The relationship between ERP software selection criteria and ERP success 1
W.-H. Tsai1, P.-L. Lee1*, Y.-S. Shen1, C.-C. Yang1,2
Department of Business Administration, National Central University, Jhongli, Taiwan Department of Information Management, ChungChou Institute of Technology, Yuanlin, Taiwan 1* (
[email protected])
2
Abstract –“ERP success” measures are the most important, but they cannot be analyzed and understood without “software quality” and “information quality” measurements [1]. Moreover, high software quality is an essential requirement in an ERP system. And, it will further influence information quality and ERP success. Consequently, the determination of ERP software selection criteria for ERP success plays an important role while organizations consider implementing an ERP system. This study presents a conceptual framework to investigate how ERP software selection criterion are linked to software quality, information quality and ERP success in the ERP implementing process, as well as, the impacts of those factors on software quality. Through a cross-sectional survey of top 5000 largest companies in Taiwan, undertaken in 2006, the study explores 13 important selection criterion which can directly and positively influence ERP software quality in the dimension of functionality, reliability, usability, efficiency and maintainability, respectively, in pre-implementing ERP phase. Generally, software quality and information quality are critical in influencing the effectiveness of ERP success after implementing ERP system. Despite ERP software selection criterion seem less influential to ERP success, they still impact the ERP success indirectly through software quality and information quality. We consider the results are generally supportive to the research model and such support also provides additional evidence of the validity of the concept proposed in the study. Keywords – Enterprise Resource Planning (ERP), selection criterion, software quality, information quality, ERP success
Even there are several empirical studies in ERP field; however, to our knowledge, no other empirical studies have directly investigated the influence between ERP software selection criteria and ERP software quality, as well as the relationship between ERP software quality and ERP information quality, and further the relationship between information quality and ERP success on ERP implementation in Taiwan. Consequently, this study concentrates on ERP selection criteria, investigating whether such selection criteria affect the software quality, and further related to effective information quality and ERP success. II. RESEARCH BACKGROUND The research constructs and the hypotheses are discussed and derived in this section. Fig. 1 depicts the research model and summarizes the hypotheses derived. 1) ERP software selection criteria: An original of software quality model which contains 11 criteria is first proposed by McCall et al. [14]. Boehm et al. [15] expanded the characteristics of software and incorporates 19 criteria. Grady and Caswell [16] proposed FURPS model which included five major factors containing 24 attributes for software quality. These quality models are similar to one another in many respects but differ essentially in terminology. After that, ISO 9126 standard (1991) normalized these models and drawn on the various quality models to produce a software quality model. In ISO 9126, the key characteristics of the software quality are categorized into six dimensions based on attributes, such as functionality, reliability, usability, efficiency, maintainability and portability [17].
I. INTRODUCTION “ERP success” measures are the most important, but they cannot be analyzed and understood without “software quality” and “information quality” measurements [1]. Moreover, high software quality is an essential requirement in an ERP system. And, it will further influence information quality and ERP success. Consequently, the determination of ERP software selection criteria for ERP success plays an important role while organizations consider implementing an ERP system. Numerous researchers regarding ERP implementation issues have been put forward to illustrate an extensive set of risk factors, management issues and critical success factors for ERP implementation projects. [2,3,4,5,6,7,8,9]. Many studies have analyzed the different implementation strategies between the different approaches such as integral planning and Bigbang/phased implementation approach and stepwise planning and phased implementation approach [10,11,12].
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2) Software quality: Researchers are still wrestling with the question of which constructs best stand for ERP success implementation. Delone and Mclean [18,1] integrated numerous studies and introduced eight elements to measure the system quality. The Software Improvement Group has developed the Software Monitor, an analysis and on-line reporting tool for monitoring the quality of the software system during development [19]. Gable et al. [20] also proposed a valuation model with four dimensions for assessing enterprise systems success. However, the organizational impacts of ERP investment in adopting firm may not be realized, and the impact of different dimensions may also be context-dependent. Further, whether a system can provide reliable and useful
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information and be maintained or operated without error will determine its further use and benefits. Without such a characteristic, an ERP system may lose users’ confidence, resulting in less usage of and greater resistance to the system. Consequently, instead of assessing the individual and organizational impacts of ERP, this study focus on the quality of the implemented ERP package perceived by client, which is term “ERP software quality” and includes the systems’ operational reliability, functional reliability, integrity, correctness, and usefulness [21]. H1.~H6. Consider the selection criterion is positively associated with ERP software quality.
Selection Criteria Functionality Usability
H1a+~H1g+
H2a+~H2b+
Maintainabilit
H3a+~H3d+
Efficiency
H4a+~H4c+
Software Quality
H7+
Information Quality
ERP Success H8+
H5a+~H5c+
Reliability Portability
3) Information Quality:
H6a+
Fig 1.ERP selection model
Numerous researchers have been attempting to figure out elements of information system success. Among the various researches, the one proposed by DeLone and MaLean [18] has been widely cited. Nine papers are cited in their information quality. The attributes include accuracy, precision, currency, timeliness, reliability[22], perceived usefulness of specific report items [23], perceived importance of each information item [24], currency, sufficiency, understandability, freedom from bias, timeliness, reliability, relevance to decisions, comparability, quantitativeness [25], report accuracy, report timeliness [26], report usefulness [27], completeness of information, accuracy of information, relevance of reports, timeliness of report [28], usefulness of information [29] and report accuracy, reportrelevance, understandability, report timeliness [30]. Two more measures, clarity: the degree to which output information is meaningful and unambiguous, and instructiveness: the capacity of output information to indicate possible corrected actions when problem occurs, are added into Li’s [31] research. H7. ERP software quality is positively associated with ERP information quality.
