A development of enterprise resource planning success model for accounting profesionals.

A development of enterprise resource planning success model for accounting profesionals. A development of enterprise resource planning success model for accounting profesionals. A development of enterprise resource planning success model for accounting profesionals. A development of enterprise resource planning success model for accounting profesionals. A development of enterprise resource planning success model for accounting profesionals. A development of enterprise resource planning success model for accounting profesionals.

MINISTRY OF EDUCATION AND TRAINING

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

Phan, Thi Bao Quyen

A DEVELOPMENT OF ENTERPRISE RESOURCE PLANNING SUCCESS MODEL FOR ACCOUNTING

PROFESSIONALS

A DOCTORAL THESIS

Ho Chi Minh City, 2020

MINISTRY OF EDUCATION AND TRAINING

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

Phan, Thi Bao Quyen

A DEVELOPMENT OF ENTERPRISE RESOURCE PLANNING SUCCESS MODEL FOR ACCOUNTING

PROFESSIONALS

Major: AccountingCode: 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 anumber of persons and organizations First and foremost, I would like to express my deepestgratitude to my two supervisors, Associate Professor, Dr Vo Van Nhi and Dr Nguyen ThiKim Cuc for their support and guidance Especially Associate Professor, Dr Vo Van Nhi, myprincipal supervisor, his encouragement keeps me going even through the most difficultmoments of this study

I would like to offer my gratitude to University of Economics Ho Chi Minh City, andacknowledge the supports I have received from the School of Accounting at University ofEconomics Ho Chi Minh City I would like to thank Associate Professor, Dr Nguyen XuanHung 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 theirencouragement during my PhD journey I would like to give a special thank to Dr NguyenPhuoc Bao An for providing me constructive feedback and making me trust myself that I amcapable to finish this stressful research project I also would like to thank Dr Nguyen BichLien for her comments on system-use concept of the ERP success model for accountingprofessionals, which is a motivation for discovering a more appropriate system-use concept inthe 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 performlecturing-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 effectivelyadopt 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 formativeconstructs I also would like to thank Nguyen Thao Nguyen for her counseling onconfirmation factor analysis

My thanks also go to academics from UEH and informants from participant organizations thathave assisted me to complete the pre-testing, pilot testing and main survey, whose namescannot be disclosed owning to confidentiality agreements.

I would like to thank my brothers and sisters, as well as my friends, in particular, Phan QuocHieu, 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 thisthesis 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 mychildren Without their support and sacrifice, this work would have been stalled For thisreason, 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

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

2.3.4Differences between the current study and the eleven previous ESMs 46

2.4Review of ‘rich construct(s)’ enabling to overcome unanswered validity-setting-related issues 45

CHAPTER 3 CONCEPTUAL FRAMEWORK, CONSTRUCT CONCEPTUALIZATION AND HYPOTHESES 49

3.2Theories used in the ESMAP 49

3.3.1Conceptual ESMAP 54

4.2Research approach 64

5.2.2Straight lining check 86

5.2.3Testing for outliers 86

5.2.4Bias Tests 87

5.2.5Section summary 88

6.3.2Discussion on organizations’ perceptions of accountant performance 1306.3.3Discussion on direct impact of accountant performance on organizational performance 131

6.4.2Discussion on appropriateness of effective use in the ERP context 1326.4.3Discussion on direct impact of effective use on accountant performance 1336.4.4Additional discussion on indirect impact of effective use on organizational performance 133

6.5.1Discussion on organizations’ perceptions of satisfaction 1346.5.2Discussion on direct impact of satisfaction on accountant performance 1356.5.3Additional discussion on direct and indirect impact of satisfaction on organizational

6.6System quality and its direct impacts on use and satisfaction 1366.6.1Discussion on organizations’ perceptions of system quality 136

