ERP Systems Benefit Realization and the Role of ERP-Enabled Application Integration

ERP Systems Benefit Realization and the Role of ERP-Enabled Application Integration

Joseph K. Nwankpa (Miami University, USA)
Copyright: © 2018 |Pages: 12
DOI: 10.4018/978-1-5225-2255-3.ch258

Abstract

This study proposes a conceptual framework that highlights how organizations can exploit ERP-enabled application integration to improve their overall post-implementation ERP benefits while examining the moderating effects of knowledge integration mechanisms. Specifically, the study proposed that intermediate ERP benefits namely task efficiency and coordination improvement as well as existing ERP factors, namely current ERP performance and extent of ERP implementation, affect ERP-enabled application integration, which in turn influences overall ERP benefits. A firm-level survey was used to collect data, and structural equation modeling was used to test the hypotheses. The findings support the proposed hypotheses. Significant theoretical and practical implications of these findings are discussed.
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Introduction

One of the key challenges facing businesses after ERP systems implementation is discerning how to realize pre-implementation benefits. ERP systems are complex software solutions that integrate information and business processes within and across functional areas of business (Davenport, 2000). These systems represent a major departure from the legacy systems and functional information systems that were widespread in the past. Some organizations have successfully implemented and benefited from their ERP system deployments (Nwankpa & Roumani, 2014) and have indeed achieved operational efficiencies and other far-reaching positive changes (Jones et al., 2008), while other organizations are left to grapple with ways to translate pre-implementation expectations into actual post-implementation benefits (Gattiker & Goodhue, 2005). Despite a large body of ERP research literature from a number of different perspectives most published research continues to struggle to adequately explain these mixed results in post-implementation outcomes and benefits (Markus et al., 2000; Nwankpa et al., 2013). As organizations continue to invest in ERP systems, the overarching question for management becomes how they can optimally realize the potential benefits from their ERP system.

ERP systems as platform technologies provide not only a common business process within the organization but also create an integrated platform that permits the adoption and integration of third party non-ERP applications (Liu et al., 2013; Nwankpa et al., 2013). Thus, organizations with ERP systems can leverage on this information superiority and integrate additional non-ERP applications such as e-commerce applications, customer relationship management (CRM) systems and supply chain planning systems. This level of integration enabled by an ERP system can extend functionalities such as connecting a website to an ERP system as well as advancing information visibility across an organization’s value chain (Nwankpa et al., 2013). For instance, integrating CRM and ERP applications can improve operational efficiencies by enabling value-chain processes to adjust promptly to each other (Liu et al., 2013). Firms with CRM applications and ERP systems are able to leverage the CRM applications’ ability to extract customer information from multiple customer touch points as well as ERP systems ability to configure product offerings, scheduling, order fulfilment and interdepartmental information exchange (Liu et al., 2013). Given the critical role ERP-enabled third party application integration, studies on ERP benefits that combine ERP-enabled application integration are needed to develop a better grounded theoretical understanding and devise more effective ERP benefit realization practices.

To this end, this study sets out to examine a central research question that has not been adequately investigated in the ERP benefit literature: (i) Is there a positive implication of ERP-enabled application integration on overall ERP benefit? And if yes, what are the antecedents of ERP-enabled application integration? This study attempts to answer this question by conceptually and empirically testing an integrated research model that combines the framework of ERP-enabled application integration and overall ERP benefits with survey data collected from employees in a wide range of United States firms.

The rest of the article is arranged as follows. The next section reviews the extant research on existing ERP system factors, ERP-enabled integration and ERP benefits, and based on this review the study will develop research hypotheses and propose a theoretical model. Next, a description of the research design and data collection, as well as data analyses using structural equation modeling is presented. Next, a discussion and conclusions will be presented.

Key Terms in this Chapter

ERP Systems: Information system packages that integrate information and business processes within and across functional areas of business.

Current ERP Performance: The degree to which the existing ERP system is able to meet the requirements of the current business functions and activities as well as anticipated future requirements.

ERP Benefit: The degree to which an ERP system improves organizational performance and objectives.

Extent of ERP Implementation: The degree and scale of initial ERP implementation and deployment.

Coordination Improvement: The degree of real-time communication and information flow among cross-functional units within an organization.

Task Efficiency: The ability to achieve organizational task with minimal resources.

ERP-Enable Application Integration: The extent of real-time communication between an ERP system and another non-ERP application.

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