A development of enterprise resource planning success model for accounting professional

1.3.3 Combination of ERP research and Behavioral Accounting research BAR 92.3.2 A summary of ERP Success Models from 1990 up to present 27 2.3.4 Differences between the current study and

Phan, Thi Bao Quyen

A DEVELOPMENT OF ENTERPRISE RESOURCE PLANNING SUCCESS MODEL FOR ACCOUNTING

Phan, Thi Bao Quyen

A DEVELOPMENT OF ENTERPRISE RESOURCE PLANNING SUCCESS MODEL FOR ACCOUNTING

PROFESSIONALS

Major: Accounting Code: 9340301

A DOCTORAL THESIS

Supervisors:

1 Associate Professor, Dr Vo, Van Nhi

2 Dr Nguyen, Thi Kim Cuc

Ho Chi Minh City, 2020

Phan Thi Bao Quyen

The effort to complete this thesis would not have been possible without the contribution of a number of persons and organizations First and foremost, I would like to express my deepest gratitude to my two supervisors, Associate Professor, Dr Vo Van Nhi and Dr Nguyen Thi Kim Cuc for their support and guidance Especially Associate Professor, Dr Vo Van Nhi, my principal supervisor, his encouragement keeps me going even through the most difficult moments of this study

I would like to offer my gratitude to University of Economics Ho Chi Minh City, and acknowledge the supports I have received from the School of Accounting at University of Economics Ho Chi Minh City I would like to thank Associate Professor, Dr Nguyen Xuan Hung and Dao Tat Thang for facilitating me completing the PhD thesis on time

I would like to thank my colleagues in Accounting Information System Division for their encouragement during my PhD journey I would like to give a special thank to Dr Nguyen Phuoc Bao An for providing me constructive feedback and making me trust myself that I am capable to finish this stressful research project I also would like to thank Dr Nguyen Bich Lien for her comments on system-use concept of the ERP success model for accounting professionals, which is a motivation for discovering a more appropriate system-use concept in the ERP ongoing context In my daily work, I would like to thank Dr Luong Duc Thuan, Dr Pham Tra Lam, Nguyen Quoc Trung and Nguyen Huu Binh for supporting me to perform lecturing-tasks in order to facilitate my researching

I am so grateful to Dr Nguyen Thi Thu for her enthusiasm for my queries I would like to acknowledge the advices and the comments on how to effectively adopt the Smart-PLS software to analyze the collected data from Dr Nguyen Phong Nguyen

research-method-related-I really appreciate his experience of such a useful tool research-method-related-I would like to thank the help of Dr Trinh Hiep Thien for his assistance in distinguishing between reflective and formative constructs I also would like to thank Nguyen Thao Nguyen for her counseling on confirmation factor analysis

My thanks also go to academics from UEH and informants from participant organizations that have assisted me to complete the pre-testing, pilot testing and main survey, whose names cannot be disclosed owning to confidentiality agreements

I would like to thank my brothers and sisters, as well as my friends, in particular, Phan Quoc Hieu, Dr Pham Thanh Ha, Phan Quoc Lan, and Nguyen Thi Thu Nguyet Their help, support, and friendship keep me balance every up and down moment and make the completion of this thesis more interesting and enjoyable instead of pressure only or sometimes boringness

I give special thanks to my parents, especially my wonderful mom, who have always stayed

by me, encouraged me to pursue my academic career, as well as assisting me to take care my children Without their support and sacrifice, this work would have been stalled For this reason, this thesis is dedicated to both of you

Last but not least, I would like to thank my husband and my little daughters Your love, support and continual understanding have made this adventure possible Therefore, this thesis

is also dedicated to all of you

1.3.3 Combination of ERP research and Behavioral Accounting research (BAR) 9

2.3.2 A summary of ERP Success Models from 1990 up to present 27

2.3.4 Differences between the current study and the eleven previous ESMs 37

2.4 Review of ‘rich construct(s)’ enabling to overcome unanswered validity-setting-related

CHAPTER 3 CONCEPTUAL FRAMEWORK, CONSTRUCT CONCEPTUALIZATION AND

3.1 Chapter introduction 46

3.2.1 D&M IS success model (DeLone & McLean, 1992) 46

3.3 Conceptual ESMAP, construct conceptualization and hypotheses 51

6.3.3 Discussion on direct impact of accountant performance on organizational performance 129

6.4.2 Discussion on appropriateness of effective use in the ERP context 1306.4.3 Discussion on direct impact of effective use on accountant performance 1316.4.4 Additional discussion on indirect impact of effective use on organizational performance131

6.5.1 Discussion on organizations’ perceptions of satisfaction 1326.5.2 Discussion on direct impact of satisfaction on accountant performance 1336.5.3 Additional discussion on direct and indirect impact of satisfaction on organizational

6.6 System quality and its direct impacts on use and satisfaction 1346.6.1 Discussion on organizations’ perceptions of system quality 1346.6.2 Discussion on direct impact of system quality on use 1356.6.3 Discussion on direct impact of system quality on satisfaction 1356.7 Information quality and its direct impacts on use and satisfaction 1366.7.1 Discussion on organizations’ perceptions of information quality 1366.7.2 Discussion on direct impact of information quality on use 1366.7.3 Discussion on direct impact of information quality on satisfaction 1376.7.4 Discussion on the role of information quality in D&M IS success model (1992) 1376.7.5 Discussion on the role of information quality in the ESMAP 137

6.8.1 Discussion on organizations’ perceptions of perceived accounting benefit 1386.8.2 Discussion on operationalization of perceived accounting benefit 1396.8.3 Discussion on direct impact of perceived accounting benefit on use 1416.8.4 Discussion on direct impact of perceived accounting benefit on satisfaction 1426.8.5 Additional discussion on direct and indirect impacts of perceived accounting benefit on

6.9.1 Differences of the ESMAP by the length of ERP system 144

7.2.1 How is the ERP success model for accounting professionals formed in order to improve accountant performance, which in turn enhances organizational performance? 1487.2.2 How is the ERP success model for accounting professionals (ESMAP) validated? 148

7.4 Limitations of the study and area for further research 153

Appendix 2.1 Eleven previous ERP success models 182Appendix 4.1 Advantages of using survey method in the current study 189Appendix 4.2 Identifying formative and reflective constructs 190Appendix 4.3 Evidence in relation to the expert panel’s feedback on the preliminary

Appendix 4.4 The original Part A of the preliminary questionnaire 194Appendix 4.5 A summary of changes in Part B of the preliminary questionnaire after analyzing

Appendix 4.7 Questionnaire translation process in the current study 199Appendix 4.8 List of interviewees and demographic information 200Appendix 4.9 Pilot study responses from three target informants 201Appendix 4.10 The Vietnamese questionnaire after pilot testing 202Appendix 4.11 Bias issues consideration and how to minimize them 206Appendix 4.12 Sample size Calculator v2.0 for Cronbach’s Alpha Test 208Appendix 4.13 The result of calculating the minimize sample size by G*Power software 209Appendix 4.14 Sample size recommendation in PLS-SEM for a Statistical Power 80% (Hair Jr et

Appendix 5.3 Independent Sample T-test for Non-response Bias 217Appendix 5.4 Total Variance Explained for Common Method Bias Test 222

