More than two decades of research on information technology (IT) value still leaves the issue of IT value in an organization a poorly understood concept. In the case of Enterprise Resource Planning (ERP) systems, evidence indicates that the value of ERP systems is realized across different dimensions at different points in time with as many as 70% of ERP implementations failing to deliver the anticipated benefits (Majed, 2000). Considering the sizable investments required for ERP implementation and the lack of compelling evidence regarding ERP value, the issue of ERP value merits attention. Up to now, a majority of ERP related studies have focused on capabilities that get a functional ERP system up and running instead of on capabilities that help create ERP value in the years after going live. As a result, there is a dearth of studies that focus on capabilities required to derive benefits from ERP systems in the post-implementation stage. Additionally, few studies identify capabilities required to sustain ERP value over longer time periods. Considering that any ERP implementation requires significant investments and commitment, the compelling issue for organizations, from a strategic perspective, is to sustain the value accorded by ERP systems. Currently available ERP value research frameworks do not adequately address the issue of either post-implementation ERP value creation or ERP value sustainability.
By adopting a resource-based-view and a dynamic capabilities perspective, this study conceptualizes value creation and value sustenance as two processes essential for an organization that desires to sustain ERP value. Based on the notion of value creation and value sustenance, a research framework that integrates ERP value creation capabilities and ERP value sustenance capabilities is developed. This framework is grounded in the logic that creation of ERP value is necessary but not sufficient to sustain it. To sustain ERP value requires a set of capabilities which are distinct from the capabilities required to create ERP value. The research framework used in this study incorporates post-implementation ERP use capabilities such as quality of ERP system use and quality of ERP information use along with organizational IT capability as key capabilities required to create value from ERP systems. For sustaining ERP value, the research framework incorporates organizational innovation capability and organizational strategic flexibility as two key capabilities.
A survey of 251 ERP implementations in India was conducted to validate the research model. The results of this study indicate that quality of ERP system use, quality of ERP information use, and organizational IT capability have a significant effect on ERP value. However, study results provide only partial support for the importance of organizational innovation capability and organizational strategic flexibility in sustaining ERP value, which suggests the potential for further examinations of the role of these two capabilities.
There are a number of expected contributions of this research. First, this research is one of the few to analyze the issue of ERP value sustainability. In view of the significant resource commitment required for any ERP implementation, leveraging ERP systems over a longer period of time becomes an important issue for organizations. However, few studies have focused on this important aspect while analyzing ERP value. Second, using concepts of ERP value creation and ERP value sustenance, this research emphasizes the significance of differentiating capabilities that help organizations to sustain ERP value from the ones that help organizations to create ERP value. By doing so, IT and business managers in organizations can develop interventions that will strengthen the creation of ERP value as well as interventions that will help to sustain ERP value. Such an approach is likely to provide for better management of organizational resources and efforts. Third, this research provides a more comprehensive view of ERP value at the organizational level compared to earlier research by using a Balanced Scorecard (BSC) perspective. Such a perspective allows analysis of sustainability across multiple dimensions, while earlier research has focused on strategic and financial dimensions as the prime focus of sustainability. Finally, this research provides evidence for role of post-implementation use of ERP systems in influencing ERP value. By focusing on post-implementation use capabilities such as quality of ERP system use and quality of ERP information use, this research highlights the significance of post-implementation use behavior of ERP users in influencing the value realized by an organization from its ERP systems.