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Ping-Yu Hsu
National Central University
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Abstract
The purpose of this paper is to explore the relationship between some implementation variables and
performance improvement of ERP systems. DeLone and McLean (1992) surveyed 180 articles attempting to
measure information systems (IS) success and proposed an analysis framework, composed of six
dimensions, for assessing the ERP performance in the post-implementation stage. In this paper, DeLone-&-
McLeans framework will be used to develop the ERP performance measures fit for ERP adopters of
Taiwan. The implementation variables explored in this paper are ERP implementation statuses (all the
planned modules having been implemented or not), ERP system sources (packaged ERP systems or non-
packaged ERP systems), and ERP implementation strategies (integral or step-by-step planning; Big Bang
or phased approach). Structured questionnaire were sent to those companies listed in the TOP500 The
Largest Corporations in Taiwan 2001. The research findings indicate that the companies using non-
packaged ERP systems, integral planning and having implemented all the planned ERP modules will have
the better performance improvement.
1. Introduction
In recent years, companies throughout the world gradually adopt Enterprise Resource Planning (ERP)
systems to enhance competitiveness, to enhance the ability of responding more quickly to change, to enable
easier access to information and faster retrieval of information or reports, to improve information for
strategic planning and operational control, and to achieve other benefits (Mirani and Lederer, 1998). The
main purpose of ERP projects is the automation and integration of many basic processes in order to
integrate information across the enterprise and eliminating complex, expensive interfaces between
computer systems (Teltumbde, 2000). Since all business functions are involved in ERP systems, they will
be highly complex information systems. And, it is expensive and time consuming to implement an ERP
system (Sarkis and Gunasekaran, 2003). Due to the constraints of budget and time, some companies may
employ a phased implementation approach, that is, modules are implemented one at a time or in a group of
modules, often a single location at a time. Phased implementations require substantial attention and
maintenance given to legacy systems in order to facilitate integration with the new ERP system. Moreover,
there may not be enough modules implemented to achieve functionality. However, there also are some
advantages and disadvantages for a Big Bang implementation approach, where an entire suite of ERP
modules is implemented at all locations at the same time (Thanasankit, 2001; Mabert et al., 2003).
Generally, so-called ERP systems are the packaged ERP software purchased from vendors.
Nevertheless, in our knowledge, some companies in Taiwan employed the non-packaged ERP systems that
came from evolution of legacy systems, self-redevelopment, or outsourcing. ERP vendors designed their
packaged ERP systems to be the universal package software for various industries and organizations. Also,
Packaged ERP systems often offer numerous options representing best practices (Teltumbde, 2000). Even
so, it is impossible for any organization to install a packaged ERP system without any tailoring or add-on.
Thus, it is not advantageous to adopt an ERP system if it requires considerable modifications.
In view of the issues mentioned above, the purpose of this research is to explore the relationship
between some implementation variables and performance improvement of ERP systems. The
implementation variables explored in this paper are ERP implementation statuses (all the planned modules
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Proceedings of the First Workshop on Knowledge Economy and Electronic Commerce
having been implemented or not), ERP system sources (packaged ERP systems or non-packaged ERP
systems), and ERP implementation strategies (integral or step-by-step planning; Big Bang or phased
approach). Besides, the Information System (IS) success model of DeLone and McLean (1992) is used to
develop the ERP performance measures for measuring the performance improvement levels.
In this paper, we utilize DeLone and McLean (1992) IS success model to develop ERP performance
measures. DeLone and McLean (1992) divided IS success measure into six dimensions or categories as
follows:
(1). System Quality: measures of the information processing system itself.
(2). Information Quality: measures of the information system output.
(3). System Use: measures of recipient use of information system.
(4). User Satisfaction: measures of recipient response to the use of information system.
(5). Individual Impact: measures of the effect of information on the behavior of the recipient.
(6). Organizational Impact: measures of the effect of information on organizational performance.
This study selected ERP performance measures from the related literature (DeLone and McLean,
1992; DeLone and McLean, 2003; Saarinen, 1996; Skot et. al., 2001; Mirani and Lederer, 1998; Lee et al.,
2002; Liberatore and Miller, 1998; Mabert et al., 2000). As for Organizational Impact, the Balanced
Scorecard (BSC) approach is used to divide ERP performance measures of Organization Impact dimension
into four categories (Kaplan and Norton, 1992; Roseman and Wiese, 1999; Lipe and Salterio, 2000).
Among those authors researching on the DeLone and McLeans IS success model, Li (1997) and Skok et
al., (2001) explored the importance of IS success measures using 7-point and 9-point Likert-type scales of
survey questionnaires respectively. In this research, we will use 7-point Likert-type scales.
3. Methodology
As mentioned in Section 1, the purpose of this research is to exploring the relationship between some
implementation variables and performance improvement of ERP systems. The dependent variables are the
performance improvement levels of System Quality, Information Quality, System Use, User Satisfaction,
Individual Impact, Organizational Impact, and Composite Performance after having implemented ERP
systems. The implementation variables (dependent variables) explored in this paper are: (1) ERP
implementation statuses (all the planned modules having been implemented or not), (2) ERP system
sources (packaged ERP systems or non-packaged ERP systems), and (3) ERP implementation strategies
(integral or step-by-step planning; Big Bang or phased approach). The research hypotheses of this research
are as follows:
H1: There is no difference in performance improvement levels between the companies that have
implemented all the planned modules and that have implemented the partial modules.
H2: There is no difference in performance improvement levels between the companies that have
implemented ERP systems with different ERP system sources.
H3: There is no difference in performance improvement levels between the companies that have
implemented ERP systems with different ERP implementation strategies.