Appendix 5.9 EFA Test Results - Scales without modifications 233

Appendix 5.11.1 Results of fit consideration of higher-factor instruments – PAB 235Appendix 5.11.2 Results of fit consideration of higher-factor instruments - USE 236

Appendix 5.13 Internal consistency and convergent validity results of the first order factor

Appendix 5.14 Decision-making process for keeping or deleting formative indicators basing on

Appendix 6.1 Demographic characteristics of surveyed companies 243

Appendix 6.5 Testing the D&M IS Success model (1992) without PAB 249Appendix 7.1 Practical implications for ERP adoption organizatons’ stakeholders 250

BAR Behavioral Accounting Research

CB-SEM Covariance-Based Structural Equation Modeling CFA Confirmatory Factor Analysis

CFOs Chief Finance Officer(s)

CSF/ CSFs Critical Success Factor(s)

D&M Delone And Mclean

EFA Exploratory Factor Analysis

ERP Enterprise Resource Planning

ESM/ ESMs ERP Success Model(s)

ESMAP ERP Success Model For Accounting Professionals

Extended _U Extended Use

FMCG Fast Moving Consumer Goods

HTMT Heterotrait-Monotrait Ratio

MRP Manufacturing Resource Planning

OP Ogrnizational Performance

PAB Perceived Accounting Benefit

PCA Principal Component Analysis

PLS-MGA Partial Least Squares – Multi-group Analysis

PLS-SEM Partial Least Squares - Structural Equation Modeling

UEH University Of Economics Ho Chi Minh City

VAF Variance Accounted For

VIF Variance Inflation Factor

Table 1.1: Rankings of the most mentioned ERP-related topics (Huang & Yasuda, 2016) 3

Table 2.1: Evolution of ERP 22

Table 2.2: Advantages of ERP (Mohammad A Rashid et al., 2002) 24

Table 2.3: Disadvantages of ERP (Mohammad A Rashid et al., 2002) 24

Table 2.4: ERP lifecycle models 25

Table 2.5: Summary of ERP success models from 1990 to present 28

Table 2.6: A summary of studies involving measuring ERP success in Vietnam 40

Table 2.7: Summary of definitions and how to develop the conceptualization of PAB in ERP context 43

Table 2.8: Advantages of the ESMAP 45

Table 3.1: Differences among the training, adoption and ongoing use contexts (adapted from Deng et al (2004)) 54

Table 4.1: Conceptualization of the constructs 65

Table 4.2: Indicators of System Quality 66

Table 4.3: Indicators of Information Quality 66

Table 4.4: Indicators of Perceived Accounting Benefit 67

Table 4.5: Indicators of Use 67

Table 4.6: Indicators of Satisfaction 68

Table 4.7: Indicators of Accountant Performance 68

Table 4.8: Indicators of Organizational Performance 69

Table 4.9: The minimize sample size of the current study 77

Table 5.1: Summary of The Factor Analysis Appropriateness Criteria 89

Table 5.2: EFA Test Results - Refined scales 90

Table 5.3: New conceptualization and operationalization of new factors extracted from EFA 92

Table 5.6: Internal consistency, indicator reliability and convergent validity analyses of the first-order measurement model 98

Table 5.7: Discriminant validity (Fornell and Lacker criterion) 100

Table 5.8: Discriminant validity (HTMT) 100

Table 5.9: Internal consistency, and convergent validity of the second-order measurement model 101

Table 5.10: Validity of formative second-order constructs 102

Table 5.11: Collinearity assessment of the ESMAP 103

Table 5.12: Direct relationships for hypothesis testing 106

Table 5.13: Summary of results in terms of path coefficients, f 2 and q 2 value 108

Table 5.14: Results of total and specific indirect effects 109

Table 5.15: Direct effects including mediators in the ESMAP 110

Table 5.16: VAF values of each mediator model 111

Table 5.17: Results of specific indirect effects 112

Table 5.18: Results of PLS-MGA for ERP implementation and post-implementation organizations 113

Table 5.19: Results of PLS-MGA for large-sized and small-and-medium-sized organizations 114

Table 5.20: Results of PLS-MGA for popular and non-popular-ERP-packages-adopted organizations 114

Table 5.21: Results comparison among models 115

Table 5.22: Results of the adjusted R 2 value between the ESMAP and the parsimonious model 117

Table 5.23: Impacts of omitting information quality to use 118

Table 5.24: Impacts of omitting information quality to satisfaction 119

Table 5.25: A summary of significant total effects among constructs and significant difference of several paths in the ESMAP 120

Table 6.1: Comparison of Variance Explained among three models 130

Table 6.2: Summary of PAB's operationalization 140

Table 6.3: Summary of the current PAB construct's advantages (in comparison with the original PAB of Kanellou and Spathis (2013)) 141

Figure 1.1: Different management software types adopted in organizations in Vietnam 2

Figure 1.2: The number of publications on "ERP" in Google Scholar by year 3

Figure 1.3: Accounting value chain (Hunton, 2002) 7

Figure 1.4: Research question hierarchy 13

Figure 1.5: A systematic procedure for designing the ESMAP 18

Figure 2.1: A literature map identifying uniqueness and worth of the research topic 20

Figure 2.2: Stand-alone applications' architecture (Loh & Koh, 2004) 21

Figure 2.3: ERP-integrated architecture (Loh & Koh, 2004) 21

Figure 2.4: ERP applications market shares split by top 10 ERP vendors and others in 2016 23

Figure 2.5: Categories of IS success (DeLone & McLean, 1992) 42

Figure 3.1: D&M IS Success Model (DeLone and McLean, 1992) 47

Figure 3.2: IS-continuance theory (Bhattacherjee, 2001) 48

Figure 3.3: The research model (the ESMAP) 51

Figure 4.1: A research framework of John W Creswell (2013) 61

Figure 4.2: Location of VN (green) in ASEAN (dark grey) (Referenced from wiki website) 74

Figure 4.3: Different management software types adopted in organizations in Vietnam 78

Figure 5.1: Data analysis process of the study 82

Figure 5.2: Data preparation process of the study 83

Figure 5.3: Instrument Preparation Process of the study 94

Figure 5.4: Process of testing the ESMAP 96

Figure 5.5: Hypotheses Testing _ Bootstrapping Direct Effect Results 105

Figure 6.1: Effects of the length of ERP adoption 124

Figure 6.2: Effects of the organizational size 125

Figure 6.3: Organizations' perceptions of the ESMAP's constructs by the adopted ERP package 126

Figure 6.4: Descriptive findings of organizational performance 127

Figure 6.5: Impacts of ERP lifecycle phases on firms' organization performance (Ross & Vitale, 2000) 127

Figure 6.6: Descriptive findings of accountant performance 128

Figure 6.7: Descriptive findings of use 129

Figure 6.8: Descriptive findings of satisfaction 132

Figure 6.9: Descriptive findings of system quality 134

Figure 6.10: Descriptive findings of information system 136

Figure 6.11: Descriptive findings of perceived accounting benefit 139

Enterprise Resource Planning (ERP) system is commercial software that automates and integrates many or most of a firm’s business processes It allows to access to integrated data cross the entire enterprise according to real-time Therefore, ERP system is expected to increase productivity via processes standardization, to improve decision-making ability via information integration throughout the whole enterprise, to enhance cooperation between organizational entities by connecting them smoothly, and the most important, to maintain competitive advantage once these benefits are satisfied These promises are possibly a close explanation of its increasing popularity Namely, Fortune 500 companies are trusting ERP system1 and it is also a solution that large-sized organizations in Vietnam select and adopt more growingly2

Nevertheless, instead of achieving impressive benefits from their ERP systems, some firms have faced difficulties in gaining the benefits they expected Therefore, for both researcher and executives, one of the initial interested-questions is whether investments in ERP will pay off Several organizational-level econometric studies conducted give an answer that it is likely yes – on average However, the impacts vary from enterprise to enterprise, even from module

to module in which accounting-related modules are in charge of changed-focuses In other words, ERP implementation has a considerable impact on accounting department of the

business organizations Hence, the executives’ next questions are probably to be, how can I maximize the positive impacts on accounting department? Is there some way to predict what the ultimate impacts of ERP systems on accounting professionals will be in order to achieve a goal of enhancing organizational performance?

