Improvement in Operational Efficiency due to ERP Systems Implementation

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701 E. Chocolate Avenue, Suite 200, Hershey PA 17033-1240, USA Tel: 717/533-8845; Fax 717/533-8661; URL- 18 Information Resources Management Journal, 19(2), 18-36, April-June 2006
This paper appears in the publication, Information Resources Management Journal, Volume 19, Issue 2 edited by Mehdi Khosrow-Pour © 2006, Idea Group Inc.


Improvement in Operational Efficiency Due to ERP Systems Implementation:
Truth or Myth?
Vijay K. Vemuri, Long Island University, USA Shailendra C. Palvia, Long Island University, USA

ERP systems are expected to provide many benefits, including improved business efficiency. However, they are also blamed for several business problems and
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Some believe that dynamic capabilities, not resources, are the source of competitive advantage. It is possible that ERP provides both unique resources as well as dynamic capabilities in the form of improved information and decision making to improve competitive advantage.

Enterprise Resource Planning (ERP) Systems

To avoid struggling with integrating myriad IT applications, many companies implemented ERP systems that required substantial investment of time, internal resources, and capital, resulting in significant organizational change (Dorien & Wolf, 2002). Often, ERP system implementation is accompanied by other improvements and enhancements in existing legacy systems. Due to many simultaneous changes that accompany ERP system implementation, it is hard to attribute any performance changes after ERP system installation solely to ERP systems. However, ERP system implementation is, by far, the most criticized aspect of IT investments. ERP systems require outlays ranging from a few million dollars to several hundred million dollars (Mabert et al., 2001). Despite high expenditures, ERP implementations have resulted in problems. Rushed software installations and inadequate training are blamed for well-publicized troubles with ERP. In 1999, soon after the rollout of its ERP system, Hershey Food Corp., in the third quarter of that year, lost $60.4 million due to problems in customer service, warehousing, order processing, and
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