ERP Systems In Hospitals: A Case Study

ERP system

Among the factors that have been characterising the business environment in recent years are increased competitively between companies, the rapidity of technological change, shortened product life cycles, increasing use of subcontracting, the flattening of traditional bureaucratic structures in organisations, and the growing importance of the communications media as a result of the globalisation of markets. Largely as a result of this situation many companies have decided to implement ERP systems as one means of confronting the new challenges and threats they face. (Robinson and Wilson, 2001; Fan et al., 2000). The reasoning behind this decision is that ERP is considered particularly appropriate since it brings together three properties essential for adapting to a business environment of this type (Chen, 2001): ERP systems provide a multifunctional perspective that encompasses the various different areas of the company (Finance, Inventory, Sales, etc.) Since they are integrated systems, the same items of data can be shared by different areas.

ERP systems have a modular structure, which means that different combinations of modules can be utilized in function of the needs of the company. These properties, together with the evolution of the technologies of information and communication, and the need for integration, have led to increasing interest in ERP as a tool for coordinating the management of different organisational units (Sikora and Shaw, 1998; Al-Mashari, 2001). For Newell et al. (2002), ERP systems represent a new class of information system designed to help integrate all the key areas of activity of a company, particularly the financial, productive and human resources functions. Thus, from the point of view of companies, ERP systems could be considered the most important development of the 1990's: according to some authors, even more significant than the Internet and electronic commerce (Davenport, 1998).

The appearance of ERP marked a trend towards the acquisition of standardised information systems, rather than tailormade systems designed to meet the specific needs of a particular organisation (Scheer and Habermann, 2000). As a consequence of the division in functional areas, traditional information systems were focused on supporting each functional area, and only rarely did they ensure that data flowed smoothly between the different functional areas.

This was aggravated by the fact of that the information systems of each area had, in many cases, been developed independently, with data formats that were incompatible or did not meet the information needs of the rest of the processes of the business (Scheer and Habermann, 2000). An ERP system overcomes these disadvantages by integrating the information from the different departments and subsidiaries of the company in one single database accessible to the whole organisation (Shang and Seddon, 2002). When a datum is entered in the ERP system by any organisational unit, it is immediately available for use by the rest of company's organisational units. In respect of this key feature, Gattiker and Goodhue (2000) state that this integration brings about an improvement in the flows of information between the various organisational units and reduces administrative costs, since fewer tasks have to be performed to obtain any particular piece of information.

It was decided to use the case study as our research method because the design, development and implementation of an ERP cannot be fully understood in isolation of its context, and therefore a contextual approach is necessary. Unlike other empirical research methods, the case study permits the analysis of a contemporaneous phenomenon in its real-life context, when the boundaries between the phenomenon and the context are not clearly differentiated, and when numerous sources of evidence are utilised with the object of bringing the research work into closer contact with the organisational reality (Hopwood, 1983; Otley and Berry, 1994; Scapens, 1990; Tomkins and Groves, 1983; Yin, 1993, 1994).

Further, the case study has been recommended as the ideal research methodology for gaining a better understanding of complex phenomena (Flynn et al., 1990; McCutcheon and Meredith, 1993; Yin, 1993, 1994), and the implementation of an ERP system in an organisation with sharply divided functional areas and professional cultures is a very complex phenomenon. We have opted to analyse the implementation of ERP in a hospital since it is an example of an organisation with heterogeneous functional areas that are markedly divided, basically, between clinical personnel and administrative managers, who have traditionally been employing information systems designed, implemented and operated in a deliberately independent way.

The HSP was constituted in 1990 under the juridical form of a Hospital Foundation. The project plan for the construction of the hospital was approved in June 1992. However, the building work did not begin until June 1993. In December 1996 the legal basis of the constitution of the HSP was changed, and it was brought under a new normative framework dealing with the creation of new forms of management of the Spanish National Health system.