These questions are worth addressing In attempting to do so, the author draws on D&M IS success model, IS-continuance theory and the principle “fitness for use” to develop the ERP success model for accounting professionals in order to make them more productive, which in turn improves performance of implemented organizations The theoretical and empirical results indicate that organizational performance is, indeed, influenced by the extent to which accounting experts effectively utilize ERP systems in the adoption and ongoing context This study makes an original contribution to both of theory and practice through forming and validating the ERP success model for accounting professionals only In a little more detail, it provides empirical evidence regarding Hunton’s accounting value chain In addition, it

1 This information is quoted from website http://fortune.com/2017/09/13/amazon-microsoft-google-sap-cloud/

2 This information is quoted from Vietnamese E-commerce Indicator Report in 2018

discovers and proves effective use as the most appropriate system-use concept so far Moreover, it makes an effort to investigate outcomes of accounting benefits perceived from ERP system, which related-studies are much further under-researched Last but not least, the research provides valuable implications for organization management on how they can successfully manage accounting department as well as accounting professionals in an attempt

to maximize ERP’s impacts on organizational performance, which executives have paid much attention to for recent years but have not yet found out the answer so far

Key words: ERP success model, accounting professionals, perceived accounting benefits, system use, the principle "fitness for use"

CHAPTER 1   INTRODUCTION 

1.1 Chapter introduction 

The purposes of this chapter are to describe a broad overview of the research, generally present methodology, and introduce forthcoming chapters This chapter begins with research background, and moves on a discussion on two main motivations for research, which focus on explanation what research topic is and why to choose it Identifying research topic is very important as it allows limiting the scope of reviewing a literature The research objective and research questions are then addressed in the third and forth part of this chapter Next, section five of this chapter represents research justification to make clarify the significance of the study Subsequently, research methodology is outlined to enable to image how to conduct the whole dissertation, and followed by research scope Finally, the thesis structure will be proposed, providing description of the six forthcoming chapters of this thesis

1.2 Background of research  

Enterprise Resource Planning (ERP) system is one of the most popular forms of IT for businesses at present Deriving from efforts to rationalize lead times and possession stock costs, the 80’s manufacturing resource planning (MRP II) is developed into ERP system considered as the standard that integrates business processes throughout the organization, which in turn enhances operational efficiency (Akkermans, Bogerd, Yücesan, & Van Wassenhove, 2003; Davenport, 1998) Callaway (1999) states that the ERP system promises

to achieve benefits in both tangible (e.g., reduced personnel, inventory, IT and procurement, transportation, and logistic costs; improved cash flow management, revenue and profits) and intangible (e.g., increased visibility of corporate data, speed of decision making, and control over global business operations; improved customer responsiveness and business processes) manner

Such those benefits push business organizations towards adopting the ERP systems (Davenport, 1998; Ifinedo, Udo, & Ifinedo, 2010; Vincent A Mabert, Soni, & Venkataramanan, 2003) This has been proved by tremendous expansion of the worldwide ERP applications market for the last ten years Its revenue, about $38 billion in 2008 (Ifinedo, Rapp, Ifinedo, & Sundberg, 2010), has grown more than twice to approach nearly $82.2

billion in 2016 This ERP applications market is expected to continuously increase and reach

Accounting/

Financial software

Figure 1.1: Different management software types adopted in organizations in Vietnam

(Source: Vietnamese E‐commerce Indicator Report in 2017)

As such, this study is conducted in the context, which the ERP system has already been one of the most popular business-management-applications in organizations all over the world and begins to be increasingly adopted in Vietnam

1.3 Motivations for research  

1.3.1 Motivation 1 - ERP research

With respect to a boom in ERP-adopted business organizations, research in the ERP has also increased over the past years To acquire how the growth of publications about ERP is, the Google Scholar database is scanned for the term “Enterprise Resource Planning” in the period 1990-2016 The results of this searching are summarized in following bibliometric4 graph (see Figure 1.2) This graph reveals the growing interest in ERP over the past 26 years Accordingly, ERP (although a little decrease) is still a prominent field in the research community, with about 6000 search results on average in the 2009-2016 period (Google 2017)

3 These figures are quoted from the Allert Pang’s report (December 1st 2017) that is posed on website Apps Run The World Retrieved September 18th 2018 from https://www.appsruntheworld.com/top-10-erp-software- vendors-and-market-forecast/

4 Bibliometrics is statistical analysis of bibliographic data; commonly focusing on citation analysis of research output and publications, i.e how many times research outputs and publications are being cited (Leeds University Library 2017)

Huang and Yasuda (2016) conduct a comprehensive review of literature survey articles on the ERP to highlight the current research status of this field As a result, they summarize the most mentioned ERP-related topics as follows:

Table 1.1: Rankings of the most mentioned ERP‐related topics (Huang & Yasuda, 2016)

No The most mentioned ERP-related topics

1 New emerging ERP technologies

2 Critical success/ failure factors

3 Business process reengineering

Among ten topics above, ERP critical success factors (CSFs) has been the most prolific area

in early ERP research (Grabski, Leech, & Schmidt, 2011) The reason of this may be that ERP

is very expensive, complex system, impacts the entire organization, and if it fails, it seems likely to contribute to the failure of the firm itself (J Scott, 1999) Moreover, many adopting enterprises realize that the deployment of such systems is not as effective as expected (E T

G Wang, Shih, Jiang, & Klein, 2008) Critical success factors (CSF) have thus constituted few things that must go well to ensure success of an organization (Boynton & Zmud, 1984) CSF is investigated to identify essential areas of concern and provides measures that would aid in managing those areas (Boynton & Zmud, 1984) The CSF researches have typically addressed several different issues In most cases, typical CSF studies have consistently identified a set of core factors critical to the success of ERP implementations including top management support, the implementation team, organization-wide commitment to the system,

and fit between the ERP systems and the firm (Finney & Corbett, 2007; Hong & Kim, 2002; Murray & Coffin, 2001; Ross & Vitale, 2000; J E Scott & Vessey, 2000; Somers & Nelson, 2001; Somers & Nelson, 2003; Stefanou, 2000) In other cases, some papers have found that firm size is also an important factor related to ERP implementation success (Bernroider & Koch, 2001; Buonanno et al., 2005; Vincent A Mabert et al., 2003; Muscatello, 2003; Snider,

da Silveira, & Balakrishnan, 2009)