use and user satisfaction dimensions in the DeLone and McLean [18].Arguments against dropping them out are also suitable in the literature [40]. The retained ERP success dimensions in Gable et al.’s model are system quality, information quality, individual impact, and organization impact. H8. ERP information quality is positively associated with ERP success. III. Research Methodology A. Survey procedures and sample characteristics The questionnaires were distributed to the Top 5000 Largest Corporations in Taiwan which include the manufacturing industry and service industry in 2006, in order to explore the status of ERP implementation. 4300 questionnaires were sent to organizations with usable responses of 620 received. After deleting missing responses and unusable ones, the total usable data have been received for response rates of 14.4%. It is worth mentioned that our data collection effort reflects the typically low responses that are commonly seen for IS studies in the field and for our surveys targeting midlevel and senior employees in organization [41]. The response rate is 17% for Bernroider and Koch’s [42] research that also aim to identify the important ERP software selection criteria for Austrian companies and 3.9% for Rao’s [43] research. In this study, only organizations with prior experience of implementing ERP systems were selected as our investigative sample. Therefore, the final investigative samples included 249 out of 620. To ensure data validity and reliability of the survey instrument, an iterative process of personal interview with eight knowledgeable individuals (i.e. two IS faculty, two ERP supplier, two ERP consultant and two managerial level user) were conducted to modify the questionnaire before sending it out and their comments also helped us improve its quality. The questionnaires were sent to the ERP project managers and senior project team members of selected companies.
4) ERP system success ERP success here is similar to ERP success or usefulness in [32] and is different from ERP implementation success. Basically, ERP success refers to the utilization of such systems to enhance organizational goals [32,20]. This definition not includes the technical installations success of such systems [33] in which the measurement indicators consist of cost overruns, project management metrics, time estimate, etc. [33,34,35]. Some researchers have discussed the value, benefit, or success of ERP systems using financial indicators such as ROI, ROA and cost-benefit analysis [36,37] or vis-à-vis organizational performance [38,39]. This study did not evaluate ERP success using financial parameters owing to the inherent limitations in that approach. Given that ERP systems are a different kind of IT systems, it is therefore critical for a specialized success measurement structure to be used when measuring the success of the systems. Gable et al. [20] developed an ERP success measurement model which redefined the dimensions in the widely cited DeLone and McLean’s [18] structure. They removed the
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B. Measures
integrating different platforms and data’ in functionality dimension. In reliability dimension, the higher system quality has relation with the organizations who consider the selection criteria of ‘the integrity of module framework’ and ‘ease of maintain’. Higher system quality is associated with the organizations who consider the selection criteria of ‘providing best practice’, ‘ease of use’ and ‘constant’s suggestion’ in usability dimension. Moreover, organizations consider the selection criteria of ‘real-time online inquiries and reporting functions’ and ‘the rate of return in this investment’ are relative to higher system quality in efficiency dimension. In maintainability dimension, higher system quality is in relation with organizations who consider the selection criteria of ‘providing several successful examples’, ‘flexibility in adjusting demands according to business requirements’ and ‘with a test-passed high stability system’.
According to a set of evaluation criteria based on the extensive literature review [44,45,46,47,48,49] and the consideration of the characteristics and environment of ERP systems, 20 selection criteria for the ERP package were identified and classified into six characteristic according to ISO 9126. In the questionnaire, YES/NO selections were used to see if the selection criteria were taken into account while organization selecting their ERP package. The five-item scale of measuring ERP software quality were adapted from Shin and Lee [21], assessing the extent to which the ERP system provided the client with accurate data and information and sufficient functions. Information quality was measured in terms of accuracy, timeliness, completeness, relevance, and consistency and was develop by DeLone and Mclean [18]. ERP success was adopted form the measure of ERP success developed by Gable et al.’s model. In second stage, respondents were asked to evaluate the ERP performance improvement levels and importance for the ERP software quality, ERP information quality and ERP success 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 were applied to determine the relative weight of measures. The performance improvement levels of these three dimensions were measured by the following expressions: lj
Pij =
∑ (P
ijk
H1c H1f H1g
li
× W jk
k =1
∑W k =1
jk
) ,i
=1 to N ,and j =1 to 3
(1)
TABLE I The Mean and Frequency for significant selection criteria Consider Selection Criteria Mean or not 6.070 Ease of integration with other No 5.825 Yes systems (CRM, SCM) Sig. 0.040** 6.013 No With a complete mechanism 5.787 Yes of internal auditing 0.048** Sig. 6.044 No The capacity of integrating 5.823 Yes different platforms and data 0.07* Sig.
H2a
The integrity of the module framework
H2b
Ease of maintain
H3a
Providing best practices
H3b
Ease of use
H3c
Consultant’s suggestions
N
W
jk
=(
∑W i =1
)
N
, i =1 to N
(2)
ijk
, where Pij is the performance improvement level of the th th j dimension for the i respondent’s company. W jk is the
average importance level score of the k th measure of the th j dimension as perceived by N respondents. Pij is the K
th performance improvement level score of the k measure of the j th dimension for the i th respondent’s company, and
H4a
j l is the number of chosen measure of the j th dimension.
Wijk is the importance level score (1 to7) of the of the k
H4b
th
measure of the j th dimension as perceived by the i th respondent.
The rate of return in this investment
H5a
Providing several successful examples
H5b
Flexibility in adjusting demands according to business requirements
IV. RESULTS H5c
A T-test was employed to determine whether the means are distinct. The results are showed in Table I, which displays that the higher software quality is relative to organizations who consider the selection criteria of ‘ease of integration with other systems’, ‘with a complete mechanism of internal auditing’ and ‘the capacity of
Real-time online inquiries and reporting functions
With a test-passed high stability system
*:P
