ERP Misfit-Reduction Strategies

Abstract

Misfit between Enterprise Resource Planning (ERP) system and business is widely recognized as the main cause of ERP system failure. Modification of the ERP system and adaptation of business processes have been hyped as the means to reduce misfits between ERP system and business organizations. Nevertheless, to date, very little empirical evidence exists to demonstrate that the potential has indeed been realized. Thus, the purpose of this study is to empirically examine to which extent the two misfit-reduction strategies, namely system modification and organizational adaptation mitigate the negative impacts of ERP misfits on ERP system performance, which is measured by information quality in this study. A total amount of 305 sets of questionnaire that collected from the ERP system users in manufacturing sector in Malaysia were analyzed using Structural Equation Modeling (SEM) approach. The findings of this study have revealed that the effects of the two misfit-reduction strategies vary based on the different characteristic of ERP misfits. Specifically, system modification is found to significantly reduce the negative impacts of deep-structure misfit such as process misfit, whereas organization adaptation is significant in mitigating surface-structure misfit such as data presentation and layout.