Alternatively, rather than focusing on identifying the factors critical for success in implementing ERP system, the few researchers are interested in building ERP success models

as untypical CSF studies For instance, H.-Y Lin, Hsu, and Ting (2006) develop an ERP success model upon the DeLone and McLean’s (1992, 2003) information system success model Lin et al.’s (2006) model relates the individual impact to balanced scorecard measures (i.e., financial effectiveness, customer effectiveness, internal business effectiveness, and innovation and learning effectiveness) They demonstrate that the success of any ERP system may be predicted by integration of the information system success model and balance scorecard constructs Specifically, they suggest that the adoption of balance scorecard criteria will allow firms to more easily assess impacts of the ERP system is either positive or negative

as well as to more effectively manage the ERP system implementation

ERP CSFs research is crucial; however, quite mature for a certain period of time; therefore, a question is whether there still have the interesting research opportunities for ERP researchers Drawing on recent relevant literature, Mukti and Rawani (2016) as well as Grabski et al (2011) assert that there exists a paucity of ERP success model research Thus, this study is expected to increase insight regarding such an area Another reason of choosing ERP success model to study in place of investigating single critical success factors is due to its advantages5 First, the ERP system causes complex and challenging tasks, and there are many integrated factors influencing the level of success, therefore identifying primary factors running organizational performance under a whole model is more appropriate Second, the model forces researchers to be explicit about the way the problem is perceived Thus, there is less room for sloppy or confused thinking when modeling The act of systematically considering the impact of one variable on another forces researchers to make their logic more consistent when thinking about a problem Third, model is effective and efficient way of organizing researchers’ knowledge about a problem of interest Hypotheses investigated in model will expand their knowledge about the phenomena Finally, model provides a safe and

5 The last three reasons are quoted by J W Jones, Steffy, and Bray (1991)

economical way of testing relationships as it allows simulating the effect of making a change

in one variable on other variables without actually making the change

Finney and Corbett (2007) lament the fact that most of recent ERP CSF research (both typical and untypical CSF type) has generally taken from a macro perspective or a view of multiple top mangers, the perspectives of key or single stakeholders are often missing This proves that CSF research potentially still lies in either micro-level or target-level approaches Likewise, Grabski et al (2011) suggest that ERP research has yet to sufficiently investigate some issues such as how ERP influences stakeholders in accordance with stakeholders’ insights; or whether stakeholders’ performance can be effectively improved in organizations adopting ERP; or even whether the perceptions of stakeholders on the ERP system can enhance the organizational performance of adopting enterprises To put it in other way, to comprehend positive impacts of the ERP system on stakeholders, a question is whether there is a model guiding stakeholders how to adopt ERP successfully in order to contribute to increasing organizational performance from stakeholders’ perspectives themselves

For these reasons, it could be concluded that in terms of ERP research, a call for developing a model measuring ERP success from stakeholders’ perspective has been established for recent years

1.3.2 Motivation 2 – Behavioral Accounting Research (BAR)

Behavioral accounting research (BAR) or behavioral research in accounting is defined as the study of accounting professionals’ behavior or non-accountants’ behavior influenced by accounting functions, and/or report system, and/or creating accounting information (Hofstedt

& Kinard, 1970)

Since the late twentieth century, BAR have drawn increasing attention from accounting researchers, academics and international community (Nowak, 2016 ) In the early stage of BAR, Birnberg and Shields (1989, pp 41-61) extract five accounting-related schools of behavioral research, namely:

(1) Managerial control – designing and implementing control system for staffs and firm; (2) Accounting information processing – guiding users how to gather, process, store, and create accounting information;

(3) Accounting information system design – concerning behavioral issues when conducting

to design information system of business organizations

(4) Auditing-related-issues research – i.e., decision-making behavior of auditors

(5) Organizational-subjectivity-issues research – identifying the nature and interpretation of social interactions in ideographic (as opposed to nomothetic) manner

Out of these five schools of accounting behavioral research, Birnberg and Shields (1989) also mention a few behavioral researches related to accountants, which are called the studies of accountants Because of their shortage, they have not yet constituted the sixth school of behavioral research in accounting Likewise, Sorensen (1990) determines that the a school of

‘study of accountants’, indeed, exists however its status is alarming

Recently, Tin, Agustina, and Meyliana (2017) conduct a comprehensive review to obtain a clearer picture and more extensive knowledge about direction and development in behavioral aspects of accounting Accordingly, behavioral accounting research scopes from 2005 to 2014 are classified into seven schools as follows:

(1) Topics discuss the effect of human behavior on the design, construction, and use of the accounting system (10.74%)

(2) Topics discuss the effect of accounting system on human behavior (13.22%)

(3) Topics discuss the method/ strategy to alter human behavior (29.75%)

(4) Topics discuss the handling of human that can affect subject’s behavior (27.28%) (5) Topics discuss the research methodology associated with a behavioral aspect of accounting, such as examining measures, developing measures, and variable construct dimension towards human behavior examination (9.09%)

(6) Topics discuss building a model in accounting professions (3.3%)

(7) Topics discuss the use of theory to analyze human behavior in accounting (7.43%) Given these related literature reviews of behavioral research in accounting, it is obvious that research directions of behavioral accounting are broader developing although the priority to each school at each moment is dramatically different Notably, among such schools, study of accountants is, indeed, more growingly concerned This school, from being charged of the few studies in 1989 (Birnberg & Shields, 1989), has been considered as a part of an individual, independent group (10.74%) in recent years (Tin et al., 2017) The evidence points

to the fact that a call for the ‘study of accountants’ is real and vital

Not only choosing study of accountants as a response to its call, this study intends to focus on

it because of the increasingly dramatic change of accountants’ roles and functions in ERP environment For example, Sayed (2006) emphasizes that the traditional accounting role in IS-adopted organizations is declining However, rather than a threat, he provides evidence that accountants exploit the ERP system as an occasion where their skills and their accounting knowledge are represented Likewise, Newman and Westrup (2005) indicate that accountants should be considered as subjects that need to be paid more attention to as the relationship of accountants and the ERP system has become more increasingly intertwined This relationship

is confirmed via the findings of their survey in which about 83% of those who have some experience of the ERP system choose the statement ‘the ERP system have positive effects on management accountants’ in comparison with a total of 55% interviewees agree with the statement ‘the ERP system have positive effect on organizational performance’ when being required to give opinions about perceived effects of the ERP systems on organizations and on management accountants According to these statistics, there is no denial that users who experience the ERP system easily recognize the impacts of ERP system on management accountants, rather than on organizational performance Moreover, their respondents (senior accountants) concede that the ERP system is as a positive development enabling them to be more focused on financial management and less on bookkeeping aspects Furthermore, rather than being changed their role by the ERP system only, accountants, in contrast, also influence the design of ERP systems For example, in ERP pre-implementation stage, when questioning vendors about features that are supported by their packages, the focus of questions is often on whether certain techniques such ABC and the balanced score card could be supported by their product (Newman & Westrup, 2005)

Another reason explaining why a school of ‘study of accountant’ is chosen in this thesis is due

to accountants’ contributions to organization value in business organizations adopting IS, especially ERP system Drawing on Porter’s value chain and Elliott’s information value chain, J E Hunton (2002) proposes the accounting value chain (shown in Figure 1.3) which illuminates how accountants can add value to business organizations in today’s global information and communication technology environment

