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CHAPTER 3

THEORITICAL FRAME WORK

3.1 ERP IMPLEMENTATION MODELS & MEASURES

Since ERP systems integrate various business processes, previous

research on user acceptance models for IS can be a starting point to understand the
success of ERP systems adaptation. In this section some models for success
measurement are listed and explained. Table 3.1 shows nine success measurement
models

Table 3.1 ERP implementation models & success measurements

Tested in No. of
Model Measures
practice measures
1 Technology Yes 5 1. Image, 2. Job relevance,
Acceptance Model 3. Output quality, 4. Result
(TAM ) (1989) demonstrability, 5. Subjective
norm which includes willingness
& experience
2 DeLone & McLean Yes 6 1. System quality, 2. Information
Model ( D & M ) quality, 3. Use, 4. User
(1992/2003) satisfaction, 5. Individual impact,
6. Organizational impact
3 The Gable model Yes 5 1. Individual impact,
(2003) [Link] impact,
3. Information quality, 4. System
quality, 5. Satisfaction
4 The extended ERP Yes 7 Above five plus additional two
systems success measures
measurement model 1. Vendor/Consultant quality
of Ifinedo (2006) 2. Workgroup impact


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Table 3.1 (Continued)

Tested in No. of
Model Measures
practice measures
5 Markus & Tanis No 4 phases Defined success based on their
model (2000) observations at Planning phase,
Implementation phase, Stabilizing
phase and Maintenance phase.
6 Ex-ante evaluation Yes 5 1. Clarification of business vision,
model of Stefanou 2. Comparing needs Vs
(2001) capabilities, 3. Selection of
needed software, 4. Ex-ante
model costs & benefit estimation
for implementation, 5. ..for
operation, maintenance &
evolution.
7 ERP Balance No 4 1. Financial perspective,
scorecard of 2. Internal process perspective,
Rosemann & Wiese 3. Customer perspective,
(1999) 4. Innovation and Learning
perspective
8 TTF ERP success No 6 1. Task, 2. Technology, 3. User,
model from Smyth 4. Perceived usefulness,
(2001) 5. Aggregate organizational
benefit, 6. User satisfaction
9 Boo Young Chung Yes 4 1. Intentions to use / Use,
[Link] model (2009) 2. Project progress, 3. Quality,
4. ERP benefits

The success of ERP system can be classified into two categories: the
success of ERP adoption and the success of ERP system implementation. For the
successful ERP adoption, it used already proven user acceptance models for IS such
as TAM and D & M models as the starting point. TAM ( Technology Acceptance
91
Model) , Davis F.D (1989) provides basis for tracing the impact of external
variables on internal beliefs, attitude & intentions. All the relation among the
elements of TAM has been validated through many empirical studies.


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Most cited for success measurement in the IS field is the D & M model ,
DeLone & McLean 92 (1992) ,which adopt user centered approach to judge success,
it assumes system quality & information quality derives use & user satisfaction
which will impact individual performance & that will lead to organizational impact.
This model was tested in different use cases like in Taiwanese high-tech industries
(2007). The model was initially published in 1992 and reformulated in 2003 with the
new construct ‘Net benefits’ collapsing earlier measures individual impact &
organizational impact. The new measure includes financials like cost savings,
additional market etc.

The Gable model, Gable et al. 63 (2003), consists of four main dimensions
as four quadrants, which lead to the fifth dimension the ‘Satisfaction’. The model
can be used for measures at a certain point of time, a snapshot of the organization’s
experience. The impact dimensions are an assessment of benefits which are caused
by the system (in a negative or positive way). The quality dimensions of the model
show the future potential. Together, the four dimensions reflect a complete view of
the enterprise system and success reached.

The extended ERP system success measurement model , Ifinedo 93 (2006)

, differs from Gable model by two additional measures vendor/consultant quality &
workgroup impact. It has nearly the same area of application as Gable [Link]. Model,
but it provides a framework that allows collecting more comprehensive data
influencing the ERP systems success.

Markus & Tanis model , Markus & Tanis 9 (2000) provides a theoretical
framework for analyzing retrospectively and prospectively, the business value of
enterprise systems. At each phase it generates a data of successful outcome,
necessary conditions, probabilistic processes and a recipe for success, which will
help to take actions if a result is not good as expected and to get better results in the
next phase because every outcome of a phase influence the next phase.

94
Stefanou’s ex-ante evaluation model, Stefanou (2001) is different from
other models, it is meant for selection process. It shows how companies can evaluate


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a planned implementation project ex-ante. This framework provides an instrument to

evaluate the future outcome also guides the evaluator through all the important
stages which must be considered when evaluating ERP systems.

95
The intention of Balanced Score Card ( BSC), Rosemann and Wiese
(1999) is the supplementation of traditional financial measures with three additional
perspectives – customer , internal business process & learning and growth
perspectives. In the ERP operation BSC of Rosemann & Wiese, four standard
perspective of the original model have to be adjusted to the specific object of an
ERP system.

x Financial / cost – What is the financial input necessary for achieving

the targeted performance level?

x Internal – Are the internal process effective and efficient in assuring a

level of performance determined by the customer perspective?

x Customer – What benefits derives the company from a certain level

performance?

x Innovation & Learning – Does the ERP system have enough potential
for possible future customer needs?

96
The TTF ERP success model, Smyth (2001) describes the match
between functionality provided by the ERP package, the tasks undertaken by the
users of the package, and the skills and attitudes of the individual users. In this
model poor TTF would contribute to a low level of user satisfaction and both leads
to ERP failure. Perceived usefulness is influenced by organizational factors and
that’s influencing the user satisfaction in a direct and an indirect way.

