Effect of ERP Implementation on Organisational Performance: Manager's Dilemma

Enterprise Resource Planning (ERP) improves commercial activity control and provides a competitive advantage when combined with existing benefits.  However, end-users oppose ERP implementation because it disrupts the status quo.  In addition, ensuring that all operational units use the same ERP system is not an easy task.   Therefore, a lack of adaptability is the cause of ERP failure.  This study used a qualitative case study approach to analyze an event and understood the ERP system and natural phenomena.  The data was collected using a semi-structured interview.  The researcher reached data saturation at the 15^th respondent's feedback.  Documentary data were examined for patterns and themes prior to triangulation.  The result of this study shows that end-user support is critical to a system's daily operation and implementation, especially when it is new.  Only a system that has been effectively designed, delivered, and trained may be used by end users.  Implementing ERP enhances an organization's capacity and performance.  Post-implementation evaluation is needed to determine the organization's potential and the system's value.  Except for financial performance, the organization's overall performance has improved across all Balance Score Card (BSC) perspectives of internal processes, customers, learning, and growth.  Adopting new technologies is expected to enhance the organization's overall efficiency.  Each identified thematic area affects an organization's ability to use its ERP system effectively and efficiently to achieve previously identified benefits.  In addition, the study found that STP organizations focus on the benefits of implementing ERP rather than the associated costs.  Finally, organizations can better plan for the future benefits of replacing or updating ERP systems.

Behaviour of the end-user; ERP system; Enterprise performance; Post-ERP implementation; STP organization

     Notwithstanding the benefits and challenges of the ERP system, the STP for this study had decided to proceed with implementing the ERP as part of its digital transformation initiative.  The STP chose ERP because of its non-financial and financial benefits.  After implementation, the STP did not evaluate the ERP systems to see if their potential had been fully realized.  As a result, preliminary interviews indicated that STP end-users have mixed feelings toward adopting the ERP.  Thus, this ERP study aims to determine how ERP has benefited the STP organization.

    The most challenging phase of an ERP system is system implementation.   ERP/SAP implementation uses the SAP Accelerated SAP (ASAP) methodology (Mueller et al., 2019). The ASAP methodology is an effective SAP project management tool for planning, managing, and implementing SAP (Supriyono & Sutiah, 2020).  However, the current ASAP methodology lacks an evaluation element to assess the ERP post-implementation benefits.  After years of ERP implementation, a post-implementation evaluation is recommended to determine if benefits were realized.  Following ERP implementation, a new framework for ASAP will be created by adding evaluation components.  Therefore, this study aims to provide managers with the knowledge necessary for a successful ERP implementation.

1.1.   Implementation Challenges

ERP systems have the potential to help businesses improve their operations and develop a competitive edge (Alomari et al., 2018).  It is because the ERP system integrates best practices, management capabilities, real-time reporting, and data analysis to increase value creation and efficiency within the organization.  Furthermore, in today's business environment, an ERP system enables the organization to manage all aspects of its operations comprehensively (Ullah et al., 2018).  As a result, ERP systems improve process efficiency, streamlined inventory, supply chain communication, and customer experience (Govindaraju et al., 2018).  Furthermore, an ERP system can reduce costs and increase investment return, improving consumer decision-making (Seyal & Rahman, 2017).  Additionally, the ERP reduces turnaround times, order cycles, and inventory levels (AboAbdo et al., 2019).

Notwithstanding the above, the organization often faces business issues after significant investment in an ERP system, which receives no return (Abd-Elmonem et al., 2017).  This study was done on STP ERP systems because they face similar implementation challenges.   The fact that no system performance evaluation had been carried out despite years of ERP implementation also motivated this study.  Therefore, the study findings will assist future ERP system implementations by understanding key issues and potential solutions.  Furthermore, IT managers and managers must be able to quantify the system's benefits to justify ERP maintenance costs (Beric et al., 2018).  When an ERP system is fully implemented, only then its benefits become apparent.

1.2.  Research Gaps

Gap 1: The research gap on ERP post-implementation within STP focuses on end-user resistance to change to a new system.

Gap 2: There is a research gap in the success of ERP implementation in STP, which focuses on organizational performance using a balanced scorecard.

Gap 3: The ASAP methodology has a research gap in the post-ERP implementation component.  i.e., ERP success requires post-implementation evaluation.

Relevant Theories and Models to the Implementation of ERP System

        STS, UTAUT, and BSC are among the theories/model that may explain the challenges, as shown in Table 1 below.  This section provides an overview of relevant theories and approaches to the study.