Figure 1.3: Accounting value chain (Hunton, 2002)

Figure 1.3 reflects that the accounting value chain includes three-value levels ranging from low to high level in the IS context On its low-value side, accountants have no longer opportunities to add incremental value to the traditional functions relating to identify, measure, and record accounting transactions owing to IS’s predictability, and automatic-ability The following phase of such a chain focuses on translating data into information that makes sense In a little more detail, in routine work, recording and processing accounting transactions as well as creating previous formatted-information are conducted automatically Reliable IS controls relating to accounting are a guarantee of the integrity of such systems As such, accountants’ contributions in this phase are also not high It can be easily realized that,

in the IS context, the more increasingly the accounting functions and tasks can be performed

by IS, the lower the accountants can contribute to benefits to enterprises Therefore, the significant contributions of accountants focus on the side that IT just assists instead of performing accountants’ tasks Here are some of outstanding values that accountants can create in IS adopting organizations:

(1) Disseminating business knowledge: Information system provides functions and features which allow accountants to generate, manage, integrate business knowledge and disseminate such knowledge to inside and outside users of the organizations Under the viewpoint of Elliott (2001), a capability of knowledge leveraging makes accounting professionals distinguish rather than different types of staffs

(2) Developing externalities: Merging e-commerce and supply chains into organization operations likely leads to appearance of externalities, which in turn creates new works for accountants For example, they need to monitor, control the flows of information and protect the privacy, confidentiality and security rights of related parties These requirements undoubtedly put pressure on accounting experts, but, on the other hand, propose opportunities for them to add more value to their companies

(3) Providing assurance: Not only adding value impossibly-replaced to organizations, accounting professionals also provide assurance for managers, investors, and societies via auditor’s opinion regarding the fairness on and off financial reporting

(4) Internal value of accounting systems: Drawing on data integration feature of some IS (especially ERP system), accountants conduct to process data, and create useful decision-making information more quickly, reliably and relevantly

To sum up, this thesis focuses on “study of accountants” due to its increasing concern in BAR literature; the more growingly intertwined relationship between accountants and ERP system; and their valuable contributions in IS-adopting business organizations

1.3.3 Combination of ERP research and Behavioral Accounting research (BAR)

Combination of ERP research and BAR is essential and timely because ERP is a transformative force on the accounting In reality, because of its accounting benefits, ERP requires accounting expertises to change their role in order to make broader contribution to the company, such as reporting on non-financial measures, auditing information systems, implementing management controls within information systems, and providing management consulting services (Grabski et al., 2011) Therefore, the thesis will combine ERP CSFs research with the study of accountants

Given research gaps related ERP research and BAR, a research topic is formulated That is to discover how to assess ERP success for accounting professionals from accounting professionals’ perspective themselves, in simple terms, developing an ERP success model for accounting professionals (ESMAP)

It is worth noting that there are virtually no researches of the ESMAP, thus, it is considered as the first and unique study up to now in an effort to better understand ERP system-related drivers leading improvement in organizational performance toward a point of accounting experts’ view

Drucker (2018) once said: “What you measure is what you get.” “Ensure that every measure

of performance is pertinent to be achievement of a goal or value of your organization Otherwise, you risk misdirecting your organization.” Accordingly, give the relatively few

studies on the development of ERP success model (ESM) (G Gable, Sedera, & Chan, 2003; Ifinedo, 2006; H.-Y Lin et al., 2006; Smyth, 2001), two broad problems are identified: first, the validity of ESM design and second, target setting in ESM design These are also primary concerns in developing the ESMAP

Validity issue of the ESMAP design 

The first problem in this line of research relates to the validity of the ESMAP Being adapted

from Ittner and Larcker (2001), validity in this study is defined as ‘the extent to which a model succeeds in capturing what it is supposed to capture’ Accordingly, there are two

questions that need to be considered when designing a model: what is supposed to be captured? and how can a framework be designed to successfully capture this?

In the context of this study, the success of adopting the ERP system of accounting experts is what supposed to be captured Therefore, the remaining question is how a framework can be designed to successfully capture the ERP success for accounting professionals

Recall that, ESMAP is the first study conducted Hence, the gap in the knowledge about validity of the ESMAP is due to two main reasons First, there is still little work on the integration of ESM and accounting (Grabski et al., 2011) This means that it is difficult for us

to have a comprehensive understanding of accounting professions behind the phenomenon we study To overcome this limitation, we will review extensive literature related to ESM, information system success model to choose a proper ESM as well as scanning previous studies in relation to impacts of ERP systems on accounting in order to discover, then incorporate appropriate accounting-related construct(s) into the selected model of ERP success

The second reason in relation to the validity of constructs used in the ESMAP is that most of ESM researchers typically focus primarily at the organizational level rather than looking at the detail in the operational level6 of organizations when studying ESM design (Chien & Tsaur, 2007; Markus & Tanis, 2000; Rosemann & Wiese, 1999; Smyth, 2001; Stefanou, 2001) Hence, referring such a approach, the ESMAP studies at the higher organizational levels provide aggregate information about organizational performance; the aggregate, high-level information may capture the underlying phenomenon being examined, that allow us to better understand the actual drivers of organizational performance

In summary, in order to deal with the validity issue of the ESMAP design, it is important for researchers to integrate an accounting-related construct(s) into the suitable ESM frameworks, and examine accounting issues at the organizational level This will enable AIS researchers to gain more insights into what is supposed to be captured and which constructs can successfully capture this in relation to improving organizational performance

Target setting issue of the ESMAP design 

The second problem in this line of research relates to target setting of the ESMAP design Target of the ESMAP is to guide accounting professionals how to successfully adopt the ERP systems, in other words, to make them increasingly productive in the ERP context, in order to achieve improvement in organizational performance Obviously, this motivation runs how to select constructs of interest in order to establish the ESMAP To reach such an endmost target, organizational performance officially is dependent variable in the framework of the ESMAP To enable to assess whether or not accounting experts is becoming increasingly

6 The organization’s operational level concept is defined by Scherer (2001, p 5679) as ‘the level at which hands-on knowledge and responsibility for implementation are present’ Accordingly, the organization’s operational level refers to the level at which organizational activities that relates to the organizational day-to-day rountine accounting processes are conducted

efficient, accountant performance should be also another dependent variable Indeed, even though the main objective of any businesses is to maximize organizational profits, it is essential to recognize that profits, in nature, are generated from productive employees, and as

a result, it is vital for any enterprise to find out how to improve IS’s positive impacts on individuals As IS’s these impacts on an individual are high, it seems likely that the effect for organization that the individual participates in will also be high (Princely Ifinedo et al., 2010) Consequently, target-setting issue of the ESMAP design allows indicating organizational performance and accountant performance as two dependent variables in the ESMAP

In conclusion, a call for combination of ERP research and BAR leads to forming research idea

of developing the ESMAP in order to improve organizational performance In doing so, as discussed above, validity and target setting when designing the ESMAP must be made clarify

To put it differently, the development of the ESMAP must be considered at organizational level and the components of the ESMAP need to include organizational performance and accountant performance as dependent variables More important, it is crucial to find out an accounting-related construct(s) appropriate to embed in the proper ERP success model Research streams in relation to ERP success models and an accounting-related construct(s) will be reviewed systematically and critically in Chapter 2

