American Accounting Association 2006 Midwest Region Meeting March 30 – April 1 Chicago, Illinois

Friday, March 31, 4:00 p.m. to 5:40 p.m.
Concurrent session 4E - Multinational Issues (International Accounting)

Title: Enterprise Resource Planning (ERP) and Implementation Woes: Why Companies Don・t Fully Benefit from Their Systems 

Mehmet C. Kocakulah University of Southern Indiana Kelly D. Huff University of Southern Indiana

Brian L. McGuire University of Southern Indiana

ABSTRACT:  In an effort to continuously improve a company・s efficiency and remain competitive within the market, many organizations (service and manufacturing) have purchased, installed, and implemented Enterprise Resource Planning (ERP) systems.  ERP systems integrate the various units of an organization, such as financial accounting, sales and distribution, material management, human resource, quality assurance, and plant maintenance.  Once the various units are linked together through the ERP system, information generated within each unit becomes available on a real-time basis to anyone authorized to log on to a company・s server.

ERP systems can greatly enhance a company・s overall performance.  However, if the ERP system is not designed and implemented in a manner that supports a company・s functions, the results generated by the ERP system may lead the company on a course where market share and profits are lost unnecessarily.  For example, National Corporation, the parent company of Tri-State Milling (names changed for confidential reasons), installed an ERP system (Systems Applications and Products, or SAP) corporate wide.  Several critical issues were noted in the installation of their ERP system that must be addressed by any company attempting to acquire and implement an ERP system.

ERP systems (such as SAP) are incredibly powerful tools that can greatly enhance the efficiency of an organization, regardless of whether the organization operates within the manufacturing or service industries.  An ERP system is a wonderful tool, but like any tool it must be properly maintained and used in order to provide any benefit to its users.  The implementation process of an ERP system is absolutely critical to the success or failure of the system.

As demonstrated during this study, the ERP system must have the complete, steadfast support of top management, a thorough understanding of the company・s processes by the implementation team, an intensive, on-going training process, a knowledgeable (available) IT staff, and an organizational structure that supports the ERP system.  Additionally, the positive results of a well implemented ERP system will not surface overnight.  In Tri-State・s case, the results did not really appear until after a two-year period.

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