User Adoption and Acceptance of Enterprise Resource Planning (ERP)

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User Adoption and Acceptance of Enterprise Resource Planning
(ERP)
Hisham Alhirz*, Kamaljeet Sandhu**
and Sajeev**
This paper explains a planned study of variables and their
relationships in the adoption and acceptance of Enterprise Resource
Planning (ERP) systems. This potential research would then
investigate the role of culture, resistance, involvement, satisfaction,
software quality and acceptance of ERP, where user perception is the
means to gain in-depth understanding of the role of these variables.
This study would also look into factors influencing the process of ERP
acceptance among users as a model to assess the role of each
variable which is proposed.
JEL Codes: Managing People and Organisation
1. Introduction
1.1 Enterprise Resource Planning (ERP)
ERP plays an important role in integrating an organization’s resources; ERP systems
are associated with integrating various business processes into a central respiratory
(Davnport, 1998; Beheshti, 2006; Nah et al., 2004). They support major
organizational activities such as manufacturing and logistics, finance and accounting,
sales and marketing, and human resources. They also provide a tool to share data
and knowledge among various departments of an organization (Mohamed and
Fadlalla, 2005; MØller, 2005). They reduce cost and also enhance the accuracy of
business processes. Therefore, when ERP systems successfully implemented, ERP
will have positive effects on an employee’s efficiency and then influence positively an
organization’s productivity (Shang and Seddon, 2000).
Beheshti (2006:184) defines ERP systems as “a set of business applications or
modules, which links various business units of an organization such as financial,
accounting, manufacturing and human resources into a tightly integrated single
system with a common platform for flow of information across the entire business”.
Therefore, the integration is a means to make available a flow of all information
through the company (Davenport, 1998:1). ERP systems are not like any other
Information Technology (IT) adoption because ERP systems enforce their way of
doing business (Davenport, 1998:2). ERP systems also require organisational
changes associated with technological, operational, managerial, and strategic and
component related organizations (Ifinedo, 2007:272). Therefore, ERP systems are
*Hisham Alhirz. A PhD student. University of New England, Australia
**Dr. Kamaljeet Sandhu. Faculty of The Professions, School of Business Economics and Public Policy,
Australia. Eamil: [email protected]
***Prof. Sajeev. School of Science and Technology, Australia. Email: [email protected]
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complex projects that require careful investment in terms of money, time and
expertise.
ERP implementation has witnessed a high rate of failure in developed and
developing countries. This failure has been associated with cost and time overruns
(Nagi et al., 2008). According to Aladwani (2001:266), “many ERP systems still face
resistance, and ultimately, failure”. This point of view is also supported by other
researchers. Rasmy et al. (2005:1) believed that more than a half of ERP projects
would be considered failures and therefore many ERP projects would end
disastrously. Wang et al., (2007:200) indicated that 70 percent of ERP
implementations could not deliver required benefits. This implies what Muscatello
and Parente (2006:61) found: “failure rate estimated to be as high as 50 percent of
all ERP implementation.”
ERP failures seem to be universal because developed or developing countries would
face the same fear of failure of ERP implementation (Aldammas and Al-Mudimigh,
2011). ERP failures do not seem to distinguish between the size of organisations
(small or large) or the reputation of organisations. When failures happen, they would
cost billions of dollars.
We are particularly interested in ERP implementations in developing countries as we
use Saudi Arabia as a case study. Apparently, there are few studies associated with
the adoption of Information Technology (IT) in Arab and Gulf States because of the
late adoption of technology (Al-Turki, 2011:4). Arab and Gulf States adopted IT in
1990s while this implies that social and cultural factors (Baker et al., 2007:353) seem
to play a major role in shaping the perception of adoption and acceptance of IT that
is built to Western specificaitons like ERP (Yavas et al 1992; Abul-Gader 1997; AlTurki, 2011). Therefore, it is worth investigating what success factors would influence
the perception of user adoption and acceptance of ERP.
Saudi Arabia might be different from other developing countries with regard to IT
adoption. The Saudi government has played a role in enforcing IT adoption because
of the government’s awareness of IT adoption’s role in enhancing the productivity of
national organizations (Baker et al., 2007:355). For instance, in 2004, the Saudi
Crown Prince issued a decree to the Saudi Computer Society to provide a National
IT Plan for Saudi Arabia in order to support economic development throughout the
kingdom. This would also minimise the digital gap between Saudi Arabia and other
developed countries since Saudi’s government does not face financial limitations like
other developing countries.
