Finding the tipping point for a CEO to say yes to an ERP: a case study

Abstract

Purpose – Most small- and medium-sized enterprises use some business management software to manage day-to-day operations. Eventually they consider transitioning to an enterprise resources planning (ERP) system. The purpose of this paper is to find what motivates the top management to consider a transition from an existing system to an ERP especially as such a transition can be painful, expensive, and involve considerable business risk. The research posits a decision model that top management may use to aid their decision. Design/methodology/approach – The research question is about examining the organizational phenomenon of transition to an ERP system and so a case study research methodology is followed to understand the phenomenon. Findings – The research concludes it is usually a change in scale of operations that drives the transition. The motivators are abstracted as: scalability – increased hierarchical controls and systems scalability driven by increasing number of employees; complexity – more business functions need systems support to address increased operational complexity; and integration – systems and process integration for seamless operations. Research limitations/implications – There is a need to check if the same fundamental issue of change in scale of operations is true across industries and across geographies. Also it creates a need for a statistical validation of the motivators and their importance across organizations and industries. Practical implications – ERP considerations are of strategic importance because of the high risk and the high expense. The research presents a decision model to aid top management to find if ERP systems make sense for their organization. Originality/value – The research provides new directions for academicians as there are few empirical studies on the true motivators that drive ERP adoption.