Table 1 Relevant Theories/Models

The following are the objectives of this paper:

a)    To review post-implementation research gaps in the Malaysia STP organization,

b)    To propose an STP conceptual framework based on research results.

2.1. Conceptualisation

Figure 1 shows a conceptual framework for post-implementation studies emphasizing the evaluation stage.  The two predominant theories and the BSC method for comprehending these three distinct facets:

a)    Sociotechnical system (STS) theory: End user behavior

b)  A unified theory of technology acceptance and use technology (UTAUT) for ERP implementation

c)    A Balanced Scorecard (BSC) approach to measuring organizational performance 

Figure 1 Conceptual Framework

This study is based on an interpretive paradigm appropriate for investigating natural phenomena using the qualitative research method (Thelwall & Nevill, 2021).  As a result, this study employs a case study methodology (Vega, 2018).  Interviews were collected using semi-structured questions (Boulos et al., 2022).  Triangulation was used to check the accuracy of the interview data (Goodman-Scott, 2022).  The study's case organization is a Malaysian STP.   Therefore, the sample for this study was chosen using purposive sampling (Doan, 2018).  Purposive sampling is a non-random sampling design in which respondents were selected based on their similarity to the phenomenon under study (Agapiou, 2022).

 This sample included fifteen (15) respondents who were interviewed from four different employee groups at the Malaysian STP organization.  End users of ERP systems and those working on ERP implementation projects in Malaysia STP are eligible for participation because they meet the criteria of the sample.  At the fifteenth (15) participant, data saturation was achieved.  Data saturation aims to determine when to end data collection (Lassig, 2022).  In addition, according to Yin (1994), a diverse group of respondents gives more useful answers (Ye, 2022).
         In this study, a qualitative data analysis methodology was employed.  The qualitative data revealed recurring patterns in underlying themes or beliefs (Darko, 2022).   Furthermore, themes and patterns from the qualitative data analysis were extracted, and the results were triangulated with data from the supporting documentation.  Therefore, this study used respondents' semi-structured interview data and other relevant documents related to the implementation of the ERP.  Thematic analysis was used to analyze the study interview data.  Analysis of interview data revealed the shape and meaning of substances (Maming, 2022).  The use of thematic analysis has made it possible to identify common themes.  Thematic studies include, but are not limited to, data profile analysis and visualization (Ozuem et al., 2022).   The interview questions were sent to three subject matter and methodology experts before the data collection to identify potential mistakes and enhance the interview questions.  After amending the interview questions in response to a review by a subject-matter expert, cognitive interviews with two chosen sample respondents were carried out.  A cognitive interview evaluates the clarity of statements, instructions, and unclear elements in the session (Simler et al., 2022).  After receiving feedback, the interview questions were refined and used for real interview sessions with respondents.

        The researcher used thematic analysis to search for common themes in the research data.  Thematic analysis is a technique that allows the identification, analysis, and communication of data trends (themes).  Three major themes emerged:

4.1. Themes 1:  Frequent Use, On-going Training, and Adequate Resources Will Improve ERP Acceptance

         The first theme is "Frequent use, ongoing training, and adequate resources will improve ERP acceptance".  These themes focused on end-users reluctance to adopt a new Enterprise Resource Planning (ERP) system.  It is linked to Research Question 1.  (RQ1).  End-user support is critical to the day-to-day implementation and operation, mainly when the system is brand new.  On the other hand, end-users cannot use a system efficiently unless designed, trained, and delivered efficiently.  Therefore, the ERP will not accomplish its objective due to end-users resistance.

         The researcher used Nvivo software and a word frequency request for visual analysis to find themes identified by end-users of the ERP system.  The most popular words found are activities, knowledge, and support, with 72 counts for activities, 49 for knowledge, and 40 for support (Table 2).  This result confirms that end-user support is crucial to the success of an ERP system and the optimal use of the system by end-users.  Figure 2 illustrates a Word Cloud showing the frequency of words used in response to Research Question 1.

Table 2 Themes

4.2. Themes-2: The Effects of ERP Implementation on Organizational Performance

The second theme is "The Effects of ERP Implementation on Organizational Performance". This second theme relates to the ERP's post-implementation success and its impact on organizational performance as measured by the balanced scorecard.  This theme supports Research Question 2 (RQ2).  Implementing Enterprise Resource Planning (ERP) improves an organization's organizational capacity while enabling it to reach higher levels of organizational performance.  Furthermore, ERP systems should reduce costs by increasing efficiency through automation and improving decision-making by providing accurate and timely information across the enterprise.

