A Comprehensive Framework for Classifying the Benefits of Erp Systems

A Comprehensive Framework for Classifying the Benefits of ERP Systems

Shari Shang, Department of Information Systems, The University of Melbourne, [e-mail]
Peter B. Seddon, Department of Information Systems, The University of Melbourne, [e-mail]

Abstract

This paper presents a framework for assessing the business benefits of Enterprise Resource Planning (ERP) systems. After analyzing the features of ERP systems, the literature on IT benefits, data from 233 ERP-vendor success stories published on the web, and interviews with 34 ERP cases, we have produced a consolidated framework of five benefit dimensions. This framework tries to classify the types of benefit that organizations can achieve by using ERP systems and provide a comprehensive foundation for planning, justifying, and managing the system. The framework focuses on benefits only, from the point of view of management as stakeholders; it does not consider costs.

Introduction

According to AMR Research, total revenue in the Enterprise Resource Planning (ERP) software and services market in 1999 was US$18.3 B (Gilbert, 2000). ERP system implementation costs are often reported to be five to ten times the cost of software licenses (Davenport, 2000). If so, organizations world-wide spent something like US$90-180 billion on ERP systems in 1999. Most organizations that have implemented ERP systems expect to continue using them for many years.

ERP systems are integrated, enterprise-wide, packaged software applications that impound deep knowledge of business practices accumulated from vendor implementations in many organizations. ERP systems are evolving to incorporate new technologies, such as E-commerce, data warehousing, and customer relationship management. ERP software is a semi-finished product with tables and parameters that user organizations and their implementation partners configure to their business needs. Implementation of ERP systems therefore

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