Studies (Davis et al., 1989; Igaria, 1993) indicate that IT adoption plays a major role
in increasing organisational productivity, cost reduction and gaining a competitive
advantage over other organisations. This view might be contrary to the Saudi
Arabian perception of IT adoption as productivity gain has not been the only reason
for IT adoption (Al-Gahtani, 2003:58). Saudi Arabia has adopted IT to restrict the
demand for workers or semi-skilled workers because social and economic problems
have arisen from the flow of foreign labor. This is to say that the way IT adoption is
perceived might be different from Western countries.
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2. Literature Review
Studies like Huang and Palvia (2001), Al-Gahtani (2003) and Rajapakse and Seddon
(2005) showed that ERP implementation is influenced by a number of factors such
as a country’s infrastructure, the readiness of organisations and the actual process
of ERP implementation. Below is a brief discussion of these factors in industrialised
countries and developing countries.
It is possible to say that North America and Europe have been the largest ERP
markets (Huang and Palvia, 2001:279; Al-Gahtani, 2003:58) because these
countries have the necessary infrastructures to effectively ease IT diffusion. This
implies other factors associated with national and environmental aspects, such as
having a strong economic base and growth, are required for implementing new
technology. From an organizational perspective, companies in developed countries
have high IT maturity and also favorable computer cultures that apparently enable
them to adopt complex technology faster than developing countries.
Huang and Palvia (2001:283) suggest the reasons above as a hindrance for ERP
adoption in developing countries. For example, developing countries appear to have
a poor record in infrastructure and suffer from the consequences (Rajapakse and
Seddon, 2005:2). This indicates that developing countries still suffer from the lack of
skills to implement ERP systems and a lack of telecommunication infrastructure.
Infrastructure is supposed to be aligned with other factors, such as governmental
policy encouraging foreign investment and fair competition.
From the organisational perspectives, the low IT maturity and small firms also seem
to be reasons preventing companies in developing countries from adopting ERP.
Small firms play a major role in the national economy of developing countries; as a
result, this could create problems associated with the affordability and availability of
ERP implementation. Small firms might also be afraid of changing their business
processes since ERP imposes its way of doing business.
Rajapakse and Seddon (2005:2) indicated that most Asian countries could not afford
the high cost of ERP systems (hardware, software and support) due to the national
per-capita incomes. As a result, high costs might lead organizations to seek lower
demands. Another issue within developing countries is that individuals and
organisations might not be prepared for the complex level of ERP integration and
this might lower the rate of ERP adoption as well. National and organizational culture
might also prevent ERP adoption since developing countries have different cultural
and business practices.
Technology adoption is believed to happen in a social level context rather than in a
cultural vacuum (Steers et al., 2008:256). It entails values and beliefs that innovation
might bring along with changes. It is not a straightforward process; otherwise, most
nations would have adopted new technologies regardless of cultural differences.
Different nations would raise an issue of how the new adoption of technology would
affect their local culture, where the new technology could then be abandoned. The
problem would rest with some Western scholars, who might use their own
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perceptions about new products and new technologies to identify reasons that might
prevent a particular technology from being adopted in a country other than theirs.
2.1 Critical Success Factors (CSFs) of ERP Implementation
Rochtart (1979) was the pioneer as he was the first person trying to identify CSFs in
the Information System (IS) realm (Moohebat and Jazi, 2010:99). CSFs are defined
as “Factors which, if addressed, significantly improve project implementation
chances” (Pinto et al., 1987). CSFs would then receive a great deal of attention from
the management perspective if IT projects are under implementation. Therefore, not
addressing CSFs while implementing an IT project might give inadequate results
because ERP systems are complex and integrated in nature, require large
investments of money and time, and have high-implementation failure rates (AlMudimigh, 2007:867). Organisations implementing ERP systems would then be
encouraged to examine other organisations' experience in learning from their
practices and success factors in ERP implementation.
Bruno and Leidecker (1984) also define CSFs as “those characteristic, conditions or
variables that, when properly sustained, maintained, or managed, can have a
significant impact on the success of a firm competing in a particular industry”. CSFs
would then enable organisations to have competitive advantages such as increasing
organisational productivity and cost reduction because of ensuring the success of IT
projects (Davis et al., 1989; Igaria, 1993). Rasmy et al. (2005) define CSFs of ERP
implementation as “factors needed to ensure a successful ERP project”. Apparently,
the CSFs of ERP projects are an interesting area of study because they would be
associated with the term success that is related to technical and organisational levels.