The researcher used Nvivo software and a word frequency query for visual analysis to find the themes identified by the ERP system's end-users.  The most frequently used words were identified as organization, process, and structured, with 44 counts for organization, 32 for process, and 31 for structured (Table 3).  Thus, this confirms that the ERP system significantly impacts organizational performance as it is an organized and systematic approach.  Figure 3 illustrates a Word Cloud showing the frequency of words used in response to Research Question 2.

Table 3 Relevant Theories/Models

Themes / Set of Themes	Sub Themes
The Effects of ERP Implementation on Organizational Performance	Organization (44) Process (32) Structured (31)

Figure 3 Word Cloud Illustrating Word Frequency – Response to Question 2

4.3. Themes-3: ERP Post-Implementation Evaluation is Crucial

The third theme is "ERP Post-Implementation Evaluation is Crucial".  This third theme emerged from this research: whether there was a need for post-implementation evaluation to determine whether the case organization had realized the full benefits of the ERP system following its successful implementation.  As a result, this theme is supportive of Research Question 3 (RQ3).

After implementing an ERP system for a few years, participants unanimously agreed that it must evaluate whether the organization has reached its full potential.  In addition, the organization will assess whether the end-user has fully used the module's capabilities and improved the quality of its results.  Furthermore, to determine whether an ERP system is a good investment, a cost-benefit analysis must be performed.

The researcher used Nvivo software and a word frequency query for visual analysis to find the themes identified by the ERP system's end-users.  The most frequently used words were system, knowledge, and program, with 32 counts for a system, 32 for knowledge, and 22 for the program; similar words represented these.  (Table 4).  Thus, this finding confirms that, following the implementation of an ERP system for a few years, all participants agreed that an evaluation is necessary to determine whether the organization has fully realized its potential.  Figure 4 illustrates a Word Cloud showing the frequency of words used in response to Research Question 3.

Table 4 Relevant Theories/Models

Themes / Set of Themes	Sub Themes
ERP Post-Implementation Evaluation is Crucial	System (32) Knowledge (32) Program (22)

Figure 4 Word Cloud Illustrating Word Frequency – Response to Question 3

4.4. The Impact of ERP Implementation on Organizational Financial Performance

 A comparison has been made between STP's overall financial ratio analysis and that of the benchmark organization.  Implementing an ERP system has not significantly improved the financial performance of the STP organization.  However, it did decrease operating expenses as a percentage of revenue generated, implying that the case organization used less workforce to generate revenue than the benchmark system.  However, it is essential to bear in mind that there are limits to financial ratios analysis because of its inability to take external factors into account in its calculations.  In the ratios analysis, external factors like the economic slowdown, for example, cannot be considered (Kliestik et al., 2020).

4.5. Organisation Performance Assessment using a Balanced Scorecard Model (BSC)

In the case organization or a selected STP organization, three years after implementing ERP, overall organizational performance based on the Balanced Scorecard assessment had improved from internal processes, customers, and learning and growth, except for financial performance, which had decreased.   The organization's financial performance is impacted by several factors, such as the ERP implementation and external factors beyond its control.  External factors such as the slowdown in the economy, shifts in government policy, and the inability to secure contracts have contributed to the organization's poor financial performance.

4.6. Triangulation

Using a technique known as "triangulation" in qualitative research can help improve the validity of the results (Bryman, 2004).  The researcher collects data that converge from various methods or data sources.  For example, this section will discuss Research Question 2 (RQ2) findings.  The current study used triangulation to ensure the highest data quality by examining participant perceptions using semi-structured interviews, financial data analysis, and the organization's Balanced Scorecard output on Research Question 2 (RQ2).

The fifteen (15) semi-structured interviewees' responses support the second Research Question (RQ2).  Participants agreed that the ERP implementation improved the non-financial performance of this organization, except for financial performance.  This response is consistent with this organization's financial ratio analysis before and after ERP implementation.  This analysis revealed that the organization's financial performance had deteriorated due to the ERP system's implementation.  On the other hand, implementing ERP has increased performance across all three (3) Balanced Scorecard dimensions, namely internal processes, customer service, and learning and growth. 

    This study aims to inform the ERP Knowledge Community about research gaps in ERP implementation and organizational performance.  Adopting new technologies is expected to improve the organization's overall effectiveness. After ERP was implemented in this STP organization, its relationship to organizational performance was analyzed.  These thematic areas influence an organization's ability to utilize its ERP system effectively.  For example, organizations with knowledge-based employees may ignore the full impact of missing or incomplete attributes and inadequate training if they are not carefully monitored.  The study found that STP organizations prioritize the benefits of implementing an ERP system over the costs.  In addition, as the organization replaces or upgrades the system, it will have a better return on investment plan.

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