6.6.3Discussion on direct impact of system quality on satisfaction 1376.7Information quality and its direct impacts on use and satisfaction 1386.7.1Discussion on organizations’ perceptions of information quality 1386.7.2Discussion on direct impact of information quality on use 1386.7.3Discussion on direct impact of information quality on satisfaction 1396.7.4Discussion on the role of information quality in D&M IS success model (1992) 1396.7.5Discussion on the role of information quality in the ESMAP 139

6.8.1Discussion on organizations’ perceptions of perceived accounting benefit 1406.8.2Discussion on operationalization of perceived accounting benefit 1416.8.3Discussion on direct impact of perceived accounting benefit on use 1436.8.4Discussion on direct impact of perceived accounting benefit on satisfaction 1446.8.5Additional discussion on direct and indirect impacts of perceived accounting benefit on

7.2.1How is the ERP success model for accounting professionals formed in order to improve

accountant performance, which in turn enhances organizational performance? 1507.2.2How is the ERP success model for accounting professionals (ESMAP) validated? 150

APPENDICES 183

Appendix 4.1 Advantages of using survey method in the current study 190

Appendix 4.3 Evidence in relation to the expert panel’s feedback on the preliminary questionnaire

193 Appendix 4.4 The original Part A of the preliminary questionnaire 195 Appendix 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 200

Appendix 4.11 Bias issues consideration and how to minimize them 207 Appendix 4.12 Sample size Calculator v2.0 for Cronbach’s Alpha Test 210 Appendix 4.13 The result of calculating the minimize sample size by G*Power software 211 Appendix 4.14 Sample size recommendation in PLS-SEM for a Statistical Power 80% (Hair Jr et al.,

Appendix 5.4 Total Variance Explained for Common Method Bias Test 224

Appendix 5.11.1 Results of fit consideration of higher-factor instruments – PAB 237 Appendix 5.11.2 Results of fit consideration of higher-factor instruments - USE 238

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 outer

Appendix 6.5 Testing the D&M IS Success model (1992) without PAB 251 Appendix 7.1 Practical implications for ERP adoption organizatons’ stakeholders 252

PLS-SEM Partial Least Squares - Structural Equation Modeling

LIST OF TABLES

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 31

Table 2.6: A summary of studies involving measuring ERP success in Vietnam 43

Table 2.7: Summary of definitions and how to develop the conceptualization of PAB in ERP context 46

Table 2.8: Advantages of the ESMAP 48

Table 3.1: Differences among the training, adoption and ongoing use contexts (adapted from Deng et al (2004)) 56

Table 4.1: Conceptualization of the constructs 67

Table 4.2: Indicators of System Quality 68

Table 4.3: Indicators of Information Quality 68

Table 4.4: Indicators of Perceived Accounting Benefit 69

Table 4.5: Indicators of Use 69

Table 4.6: Indicators of Satisfaction 70

Table 4.7: Indicators of Accountant Performance 71

Table 4.8: Indicators of Organizational Performance 71

Table 4.9: The minimize sample size of the current study 79

Table 5.1: Summary of The Factor Analysis Appropriateness Criteria 91

Table 5.2: EFA Test Results - Refined scales 92

Table 5.3: New conceptualization and operationalization of new factors extracted from EFA 94

Table 5.6: Internal consistency, indicator reliability and convergent validity analyses of the first-order measurement model 100

Table 5.7: Discriminant validity (Fornell and Lacker criterion) 102

Table 5.8: Discriminant validity (HTMT) 102

Table 5.9: Internal consistency, and convergent validity of the second-order measurement model 103

Table 5.10: Validity of formative second-order constructs 104

Table 5.11: Collinearity assessment of the ESMAP 105

Table 5.12: Direct relationships for hypothesis testing 108

Table 5.13: Summary of results in terms of path coefficients, f 2 and q 2 value 110

Table 5.14: Results of total and specific indirect effects 111

Table 5.15: Direct effects including mediators in the ESMAP 112

Table 5.16: VAF values of each mediator model 113

Table 5.17: Results of specific indirect effects 114

Table 5.18: Results of PLS-MGA for ERP implementation and post-implementation organizations 115

