Firm Growth and Innovation in the ERP Industry: A Systems Thinking Approach

Achievement and sustenance of growth are essential themes in organizational literature. In our paper, we develop models using systems thinking approach to understand how firms achieve and sustain growth in a technology-intensive product domain. We augment these to explain the possible impact of a disruptive technological innovation. We use enterprise software industry as the context where SAP has been acknowledged as the market leader. We find that product differentiation and learning effects helped SAP establish itself, and this growth was further sustained through networks and complementors. Introducing cloud computing as the disruptive innovation, we explain its impact on a firm. Analysis reveals that for the next wave of growth to occur, and to tap into newer markets, it would be imperative for SAP to create attractive cloud based offerings. We also discuss how the model can be enhanced by considering competitor dynamics.

[1]  F. Robert Jacobs,et al.  Enterprise resource planning (ERP)—A brief history , 2007 .

[2]  Peng Huang,et al.  IT Knowledge Spillovers, Absorptive Capacity, and Productivity: Evidence from Enterprise Software , 2013, Inf. Syst. Res..

[3]  Rajkumar Buyya,et al.  Article in Press Future Generation Computer Systems ( ) – Future Generation Computer Systems Cloud Computing and Emerging It Platforms: Vision, Hype, and Reality for Delivering Computing as the 5th Utility , 2022 .

[4]  Prashant Pandey,et al.  Cloud computing , 2010, ICWET.

[5]  Sue Conger,et al.  Service Management and Engineering in Information Systems Research , 2013, J. Strateg. Inf. Syst..

[6]  W. J. Regan.  The Service Revolution , 1963 .

[7]  Ondrej Zach,et al.  ERP Systems in SMEs: A Literature Review , 2011, 2011 44th Hawaii International Conference on System Sciences.

[8]  P. Mell,et al.  The NIST Definition of Cloud Computing , 2011 .

[9]  Michael A. Cusumano,et al.  Cloud computing and SaaS as new computing platforms , 2010, CACM.

[10]  Elisabeth J. Umble,et al.  Enterprise resource planning: Implementation procedures and critical success factors , 2003, Eur. J. Oper. Res..

[11]  Avinash,et al.  Micro, Small and Medium Enterprises in India , 2009 .

[12]  Ronald Batenburg,et al.  Sticking to standards; technical and other isomorphic pressures in deploying ERP-systems , 2006, Inf. Manag..

[13]  David B. Yoffie,et al.  With friends like these: the art of managing complementors. , 2006, Harvard business review.

[14]  Timo Leimbach.  The SAP Story: Evolution of SAP within the German Software Industry , 2008, IEEE Annals of the History of Computing.

[15]  M. Al-Mashari.  Enterprise resource planning (ERP) systems: a research agenda , 2002 .

[16]  Lei Ren,et al.  Cloud manufacturing: a new manufacturing paradigm , 2014, Enterp. Inf. Syst..

[17]  Shaker A. Zahra,et al.  The Net-Enabled Business Innovation Cycle and the Evolution of Dynamic Capabilities , 2002, Inf. Syst. Res..

[18]  S. Shekhar.  Problems and Strategies in Services Marketing , 2003 .

[19]  Andrew B. Whinston,et al.  Multitask Agency, Modular Architecture, and Task Disaggregation in SaaS , 2010, J. Manag. Inf. Syst..

[20]  Miguel P Caldas,et al.  How consultants can help organizations survive the ERP frenzy , 1998 .

[21]  Nabil Sultan,et al.  loud computing for education : A new dawn ? , 2009 .

[22]  N. Carr.  The end of corporate computing , 2005 .

[23]  Kalle Lyytinen,et al.  The Disruptive Nature of Information Technology Innovations: The Case of Internet Computing in Systems Development Organizations , 2003, MIS Q..

[24]  John D. Sterman,et al.  System Dynamics: Systems Thinking and Modeling for a Complex World , 2002 .

[25]  Erwin Fielt,et al.  The Impact Of Software-As-A-Service On Business Models Of Leading Software Vendors: Experiences From Three Exploratory Case Studies , 2011, PACIS.

[26]  Han van Dissel,et al.  Enterprise resource planning: ERP system migrations , 2000, CACM.

[27]  Raouf Boutaba,et al.  Cloud computing: state-of-the-art and research challenges , 2010, Journal of Internet Services and Applications.

[28]  George Pallis,et al.  Cloud Computing: The New Frontier of Internet Computing , 2010, IEEE Internet Computing.

[29]  Johan Magnusson,et al.  Incumbents and Challengers: Conflicting Institutional Logics in SaaS ERP Business Models , 2012 .

[30]  R. Ramalho,et al.  Micro , Small , and Medium Enterprises Around the World : How Many Are There , and What Affects the Count ? , 2010 .

[31]  Shu Han,et al.  Service Expansion of Product Firms in the Information Technology Industry: An Empirical Study , 2013, J. Manag. Inf. Syst..

[32]  Peter B. Seddon,et al.  A Comprehensive Framework for Classifying the Benefits of ERP Systems , 2000 .

[33]  Nabil Sultan,et al.  Servitization of the IT Industry: The Cloud Phenomenon , 2014 .

[34]  H. Chesbrough,et al.  The Role of the Business Model in Capturing Value from Innovation: Evidence from Xerox Corporation's Technology Spin-Off Companies , 2002 .

[35]  Lee G. Cooper,et al.  Market-Share Analysis , 1988 .

[36]  Gustavo Stubrich.  The Fifth Discipline: The Art and Practice of the Learning Organization , 1993 .

[37]  Bradley C. Wheeler,et al.  NEBIC: A Dynamic Capabilities Theory for Assessing Net-Enablement , 2002, Inf. Syst. Res..

[38]  R. K. Shelp,et al.  The service revolution , 1987 .

[39]  M. A. Rashid.  The Evolution of ERP Systems: A Historical Perspective , 2002 .

[40]  P. Senge.  The fifth discipline : the art and practice of the learning organization/ Peter M. Senge , 1991 .

[41]  M. Lehrer.  Two Types of Organizational Modularity: SAP, ERP Product Architecture and the German Tipping Point in the Make/Buy Decision for IT Services , 2006 .

[42]  J. F. Graham,et al.  Enterprise Resource Planning Implementation in Higher Education. , 2009 .

[43]  B. Johansson,et al.  Exploring Factors for Adopting ERP as SaaS , 2013 .

[44]  Vijay Prakash Sharma,et al.  Cloud Computing and Emerging Security Challenges , 2014 .

[45]  Pat Helland.  Condos and clouds , 2013, CACM.

[46]  Tim Baines,et al.  The servitization of manufacturing: A review of literature and reflection on future challenges , 2009 .

[47]  GLOSSARY OF INDUSTRIAL ORGANISATION ECONOMICS AND COMPETITION LAW , 1999 .