There are a wide range of CSFs of ERP systems, but the question remains about the
reasons for the diversity of CSFs of ERP implementation (Zhang et al., 2002:237).
This phenomena could be explained within the context of different samples used and
research settings; besides, researchers would undertake their researches in different
countries, from which arise different challenges and issues because of differences in
culture, government regulation and economic growth (Nagi et al., 2008). For
example, Sheu et al. (2004) suggest that language, culture, politics, government
regulations, management style, and labor skills impact various ERP implementation
practices in different countries. Within the context of culture, Sheu et al. (2004:367)
point out that national culture has a significant influence on ERP implementation
because of its influences on training programs important for ERP system success.
They also claim that cultural perceptions about information format could also affect
the ERP implementation.
Different researchers like Nah et al. (2001), Al-Mashari et al. (2003) and Somers and
Nelson (2004), Holland and Lightstudied (1999) conducted different studies to
analyse the CSFs of ERP implementation. Nah et al (2001) presented 11 success
factors, where they studied within the context of ERP phases. AL-Mashari et al.
(2003) analysed success factors from five different perspectives, Setting up,
Implementation, Evaluation, ERP Success and ERP Benefits. Somers and Nelson
(2001) explained the importance of success factors within phases of ERP life cycle.
Ibrahim et al. (2008) classified the soft factors, CSFs, into three major groupings of
strategy, people and organisational.
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3. Aims
The main focus of this study is to investigate users’ perception of ERP
implementation. This planned research would then aim at understanding the
formation process of ERP adoption and acceptance from user's perspectives. The
ongoing research does not assume to be a psychological explanation of ERP
adoption and acceptance; rather, it provides an in-depth understanding of how
system users perceive some influential factors in relation to their adoption and
acceptance of ERP such as the role of power distance or uncertainty avoidance
during the implementation of ERP. Another focus of this study is to draw a
relationship, if any, between the cultural context of Saudi Arabia and some potential
success factors of ERP implementation.
4. Significant
This proposed study is in hope to enable researchers to gain more understanding of
Saudi' context with ERP adoption because Saudi Arabia has not fallen far from
Western countries in ERP adoption (Al-Turki, 2011). Therefore, investigating some
factors would bridge the gap, if any, of how a developing country or individuals would
adopt ERP in comparison to Western countries.
For practitioners, investigating user perceptions will provide organisations with a tool
to manage ERP users better during ERP implementation. Highlighting these
differences, if any, will bring in new strategies that enable organisations to overcome
difficulties during different stages such as stabilising, improvement and postimplementation of ERP.
5. Theories Studied and Adopted
There are three theories forming the foundation of the intended study and the
model’s constructs. These theories are the Technology Acceptance Model (TAM),
Diffusion of Innovation Theory and the Hofstede’s Theory.
First of all, this study is associated with users' perceptions and factors influencing
their perceptions to adopt and then accept ERP. For this reason, TAM contributes to
providing a precise understanding of how user perceptions can play a role in
promoting adoption and acceptance of a particular system such as ERP.
Users’ attitudes towards accepting technology have been an important realm of
study over two decades now (Chuttur, 2009, Bagozzi, 2007). In the 1970’s, there
was a great emphasis on predicting system use because of growing technology
needs and increasing failure of system adoption in organizations (Davis, 1989). Most
studies failed to explain how users would accept a system, where TAM came out as
a reaction to explain these difficulties in relation to system design before users would
experience them (Dillon and Morris, 1996:online). TAM has played an important role
since TAM was introduced to the information system field in the late 80’s (Silvo, 2007,
King and He, 2006).
TAM is derived from the Reason Action Theory (TRA) developed by Fishbein and
Ajzen (1975), where two factors are assumed to predict user acceptance of any
technology, namely perceived usefulness and perceived ease of use. Davis (1989:
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320) defined perceived usefulness as “the degree to which a person believes that
using a particular system would enhance his or her job performance”. On the other
hand, Davis defined perceived ease of use as “the degree to which a person
believes that a particular system would be free of effort”. This definition is related to
whether a system user would be free from difficulty or great effort.
