Post-Implementation Evaluation of Enterprise Resource Planning

306 Pages·2008·1.6 MB·English

POST-IMPLEMENTATION EVALUATION OF ENTERPRISE

RESOURCE PLANNING (ERP) SYSTEMS

ArunKumar Madapusi, B.E., M.B.A.

Dissertation Prepare d for the Degree of

DOCTOR OF P HILOSOPHY

UNIVERSITY OF NORTH TEXAS

May 2008

APPROVED:

Richard E. White, Major Professor
Lewis A. Taylor III, Committee Member
Grant E. Miles, Committee Member
Chang E. Koh, Committee Member
D. Krishna Sundar, Committee Member
Anat BarNir, Department Program Coordinator
Nancy Boyd-Lillie, Chair of the Department of
Management
O. Finley Graves, Dean of the College of Business
Administration
Sandra L. Terrell, Dean of the Robert B. Toulouse
School of Graduate Studies
Madapusi, ArunKumar, Post-Implementation Evaluation of Enterprise Resource Planning
(ERP) Systems. Doctor of Philosophy (Management), May 2008, 295 pp., 41 tables, 9
illustrations, references, 174 titles.
The purposes of this dissertation were to define enterprise resource planning (ERP)
systems, assess the varying performance benefits flowing from different ERP system
implementation statuses, and investigate the impact of critical success factors (CSFs) on the ERP
system deployment process. A conceptual model was developed and a survey instrument
constructed to gather data for testing the hypothesized model relationships. Data were collected
through a cross-sectional field study of Indian production firms considered pioneers in
understanding and implementing ERP systems. The sample data were drawn from a target
population of 900 firms belonging to the Confederation of Indian Industry (CII). The production
firms in the CII member directory represent a well-balanced mix of firms of different sizes,
production processes, and industries.
The conceptual model was tested using factor analysis, multiple linear regression analysis
and univariate Anova. The results indicate that the contributions of different ERP system
modules vary with different measures of changes in performance and that a holistic ERP system
contributes to performance changes. The results further indicate that the contributions of CSFs
vary with different measures of changes in performance and that CSFs and the holistic ERP
system influences the success achieved from deployments. Also, firms that emphasize CSFs
throughout the ERP implementation process achieve greater performance benefits as compared
to those that focus on CSFs during the initial ERP system deployment. Overall, the results of the
study support the relationships hypothesized in the conceptual model.
Copyright 2008
by
ArunKumar Madapusi
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TABLE OF CONTENTS

Page

LIST OF TABLES........................................................................................................................vii

LIST OF ILLUSTRATIONS...........................................................................................................x

Chapter

1. INTRODUCTION...................................................................................................1
Introduction..................................................................................................1
Understanding ERP......................................................................................4
Evolution of ERP.............................................................................4
Characterisitcs of ERP.....................................................................6
Definitions of ERP...........................................................................7
ERP Defined....................................................................................8
Modules of the ERP System............................................................8
Critical Success Factors for ERP System Implementation..............9
Changes in Performance due to ERP System Implementation......10
Systems Approach to ERP.............................................................10
Need for Research......................................................................................11
General Model of ERP System Implementation............................12
Research Questions........................................................................13
Summary....................................................................................................14

2. LITERATURE REVIEW......................................................................................17
Introduction................................................................................................17
ERPSystems Research...............................................................................18
Descriptive Studies........................................................................19
Case Studies...................................................................................33
Survey Studies...............................................................................47
Modeling & Simulation Studies.....................................................61
Instrument Development Studies...................................................66
Modules of the ERP System......................................................................72
ERP Modules.................................................................................76
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Module Subsystems.......................................................................81
ERP Systems Approach and Implementation Status.................................84
Critical Success Factors for ERP System Implementation........................88
Critical Success Factors.................................................................91
Aggregate CSF...............................................................................97
Changes in Performance due to ERP System Implementation................100
Performance Measures.................................................................104
Overall Performance....................................................................107
Model of ERP System Implementation...................................................109
Theoretical Model....................................................................................111
Galbraith’s Model........................................................................111
Theoretical Framework for ERP System Implementation...........114
Hypotheses...............................................................................................124
ERP System Implementation Status and Changes in Performance
......................................................................................................125
Influencers of ERP System Implementation Success..................126
Summary..................................................................................................127

3. RESEARCH METHODOLOGY.........................................................................129
Introduction..............................................................................................129
Measuring Instrument..............................................................................129
Questionnaire Development.........................................................129
Questionnaire Construction.........................................................132
Operational Definitions................................................................133
Other Questionnaire Items...........................................................143
Reliability.....................................................................................144
Validity........................................................................................145
Data Collection........................................................................................146
Target Population.........................................................................146
Design..........................................................................................149
Sampling Method.........................................................................149
Survey Procedures.......................................................................150
Non-Response Bias..................................................................................153
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Sample......................................................................................................154
Power Analysis........................................................................................156
Common Method Bias.............................................................................158
Summary..................................................................................................158

