Abstract
A cause of high ERP failure rate is the misfit between organization processes and ERP systems. To solve the misfit problem, literature suggests two adaptation approaches: conducting business process reengineering (BPR) to fit organization processes into ERP systems, or customizing ERP systems to fit organizational processes. However, extant studies seldom explore how firms should choose between the two adaptation approaches and adjustment level based on their heterogeneous firm characteristics. Through the lens of contingency based task-technology-fit (TTF) theory, this study collects data from 150 U.S. manufacturing firms that use ERP systems, and empirically investigates how firms could choose a suitable adaptation approach between BPR and system customization while considering their heterogeneous characteristics, such as firm size, industry, top management involvement, big-bang or phase-in implementation speed. Consequently, this study further examines how such choice of different adaptation strategies and adaptation level affect firms’ final firm performance. Our results show that industry, top management involvement, and implementation speed significantly affect firms’ choice of adaptation approaches and adaptation level, while their choices also significantly affect final firm performance.
Highlights
Enterprise resource planning (ERP) is an enterprise system that helps integrate business information and reengineer business processes (Tian & Xu 2015; Strong & Volkoff, 2010)
When examining top management involvement (Table 5), we found that firms with a low level of top management involvement mostly choose low business process reengineering (BPR) (82.6%) and low customization (75%); a low-low situation
This study aims to bridge the three research gaps by proposing and empirically examining an ERP implementation framework to further understand how firms can choose appropriate adaptation strategies and adaptation levels based on their heterogeneous characteristics, while further exploring how these different choices influence subsequent firm performance
Summary
Enterprise resource planning (ERP) is an enterprise system that helps integrate business information and reengineer business processes (Tian & Xu 2015; Strong & Volkoff, 2010). ERP vendors design systems to comply with the general mass market, rather than specific needs of individual companies (Strong & Volkoff, 2010). That type of design leads to a problem in that ERP systems cannot fully comply with firms’ specific and unique requirements (Seddon et al, 2003; Strong & Volkoff, 2010). In order to solve the misalignment problem, previous studies propose two adaptation approaches: 1) Business Process Reengineering (BPR), and 2) customizing ERP systems (Soh et al, 2003)
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