Applying the viable system model in an MCS: Addressing relationships between ERP and budgeting

We apply the viable system model (VSM) in the management control system (MCS) area in order to address the multifarious relationships between enterprise resource planning (ERP) systems and budgeting through the introduction of five research criteria: ERP system, budgeting, informal control, organizational hierarchy and the relationships among them. The research question discussed is: How can we develop an MCS that addresses the relationships among budgeting, ERP systems, informal control and organizational hierarchy? It is found that the VSM application overcomes the limitations in MCS frameworks by addressing the relationships among formal and informal sub-control components across all the organization levels. The main conclusion of the research is that the amended VSM could be used to describe and explain the social aspect between ERP and budgeting in organizations. The unintended use and disconnection of ‘ERP as a database’ in VSM’s system 2 explains why the relationship between ‘ERP as a system’ and budgeting remains multifarious.