Business value of enterprise resource planning spending and scope: A post-implementation perspective

Abstract

Purpose

The purpose of this study is to contribute to the existing knowledge about the value of post-implementation Enterprise Resource Planning (ERP) system at the firm level.

Design/methodology/approach

A questionnaire-based survey was conducted to collect data from 217 Malaysian firms that successfully implemented ERP system. Data analysis was conducted with partial least squares-structural equation modeling and partial least squares multi-group analysis techniques.

Findings

Higher ERP spending and greater ERP scope in the post-implementation stage were associated with higher performance gains.

Research limitations/implications

Among other limitations, relying on a small sample size and cross-sectional data of this study and lack of generalizability of findings tend to have certain limitations. An interesting direction for future research would be to extend this study by conducting a multi-level analysis to understand how ERP spending and scope would affect the micro-level performance.

Practical implications

Non-financial performance gain is another valuable outcome of ERP implementation. The choice between in-house and off-the-shelf ERP systems will have dramatic impacts on the future profitability of firms. ERP risk management team and related practices during implementation phase result in a significantly higher financial gain in the post-implementation phase.

Originality/value

This study assesses the business value of ERP at the post-implementation phase while accounting for key contextual and managerial issues, a topic that has received little attention to date.

Citation

Ghobakhloo, M., Azar, A. and Tang, S.H. (2019), "Business value of enterprise resource planning spending and scope: A post-implementation perspective", Kybernetes, Vol. 48 No. 5, pp. 967-989. https://doi.org/10.1108/K-01-2018-0025