MEASURING ERP SYSTEM SUCCESS: A RESPECIFICATION OF THE DELONE AND MCLEAN’S IS SUCCESS MODEL Kwang Su Wei and Dr. Alain ChongYee Loong Faculty of Computing and IT, INTI International University College, Malaysia Ying-Mei Leong and Keng-Boon Ooi Faculty of Business & Finance, University Tunku Abdul Rahman ABSTRACT The implementation of Enterprise Resource Planning (ERP) system has grown rapidly world-wide in recent years. According to AMR Research, the globalization and centralization, and the performance management as the key drivers for continue ERP investment among the large corporations and small companies. Therefore measuring ERP systems success has been an important criterion for adopting organization. This paper presents a re-specification to DeLone and McLean’s IS success Model and empirically examines it in ERP context. A conceptual model was proposed by the comprehensive review of IS success literature that attempted to evaluate the ERP system success. Four dependent valuables (system quality, information quality, vendor/consultant’s quality, and perceived ERP benefits) were used in evaluating ERP system success. This conceptual model and relationships will be tested and validated using data gathering from small and medium enterprises (SMEs) in Malaysia. The result provides an expanded understanding of factors that measure ERP system success and suggest a ways to improve the ERP system usage. Keywords— ERP system success, Delone and McLean, SMEs in Malaysia 1. INTRODUCTION The current business environment is getting more competitive. With customers expecting better quality products in a shorter period of time, many companies increasingly are facing the challenges of operating efficiently. Computers today are no longer just a tool for organizations. By implementing IT technologies, organizations will be able to operate more efficiently and effectively. One tools that are implemented by organizations in respond to the current demanding business world is Enterprise Resource Planning (ERP). By implementing ERP, organizations will have more real time real time visibility and control over their business operation. According to Gupta (200), implanting ERP systems is not an easy task. ERP systems are complex and large and thus warrant careful planning and execution to ensure their successful implementation (Gupta, 2000). ERP brings many benefits. A properly implemented ERP system will improve the efficiency and effectiveness of organizations by through added value, automation, integration of business processes, sharing of data and practices, and real-time information (Ragowsky et al., 2005). More importantly, with greater emphasis in supply chain management by organizations, ERP system implementation will be an important step for the integration of interorganizational supply chains for the companies (Markus and Tanis, 2000). Although the benefits of ERP is well publicized, the usage of ERP system among Malaysian SMEs is still considered new and low. According to Lian (2005), only about 10 percent of SMEs in manufacturing have used ERP system. With the Malaysian government placing great emphasis IT and wanting companies to compete with lower cost nations by being more efficient, the success of the ERP systems adoption is considered an important issue for Malaysian SMEs. However there is currently little research on measuring the success of ERP system for adopting organizations that has been carried out. Although past literatures showed that several researchers such as Martin, (1998), Markus and Tanis (2000), and Ifinedo, (2007) have studied the implementation success of ERP systems in adopting organizations, but there is little research which has examined the impact of contingency factors on ERP system success (Sedera et al., 2003; Wang and Chen, 2006). Most current researches in the field of ERP implementation tend to focus on the implementation success of ERP systems in adopting organization (Gable et al., 2003; Ifinedo, 2006). Due to the lack of current research on ERP system success as well not having a validated conceptual model, we proposed a re-specified DeLone and McLean’s IS success Model and empirically examines it in the ERP context. This conceptual model and relationships will be tested and validated using data gathering from small and medium enterprises (SMEs) in Malaysia. The objective of this study to measure the ERP system success factors among the SMEs in Malaysia by using the re-specification DeLone and McLean’s IS success Model and empirically examines it in ERP context. The objectives of this study are: • To measure the success factors of adopting ERP system among the SMEs in Malaysia. Symposium on Progress in Information & Communication Technology 2009 7
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MEASURING ERP SYSTEM SUCCESS: A RESPECIFICATION OF THE DELONE AND
MCLEAN’S IS SUCCESS MODEL
Kwang Su Wei and Dr. Alain ChongYee Loong
Faculty of Computing and IT, INTI International University College, Malaysia
Ying-Mei Leong and Keng-Boon Ooi
Faculty of Business & Finance, University Tunku Abdul Rahman
ABSTRACT
The implementation of Enterprise Resource Planning (ERP)
system has grown rapidly world-wide in recent years.
According to AMR Research, the globalization and
centralization, and the performance management as the key
drivers for continue ERP investment among the large
corporations and small companies. Therefore measuring ERP
systems success has been an important criterion for adopting
organization. This paper presents a re-specification to
DeLone and McLean’s IS success Model and empirically
examines it in ERP context. A conceptual model was
proposed by the comprehensive review of IS success
literature that attempted to evaluate the ERP system success.