Secondly, Diffusion of Innovation Theory (DoI) will also form a base of the potential
study because it will increase the awareness of factors influencing user adoption
behaviour of technology. Diffusion is defined as “the process by which (1) an
innovation (2) is communicated through certain channels (3) over time (4) among the
members of a social system” (Rogers and Scott, 1997:para. 12). Diffusion represents
a unique type of communication associated with spreading messages that are
perceived as new ideas. As a result, the diffusion of new ideas includes four main
aspects/elements: innovation, communication channels, time and the social system.
Finally, this study will also consider culture theories like Hofstede's theory of culture.
Since the potential study will investigate ERP adoption and acceptance, the role of
culture during the implementation will also be highlighted within the context of power
distance, uncertainty avoidance and individualism vs collectivism (Hofstede, 2001).
Hofstede (2001) defines culture as “A collective programming of the mind which
distinguishes one group from another”. Culture is associated with learning values,
partaking of rituals, modelling against heroes and understanding symbols (Jones
2007). As a result, it is a slow process of growing into a society where different
factors influence people’s cultures.
6. Research Model
The research model (see figure 1) is constructed to answer the ongoing research
question: what success factors would influence the perception of user acceptance of
ERP. Therefore, investigating differences among different ERP users could answer
the above question. This research model is derived from intensive literature reviews,
where the model of Delone and Mclean (1992) has been the trigger idea of
constructing the following model. It is true that the following model does not measure
ERP success as the model of Delone and Mclean (1992, 2003); rather, it provides indepth understanding of users' perception of ERP acceptance during the
implementation stage of ERP life cycle. The implementation stage of ERP seems to
be a critical stage because ERP users would interact with the system and then
describing differences, if any, would be taken into account.
The developed model is a tool to explain factors influencing users’ acceptance of
ERP throughout the recognition of different users' perspectives. The model's
variables and success factors during the implementation stage are assumed to be
interrelated because adoption and acceptance of ERP during the implementation
stage are mediated by success factors that ensure the success of ERP
implementation in technical, organisational and cultural levels.
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Perceived cultural
dimensions to ERP
software (VAR1)
H1
Perceived user resistance
to ERP software (VAR3)
H2
Perceived User
Involvement with ERP
Software (VAR2)
H4
Perceived software
quality of ERP software
(VAR5)
H3
Perceived user
satisfaction with ERP
software (VAR4)
H6
User acceptance of ERP
system (VAR6)
H5
Figure 1 Perception of User Acceptance Model (PUAM)
6.1 Hypotheses Testing
The hypotheses that will be tested in this research are discussed below:
The cultural dimensions identified by Hofstede’s theory such as power distance,
uncertainty avoidance and individualism are measured on a scale of 0 to 100 (Mooij,
2000). The scores for cultural dimensions differ from country to country. For example,
Saudi Arabia has higher power distance and lower individualism, whereas Australia
and the United State have lower power distance and higher individualism values.
Since the level of ERP acceptance in different parts of the world is not uniform
(Agouram, 2009; Davison, 2002; Chadhar and Rahmati, 2004; Sheu et al., 2004), it
is possible to hypothesise that culture has an influence on the perceived user
resistance to ERP.
H1:
Perceived cultural dimensions (VAR1) are related to perceived user
resistance to ERP software (VAR3).
When users are involved in implementing ERP systems from the start, they will be
able to perceive their important roles in participating in the ERP implementation. This
assists users in understanding the benefits gained from such involvement and
therefore users will perceive such benefits while interacting with the ERP system
(Wu & Wang 2006). Additionally, user involvement assists users to develop realistic
expectations about ERP systems, to resolve conflict about design issues and to
decrease their resistance to change (Ives et al., 1983; William et al., 1989). As a
result, users will be satisfied because their potential requirements are likely to be met.
Based on such an argument, it is possible to hypothesise that user involvement has
a positive influence on the perceived user satisfaction with ERP systems.
H2:
Perceived user involvement with ERP software (VAR2) is related to perceived
user satisfaction with ERP software (VAR4).
If user satisfaction is positively perceived, such a positive perception would affect
Perceived User Resistance to ERP software (Hassenzahl, 2001)
H3:
Perceived user satisfaction (VAR4) affects perceived user resistance (VAR3)
to ERP software.
