Bundling and Unbundling Tasks in an ERP Acquisition Transaction: An Analysis of Asset Acquisition Incentives

The market for the corporate acquisition of Enterprise Resource Planning (ERP) systems was estimated at $45.5 billion in 2011. Failure of these transactions is a continuing issue for both business and researchers. As the system acquisitions and transactions that govern them grow increasingly complex, a better understanding of the transactions and how to govern them is imperative. This study begins the examination of such transactions through the lens of Incentive-System Theory, an extension of Transaction Cost Economics Theory. A case study was conducted at a large (several hundred outlets) retailer/distributor in the US currently engaged in the acquisition of an ERP through a major ERP vendor. The initial findings suggest Incentive-System Theory is a viable lens and one that may suggest improvements in the way such transactions are structured. Limitations and paths for future research to extend the theory and its application are discussed.