Four dependent valuables (system quality, information
quality, vendor/consultant’s quality, and perceived ERP
benefits) were used in evaluating ERP system success. This
conceptual model and relationships will be tested and
validated using data gathering from small and medium
enterprises (SMEs) in Malaysia. The result provides an
expanded understanding of factors that measure ERP system
success and suggest a ways to improve the ERP system
usage.
Keywords— ERP system success, Delone and McLean,
SMEs in Malaysia
1. INTRODUCTION
The current business environment is getting more
competitive. With customers expecting better quality
products in a shorter period of time, many companies
increasingly are facing the challenges of operating efficiently.
Computers today are no longer just a tool for organizations.
By implementing IT technologies, organizations will be able
to operate more efficiently and effectively. One tools that are
implemented by organizations in respond to the current
demanding business world is Enterprise Resource Planning
(ERP). By implementing ERP, organizations will have more
real time real time visibility and control over their business
operation. According to Gupta (200), implanting ERP
systems is not an easy task. ERP systems are complex and
large and thus warrant careful planning and execution to
ensure their successful implementation (Gupta, 2000). ERP
brings many benefits. A properly implemented ERP system
will improve the efficiency and effectiveness of organizations
by through added value, automation, integration of business
processes, sharing of data and practices, and real-time
information (Ragowsky et al., 2005). More importantly, with
greater emphasis in supply chain management by
organizations, ERP system implementation will be an
important step for the integration of interorganizational
supply chains for the companies (Markus and Tanis, 2000).
Although the benefits of ERP is well publicized, the
usage of ERP system among Malaysian SMEs is still
considered new and low. According to Lian (2005), only
about 10 percent of SMEs in manufacturing have used ERP
system. With the Malaysian government placing great
emphasis IT and wanting companies to compete with lower
cost nations by being more efficient, the success of the ERP
systems adoption is considered an important issue for
Malaysian SMEs. However there is currently little research
on measuring the success of ERP system for adopting
organizations that has been carried out. Although past
literatures showed that several researchers such as Martin,
(1998), Markus and Tanis (2000), and Ifinedo, (2007) have
studied the implementation success of ERP systems in
adopting organizations, but there is little research which has
examined the impact of contingency factors on ERP system
success (Sedera et al., 2003; Wang and Chen, 2006). Most
current researches in the field of ERP implementation tend to
focus on the implementation success of ERP systems in
adopting organization (Gable et al., 2003; Ifinedo, 2006).
Due to the lack of current research on ERP system success as
well not having a validated conceptual model, we proposed a
re-specified DeLone and McLean’s IS success Model and
empirically examines it in the ERP context. This conceptual
model and relationships will be tested and validated using
data gathering from small and medium enterprises (SMEs) in
Malaysia.
The objective of this study to measure the ERP
system success factors among the SMEs in Malaysia by using
the re-specification DeLone and McLean’s IS success Model
and empirically examines it in ERP context. The objectives
of this study are:
• To measure the success factors of adopting ERP system
among the SMEs in Malaysia.
Symposium on Progress in Information & Communication Technology 2009
7
• To validate the ERP system success conceptual model
and its extendibility to SMEs in Malaysia.
• To understand the state of ERP system in SMEs in
Malaysia.
Toward that end, the main purpose is to present an
extended ERP systems success measurement model or
framework that could be of use to organizations where such
systems are being adopted. Likewise companies could benefit
from this endeavor as we replicate and enhance knowledge in
this area of research study. Following is the research question
for this research study:
• What are the success factors of ERP system adoption?
• How ERP system success factors can be usefully
measured.
2. LITERATURE REVIEW
4.1. ERP System
ERP systems are one of the most prevalent forms of business
computing for large organizations in both private and the
public sectors (Gable, 2008). An ERP system link back-office
operations to front-office operations as well as both internal
and external supply chains through a suite of client/server
based application modules (Verville and Halingten, 2003).
An ERP system integrates various business activities in
companies such as human resources, marketing, production,
customer relationship management, finance into a single
system through the use of a share database.
There are many reasons why businesses are adopting
ERP. Some reasons include replacing existing legacy
systems, reducing cost and faster information transactions,
among others (Davenport, 1998; Hallikainen et al., 2004).
ERP system provides consistency and visibility or transparent
information flow across the entire enterprise which helps to
improve the business process efficiency and enhance the
competitive advantage of organization.
4.2. The evolution of ERP system
Evolutions of ERP systems have their roots back in
the 1960s. The focal point of manufacturing systems in the
1960's was on Inventory control. Most of the software
packages were designed to handle inventory based on
traditional inventory concepts include identifying inventory