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Proceedings of the First Workshop on Knowledge Economy and Electronic Commerce
In the questionnaire of Stage 2, we asked respondents to evaluate the performance improvement level
and importance level for each of the 37 chosen ERP performance measures by using 7-point Likert-type
scales ranging from 1 (Substantial Deterioration) to 7 (Substantial Improvement) and from 1 (Extremely
unimportant) to 7 (Extremely important), respectively. The data of importance levels are used to calculate
the relative weights of measures. We used these data and the following equations to determine the
performance improvement levels of System Quality, Information Quality, System Use, User Satisfaction,
Individual Impact, Organizational Impact, and Composite Performance after implementing ERP systems:
th th
1.The performance improvement level of the j dimension for the i respondents company:
lj
W
Pij = Pijk , i = 1 , 2 , 3 ,..., N , j = 1, 2 , 3 ,..., 6
jk
lj
W
k =1
jk
k =1
where W jk = the average importance level score of the k th measure of the j th dimension as perceived by
N respondents
N
( W ijk )
= i =1 ,
N
Wijk = the importance level score (1 to 7) of the k th measure of the j th dimension as perceived by
the i th respondent,
Pijk = the performance improvement level score (1 to 7) of the k th measure of the j th dimension
th
for the i respondents company,
l j = the number of chosen measures for the j th dimension.
th
2.The composite performance improvement level for the i respondents company:
lj
6 W jk
Pi = ( Pij k =1
), i =1, 2, 3, , N
6 lj
W
j =1
jk
j =1 k =1
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Proceedings of the First Workshop on Knowledge Economy and Electronic Commerce
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Proceedings of the First Workshop on Knowledge Economy and Electronic Commerce
4. Research Results
4.1 Performance Improvement and Importance Levels of ERP Performance Measures
The performance improvement and importance levels of ERP performance evaluation dimensions and
measures for all respondents are shown in Table 2 and Table 3. From Table 2, we know that System Quality
and Information Quality are the top two important dimensions of ERP performance evaluation as perceived
by the respondents. These two dimensions are the fundamental factors of achieving ERP/IS success. Also,
System Quality and Information Quality are the top two performance improvement dimensions after having
implemented ERP systems. From Table 3, the top five important measures in evaluating ERP performance
are: (1) data accuracy, (2) believability of output, (3) system accuracy, usefulness of output, and (5)
inventory level; the top five performance improvement levels after having implemented ERP systems are:
(1) data accuracy, (2) database contents, (3) data accuracy, (4) timeliness of output, and (5) usefulness of
output.
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Proceedings of the First Workshop on Knowledge Economy and Electronic Commerce
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Proceedings of the First Workshop on Knowledge Economy and Electronic Commerce
Difference (1)(2) 0.270 0.322 0.186 0.308 0.197 0.239 0.2768 283
Significance (ANOVA) .011** .002*** .055* .011** .062* .011** .002***
***p-value < 0.01; **p-value < 0.05; *p-value < 0.1
System Quality
6.5
6
Organization Impact 5.5 Information Quality
User Satisfaction
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Proceedings of the First Workshop on Knowledge Economy and Electronic Commerce
Difference (1)(2) 0.295 0.382 0.346 0.489 0.524 0.455 0.3971 279
Significance (ANOVA) .037** .011** .006*** .001*** .000*** .000*** .000***
***p-value < 0.01; **p-value < 0.05; *p-value < 0.1
System Quality
6.5
6
5.5
Organizational Impact Information Quality
5
4.5
Non-packaged ERP systems
4 Packaged ERP systems
User Satisfaction
Fig. 2 Non-packaged and Packaged ERP Systems and Performance Improvement
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Proceedings of the First Workshop on Knowledge Economy and Electronic Commerce
System Quality
6
5.5
Organizational Impact Information Quality
5
4.5
7. Conclusions
The purpose of this paper is to explore the relationship between some implementation variables and
performance improvement of ERP systems. The implementation variables explored in this paper are ERP
implementation statuses (all the planned modules having been implemented or not), ERP system sources
(packaged ERP systems or non-packaged ERP systems), and ERP implementation strategies (integral or
step-by-step planning; Big Bang or phased approach). The performance improvements are measured
according to the six dimensions of Delone and McLeans 1992 success model and by the 7-point Likert-
type scales of ERP performance improvement and ERP performance measures importance. We also use the
composite performance that integrates all the six dimensions measures into one single composite
performance index. In this study, we utilize a two-stage approach: (1) listing ERP performance measure and
then evaluating their importance by a small sample survey, and (2) redesigning the survey questionnaire
concerning ERP performance measures and implementation variables; collecting the data by a large sample
and analyzing the data collected. The research results indicate that:
(1) System Quality and Information Quality are the top two important dimensions of ERP performance
evaluation as perceived by the respondents. Also, System Quality and Information Quality are the top
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Proceedings of the First Workshop on Knowledge Economy and Electronic Commerce
two performance improvement dimensions after having implemented ERP systems. These two
dimensions are the fundamental factors of achieving ERP/IS success.
(2) The companies having implemented all the planned modules will have higher performance
improvement levels than the companies having implemented partial planned modules. It may because
the companies will achieve the synthetic effect after having implemented all the planned modules.
(3) The companies with non-packaged ERP systems will have higher performance improvement levels
than the companies with packaged ERP systems.
(4) There is no significant difference in ERP performance improvement between the various
implementation strategies. However, if a company adopts the phased implementation, it should do the
integral planning job for all the ERP implementation phases.
Reference
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Acknowledgement
This paper is supported by the MOE Excellence Research Project: Electronic Commerce Environment,
Technology Development, and Application (Project Number: 91-H-FA08-1-4).
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