Table 5.19: Results of PLS-MGA for large-sized and small-and-medium-sized organizations 116

Table 5.20: Results of PLS-MGA for popular and non-popular-ERP-packages-adopted organizations 116

Table 5.21: Results comparison among models 117

Table 5.22: Results of the adjusted R 2 value between the ESMAP and the parsimonious model 119

Table 5.23: Impacts of omitting information quality to use 120

Table 5.24: Impacts of omitting information quality to satisfaction 121

Table 5.25: A summary of significant total effects among constructs and significant difference of several paths in the ESMAP 122

Table 6.1: Comparison of Variance Explained among three models 132

Table 6.2: Summary of PAB's operationalization 142

Table 6.3: Summary of the current PAB construct's advantages (in comparison with the original PAB of Kanellou and Spathis (2013)) 143

LIST OF FIGURES

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) 45

Figure 3.1: D&M IS Success Model (DeLone and McLean, 1992) 50

Figure 3.2: IS-continuance theory (Bhattacherjee, 2001) 51

Figure 3.3: The research model (the ESMAP) 54

Figure 4.1: A research framework of John W Creswell (2013) 63

Figure 4.2: Location of VN (green) in ASEAN (dark grey) (Referenced from wiki website) 76

Figure 4.3: Different management software types adopted in organizations in Vietnam 80

Figure 5.1: Data analysis process of the study 84

Figure 5.2: Data preparation process of the study 85

Figure 5.3: Instrument Preparation Process of the study 96

Figure 5.4: Process of testing the ESMAP 98

Figure 5.5: Hypotheses Testing _ Bootstrapping Direct Effect Results 107

Figure 6.1: Effects of the length of ERP adoption 126

Figure 6.2: Effects of the organizational size 127

Figure 6.3: Organizations' perceptions of the ESMAP's constructs by the adopted ERP package 128

Figure 6.4: Descriptive findings of organizational performance 129

Figure 6.5: Impacts of ERP lifecycle phases on firms' organization performance (Ross & Vitale, 2000) 129

Figure 6.6: Descriptive findings of accountant performance 130

Figure 6.7: Descriptive findings of use 131

Figure 6.8: Descriptive findings of satisfaction 134

Figure 6.9: Descriptive findings of system quality 136

Figure 6.10: Descriptive findings of information system 138

Figure 6.11: Descriptive findings of perceived accounting benefit 141

Enterprise Resource Planning (ERP) system is commercial software that automates andintegrates many or most of a firm’s business processes It allows to access to integrated datacross the entire enterprise according to real-time (Davenport, 1998) Therefore, ERP system isexpected to increase productivity via processes standardization, to improve decision-makingability via information integration throughout the whole enterprise, to enhance cooperationbetween organizational entities by connecting them smoothly, and the most important, tomaintain competitive advantage once these benefits are satisfied (Davenport, 1998) Thesepromises are possibly a close explanation of its increasing popularity Namely, Fortune 500companies are trusting ERP system1 and it is also a solution that large-sized organizations inVietnam select and adopt more growingly2

Nevertheless, instead of achieving impressive benefits from their ERP systems, some firmshave faced difficulties in gaining the benefits they expected Therefore, as suggested byMarkus and Tanis (2000), for both researcher and executives, one of the initial interested-questions is whether investments in ERP will pay off Several organizational-leveleconometric studies conducted (M C Anderson, Banker, & Ravindran, 2003; Hitt, Wu, &Zhou, 2002) give an answer that it is likely yes – on average However, the impacts vary fromenterprise to enterprise, even from module to module (Nicolaou, 2004a) in which accounting-related modules are in charge of changed-focuses Kanellou and Spathis (2013) perform therelevant literature and conclude that ERP implementation has a considerable impact onaccounting 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 ISsuccess model (DeLone & McLean, 1992), IS-continuance theory (Bhattacherjee, 2001) andthe principle “fitness for use” (J M Juran, 1988) to develop the ERP success model foraccounting professionals in order to make them more productive, which in turn improvesperformance of implemented organizations The theoretical and empirical results indicate thatorganizational performance is, indeed, influenced by the extent to which accounting expertseffectively utilize ERP systems in the adoption and ongoing context

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.