1.4 Research objective  

Both of two motivations for the research mentioned above suggest a demand for developing a model measuring ERP success from accountants’ perspective with a goal of making organization increasingly efficient Therefore, the objective of this research is to examine how

an ERP success model for accounting professionals (ESMAP) can be designed in an effort in order to improve their organizational performance More specific, while issues of ERP (Aloini, Dulmin, & Mininno, 2007, 2012; Bernroider & Koch, 2001; Cegielski, Jones-Farmer,

Wu, & Hazen, 2012; Dey, Clegg, & Cheffi, 2013; Grabski et al., 2011; Haddara, 2014; Hakim

& Hakim, 2010; Hedman & Borell, 2004; Kanellou & Spathis, 2011), its impacts at individual level (Amoako-Gyampah & Salam, 2004; Bueno & Salmeron, 2008; Buonanno et al., 2005; Chou, Chang, Lin, & Chou, 2014; Costa, Ferreira, Bento, & Aparicio, 2016; Hsu, Yen, & Chung, 2015; Kositanurit, Ngwenyama, & Osei-Bryson, 2006), accounting practices and functions in ERP environment (Aryani, 2014; Daoud & Triki, 2013; G Sutton, 2006; Kihn & Lepistö, 2011) have received growing attention from researchers, little is known about how ERP success model for accounting professionals can be designed to support managers to better manage as well as helping accountants to better conduct their work in the ERP context in order to achieve the goal of improvement on organizational performance,

which is the focus of this thesis In short, the primary objective of this research is to develop and test ERP success model for accounting professionals at organizational level

1.5 Research questions  

Cooper and Emory (1995) propose a framework of ‘top-down’ research question hierarchy including four distinct levels as follows:

 Level one, the Managerial level question, captures the management perspective This

question is defined as a statement or recognition of an interested problem, in other words, a core research question

 Level two, the Research level questions capture the ‘general purpose’ of the research

They are specific research problems extracted from the managerial question in the answerable manner

 Level three, the Investigation level, are systematic questions of how research questions

are addressed

 Level four (if necessary), the Measurement level question, consists of the actual data

collection queries (e.g survey and interview questions)

This research adopts the “top-down” research approach of Cooper and Emory (1995) to extract the research questions from above-stated research objective This hierarchy is chosen

as it allows entirely visualizing what need to be explored and how a research process can be conducted to successfully explore these

Accordingly, the managerial question of this thesis is that “How can the ESMAP be designed

in an attempt to improve accountant performance, which in turn enhances organizational performance?”

Two research questions extracted from the managerial question are sequent that: “How can the ESMAP be formed in an attempt to improve accountant performance, which in turn enhances organizational performance?” and “ How can the ESMAP be validated?”

To answer the first research question “How can the ESMAP be formed in an attempt to improve accountant performance, which in turn enhances organizational performance?”, the

study needs to investigate some queries as follows:

 What are the existing ERP success models?

 Which construct(s) makes the ESMAP distinguish from the existing ERP success models?

 Which theories are used to support the ESMAP’s path relationships?

 Which specific path relationships exist in the ESMAP?

To answer the second research question “how can the ESMAP be validated?”, the study needs

to conduct numerous steps as follows:

 Which research method is used to validate the ESMAP?

 How is data collected?

 How is collected data set prepared?

 How are the ESMAP’s constructs validated before testing the ESMAP?

 How is the ESMAP tested?

 What are the meanings of the ESMAP?

 What are the contributions of the ESMAP?

Figure 1.4: Research question hierarchy (Source: by author)

Figure 1.4 represents a hierarchy of managerial-research- and investigative-level-related research questions in the current study It is worth noting that the measurement questions have yet to be finalized in Figure 1.4 They are the subject of ongoing research effort and presented specifically in sections relating to research methodology in Chapter 4

1.6 Justification  

From a theoretical perspective, this study is significant and worth due to a numerous

contributions There are the four most remarkable theoretical implications First, the ESMAP

is developed with a goal of improving accountant performance, which in turn enhances organizational performance The results of a process of theories-based-model development and rigorous empirical investigation support to conclude that accounting professionals, via adopting effectively the ERP system, make advance organizational performance, thus, indeed, add irreplaceable value to the ERP-implemented organizations Obviously, the ESMAP more

provides empirical evidence on the accounting value chain of J E Hunton (2002) Second, it

should be noted that almost previous studies pay attention on perspectives of multiple stakeholders on ERP success while this study focuses on perceptions of accounting professionals only It is regarded as ‘pioneer’, and therefore, expands new research direction focusing on developing ERP success models for each particular user in order to maximize the positive impacts of ERP on performances of each employee type Once ERP’s these impacts

on all employees are high, it seems likely that the effect for organization that the whole

individuals participate in will likely be high (Princely Ifinedo et al., 2010) Third, perceived

accounting benefit concept is firstly validated in the complex model as the ESMAP The perceived-accounting-benefit-related findings such as its significant role in the ESMAP as well as its outcomes so far constitute to bring unique, priceless contributions to both ERP and

BAR literature Finally, the ESMAP focusing on the post-implementation stage adds more

insights into the paucity of research on ERP system after implementation (Grabski et al., 2011)

This study is also an essential from a practical standpoint Organizational profits, in nature, are generated from productive employees Thus, the ESMAP is precious as it guides accounting professionals how to become productive under ERP settings More specific, the ESMAP supports them to adjust their ERP adopting behavior in order to improve their work performance Furthermore, also the most important, the ESMAP guides organization management how to predict, assess and improve organization’s accountant performance to achieve the advanced organizational performance for their organizations As a result, the ESMAP allows management to better manager, control accounting experts and their work in

ERP post-implementation context Finally, organization will obtain beneficial outcome when individual benefits are positive influenced (Princely Ifinedo et al., 2010) To put it differently, accounting professionals and organization management obtain direct benefits from the ESMAP while their organization receives indirect benefits from the ESMAP

1.7 Methodology 

This study makes use of positivism paradigm7 and quantitative research method, as it is appropriate for validating a new theories-based-formed ESMAP against empirical data This study is divided into two phases: (1) forming the ESMAP, and (2) validating the ESMAP To start with, it reviews related literature and finds suitable foundational theories to propose the ESMAP with its 9 hypotheses and its constructs-conceptualization Then, the empirical survey data is obtained from an expected sample of 300 organizations8 in Vietnam adopting the ERP system for at least one year The ESMAP’s constructs operationalization and their validation are subsequently conducted via SPSS 24.0 and AMOS 20.0 software packages Finally, the theoretical model and hypotheses of the ESMAP are tested using PLS-SEM analysis technique with the support of Smart PLS 3.2.7 software

1.8 Research scope 

Following boundaries and considerations contribute to forming the scope of this dissertation:

First, this study selects Vietnam, an Asian developing country, as the research context for

observation and empirical testing (see a detail explanation in Section 4.5.2.1)

Second, it is necessary to clarify what ERP success is in this study The ‘success’ term in IS

literature is often used as effectiveness (DeLone & McLean, 1992; Markus & Tanis, 2000; B Myers, Kappelman, & Prybutok, 1996; B L Myers, Kappelman, & Prybutok, 1997; J Y Thong, Yap, & Raman, 1996) that constitutes the “extent to which an information system actually contributes to achieving organizational goals” Thong et al (1996, p 252) Therefore,

in the same way G Gable et al (2003) define, ERP success in the current study is referred to how to adopt ERP system to improve effectiveness in implemented enterprises Notably, the ERP success in this case excludes both ERP’s technical installation and implementation

