A study of enterprise resource planning (ERP) system performance measurement using the quantitative balanced scorecard approach

Enterprise resource planning (ERP) systems have been used in integrating information and accelerating its distribution across functions and departments with the aim to increase organizations’ operational performance. Thus, it is worth measuring ERP system performance based on its impact to critical performance of an organization: this requires a systematic method that bridges ERP performance measurement and key organizational performance. The hierarchical balanced scorecard (HBSC) model with respect to multiple criteria decision-making is such a systematic approach to ERP performance measurement. An ERP evaluation framework that integrates the balanced scorecard dimensions, linguistic variables, and non-additive fuzzy integral provides an objective approach to measuring both the performance level of the ERP system and its contribution to the strategic objectives of high-tech firms. Taking Taiwan’s high-tech firms as an example, this study demonstrates the effectiveness of this integrated approach to measure the performance of ERP systems at the post-implementation stage under evaluators’ subjective, uncertainty, and vagueness judgments.     

ERP software implementation: an integrative framework

ERP implementation is a socio-technical challenge that requires a fundamentally different outlook from technologically-driven innovation, and will depend on a balanced perspective where the organisation as a total system is considered. ERP implementation is considered to rely on behavioural processes and actions. It is a process that involves macro-implementation at the strategic level, and micro-implementation at the operational level. This therefore means that implementation in the context of ERP systems is not possible through an ON/OFF approach whereby deployment of the new systems will necessarily yield the desired and expected results. Understanding the implementation process through a balanced perspective will therefore prevent any unpleasant surprises, and will ensure and guide the change process to be embedded in a painless fashion. The balanced perspective means that socio-technical considerations must be borne in mind; the strategic, tactical and operational steps clearly defined; and the expected benefits evaluated and tracked through creating seamless and solid integration. This paper proposes an integrative framework for ERP implementation based on an extensive review of the factors and the essential elements that contribute to success in the context of ERP implementation.     

ERP evaluation during the shakedown phase: lessons from an after-sales division

Abstract.  Integrated information systems and operational efficiency are both pivotal issues for contemporary firms. While there is substantial evidence that enterprise resources planning (ERP) systems can deliver related improvements, the implementation of these systems can turn out to be a very complex and risky task. One key aspect of managing these risks is maintaining operational momentum and preventing possible problems from escalating in the so-called shakedown phase shortly after system implementation. The objective of this paper is to examine how user evaluations of ERP system success could be used to trace down the source of potential problems, which can arise during the shakedown phase, and how and why experienced system success might vary between different user groups. The paper builds on a case study completed in the after-sales division of a large multinational organization. This context is considered a fruitful empirical setting for the study as the business sets enormous demands for ERP system functionality and its smooth implementation. Based on the case study, it is argued that in such a context the importance of sufficient user skills, data reliability and intra-organizational communication becomes emphasized in the ERP implementation process. Moreover, results illustrate how downstream operations and customer relations are particularly vulnerable to problems accumulated in upstream business processes. Related problems can potentially form a self-fulfilling cycle, where the lack of skills and information constantly deteriorates both user perceptions and actual operational performance.     

A structural equation model for analyzing the impact of ERP on SCM

Enterprise resource planning (ERP) and supply chain management (SCM) represent important information technology investment options for operation or IT managers, and have been acclaimed in the practitioner and academic literature for their potential to improve business performance. The purpose of this article is to provide further insights into the adoption of ERP systems and the impacts on firm competence in SCM. We propose a model featuring ERP benefits to firm competences in supply chain management. We also hypothesize that three constructs of ERP benefits positively impact firm competences in SCM. To clarify the relationships among these constructs, structural equation model (SEM) is conducted to examine the model fit and nine hypotheses. The SEM results clearly demonstrate that there exist close interrelations among the benefits of implementing ERP systems and firm competences in SCM. The data from Taiwanese IT firms was collected through interviewing of experts and surveys. The results provide empirical evidence that the beneficial impacts of ERP on the supply chain do lead to better overall SCM competence. That evidence confirms that operational benefits, business process and management benefits, and strategic IT planning benefits of ERP in turn enhance firm competences of SCM in operational process integration, customer and relationship integration, and planning and control process integration.     