This study makes an original contribution to both of theory and practice through forming andvalidating the ERP success model for accounting professionals only In a little more detail, itprovides empirical evidence regarding Hunton’s accounting value chain (2002) In addition, itdiscovers 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 fromERP system, which related-studies are much further under-researched Last but not least, theresearch provides valuable implications for organization management on how they cansuccessfully manage accounting department as well as accounting professionals in an attempt

to maximize ERP’s impacts on organizational performance, which executives have paid muchattention 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, generallypresent methodology, and introduce forthcoming chapters This chapter begins with researchbackground, and moves on a discussion on two main motivations for research, which focus onexplanation what research topic is and why to choose it Identifying research topic is veryimportant as it allows limiting the scope of reviewing a literature The research objective andresearch questions are then addressed in the third and forth part of this chapter Next, sectionfive of this chapter represents research justification to make clarify the significance of thestudy Subsequently, research methodology is outlined to enable to image how to conduct thewhole dissertation, and followed by research scope Finally, the thesis structure will beproposed, 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 forbusinesses at present Deriving from efforts to rationalize lead times and possession stockcosts, the 80’s manufacturing resource planning (MRP II) is developed into ERP systemconsidered as the standard that integrates business processes throughout the organization,which in turn enhances operational efficiency (Akkermans, Bogerd, Yücesan, & VanWassenhove, 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) andintangible (e.g., increased visibility of corporate data, speed of decision making, and controlover 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 worldwideERP 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

$84.7 billion by 20213

Being consistent with the trend, in Vietnam, E-Commerce Indicator Report in 2017 alsoindicates that the number of organizations adopting ERP system has been more increased in2016

Human resource management 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 ofthe most popular business-management-applications in organizations all over the world andbegins 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 alsoincreased over the past years To acquire how the growth of publications about ERP is, theGoogle Scholar database is scanned for the term “Enterprise Resource Planning” in the period1990-2016 The results of this searching are summarized in following bibliometric4 graph (seeFigure 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 researchcommunity, with about 6000 search results on average in the 2009-2016 period (Google2017)

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)

Figure 1.2: The number of publications on "ERP" in Google Scholar by year (Source: by author)

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)

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 thatfirm 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 inimplementing 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 ERPsuccess model upon the DeLone and McLean’s (1992, 2003) information system successmodel Lin et al.’s (2006) model relates the individual impact to balanced scorecard measures(i.e., financial effectiveness, customer effectiveness, internal business effectiveness, andinnovation and learning effectiveness) They demonstrate that the success of any ERP systemmay be predicted by integration of the information system success model and balancescorecard constructs Specifically, they suggest that the adoption of balance scorecard criteriawill 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, aquestion 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 isexpected to increase insight regarding such an area Another reason of choosing ERP successmodel 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 integratedfactors influencing the level of success, therefore identifying primary factors runningorganizational performance under a whole model is more appropriate Second, the modelforces researchers to be explicit about the way the problem is perceived Thus, there is lessroom for sloppy or confused thinking when modeling The act of systematically consideringthe impact of one variable on another forces researchers to make their logic more consistentwhen thinking about a problem Third, model is effective and efficient way of organizingresearchers’ knowledge about a problem of interest Hypotheses investigated in model willexpand 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 typicaland untypical CSF type) has generally taken from a macro perspective or a view of multipletop mangers, the perspectives of key or single stakeholders are often missing This proves thatCSF 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 issuessuch as how ERP influences stakeholders in accordance with stakeholders’ insights; orwhether stakeholders’ performance can be effectively improved in organizations adoptingERP; or even whether the perceptions of stakeholders on the ERP system can enhance theorganizational performance of adopting enterprises To put it in other way, to comprehendpositive impacts of the ERP system on stakeholders, a question is whether there is a modelguiding stakeholders how to adopt ERP successfully in order to contribute to increasingorganizational performance from stakeholders’ perspectives themselves

