Implementing enterprise resource planning systems: organizational performance and the duration of the implementation

Abstract

This paper examines the impact of the duration of ERP implementation on firm performance both during and after implementation. Organizations choose either an accelerated implementation approach or a traditional (longer) implementation approach. The former approach gives the organization the advantage of speed, but the disadvantage of fitting its processes to that of a packaged (thus, undifferentiated from competitors) ERP. The latter approach allows the organization to redesign strategy and processes, and thus, search for ways to be unique from its competition. The study uses a regression model to capture the changes in various performance measures during and after implementation between firms that implemented the ERP, using the performance measure of a matched group of firms that did not implement an ERP as a benchmark/ control sample, on the basis of the duration of the implementation. Financial data from Compustat, and data on start date and end date of ERP implementation between 1990 and 2005 for firms in the Oil and Gas industry was collected from an ERP vendor. Results show that measures such as return on sales improved after implementation. However, measures such as inventory turnover, which reflect operational benefits, improve during implementation. We find that accelerated implementation confers both operational and strategic benefits. This study highlights the strategic consequences of the different choices of implementation.

Strategic Partnership Formation in IT Offshore Outsourcing: Institutional Elements for a Banking ERP System Licensing

“…Ring and Van de Ven (1992) sustain the need of a strong trust in strategic partnerships. ERP implementations that meet clients´ process needs normally are not fast and the client-supplier cooperation in this scenario is very critical (Anderson, Banker, Menon and Romero, 2011) for the partnership between them.…”

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

“…From this perspective, Piccoli [89] asserts that IT resources and IT capabilities are among the drivers of response lag, that is, the time it takes competitors to respond in a way that erodes a firm's competitive advantage gained from an IT initiative. The summary result of these prior studies is that IT capabilities contribute to sustained competitive advantage by leveraging other organisational resources so that a firm is able (1) to offer a product/service valued by customers on criteria such as cost, quality and convenience, (2) to render this product/service very distinctive when compared to the competition's offer, and (3) to delay or to complicate imitation by other firms.…”

“…In the second category, one finds studies on the technological, organizational and environmental antecedents or conditions under which an ERP system contributes to business performance (e.g. [2,46,52,59,96,107]). The third category is composed of studies proposing models, frameworks or methods for measuring the contribution of an ERP system to organisational performance [22,25,26,27,51,79,110].…”

“…Causal models (e.g. [2,48,49,56,98]), also known as variance models, attempt to establish a cause-effect relationship between ERP investments, ERP characteristics or aspects of the ERP implementation process on one hand, and organizational performance on the other hand. In contingency models (e.g.…”

“…Note that in Gamma's case, transversality is measured in two ways, that is, by including, or not, a business intelligence (BI) system that is linked to the ERP system. 2 The global measure of transversality for each firm corresponds on a 5-point scale to Rm i /9, where m i represents one of nine scales on which transversality is evaluated.…”