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When users perceive ERP systems as unfriendly systems in terms of ease of use,
their perception will influence their psychological will to use ERP systems (Lin, 1994).
The same scenario might also arise when ERP users suspect the accuracy of data
and the consistency of ERP systems. Additionally, ERP users are likely to form a
negative attitude when ERP systems are delivered over budget or later than
expected. If user resistance is associated with a negative attitude towards ERP
systems, such an attitude would prevent users from perceiving benefits of ERP
systems, and consequently from perceiving Software Quality. As a result, it is
possible to hypothesise that perceived user resistance to ERP software influences
perceived software quality of ERP software.
H4:
Perceived user resistance (VAR3) to ERP software influences perceived
software quality of ERP software (VAR5).
User satisfaction with ERP software is enhanced by closing the gap between user
requirements and the quality of ERP software (Lin, 1994). When users are involved
in ERP implementation, their involvement will enhance their satisfaction with ERP
software. Therefore, user satisfaction is improved because they perceive the quality
of ERP software as compatible and task relevant to their use (Holsapple et al., 2005)
H5:
Perceived user satisfaction with ERP Software (VAR4) has a positive
influence on perceived software quality of ERP software (VAR5).
If users perceive the good qualities of ERP systems, they will be more open to
adopting and then to accepting ERP systems. As a result, users will develop a
positive attitude toward the software quality since they accept the use of ERP
systems.
H6:
Perceived software quality of ERP software (VAR5) influences user
acceptance (VAR6) of ERP systems.
7. Research Methodology
Social context is a complex subject to the extent where values, beliefs and customs
play a role in influencing social phenomena and also in distinguishing a society from
others. Social science research, therefore, is about people done by people, where
qualitative approaches like case studies could handle a cultural context better. This
research is not only concerned with the repetition of the exact condition of a previous
study but with understanding human contexts (Metcalfe, 1996:18-19). Thus, human
behaviors cannot be treated as physics isolated from the influence of the
environment around. Since studying perception and acceptance require more
involvement with people in order to realize their views through a dialogue, the
emphasis is associated with understanding people’s perception not with the
measurement as physics would do.
A case study will be a technique used to gain data that provides an in-depth
understanding of the model’s variables (Saunders et al., 2007). Therefore, this
research intends to examine a case study to understand how ERP users perceive
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their adoption and acceptance of ERP. A case study is also meant to verify the
proposed model's variables.
Survey research is concerned with understanding the relationship between variables
within a model or projecting findings descriptively to a predefined population. Using
survey means using quantitative analysis to meet the purpose of the research. It is
understood that the subjects studied could be individuals, organisations or
communities. Subjects can also be projects, applications or systems (Pinsonneault
and Kraemer, 1993:5).
Surveys are considered to be an important tool to investigate people's past
behavioural experience. This is why using a survey is an effective means to ask
users about their experience with ERP system, where their attitudes can be
compared to draw a deep analytical understanding. This will help in tracing changes
of users' attitudes over time.
7.1 Sampling
The population for sampling will be different organizations that have implemented
ERP systems in Saudi Arabia in the last five years. The potential participants will be
from 250 to 300 participants. People involved in ERP systems from top management
and users are the focus of the sample.
7.2 Data collection
The first stage is a preliminary stage. This stage aims at developing questions to
interview people from different organizational levels such as executive managers,
operational managers and users in general. These interviews being a part of a case
study, might be formal or informal ones. The preliminary stage helps in providing
broad ideas about ERP implementation and adoption. The preliminary stage will also
assist in understanding early and later stages of ERP implementations and
adoptions. In other words, the preliminary stage will help in understanding the
process of ERP implementation and adoption and also difficulties that are associated
with the implementation stage of ERP.
The Final stage is to develop a questionnaire based on the findings from the
previous stage. The study can be tested and validated as the questionnaire can
target a bigger sample of the proposed population.
8. Conclusions
This paper described a planned study on the relationship between cultural variables
and ERP acceptance in a developing economy. ERP systems are often built to
Western specifications and when they are implemented in developing countries,
extraneous factors can influence their acceptance. Cultural differences, we believe,
is one potentially important factor. We have developed a model and associated
hypotheses based on the Technology Acceptance model (TAM) Diffusion of
Innovation (DoI), and Hofstede’s cultural dimensions. Details of an appropriate
research method to conduct the study are also provided.
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