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

1.3.2 Motivation 2 – Behavioral Accounting Research (BAR)

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

& Kinard, 1970)

Since the late twentieth century, BAR have drawn increasing attention from accountingresearchers, academics and international community (Nowak, 2016 ) In the early stage ofBAR, Birnberg and Shields (1989, pp 41-61) extract five accounting-related schools ofbehavioral 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, andcreate 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 ofsocial interactions in ideographic (as opposed to nomothetic) manner

Out of these five schools of accounting behavioral research, Birnberg and Shields (1989) alsomention a few behavioral researches related to accountants, which are called the studies ofaccountants Because of their shortage, they have not yet constituted the sixth school ofbehavioral 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 aclearer picture and more extensive knowledge about direction and development in behavioralaspects of accounting Accordingly, behavioral accounting research scopes from 2005 to 2014are 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 ofaccounting, such as examining measures, developing measures, and variable constructdimension 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 thatresearch directions of behavioral accounting are broader developing although the priority toeach school at each moment is dramatically different Notably, among such schools, study ofaccountants is, indeed, more growingly concerned This school, from being charged of thefew studies in 1989 (Birnberg & Shields, 1989), has been considered as a part of anindividual, 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 ERPenvironment For example, Sayed (2006) emphasizes that the traditional accounting role inIS-adopted organizations is declining However, rather than a threat, he provides evidence thataccountants exploit the ERP system as an occasion where their skills and their accountingknowledge are represented Likewise, Newman and Westrup (2005) indicate that accountantsshould be considered as subjects that need to be paid more attention to as the relationship ofaccountants 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 someexperience of the ERP system choose the statement ‘the ERP system have positive effects onmanagement accountants’ in comparison with a total of 55% interviewees agree with thestatement ‘the ERP system have positive effect on organizational performance’ when beingrequired to give opinions about perceived effects of the ERP systems on organizations and onmanagement accountants According to these statistics, there is no denial that users whoexperience the ERP system easily recognize the impacts of ERP system on managementaccountants, rather than on organizational performance Moreover, their respondents (senioraccountants) concede that the ERP system is as a positive development enabling them to bemore focused on financial management and less on bookkeeping aspects Furthermore, ratherthan being changed their role by the ERP system only, accountants, in contrast, also influencethe design of ERP systems For example, in ERP pre-implementation stage, when questioningvendors about features that are supported by their packages, the focus of questions is often onwhether certain techniques such ABC and the balanced score card could be supported by theirproduct (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 valuechain, J E Hunton (2002) proposes the accounting value chain (shown in Figure 1.3) whichilluminates how accountants can add value to business organizations in today’s globalinformation 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 fromlow to high level in the IS context On its low-value side, accountants have no longeropportunities 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 thatmakes sense In a little more detail, in routine work, recording and processing accountingtransactions 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 Assuch, 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, thesignificant contributions of accountants focus on the side that IT just assists instead ofperforming accountants’ tasks Here are some of outstanding values that accountants cancreate in IS adopting organizations:

(1) Disseminating business knowledge: Information system provides functions and featureswhich allow accountants to generate, manage, integrate business knowledge anddisseminate such knowledge to inside and outside users of the organizations Under theviewpoint of Elliott (2001), a capability of knowledge leveraging makes accountingprofessionals distinguish rather than different types of staffs

(2) Developing externalities: Merging e-commerce and supply chains into organizationoperations likely leads to appearance of externalities, which in turn creates new worksfor accountants For example, they need to monitor, control the flows of informationand protect the privacy, confidentiality and security rights of related parties Theserequirements 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 societiesvia 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 usefuldecision-making information more quickly, reliably and relevantly

