The relationship between ERP systems and budgeting: Uncovering the limited ERP system impact on budgeting

This paper investigates the relationship between enterprise resource planning (ERP) systems and budgeting to address the limited impact of ERP systems on management accounting. Budgeting is considered as a social phenomenon which requires flexibility for decision-making and integration for management controls. The analysis at the activity level, guided by the concept of ‘conflict’ in structuration theory (ST), suggests that ERP systems impede flexibility in decision-making. However, the systems have the potential to facilitate integration in management controls. The analysis at the structural level, guided by the concept of ‘contradiction’ in ST, concludes that there is a contradiction between them because ERP systems operate in terms of integration alone while budgeting assumes both roles. This research offers three new insights. First it offers a theoretical contribution by employing new theory. Second it offers empirical insights on the limited impact of ERP systems on budgeting. Third it shows how other IS technologies supplement them.