Improvement in Operational Efficiency Due to ERP Systems Implementation: Truth or Myth?

Abstract

ERP systems are expected to provide many benefits, including improved business efficiency. However, they are also blamed for several business problems and failures. Past studies have analyzed investments in ERP systems based on net income, return on investment, new present value or change in market value of a firm. We argue that an analysis of more direct measures—intangible or tangible—would enhance confidence in the efficacy of ERP systems. We investigate the impact of ERP systems implementation on operational efficiency of medium sized firms in the pharmaceutical and chemicals industry. Our analysis of the data indicates that for a majority of the firms improvement of operational performance expected due to ERP systems did not materialize.