Does ERP Provide a Cross-Functional View of the Firm?

This paper defines cross-functionality as the awareness that organizational actors have of the coupled and integrated nature of processes across various business units, which allows employees to deliver products and services to customers. That the implementation of enterprise systems (ES) provides a more complete cross- functional view of the firm has been taken for granted by managers and researchers alike. The cross-functional potential of enterprise resource planning (ERP) is a widely-held assumption and is one approaching conven- tional wisdom: "Because ERPs tear down walls within organizations, they help everyone to understand their impact on an entire operation. Ultimately, companies find their staff adopting an increasingly broad enterprise perspective rather than a departmental one" (McKeen and Smith 2003, p. 143). This paper challenges this conventional wisdom that equates technical integration and socio-cognitive integration. The "impacts" of ERP systems depend on organizational context and implementation process. We show that flexibility, the primary goal of ERP adoption, as well as implementation strategy factors (organizational vision, speed, and core modules) exert a positive impact on cross-functionality in small and medium enterprises but not in large firms. These findings are obtained through a study of 100 French firms, then further illustrated and built upon by investigating two medium-size firms as opposed to two large firms. The findings suggest that large firms might have fewer problems than SMEs in bringing different business functions to be integrated into the project. Further, they also might have a larger inter-organizational scope of integration, but their ERP systems do not foster cross-functionality. There is also a need for social interaction to coordinate activities effectively. In SMEs, cross-functionality may be easier to reach with adequate implementation strategy.