Evaluating the Information Systems Success of ERP Implementation in Taiwan’s Industries 1
W.-H. Tsai 1, T.-S. Tsaur1, Y.-W. Chou1, J.-Y. Liu1, J.-L. Hsu2 Department of Business Administration, National Central University, Jhongli City, Taiwan 2 Department of International Trade, Feng Chia University, Taichung, Taiwan 1 (
[email protected])
Abstract – Enterprise resource planning（ERP）system serves enterprise to integrate both business processes and information systems with transmission accuracy and realtime requirement. This work presents a completely survey of Taiwan’s firms that focus on their implementating packaged ERP system.The objective was to evaluate the information system performance by the DeLone-McLean (D&M) Model of information systems success, to measure the service quality provide by ERP system vendor and consultant presented by Parasuraman, et al. Method of five dimensions of service quality, and also to examine the relationship between service quality and system performance using Structure Equation Modeling (SEM) technique. Finally, the result shows that the enterprises in Taiwan have higher service quality supported from ERP system vendor and consultant will make better performance in ERP implementation. Keywords - Key Successful Factor, Service Quality, System Performance
I. INTRODUCTION A successful ERP project is usually costly and takes a long time to implement [6]. In order to achieve ERP implementation successful, few papers presented a clear picture for the causality relation between service quality provideed from systematic vendors and consultants and information systems performance in ERP implementation. The first objective of this research was to evaluate the information system performance by the D&M Model [2] of information systems success. Secondly, the service quality of ERP system vendor and consultant which presented by Parasuraman, et al. [10] was measured. Thirdly, the objective was also to examine the causality relation between service quality and system performance using Structure Equation Modeling (SEM) technique. II. RESEARCH BACKGROUND 1) Key successful factor of ERP implementation: Bingi et al., [1]; Nan et al., [7] had discussed factors that are critical to ERP implementation success. These factors are ERP teamwork and composition, Top management support, Business plan and vision, Effective communication, Project management, Project champion, appropriate business and legacy systems, Change management program and culture, Business process reengineering (BPR) and minimum customization,
Software development, Testing and troubleshooting, and Monitoring and evaluation of performance [7]. The consistency factors among vendor support, consultant competence, ERP project team member competence, ERP project manager leadership, top management support, and user support facilitated the ERP implementation and had a significant positive impact on ERP implementation success [13]. 2) Service quality evaluation: Service quality is the most researched area of services marketing. In ERP implementation stage, besides systematic ERP vendor supporting, consultants provide their providing and focus on service quality to gain competitive advantages. They also provide professional services which include IT strategy planning, software evaluation, training and change management. Definitions of service quality are result of the comparison that customers make between their service prospect and service conception [9, 10]. The 10 dimensions with descriptions served as the basic structure of service quality which was conducted by Parasuraman et al. [9]. Service quality has developed the item SERVQUAL’s five dimensions model which includes five dimensions: Tangible, Reliability, Assurance, Responsiveness, and Empathy. In this study, the Parasuraman’s SERVQUAL five dimensions structure was applied to examine the users’ satisfaction in the ERP vendor and consultant selection. 3) Information system effectiveness evaluation: D&M [2] presented the information system (IS) success measurement approach to develop ERP performance measures. The measures forming an IS success model included six major categories – System Quality, Information Quality, Use, User Satisfaction, Individual Impact, and Organizational Impact which components are interrelated and interdependent. D&M proposed that IS success should measure three major dimensions: “information quality,” “system quality,” and “service quality.” Based on the contributions in evaluating the IS success, D&M made minor refinement and proposed an updated D&M IS Success Model for measuring the ecommence system success. Wang [13] suggested that the service quality of information system should discriminate external services (e.g. services from system ERP vendor and consultant) from internal ones (e.g. services from MIS department).