7 Positivism prefer ‘working with an observable social reality and that the end product of such research can be law-like generalizations similar to those produced by the physical and natural scientists’ (Remenyi & Williams, 1998)

8 This size is large enough to obtain parameter estimates with “standard error small enough to be of practical use” (J C Anderson & Gerbing, 1988)

success, which are measured by cost overruns, project management metrics, time estimates so forth (Hong & Kim, 2002; Markus & Tanis, 2000)

Third, the study unlimited considers various ERP packages including foreign and local brands

because benefits of those still are possibly comparable (Vincent A Mabert et al., 2003) Furthermore, varying in system’s types, to some extent, may increase software-related generalizability of this study

Finally, the thesis’s unit of analysis is at organizational level Thus, respondents are

organizations implementing the ERP system for at least one year while informants are accounting professionals, specifically, chief financial officer, chief accountants, chief controllers, chief internal auditors and senior accountants who have at least two ERP-experience years As a result, the perspective being presented in this study excludes end-users, others employers, or other managers and mid-level executives

1.9 Thesis structure  

The thesis structure commences from chapter 2 – literature review The section below introduces brief summary of the content of each chapter

 Chapter 2 - Literature Review: Chapter 2 reviews areas of relevant prior research from

the literature, providing a summary of the current state of understanding of Enterprise Resource Planning System The topic areas discussed in the literature review consist of: (1) Enterprise Resource Planning: defining ERP, evolution of ERP, advantages and disadvantages of ERP and the ERP lifecycle; (2) Review of ERP success models: identify challenge of measuring ERP success, listing the existing ERP success models, discussion

on problems with the existing ERP success studies, differences between the research topic and the previous ERP success models, and review of research-topic-related studies

in Vietnam; and (3) Review of ‘rich construct(s)’ enabling to overcome unanswered validity-setting-related issues

 Chapter 3 – Conceptual framework, construct conceptualization and hypotheses:

Chapter 3 develops a theoretical model of measuring ERP success for accounting professionals in an attempt to achieve improving organizational performance The chapter begins with three theories used as explanation foundation of the ESMAP Based

on them, this chapter forms the conceptual ESMAP, then presents and explains reasons of selecting constructs’ conceptualization, and ends with the arguments leading to 9 testable hypotheses

 Chapter 4 – Methodologies: Chapter 4 represents the development of the research

methodology in the step-by-step manner The chapter begins with consideration on the nature of the phenomenon being studied The following is decision about selecting whether qualitative or/and quantitative approaches are appropriate for the research questions Then, the research design is chosen to make ensure to be matching with research approach and research objective Subsequently, research method will be precisely discussed Finally, the thesis proposes ethical considerations

 Chapter 5 – Data analysis: Chapter 5 describes the last steps of how to validate the

ESMAP once the data set is collected It starts with data preparation with a goal of developing the final sample Then all constructs of the ESMAP are re-validated to ensure their structures appropriate in ERP adoption and ongoing context in Vietnam This chapter ends with testing the ESMAP using PLS-SEM analysis technique and conducting several advanced analysis to obtain more understanding of the ESMAP’s explanatory

power

 Chapter 6 – Discussion of findings: Chapter 6 indicates and explains the prediction

power of the ESMAP It provides meanings of statistical descriptive findings, compares results with the previous literature, and interpret findings of each hypotheses proposed in the ESMAP Furthermore, it provides more comprehensive insights of the ESMAP based

on advanced-analyses-results

 Chapter 7 – Conclusion: This chapter outlines a summary of the findings and

conclusions It begins with a re-visitation from research questions that illustrates the whole work conducted in this thesis Then, based on the findings synthesized and analyzed, the theoretical contributions and practical implications of this study are discussed, followed by a consideration for the research limitations, delineations and

suggested directions for further research

All chapters mentioned above follow a multistage procedure illustrated in Figure 1.5

Figure 1.5: A systematic procedure for designing the ESMAP (Source: by author)

1.10 Chapter summary 

This introductory chapter to the thesis begins with the background of the study, and then provides a description of research motivations Next, the research objective and the research questions based on these motivations are represented in sequence Following the research questions, justification is proposed Subsequently, the research methodology is presented, followed by research scope An outline of the forthcoming thesis chapters is identified at the end of the chapter

CHAPTER 2   LITERATURE REVIEW 

2.1 Chapter introduction  

Chapter 2 introduces the basic literature of Enterprise Resource Planning, a review of the existing ERP Success Models, a review of ‘rich construct(s)’ enabling to overcome unanswered validity- and target-setting-related issues as discussed in Section 1.3.3 More detail, the literature review has two main objectives:

(1) to support to determine whether the research topic is worth studying by systematically and critically reviewing previous studies that are closely related to the one being undertaken, then comparing the research topic with these findings The whole process

of identifying whether the topic of interest is researchable is summarized in a literature map (see Figure 2.1)

(2) to find out which accounting-related construct(s) should be embedded in the ERP success model when developing the ESMAP as discussed in Section 1.3.3

As regards to two objectives above, the literature review is conducted in the two following broad topic areas:

(1) ERP and ERP success models (ESMs):

Section 2.2 generally reviews Enterprise Resource Planning in terms of highlights such as definition of ERP, evolution of ERP, advantages and disadvantages of ERP, the ERP lifecycle

in sequence These are followed by a discussion of some of the key issues related to ERP Success Models in Section 2.3 Namely, this section makes clarify which challenge business organizations has been facing when measuring ERP success Then, a summary ranging from

1990 to up to now of ERP success models that have dealt with the challenge has addressed Subsequently, a number of issues with these existing-ERP-success-model studies are specifically analyzed to provide a comprehensive picture of the alive research gaps that need

to be paid attention to when developing ERP success model Based on them, the difference between the current study and the previous ERP success studies is pointed out Finally, Section 2.3 closes with a review of the ERP success studies in Vietnam with expectation of checking whether this research idea is a duplicate of any previous Vietnamese study

(2) A review of accounting-related construct(s) to identify ‘rich and meaningful’ variable additional into the chosen ESMAP

Section 2.4 presents an extensive review to discover perceived accounting benefit instrument

of Kanellou and Spathis (2013), which is considered as ‘rich and meaningful’ construct connecting the ERP system and accounting profession

There is not an official definition of ERP system in IS literature Most researchers often

illustrate its functionality to clarify what it is For example, ERP system allows information flows to go throughout business functions as well as business units, those connections are precisely similar to what the Internet communicates among companies (Davenport, 2000)

Another explanation is that this packaged-business-management-software type enables an organization to optimally utilize its resource via integrated approach to its information-processing as well as operating upon a process-oriented perspective instead of function-oriented view (Nah, Lau, & Kuang, 2001) In a little more detail, Soh, Kien, and Tay-Yap (2000) summarizes that ERP system is capable of automating, integrating business processes, sharing data across the whole enterprise, and accessing, producing information in real time

To image more clearly what ERP system is, Loh and Koh* (2004) graphically compare integrated architecture with stand-alone applications’ architecture In term of traditional approach previously happening within organizations, each individual department has its own computer system in order to run its work (see Figure 2.2) More often than not, these systems are developed in isolation, and each function will fail to consider how it fits in with other departments This can lead to duplication of data across the organization, which creates its own problems The systems become like silos within the organization operating on their own with little interaction

