Extracting Value from ERP Investments: A Closer Look at the Integration Process

When managers consider making an investment in Enterprise Resource Planning (ERP), as with any other investment, a major concern is whether this investment will add value to their organization. This paper suggests that performance differences across firms investing in similar ERP systems can be attributed to the way the technology is integrated with the actual IT infrastructure and business processes of the firm. More precisely, it is argued that depending on manager’s perceived gap between the ERP system and actual business processes and their level of alertness to opportunities, four value creation integration processes, namely the imitative, incremental, innovative, and serendipitous, can be identified. This paper describes these four processes and validates them through six case studies. Understandings of the process to integrate ERP investments with existing business processes and IT infrastructure should helps explain how and why firms investing in similar ERP may have different outcomes.