Impact of business process reengineering and customization success enterprise resource planning implementation

Abstract

Enterprise Resource Planning (ERP) systems which are developed based on the industry best practices integrate all the business functions of an organization. Reduction of operating costs, efficiency improvements, and processes standardization are the benefits expected by ERP. However, some business managers question these benefits as they have bad experiences with ERP implementation. As a result, governing factors of ERP implementation have been investigated by many researchers. It was identified that ERP customization and resistance to change required by Business Process Reengineering (BPR) as major influencing factors. Thus this study investigated how BPR and customization involved during the implementation process affected the expected outcome of ERP system. The study adopted quantitative methodology with survey approach. Conceptual model was developed and variables were operationalized from the literature. Customers of ERP systems of SAP and IFS were taken as the target population and sample was drawn using stratified random sampling method. questionnaire was used for data collection. Face validity of the questionnaire was checked with experts’ opinion. It was e-mailed to a key person involved in the ERP implementation of each company. Descriptive and inferential statistics were used for data analysis. It was found that interdepartmental integration, end- to- end information tracking, up- to- date information, speed up transactions, and cost reduction as the major expectations of the companies to implement ERP. However achievement to expectation ratio of perceived benefits was poor. Organizations experienced higher level of customization and lower level of BPR during ERP implementation process. BPR was positively and customization were negatively correlated to the perceived benefits. Therefore companies should implement BPR along with ERP project and adapt to ERP practices rather than customizing it.