ERP - More than just ones and zeros - Investigating the costs and benefits of enterprise resourse planning systems-

Abstract

To evaluate investments in IT-system investments in general and Enterprise Resource Planning (ERP) systems in particular has in numerous studies proven to be problematic. This thesis is based on the fact that this problem is primarily due to the ERP-system infrastructural and multidimensional nature. In order to address this complexity the thesis presents a holistic approach to ERP-system investment evaluation based on the fact that the investment is evaluated on three different levels, i.e. on a macro, meso and micro level. The main idea of using this approach is that it will capture the multidimensionality of the investment and hence make it possible for the investing company to evaluate it on a more rational basis. Based on this theoretical framework the thesis investigated, by conducting an empirical study, what investing companies perceive as the costs and benefits characteristics of ERP-systems. Moreover, our empirical study showed that although the investing companies have identified numerous cost and benefit areas related to their ERP-system investment, there appeared to be a lack of metrics that could be used for measuring these. Having identified this, we propose a method for evaluating an ERP-system investment. This method is based on a combination of our empirical findings and a cross-section of what is currently considered, in the literature, to be the most useful metrics for measuring the different aspects of costs and benefits related to an ERP-system investment. By adopting this approach we feel that the investing company will be able to capture the multidimensional nature of the ERP-system investment.