By definition, enterprise resource planning (ERP) systems are standard software packages designed to integrate the data of a business organization. Underlying the system, a centralized database serves as the integrating mechanism that consolidates the data from various business functions, such as manufacturing, accounting, and marketing (Shehab, Sharp, Supramaniam, & Spedding, 2004). In this respect, the major reason that drives the businesses to adopt ERP system is to enable data visibility and transactional interoperability. This is a business environment where the data is flowing seamless across every part of the business and most of the data transactions are automated. With such data transparency, the businesses are hoping that effective decision making and management governance can be achieved.
How BIG is ERP ???
Given the unprecedented level of data integration and related benefits that can be provided by the system, ERP system has become the fastest growing market in the software business. Its eventual global market size is estimated to be 1 trillion US dollars by the year 2010 (Calisir & Calisir, 2004). The proliferation of ERP has not gone unnoticed in Asia. Indeed, recent years have witnessed a dramatic increase in ERP adoptions in Asian countries. The Asia Pacific region was the third largest market segment for ERP systems, with the spending of 3,631 million US dollars on ERP system in 2007. Moreover, the market in Asia Pacific was estimated to reach 12 percent of total spending in year 2012, with market value of 5,723 million US dollars (Jacobson, Shepherd, D'Aquila, & Carter, 2007). These numbers indicate that the ERP market is growing rapidly and gaining its ever increasing importance in Asian region
What ERP do? Sleeping?
ERP systems can provide array of benefits that are ranged from informational, operational to strategic (Shang & Seddon, 2002). Figure 1.1 shows these outcomes of ERP system and the relationship between the outcomes. Informational benefit is the most important outcome of ERP system, which aims to improve the information quality of the organization. Informational benefits include but not limited to improvement in information accuracy, retrieval of real time information, and reduction in data redundancy. In terms of operational benefits, the system enables lead-time reduction, improved response to customer queries, on-time shipment, and improved productivity. From the strategic perspective, ERP system provides the potential to support business growth, build cost leadership, and encourage business alliances
Nonetheless, both the latter operational and strategic benefits do not come automatically with the acquisition of the ERP system. Instead, they could only be attained provided that the ERP systems are implemented successfully and the business knows how to take the advantage of the high quality information. This implies that quality information is a direct outcome of ERP system, compared to operational and strategic outcomes of ERP system which eventually depend on the effectiveness the employees of the organization to utilize the information produced by the ERP system. In this sense, information quality is the predecessor of operational and strategic outcomes. This idea has been long recognized and tested by the Delone and McLean’s IS success model (Delone and McLean, 2003). In addition, information quality is critical to the overall system quality and also a success factor of the ERP system (Davis, 1993). In contrast, poor information quality often causes the ERP system to fail.
Source:
SHIANG-YEN, T., IDRUS, R. & YUSOF, U. K. 2011. A framework for classifying misfits between enterprise resource planning (ERP) systems and business strategies. Asian Academy of Management Journal (AAMJ), 16, 53-75.
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