To sum up, this thesis focuses on “study of accountants” due to its increasing concern in BARliterature; 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 atransformative force on the accounting In reality, because of its accounting benefits, ERPrequires accounting expertises to change their role in order to make broader contribution tothe company, such as reporting on non-financial measures, auditing information systems,implementing management controls within information systems, and providing managementconsulting services (Grabski et al., 2011) Therefore, the thesis will combine ERP CSFsresearch with the study of accountants

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

It is worth noting that there are virtually no researches of the ESMAP, thus, it is considered asthe first and unique study up to now in an effort to better understand ERP system-relateddrivers leading improvement in organizational performance toward a point of accountingexperts’ 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 primaryconcerns 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 becaptured? 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 iswhat supposed to be captured Therefore, the remaining question is how a framework can bedesigned to successfully capture the ERP success for accounting professionals

Recall that, ESMAP is the first study conducted Hence, the gap in the knowledge aboutvalidity of the ESMAP is due to two main reasons First, there is still little work on theintegration 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 westudy 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 previousstudies in relation to impacts of ERP systems on accounting in order to discover, thenincorporate appropriate accounting-related construct(s) into the selected model of ERPsuccess

The second reason in relation to the validity of constructs used in the ESMAP is that most ofESM researchers typically focus primarily at the organizational level rather than looking atthe 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 organizationallevels provide aggregate information about organizational performance; the aggregate, high-level information may capture the underlying phenomenon being examined, that allow us tobetter understand the actual drivers of organizational performance

In summary, in order to deal with the validity issue of the ESMAP design, it is important forresearchers 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 togain more insights into what is supposed to be captured and which constructs can successfullycapture 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 ERPsystems, in other words, to make them increasingly productive in the ERP context, in order toachieve improvement in organizational performance Obviously, this motivation runs how toselect constructs of interest in order to establish the ESMAP To reach such an endmosttarget, organizational performance officially is dependent variable in the framework of theESMAP 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 resphands-onsibility for implementatihands-on are present’ Accordingly, the organizatihands-on’s operatihands-onal 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, eventhough the main objective of any businesses is to maximize organizational profits, it isessential 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 onindividuals As IS’s these impacts on an individual are high, it seems likely that the effect fororganization that the individual participates in will also be high (Princely Ifinedo et al., 2010).Consequently, target-setting issue of the ESMAP design allows indicating organizationalperformance 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, asdiscussed 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 organizationallevel and the components of the ESMAP need to include organizational performance andaccountant performance as dependent variables More important, it is crucial to find out anaccounting-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 amodel measuring ERP success from accountants’ perspective with a goal of makingorganization 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 inorder 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 atindividual level (Amoako-Gyampah & Salam, 2004; Bueno & Salmeron, 2008; Buonanno etal., 2005; Chou, Chang, Lin, & Chou, 2014; Costa, Ferreira, Bento, & Aparicio, 2016; Hsu,Yen, & Chung, 2015; Kositanurit, Ngwenyama, & Osei-Bryson, 2006), accounting practicesand functions in ERP environment (Aryani, 2014; Daoud & Triki, 2013; G Sutton, 2006;Kihn & Lepistö, 2011) have received growing attention from researchers, little is knownabout how ERP success model for accounting professionals can be designed to supportmanagers to better manage as well as helping accountants to better conduct their work in theERP 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 developand 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 hierarchyincluding 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 otherwords, 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 theanswerable 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) toextract 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 beconducted 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-relatedresearch questions in the current study It is worth noting that the measurement questions haveyet to be finalized in Figure 1.4 They are the subject of ongoing research effort and presentedspecifically 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 enhancesorganizational performance The results of a process of theories-based-model developmentand rigorous empirical investigation support to conclude that accounting professionals, viaadopting 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 multiplestakeholders on ERP success while this study focuses on perceptions of accountingprofessionals only It is regarded as ‘pioneer’, and therefore, expands new research directionfocusing on developing ERP success models for each particular user in order to maximize thepositive 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 Theperceived-accounting-benefit-related findings such as its significant role in the ESMAP aswell 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 guidesaccounting professionals how to become productive under ERP settings More specific, theESMAP supports them to adjust their ERP adopting behavior in order to improve their workperformance Furthermore, also the most important, the ESMAP guides organizationmanagement how to predict, access and improve organization’s accountant performance toachieve the advanced organizational performance for their organizations As a result, theESMAP allows management to better manager, control accounting experts and their work in