The critical success factors for ERP implementation: an organizational fit perspective

Since early 1990s, many firms around the world have shifted their information technology (IT) strategy from developing information systems in-house to purchasing application software such as enterprise resource planning (ERP) systems. IT managers responsible for managing their organization’s ERP implementation view their ERP systems as their organizations’ most strategic computing platform. However, despite such strategic importance, ERP projects report an unusually high failure rate, sometimes jeopardizing the core operations of the implementing organization. This study explores the root of such high failure rate from an “organizational fit of ERP” perspective. Based on the relevant literature, we define the concept of organizational fit of ERP and examine its impact on ERP implementation, together with ERP implementation contingencies. The results from our field survey of 34 organizations show that ERP implementation success significantly depends on the organizational fit of ERP and certain implementation contingencies.     

Uncovering ITIL claims: IT executives�� perception on benefits and Business-IT alignment

Over 45% of companies are estimated to use IT Service Management (ITSM) frameworks, yet, these frameworks can be imitated and hence the competitive advantage gained from these will quickly become obsolete. Therefore, research on the benefits of ITSM must focus on both operational and strategic benefits. An international survey of 441 firms was conducted to examine the benefits that IT Infrastructure Library (ITIL), the de-facto ITSM framework, provided to the IT organizations. The research focused on how (1) operational benefits, and, (2) strategic positioning of the IT organizations, specifically how the perceived level of Business-IT alignment maturity evolved as the adoption of ITIL increased. Results indicate that as the adoption of ITIL increased, the number of realized operational benefits increased, as well as the levels of maturity of the Business-IT alignment. This indicates that the further the implementation of ITIL the greater the operational and strategic benefits to the organization. Implications for practitioners and researchers are also discussed.     

Strategic alignment of ERP implementation stages: An empirical investigation

We applied the notion of strategic alignment to ERP system implementation and used a balanced scorecard approach to analyze business performance. The PLS analysis showed a positive association between realized strategic alignment, shorter and more cost efficient ERP projects, faster reaction times to business events, and the benefits of ERP systems. While each stage of ERP implementation has its inherent intricacies, we concluded that there was a substantial interdependency between the stages of ERP implementation and the success factors in one stage influencing the success of another.     

Dominant actors, political agendas, and strategic shifts over time: a critical ethnography of an enterprise systems implementation

Much of the literature on enterprise systems implementation suggests that ERP systems should support the strategic objectives of the organization. In fact some ERP vendors tend to assume that implementing their products is a straightforward translation from strategy to IT-enabled business processes. But the strategic management literature reveals that corporate strategy is often contested terrain. Conflict over strategy has the potential to delay or derail ERP implementation efforts, leading to cost overruns, failures, and lack of expected benefits.This paper seeks to understand and explain how conflicts over strategy can affect the success of ERP implementations. We studied one firm's attempt to pursue information technology-enabled enterprise integration using critical ethnography. The firm is a small-to-medium sized enterprise within a large conglomerate in the Asia-Pacific region. Our findings show that, as the dominant actors and political agendas changed, so too did the company's enterprise integration strategy. The ERP system was designed to support a future corporate world and work environment that never arrived.     

A framework for the ex-ante evaluation of ERP software

It has been widely reported that a large number of ERP implementations fail to meet expectations. This is indicative, firstly, of the magnitude of the problems involved in ERP systems implementation and, secondly, of the importance of the ex-ante evaluation and selection process of ERP software. This paper argues that ERP evaluation should extend its scope beyond operational improvements arising from the ERP software/product per se to the strategic impact of ERP on the competitive position of the organisation. Due to the complexity of ERP software, the intangible nature of both costs and benefits, which evolve over time, and the organisational, technological and behavioural impact of ERP, a broad perspective of the ERP systems evaluation process is needed. The evaluation has to be both quantitative and qualitative and requires an estimation of the perceived costs and benefits throughout the life-cycle of ERP systems. The paper concludes by providing a framework of the key issues involved in the selection process of ERP software and the associated costs and benefits.     

