Avram G ECKM 05

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Avram G ECKM 05 Powered By Docstoc
					Impact of the Quality of ERP implementations on Business Value
Oana Velcu
Department of Accounting, HANKEN, Helsinki, Finland

Paper Summary
In the late 1990’s, a new research path was derived from the extant research field concerned with
measuring the value of IT investments. This new research path aimed at analysing whether Enterprise
Resource Planning (ERP) systems were a source of firm value.

Earlier research regarding the business value of IT investments has been summarized as the
“productivity paradox”. The term points to the findings that IT investments did not seem to have
positive effects on business profitability. Lately, it has been proposed that the key to negating the
productivity paradox is the quality of the IT investment. Therefore, this paper investigates the
relationship between the quality of ERP investments and firm profitability.

The empirical study is built upon a sample of 49 usable responses from Finnish mid-sized companies.
The findings indicate no significant differences in the change of ROA and ROI of successful ERP
adopters and less successful adopters, in the three years after implementation. The successful ERP
adopters did have significant higher Assets Turnover and Capital Turnover than the less successful
ERP adopters in the first two years after implementation. Additionally, the findings of this paper reveal
no significant association between the ERP implementation effort and its success. Thus, the findings
shed light on the productivity paradox regarding ERP implementations.

Keywords: ERP implementations, IT investments, business value, investment quality