ERP System Effects - A Comparison of Theory and Practice

Abstract

Background: Information Technology (IT) is becoming increasingly important for companies and enormous amounts of money is spent on implementing Enterprise Resource Planning Systems (ERP), i.e. a software which integrates all functions and processes within a company. Therefore, the need to evaluate these investments is also increasing. Previous research has primarily focused on evaluating IT and ERP investments in financial terms. Therefore, there is a need for studies dealing with nonfinancialissues. Research Question: To what extent do ERP Systems in practice achieve the effects that are most frequently related to such systems in theory? Objective: The objective of the study is to explore the congruence between theory and practice concerning effects of an ERP System implementation. Delimitations: We have chosen only to examine companies who are using SAP R/3. Furthermore, we have only examined the effects of R/3 in the Swedish activities of the companies, even though most of them operate worldwide. The number of companies included in the study is also delimited to seven companies, due to the limited scope of a master thesis. Methodology: Literature dealing with ERP effects have been summarized and six categories of effects and 25 aspects have been identified. Moreover, respondents at seven companies that have implemented at least six of twelve SAP R/3 modules and have experienced effects of this ERP investment have been interviewed regarding these effects stated in theory. Finally, theory and practice have been compared. Results and Conclusions: All of the identified categories from the ERP literature exist within the responding companies, but only to a certain extent. Within each category, the importance of each aspect also varies. Some aspects are not planned at all and some are planned in almost all of the seven companies. Furthermore, some companies experienced bonus effects that they were not expecting. Suggestions for Further Research: We suggest a case study of one or two companies or broaden the study, investigating a large number of companies, so that statistical generalization can be made.