ERP-Figure 2.2: Stand‐alone applications' architecture (Loh & Koh, 2004)

When appearing, ERP system combines them all into a single, integrated software in which consists of a series of modules related to an organization’s the different functions areas themselves These modules run upon a single shared database central so that they are integrated and able to operate efficiently In other words, unlike in the information silo approach, in an ERP system, departments can share information and communicate with each other in an easy and quick manner and addition, the problems of data duplication and redundancy are resolved (see Figure 2.3)

Figure 2.3: ERP‐integrated architecture (Loh & Koh, 2004)

Based on the preceding descriptions mentioned above, we may conduct that an ERP is a packaged complex business software designed to integrate business processes and functions through using single database in order to be able to permit the sharing of common data and information in real time

2.2.2 Evolution of ERP

ERP has it roots in Materials Requirement Planning (MRP) of the 1970’s ((Davenport, 1998); (Wortmann, Hegge, & Rolefes, 2000); (Hwa Chung & Snyder, 2000)) From a business perspective, ERP has expanded from coordination of manufacturing processes to the integration of enterprise-wide backend processes Meanwhile, from technological aspect, ERP has evolved from legacy implementation to more flexible architecture for clients Based on studies of Mohammad A Rashid, Liaquat Hossain, and Patrick (2002) and Utzig, Holland, Horvath, and Manohar (2013), the historical events related with ERP are summarized in Table 2.1 in order to illustrate the key characteristics of the ERP evolution from 1960s up to date

Enterprise

Resource

Planning (ERP II)

ERP II not only focuses on clients with additional development of supplier management module and customer management module to optimize the entire business processes, but also focuses on e-commerce with growth of html interfaces ERP II is a hosted-solution model since its platform is run off-site while its software must be installed on end-users’ computers

2010+ ERP in the cloud This is a third model of ERP, in which the ERP is distributed from the

cloud and accessed by end-users via Web browsers

The following statistics prove that the market for ERP has been dramatically growing since its introductions in 1988 (Muscatello, 2003) In 1998, the revenues to ERP vendors were approximately $16.6 billion (Carlino & Kelly, 1999); this figure shot speedily up to $47.8 billion in 2004 (Fitzgerald, 2005) After more than twenty years since its appearance, the global ERP application market has grown to approach nearly $82.2 billion in 2016 The tops

of ERP vendors includes SAP, FIS Global and Oracle achieving nearly 7%, 4% and 3% market share, respectively (Apps Run The World, December 2017)9 (see Figure 2.4) Obviously, the rapidly upward trend in the revenues of ERP providers has been a clear proof confirming the popularity of this type of software for the enterprise in the world

Figure 2.4: ERP applications market shares split by top 10 ERP vendors and others in 2016

(Source: Apps Run The World, December 2017)

2.2.3 Advantages and disadvantages of ERP

Organizations’ expectations for ERP has generally created a misleading perception that implementing ERP system will immediately improve their functionalities This is obviously impossible To have an accurate understanding of characteristics of ERP, it is necessary to comprehend its advantages and disadvantages Mohammad A Rashid et al (2002) show the benefits that a standard ERP system may bring to organizations (see Table 2.2) and simultaneously list certain disadvantages that they need to overcome (see Table 2.3)

9 These figures are quoted from the Allert Pang’s report (December 1st 2017) that is posed on website Apps Run The World, and retrieved in September 19th, 2018 from https://www.appsruntheworld.com/top-10-erp-software- vendors-and-market-forecast/

Reliable accessibility A single database, consistently and precisely integrated

data, advanced reports Avoid duplication of data Applications use a common central database, where

different functional departments enable to access same data

at the same time Transportation and reduction of

turnaround time Optimize retrieving and minimize delays in delivery Minimize cost Design of “best practice” on business processes and

capability of integration processing enable to save time and improve performance of internal business processes Flexibility Business processes re-engineering make internal business

activities adapt and restructure easily More capability of expansion The modules is developed towards ‘add-ons’-oriented

design Enhanced and active long-term

maintenance

Firms are often on a permanent maintenance-related contract with ERP vendors or implementation-authorized organizations

Association with parties on a

global scale

Appearance of added modules that relate to customer management (CRM) and supplier management (SCM) E-commerce, e-business Internet popularization, ‘social customer’ revolution

Table 2.3: Disadvantages of ERP (Mohammad A Rashid et al., 2002) Disadvantage How to overcome

Spend a lot of time

to implement a

system

Focus on preparing and training people to reach a high consensus on ERP adoption, timely support of management, minimizing sensitive issues, setting effective and efficient internal policies

Costly ERP itself is very expensive software, implementation of ERP system

often leads to business processes re-engineering, which also cost very high Hence, it should be extremely careful for organizations to choose

an ERP system that is suitable with their software-purchase-budget Match between ERP

and organization’

business processes

System’s structure and modules should be appropriate, relevant with business processes, culture and strategic vision of an organization Dependence on ERP

must-Global scalability Consideration for investment in Research and Development,

product-and-service-related permanent commitment, priority to enabled systems

Internet-Capability of ERP

extension

Examine to implement additionally ‘add-on’ modules, in particular CRM and SCM

2.2.4 The ERP lifecycle

Researchers such as Markus and Tanis (2000), Ross and Vitale (2000), Chang, Gable, Smythe, and Timbrell (2000) utilize different frameworks to describe ERP lifecycle Although the name of each phase and the number of phases in each ERP lifecycle model are

no similarity, the activities in each phase are quite corresponding (see Table 2.4)

(2000) Pre-implementation Implementation Post-implementationThis research chooses Change et al.’s (2000) approach to divide the ERP lifecycle into three principal phases:

(1) Pre-implementation refers to the activities of ERP introduction including initial

strategic planning, design, and/or software package selection

(2) Implementation reflects activities relating to software deployment, or installation,

testing and stabilization to ensure that the ERP system is ready to go live and run in the stable manner

(3) Post-implementation consists of upgrades and maintenance activities such as continuous

improvement and transformation

2.3 ERP Success Models 

2.3.1 Challenges of measuring ERP success

Researches of Baer (1999), Davis (1989), Consulting (1998), Knowles, Fotos, and Henry (2000), Sedera, Rosemann, and Gable (2001) and Sedera (2006) agree that the impacts resulting from ERP are exhausting to measure In previous studies, most of measurement and evaluation methods of ERP success focus on justifying whether investment in ERP system will pay off via return on investment (Vickers, 2000) or profit, costs, or market share, etc (Pan, Baptista Nunes, & Chao Peng, 2011; Zhu, Li, Wang, & Chen, 2010) or sales, total assets, employment (Hendricks, Singhal, & Stratman, 2007); however, the traditional approach has failed to yield an appropriate estimate of the pay-back of the ERP (Barua, Kriebel, & Mukhopadhyay, 1995), (M G Martinsons, 1991); (Mukhopadhyay, Lerch, & Mangal, 1997); (Sharda, Barr, & MCDonnell, 1988) Likewise, Consulting (1998), Vincent A Mabert, Soni, and Venkataramanan (2000), M Martinsons, Davison, and Tse (1999) believe