ERP post-implementation context Finally, organization will obtain beneficial outcome whenindividual benefits are positive influenced (Princely Ifinedo et al., 2010) To put it differently,accounting professionals and organization management obtain direct benefits from theESMAP 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 isappropriate for validating a new theories-based-formed ESMAP against empirical data Thisstudy is divided into two phases: (1) forming the ESMAP, and (2) validating the ESMAP Tostart with, it reviews related literature and finds suitable foundational theories to propose theESMAP with its 9 hypotheses and its constructs-conceptualization Then, the empiricalsurvey data is obtained from an expected sample of 300 organizations8 in Vietnam adoptingthe ERP system for at least one year The ESMAP’s constructs operationalization and theirvalidation 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-SEManalysis 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 systemactually 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 tohow to adopt ERP system to improve effectiveness in implemented enterprises Notably, theERP 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 soforth (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-relatedgeneralizability 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 areaccounting professionals, specifically, chief financial officer, chief accountants, chiefcontrollers, 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 belowintroduces 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 EnterpriseResource Planning System The topic areas discussed in the literature review consist of:(1) Enterprise Resource Planning: defining ERP, evolution of ERP, advantages anddisadvantages of ERP and the ERP lifecycle; (2) Review of ERP success models: identifychallenge of measuring ERP success, listing the existing ERP success models, discussion

on problems with the existing ERP success studies, differences between the researchtopic 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 unansweredvalidity-setting-related issues

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

Chapter 3 develops a theoretical model of measuring ERP success for accountingprofessionals in an attempt to achieve improving organizational performance Thechapter 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 ofselecting constructs’ conceptualization, and ends with the arguments leading to 9 testablehypotheses

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

methodology in the step-by-step manner The chapter begins with consideration on thenature of the phenomenon being studied The following is decision about selectingwhether qualitative or/and quantitative approaches are appropriate for the researchquestions Then, the research design is chosen to make ensure to be matching withresearch approach and research objective Subsequently, research method will beprecisely 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 ofdeveloping the final sample Then all constructs of the ESMAP are re-validated to ensuretheir structures appropriate in ERP adoption and ongoing context in Vietnam Thischapter ends with testing the ESMAP using PLS-SEM analysis technique and conductingseveral advanced analysis to obtain more understanding of the ESMAP’s explanatorypower

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

power of the ESMAP It provides meanings of statistical descriptive findings, comparesresults with the previous literature, and interpret findings of each hypotheses proposed inthe 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 thewhole work conducted in this thesis Then, based on the findings synthesized andanalyzed, the theoretical contributions and practical implications of this study arediscussed, followed by a consideration for the research limitations, delineations andsuggested 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 thenprovides a description of research motivations Next, the research objective and the researchquestions based on these motivations are represented in sequence Following the researchquestions, justification is proposed Subsequently, the research methodology is presented,followed by research scope An outline of the forthcoming thesis chapters is identified at theend of the chapter

CHAPTER 2 LITERATURE REVIEW

2.1 Chapter introduction

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

(1) to support to determine whether the research topic is worth studying by systematicallyand critically reviewing previous studies that are closely related to the one beingundertaken, then comparing the research topic with these findings The whole process ofidentifying whether the topic of interest is researchable is summarized in a literaturemap (see Figure 2.1)

