The Impact of Enterprise Resource Planning (ERP) System Implementation on Organization: Case Study ERP Implementation in Indonesia

Enterprise Resource Planning (ERP) is one of the most popular software technologies for supporting operational organization. It emphasizes business transformation which will lead to process change in its effort to maximize the company’s benefit. However, implementation of ERP system does not always give a strategic benefit for the company. Most companies did not succeed in implementing this system. In this study, we focused on the exploration of strategical and tactical impact induced by the implementation of ERP and to find out the correlation among ERP implementation success with the strategical and tactical impact. Thirty-five respondents from seven companies became the samples that represent four different industrial sectors (oil & service, manufacturing, telecommunication, automotive). It was found that ERP implementation gave more impact to tactical level than to strategical level. This is derived from data analysis using Spearman rank test which shows that ρyx1 = 0.167 (not significant with p<0.05) and ρyx2 = 0.813 (significant with p<0.01). Thus, specifically for Indonesian companies, the present study shows that ERP implementation acted only as a support toward the core business instead of creating a competitive advantage. The reasons behind these findings are: (1) the companies were not ready to make big investment for implementing all modules in ERP, including the specific modules; (2) the companies were afraid to fail in their implementation, so they chose to implement the modules only for supporting the core business; (3) the ERP implementations were not driven by the organizations’ business needs, but by the technology itself; (4) there were other external factors which forced the companies to implement ERP, such as: government policy, bank policy and political issue.