Oracle Erp and Network Computing Architecture: Implementation and Performance

Enterprise resource planning (ERP) systems enable firms to attain information technology integration. Such integration results in a uniform information system across the entire organization, thus augmenting performance. in this article, the issues and performance of Oracle ERP are discussed based on perspicacious exploratory analyses conducted in two manufacturing firms located in Ohio and Wisconsin. the factors of influence to implement Oracle ERP systems, various issues involved in the process of implementation, and performance of the systems are discussed in detail. the triangulation technique was used to make sure that the qualitative and quantitative findings were congruent. the results of the quantitative analysis and details of the constructs and items identified to measure the constructs are explained elsewhere by the first author. Oracle ERP systems enabled these firms to perform better by simplifying and streamlining their information retrieval and dissemination processes. Oracle's Web-based network computing architecture (NCA) offers many advantages, such as higher scalability and better coordination with suppliers and customers. These case studies provided a foundation for future research to build theoretical models.     

The ERP Revolution: Surviving vs. Thriving

This paper presents preliminary findings from a research project that examined how firms are generating business value from their investments in enterprise resource planning (ERP) systems. The research, which was done jointly with Benchmarking Partners, describes the stages of ERP implementation, the obstacles that firms encountered in generating benefits from the systems, and some critical success factors for getting business value from the implementation of an ERP system in business.     

Factors affecting the performance of Enterprise Resource Planning (ERP) systems in the post-implementation stage

Despite the widespread adoption of Enterprise Resource Planning (ERP) systems, many companies struggle to achieve the expected benefits from ERP. It has been especially observed that many companies fail to gain significant benefits from ERP in the post-implementation stage, regardless of their initial implementation success. This paper focuses on this post-implementation stage and empirically studies the factors that influence the performance of ERP in this stage. Through the review of related literature and a pilot study of Korean firms, the following six were identified as the influential factors: top management support, competency of an internal ERP team, user training, inter-department collaboration and communication, continuous process improvement and continuous systems integration/extension. The factors were used to build a comprehensive model that aims to explain how to successfully use ERP in the post-implementation stage. The model was tested with the data collected by questionnaires given to Korean companies using the partial least-square method. The results show that continuous improvement efforts and on-going organisational support have positive influence on the performance of ERP in the post-implementation stage.     

ERP systems adoption: An exploratory study of the organizational factors and impacts of ERP success

We examined the relationships between the success of ERP system adoption, extent of business process improvement (BPI), and organizational performance and investigated the associations between the outcomes of these initiatives and such organizational factors as strategic intent, senior management support, and the status of the IT function within a company. A correlation analysis of 96 firms was made to test our hypothesis that the strategic intent to use ERP was closely related to the success of BPI, ERP, and organizational performance. The results also demonstrated that CEO-IT distance may have little direct bearing on the outcomes of ERP and BPI initiatives. A closer CEO-IT reporting relationship, however, was found to be associated with higher levels of senior management support for both types of enterprise projects. This empirical evidence reinforced the long-held assumption that organization-level benefits, BPI, and ERP success were closely related; and that these relationships were subject to the influence of the organizational variables.     

Value management and common accounting performance measures for corporations

Management is aware that the value of firms is the ultimate measure of company performance. However, management has been using common accounting measures as an operating guide because the linkage between operational planning and value is vague and complex and, therefore, difficult to apply. Managers need to have clear targets and performance measures to track progress. This paper examines if a set of common accounting performance measures are linked tightly to the overall value of the firm. An abductive learning network (ALN) approach, an artificial intelligence technique, is used in this research because an ALN approach is non-parametric and can capture a subtle dynamic relationship between input and output variables, which is not obvious in linear statistical analysis. Empirical results show that an ALN model is very effective in synthesizing the value of the firm using six common accounting variables. The results also provide four strategic variables that can be used for devising strategic and operating plans to maximize the value of firms.     

A methodology for ERP misfit analysis

Commercial off-the-shelf ERP systems have been adopted by many large companies to support their inter- and intra-business processes. Midsize market firms are now also investing their use. However, research has indicated that about three quarters of attempted ERP projects are unsuccessful: a common problem encountered in adopting ERP software has been the issue of fit or alignment.This paper presents an ERP selection methodology, grounded in task-technology fits theory, for measuring, at a high-level, the misfit between ERP candidates and the enterprise's requirements ex-ante implementation. With this approach, organizations can more easily and systematically determine the locations of possible misfit and their degree of importance, thereby understanding the risk in their implementing an ERP. Our research thus contributes practical solutions to the problem of misfit analysis and ERP package selection.     