(2) to find out which accounting-related construct(s) should be embedded in the ERPsuccess 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 followingbroad topic areas:

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

Section 2.2 generally reviews Enterprise Resource Planning in terms of highlights such asdefinition 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 ERPSuccess Models in Section 2.3 Namely, this section makes clarify which challenge businessorganizations 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 arespecifically 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 differencebetween 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 ofchecking 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’ constructconnecting the ERP system and accounting profession

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

(Source: by author) 2.2 Enterprise Resource Planning

2.2.1 Defining ERP

There is not an official definition of ERP system in IS literature Most researchers oftenillustrate its functionality to clarify what it is For example, ERP system allows informationflows to go throughout business functions as well as business units, those connections areprecisely similar to what the Internet communicates among companies (Davenport, 2000)

Another explanation is that this packaged-business-management-software type enables anorganization 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 traditionalapproach previously happening within organizations, each individual department has its owncomputer system in order to run its work (see Figure 2.2) More often than not, these systemsare developed in isolation, and each function will fail to consider how it fits in with otherdepartments This can lead to duplication of data across the organization, which creates itsown problems The systems become like silos within the organization operating on their ownwith 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 whichconsists of a series of modules related to an organization’s the different functions areasthemselves These modules run upon a single shared database central so that they areintegrated and able to operate efficiently In other words, unlike in the information siloapproach, in an ERP system, departments can share information and communicate with eachother in an easy and quick manner and addition, the problems of data duplication andredundancy 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 apackaged complex business software designed to integrate business processes and functionsthrough using single database in order to be able to permit the sharing of common data andinformation 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 businessperspective, ERP has expanded from coordination of manufacturing processes to theintegration of enterprise-wide backend processes Meanwhile, from technological aspect, ERPhas evolved from legacy implementation to more flexible architecture for clients Based onstudies 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 Table2.1 in order to illustrate the key characteristics of the ERP evolution from 1960s up to date

Table 2.1: Evolution of ERP (Source: by author)

reconciling the inventory balances, and reporting inventory status

ResourcePlanning (ERP)

Enterprise Resource Planning (ERP) is multi-module package, in whichincludes various modules relating to not only manufacture-activities-chain as MRPII, but also assisting accounting, finance, human resource,and marketing ERP systems base on integration of business process,utilize a single database, therefore, promising improved-internal-

business-activities-performance The initial ERP is considered as an premises model

EnterpriseResourcePlanning (ERP II)

ERP II not only focuses on clients with additional development ofsupplier management module and customer management module tooptimize the entire business processes, but also focuses on e-commercewith growth of html interfaces ERP II is a hosted-solution model sinceits 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 itsintroductions in 1988 (Muscatello, 2003) In 1998, the revenues to ERP vendors wereapproximately $16.6 billion (Carlino & Kelly, 1999); this figure shot speedily up to $47.8billion in 2004 (Fitzgerald, 2005) After more than twenty years since its appearance, theglobal 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 proofconfirming 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 thatimplementing ERP system will immediately improve their functionalities This is obviouslyimpossible To have an accurate understanding of characteristics of ERP, it is necessary tocomprehend its advantages and disadvantages Mohammad A Rashid et al (2002) show thebenefits that a standard ERP system may bring to organizations (see Table 2.2) andsimultaneously 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/

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

Reliable accessibility A single database, consistently and precisely integrated

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

different functional departments enable to access same data

at the same timeTransportation 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 andimprove performance of internal business processes

Flexibility Business processes re-engineering make internal business

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

designEnhanced and active long-term

maintenance

Firms are often on a permanent maintenance-relatedcontract with ERP vendors or implementation-authorizedorganizations

Association with parties on a

global scale Appearance of added modules that relate to customermanagement (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)

Spend a lot of time

to implement a

system

Focus on preparing and training people to reach a high consensus onERP adoption, timely support of management, minimizing sensitiveissues, 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 veryhigh 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

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 particularCRM and SCM