and
(5) sustaining momentum after the change has been implemented (Cummings and
Worley, 2005).
As illustrated in this case study, the failure of the top-down approach was mainly
attributable to inadequate preparation and communication regarding the first three
components. There seemed to be little sense of urgency to change (Kotter, 1996),
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especially because of the interim nature of top leadership and their unwillingness to
reveal discrepancies between current and future change states or to provide credible
positive expectations for the change (Cummings and Worley, 2005). Consequently,
without top management supporting and communicating what outcomes they wanted
to achieve, the change approach was doomed from the beginning (Haines et al., 2005).
As the study indicated, without satisfactorily performing the first three components,
the change effort had no chance of achieving implementation and change transition.
However, the ERP-driven change approach required close cooperation and mutual
protocols between all the principal stakeholders. Primarily because of the coordination
between hospital leaders, ERP system vendor, hospital process and support teams, and
the hospital’s IT departments, and a large consulting firm, the management of the BPR
change effort resulted in successful implementation. The following key success factors
found in most organization-wide change management models (Cummings and Worley,
2005; Haines et al., 2005, Williams, 2001) were illustrated by management in this
coordinated hospital change approach:
. Installed an executive team as a change leadership team with necessary
sub-structures to rollout, communicate, develop, and sustain the involvement
process for buy-in and stay-in.
. Established a clear change vision, scope of the project, and design of the process
changes and cascaded these elements downward to the appropriate
organizational levels.
. Conducted an organizational and marketplace assessment and developed a
measurement system by using the ERP engagement tools addressing bottom line
needs for customers and employees.
. Obtained the commitment of a critical mass of both an internal and external
support cadre, i.e. process owners, IT department, and ERP vendors, by allowing
participation and involvement in change planning and implementation.
. Provided training to those who needed new knowledge and skills – through
vendor administered training programs – to accomplish the desired change
outcomes including the collective management team.
. Developed a comprehensive implementation map for the next twelve months as
well as the necessary budget and resources to support the map.
. Redesigned performance, incentive, and recognition programs to support the
change outcomes.
Overall, the ERP-driven BPR change effort in this hospital met with moderate success.
However, research on change management models suggests that additional
implementation success might have occurred with the inclusion of the following two
components. First, there is a need to plan for and celebrate successes that show
progress (Haines et al., 2005; Kotter, 1996; Williams, 2001). Second, successful
implementation is enhanced by hiring, recognizing, rewarding, and promoting people
who have acceptance of and are committed to the change vision (Haines et al., 2005).
Hospital management and its human relations department must work closely with one
another and be in legal and ethical compliance in pursuing this component.
The change effort is now in place in the hospital and like most organization-wide
change efforts, there will be a tendency for the motivation and support for the change
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to dissipate (Cummings and Worley, 2005; Haines et al., 2005). Consequently, the ability
to sustain the momentum for the change becomes paramount and this is what
management now needs to address and be vigilant over.
All stakeholders in this change effort need to recognize that initially there may be an
actual worsening in performance while employees go through start-up training and
new processes are debugged. Perseverance, along with ongoing feedback flexibility,
and regular booster shots are needed to maintain the momentum (Haines et al., 2005).
There is a need to conduct future annual reviews/audits to make sure the change is
having the expected results, management and employees are comfortable with the
change and recognize it as permanent, current documentation is available and being
followed, training is available and current with change documentation (Williams,
2001). Negative findings from these reviews/audits will require management to be
flexible and update or modify their original change plans and perhaps commit more
budget and resources to booster the efforts of various stakeholders to the change effort
(Haines et al., 2005).
In conclusion, ERP-driven approach to BPR implementation used in this hospital
represented a holistic rather than a piecemeal approach to an organization-wide change
effort. It focused on both the productivity, processes, and bottom-line economics of
integrating the SAP system in the hospital while attending to the egalitarian,
participative cultural attunement of people processes as they interact with the SAP
system. Combining these three elements produced an integrated solution that achieved
superior implementation results when compared to the top-down approach initially
used in this hospital.