Examining business value of customer relationship management systems: IT usage and two-stage model perspectives

Empirical evidence for the business value of customer relationship management (CRM) systems remains unsolid in IS studies. This study proposes a new model for CRM value according to IT/IS usage theory and “two-stage model.” Empirical tests show that operational benefits of CRM are reflected in firms’ high revenue per employee, which leads to high profitability; strategic benefits of CRM are reflected in firms’ high customer satisfaction, which leads to high profitability and market valuation. Firm size positively moderates the operational and strategic benefits of CRM, while the industry’s product differentiation level negatively moderates operational and strategic benefits of CRM.     

Segmenting and mining the ERP users’ perceived benefits using the rough set approach

Enterprise Resource Management (ERP) systems are viewed as a promising and powerful information technology solution for dealing with the impact of competition advancements and enabling corporations to improve productivity and to operate more efficiently. Although implementations of ERP are complex and costly, corporations may actively adopt and engage in such ERP implementations if perceived benefits exceed perceived risks and costs. A number of studies have contributed to discussion of important factors related to ERP introduction or implementation. Other studies have listed various potential benefits which may be obtained when implementing ERP systems. However, few studies attempt to deepen the analyses of the ERP users’ perceived benefits in order to gain meaningful findings for promoting ERP implementations. Typically, elements of a set of ERP benefits do not necessarily share the same importance. Moreover, a given ERP benefit may be accorded a variety of very different levels of importance by different corporations. This paper attempts to segment the ERP users into two subgroups according to the notion of Herzberg’s Motivation-Hygiene theory, and further, to uncover imperative perceived benefits for distinct subgroups of ERP users employing the rough set theory. The results of this study should provide better understanding and knowledge of strategic implications for both ERP system adopters and vendors, and thus advance the scope of ERP implementations.     

Impact of an ERP system’s capabilities upon the realisation of its business value: a resource-based perspective

Using the resource-based view as a frame of reference, this study seeks to explore the potential link between the essential characteristics of an ERP system, defined as ERP capabilities, and its contribution to organisational performance. This contribution is conceptualised and measured through the value added by automational, informational and transformational effects of ERP capabilities upon the firm??s operational and managerial processes. Empirical data were obtained for the study??s purpose from three case studies of manufacturing firms, through 25 in-depth interviews of various managers, including the firm??s CIO. In addition to proposing an instrument to characterise an ERP system ??as installed?? in terms of three capabilities (ERP integration, ERP flexibility, ERP transversality), the study confirms that these capabilities are crucial in determining the contribution of an ERP system to organisational performance. The study also highlights different ERP effects on organisational processes and their relative importance in providing business value. While exploratory in nature, this study derives interesting implications from the data analysis in the form of propositions that may serve as research hypotheses in future studies.     

The impact of EDI implementation commitment and implementation success on competitive advantage and firm performance

Abstract. Electronic Data Interchange Systems (EDI) are increasingly being used by business firms to improve operations and customer service. One of the major motivations for business organizations using EDI is to gain a strategic advantage in the marketplace. Although EDI has been implemented by many organizations, unfortunately not all have gained the same level of expected advantage or envisioned benefits.
In this study we focus on the impact of EDI implementation commitment and implementation success on competitive advantage and firm performance. We study two categories of companies: companies that initiate the development of EDI and are known as hub companies and those that are their non-hub counterparts. Findings indicate that non-hub firms may not reap the same level of expected benefits resulting from EDI technology adoption and implementation as hub firms.     

ERP Usage in Banking: An Exploratory Survey of the World's Largest Banks

ABSTRACT

As banking is currently considered a non-typical area for ERP usage, the authors conducted a survey on anticipated benefits, potential disadvantages and implementation success associated with ERP adoption in banking. The results indicate that, despite a predominant usage of ERP systems in back-office areas, banks see ERP systems as a long-term strategic investment to support organizational effectiveness.