ERP Misfit-Reduction Strategies

Abstract

The Enterprise Resource Planning (ERP) system is a breed of configurable package systems that aims to disseminate transactional information of the entire organization to users in a timely and efficient fashion under a uniform system environment. However, ERP systems often fail to live up their claim to improve operational efficiency and strategic effectiveness due to misfits between the standard-built ERP systems and the adopting organizations. Anecdotal evidences from subjective studies suggest modification of ERP systems and adaptation of organizational structure could mitigate the misfits between ERP systems and the adopting organizations. Nevertheless, empirical and rigorous studies capable of proving these conjectures are scarce. The purpose of this chapter is to empirically validate and examine: 1) the negative impacts of the misfits between ERP systems and organizations and 2) to what extent the two misfit-reduction strategies, namely system modification and organizational adaptation, are able to mitigate the impacts of these misfits. The Task-Technology Fit (TTF) model is adapted as the theoretical framework of this study capable of incorporating moderating variables. Three-hundred-and-five sets of questionnaires collected from ERP systems users in the manufacturing sector of Malaysia were analyzed using the Structural Equation Modeling (SEM) approach. Findings of this study indicate that different types of misfits, namely input misfit, process misfit, and output misfit, have different impacts on ERP systems performances. More importantly, this study found that the appropriateness of misfit-reduction strategies is contingent to the types of ERP misfits. Precisely, system modification can effectively mitigate input and process misfits, while organizational adaptation can be used to counteract input and output misfits.