TABLE I Questionnaire Description of Service Quality Scale Dimensions
Fig. 1. Three stage of the research framework
TABLE II Measurement Performance Improvement of Dimensions in IS System
III. RESEARCH METHODOLOGY 1) Research framework: In this work, the service quality of the systematic ERP vendor and the service quality from consultant were the different parameters that affect the system service quality in the ERP implementation. The performance improvement of the dimension was introduced by the D&M approach’s variables. The research framework can distinguished from three stages which were stage A, stage B, and stage C presented in Fig. 1, z Stage A – examined the service quality. z Stage B – examined performance improvement related with the unobserved variables. z Stage C – examined the relationship between service quality and system performance improvement. 2) Sample and data collection: This study examines the ERP implementation experiences of the Top 5000 Largest Corporations to explore the status of ERP implementation in Taiwan. Five thousand questionnaires were mailed and the survey data collected from 207 companies that have implemented ERP software package were analyzed. 3) Users’ service quality satisfaction: This work examines the users’ service quality satisfaction in the ERP vendor and consultant selection. To examine the users’ satisfaction, there have five dimensions, Tangibles, Reliability, Responsiveness, Assurance, and Empathy, in the Parasuraman’s five dimensions model presented in Table I. 4) D&M information system success model: In order to explore the important factors, the D&M’s [2] information system success measurement approach was developed to measures ERP performance improvement level in ERP vendor and consultant selection. We show the system performance improvement of dimension and corresponds description in Table II. 5) Structural equation modeling and Reliability analysis: A second-order confirmatory factor analysis approach is applied to measure Service Quality and Performance Improvement separately in the research framework and got a suitable model. Then, the Structural equation modeling (SEM) technique, LISREL package, is applied to examine the causality relationship among the presented variables [11]. Moreover, reliability analysis is
applied to measure the internal consistency dimensions of Service Quality and Performance Improvement. Cronbach's alpha is the most common form of internal consistency reliability coefficient. We use it to test the internal comparison reliability. By convention, a lenient cut-off of Cronbach α=0.60 is common in exploratory research; alpha should be at least 0.7 or higher to retain an item in an "adequate" scale; and many researchers require a cut-off criteria of Cronbach α=0.80 for a "good scale.” In this study measurement, we adopt Cronbach α>0.70 for a "good scale” [4]. 6) Research hypotheses: we describe the hypotheses showed at Fig. 2. We characterize all of the measurement category variables that affect the ERP systems performance in Table III. IV. EMPIRICAL RESULTS A. Sample Demographics The sample contained 157 (75.8% of 207) companies with fewer than 500 employees and 170 companies (82.1% of 207) with annual revenues below NT$ 5 billion. Among these organizations, approximately 138 companies (66.7% of 207) are manufacturers and 69 are members (33.3% of 207) in service industries. Table IV lists the statistics of the sample data.
Fig. 2. Research hypotheses of the framework
TABLE III Measurement Category Variables of ERP Systems Effectiveness
TABLE V Reliability analysis results of Service Quality And Performance Improvement Dimension
Scale dimensions Cronbach α System Vendor’s Service Quality 0.891 Consultant’s Service Quality 0.910 System Quality 0.907 System Information Quality 0.910 Performance System Use 0.842 Improvement User Satisfaction 0.956 Individual Impact 0.938 Organizational Impact 0.881 Service Quality
B. Reliability Analysis Results The reliability coefficients Cronbach α of the Service Quality and Performance Improvement dimension are larger than 0.7, expressed as “good scale”, were showed in Table V. C. SEM Analysis Results The totally ten observable variable paths, showed in Fig. 3 stage A, were tested the associations between Service Quality and Service Quality provided by system vendor and consultant in stage A. The results found those paths to be statistically significant but the overall model fitness indicators were unable to meet acceptable standard. After made some corrections of deleting four variables S1, S15, S21, and S25, the results showed that the internal quality of the model data are good enough and support hypotheses H2, H21, and H22. TABLE IV Descriptive Statistics
Criteria good scale good scale good scale good scale good scale good scale good scale good scale
Fig. 3. The observable variable paths in the research
In a similar manner, all of the 29 observable variable paths, showed in Fig. 3 stage B, were tested with secondorder confirmatory factor analysis model. After made some corrections of deleting 15 variables P13, P15, P21, P22, P25, P31, P32, P35, P41, P43, P45, P52, P55, P62, and P64, the results showed that all the variables have reached P