42
Boo Young Chung model, Boo Young Chung et al. (2009) developed
for construction industry. It adapts TAM and D & M model and integrate those with
key project management principles. The success indicator ERP benefit includes user
satisfaction, individual impact and organizational impact measures of D & M model.


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The measure ‘Project progress’ includes questions about project completion on time
and within budget, while ‘quality’ has questions related to system quality and the
scope matched with the company’s needs.

3.2 CONCEPTUAL ERP IMPLEMENTATION SUCCESS MODEL

3.2.1 Reference Model

All the nine models have specific strength and weaknesses and for every
practical success measurement intention different needs occur. Some of the models
are ERP specific, others on IS in general and may need adoption when used for ERP
success measurement. Most models considers user’s point of view. Each stakeholder
has a specific expectation of the outcome of the success measurement. A
comparison of ERP success measurement approaches by Stephen et al.43 (2010)
classified stakeholders and important dimensions for model selection.

The different stakeholders defined in the study are four types: Users, Top
management, I.T team and Externals.

Three dimensions considered for classification by Stephen et al.43 (2010)

which consolidates most of the measurements used by the above models : Process
improvements, Future needs and Financials.

The present research moderates the above classification to study the

stakeholder involvement to make ERP project success. The proposed study extends
ERP success model developed by Boo Young Chung et al.42 (2009) for construction
industries as reference model as well as the success measurements study of Stephen
et al.43 (2010) .

The success of ERP system can be classified into two categories: the
success of ERP adoption and the success of ERP system implementation. For the
successful ERP adoption, the reference model shown in Figure 3.1 used already
proven user acceptance models for IS such as TAM and D & M IS success model as
the starting point. The model developed the rationale for the causal relationship


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based on the combined theoretical backgrounds and incorporated three main

dimensions for identifying the truth about the success of ERP systems: success
factors, intermediate constructs, and success indicators.

Successindicators
Successfactors

Figure 3.1 Reference ERP success model. Source: Boo Young Chung et al. 42
(2009)

The success factors suggested by Boo Young Chung et al.42 (2009) are
used in the proposed model because they were already validated by previous
research. This success factors directly affect the perceived usefulness, and finally
lead to ERP success or failure. For example, the User related attributes directly
affecting the perceived usefulness are Output quality, Job relevance, Image, Result
demonstrability, Compatibility and System reliability.

3.2.2 Proposed Model

The reference model success factors are broadly grouped into three
stakeholder groups. Users, Internal groups and External groups which is similar to
the classification of stakeholder group of Stephen et al.43 (2010)


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Figure 3.2 beelow showss the propo

osed model, referred tto as conceeptual
E
ERP successs model. Thhis model combines
c th
he result of both the stuudy Boo Young
Y
42
C
Chung et all. (2009) & Stephen [Link].43 (2010) refferred abovve but prim
marily
hung et al.42
cooncentrates on the stuudy of Booo Young Ch 4
(2009) aand expand
ds the
sttake-holder group usedd by that sttudy. Expan
nsions of thhe three staakeholder group
g
ussed by that study are giiven below::

1. Users group is divided into threee, (i). Trransaction-u

users,
(ii). Knnowledge-poower users & (iii). Positional-pow
wer users

2. Internaal Groups consists of (i) Top mannagement, (ii) Project team

( IT teaam)

3. Externaal Group coonsists of (i)) Vendor, (iii) Consultannts

Figu
ure 3.2 Con
nceptual ER
RP Successs Model


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This conceptual model also includes four success indicators, the three
dimensions of success measurements, (Financial gain, taken care of future needs and
process improvements) proposed by Stephen et al.43 (2010) and one more measures
of Boo Young Chung et al.42 (2009) called project-success. Also each success
factors is related with certain attributes which directly influence the ‘perceived
usefulness’ or ‘facilitate to use’ which finally affect the ‘intentions to use / use’, as a
result ‘Net benefits ‘will occur in this conceptual success model. These attributes are
shown in Table 3.2. Attributes related to four success measurement dimensions are
shown in Table 3.3.

Table 3.2 Attributes for each success factor

Success Attributes
factors
Transaction Output quality, Job relevance, Image, Result demonstrability,
user System reliability, Willingness to learn/ change.
Knowledge Output quality, Job relevance, Image, Result demonstrability,
power user System reliability, Willingness to involve in design, Testing,
Training, Data migration and post implementation, Act as spokes
person
Positional Output quality, Job relevance, Image, Result demonstrability,
power user System reliability, Willingness to involve in design, Training and
monitoring , ct as spokes person, Giving priority, Assigning key
resources, Support project team, Interdepartmental co-operation and
communication
Top Priority, Personal involvement, Assigning key resources, Funds,
management Empowering project team, Motivating the project team
Project team Dedication, Image, Result demonstrability, Job relevance,
Commitment to achieve, Act as spokes person
Vendor Transparency in product capability, resource capability, project
management, past performance, scope, project time frame and
understanding the customer requirement. Commitment, Partnership,
tools availability, post implementation support,
Consultant Quality of output, Customization, Training, Documentation,
Knowledge sharing, Willingness to reach out for help


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Table 3.3 Four success measurement dimensions and its attributes

Financials 1 Return on Process 1 Online operations

investments ( RoI) improvements (operations anywhere)
.
2 Inventory reduction 2 Work flow approvals
3 Staff reduction 3 Internal controls( budget
monitoring. etc)
4 Cycle time 4 Uniform business process
reduction among the group
5 Other OH 5 Customer / supplier
reduction relationship mgmt
6 Increase in revenue Project 1 completed on time
success
Future 1 Scalability of 2 completed within budget
needs operations
2 Expansion – 3 with good quality
additional offices
/plants
3 Expansion in new 4 scope matched with
business company's need
4 Compliance to new
Government
regulations.