4. ANALYSIS OF RESULTS.................................................................................160
Introduction..............................................................................................160
Sample......................................................................................................160
Business Unit Characteristics......................................................160
Respondent Characteristics..........................................................165
Descriptive Statistics for Variables..........................................................167
Factor Analysis........................................................................................169
Regression Analysis.................................................................................174
Regression Assumptions..............................................................174
Control for Demographic Variables.............................................176
Regression Models.......................................................................176
Additional Analyses.................................................................................209
Summary..................................................................................................222

5. DISCUSSION OF RESULTS..............................................................................224
Introduction..............................................................................................224
Measurement Instrument Improvement...................................................224
Discussion of the Findings.......................................................................229
ERP System Implementation Status and Changes in Performance230
Influencers of ERP System Implementation Success..................235
Additional Analyses.....................................................................249
Contributions of the Study.......................................................................251
Limitations of the Study...........................................................................257
Suggestions for Future Research.............................................................258
Summary..................................................................................................259

Appendices

A. PRE-NOTICE LETTER......................................................................................261

B. FIRST WAVE MAILING PACKET...................................................................263
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C. FIRST WAVE THANK YOU/REMINDER NOTE...........................................277

D. SECOND WAVE INTRODUCTORY LETTER................................................279

E. SECOND WAVE THANK YOU/REMINDER NOTE......................................281

REFERENCES............................................................................................................................283

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LIST OF TABLES

Page

1. A Cross-Study Comparison of ERP Modules Described in Descriptive Studies..............27
2. A Cross-Study Comparison of CSFs Described in Descriptive Studies............................30
3. A Cross-Study Comparison of Changes in Performance Described in Descriptive Studies
............................................................................................................................................32
4. A Cross-Study Comparison of ERP Modules Referred to in Case Studies.......................41
5. A Cross-Study Comparison of CSFs Referred to in Case Studies.....................................43
6. A Cross-Study Comparison of Changes in Performance Referred to in Case Studies......45
7. A Cross-Study Comparison of ERP Modules Assessed in Survey Studies.......................56
8. A Cross-Study Comparison of CSFs Assessed in Survey Studies....................................58
9. A Cross-Study Comparison of Changes in Performance Assessed in Survey Studies......60
10. Modules of the ERP System..............................................................................................72
11. CSFs for ERP System Implementation..............................................................................89
12. Changes in Performance due to ERP System Implementation........................................101
13. Frequency Distribution for Business Units’ Characteristics............................................161
14. Means Distribution for Business Units’ by Production Type..........................................163
15. Frequency Distribution for Business Units’ by Industries Represented..........................163
16. Frequency Distribution for Business Units’ by Type of ERP System Implemented.......164
17. Respondents’ Characteristics...........................................................................................166
18. Mean Values of Implementation Status of ERP Modules...............................................168
19. Mean Values of Changes in Performance........................................................................169
20. Mean Values of CSFs......................................................................................................170
21. CSF Component Analysis Factor Matrix.........................................................................171
22. Summary of Items Omitted from the 13 CSF Scales & Cronbach’s Alpha....................173
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23. Significant Relationships Between Implementation Status of ERP Modules and Changes
in Performance.................................................................................................................177
24. Significant Relationships Between Holistic Implementation Status of ERP System and
Changes in Performance..................................................................................................180
25. Significant Relationships Between Holistic Implementation Status of ERP System and
Changes in Performance (ANOVA)................................................................................181
26. Significant Relationships Between Different Holistic Implementation Statuses of ERP
System and Changes in Performance...............................................................................184
27. Significant Relationships Between Different Holistic Implementation Statuses of ERP
System and Overall Change in Performance...................................................................185
28. Significant Interaction Relationships Between Implementation Status of ERP Modules
and Changes in Performance...........................................................................................186
29. Significant Interaction Relationships Between Implementation Status of ERP Modules
and Changes in Performance (ANOVA).........................................................................196
30. Significant Interaction Relationships Between Holistic Implementation Status of ERP
System and Changes in Performance...............................................................................201
31. Significant Interaction Relationships Between Holistic Implementation Status of ERP
System and Changes in Performance (ANOVA).............................................................203
32. Significant Interaction Relationships Between Different Holistic Implementation Statuses
of ERP System and Changes in Performance..................................................................205
33. Significant Interaction Relationships Between Different Holistic Implementation Statuses
of ERP System and Overall Change in Performance.......................................................209
34. Module Component Analysis Factor Matrix...................................................................211
35. Item-to-Scale Correlations for Module Scales.................................................................212
36. Performance Component Analysis Factor Matrix...........................................................213
37. Ten CSF Factor Analysis.................................................................................................215
38. Summary of Items Omitted from 10 CSF Scales & Cronbach’s Alpha..........................218
39. Item-to-Scale Correlations for 10 CSFs...........................................................................219
40. Significant Relationships Between Two Holistic ERP Module Sub-systems and Overall
Change in Performance....................................................................................................220
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41. Significant Interaction Relationships Between Two Holistic ERP Module Sub-systems
and Overall Change in Performance................................................................................222

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