Organizational performance effects of ERP systems usage: The impact of post-implementation changes

This paper examines the long-term financial performance effects of ERP system changes/revisions for firms that have previously reported ERP adoptions. The study is motivated by the mixed results of recent studies examining the financial effects of ERP systems and by studies which demonstrate that ERP implementations are modular in nature and thus may yield organizational performance gains or losses as a result of discrete changes that might be initiated after the initial system implementation. This study empirically examines the extent to which discrete changes to ERP systems over a post-implementation time-frame impact on firms' ability to deliver long-run financial performance. It further examines whether the timing and nature of system transformation during the post-implementation period presents a significant moderating condition of ERP performance outcomes. We specifically consider the ERP-adopting firms previously examined by Nicolaou [Nicolaou, A.I. 2004a. Firm performance effects in relation to the implementation and use of enterprise resource planning systems. Journal of Information Systems 18 (Fall): 79–105] and track them for changes/revisions in the form of enhancements, upgrades, abandonments and switches during the post-implementation period. Two research hypotheses are developed in the study which posit that both the nature and the timing of system implementation changes represent significant conditions for ERP post-implementation success. From the original sample of 247 firms used in Nicolaou [Nicolaou, A.I. 2004a. Firm performance effects in relation to the implementation and use of enterprise resource planning systems. Journal of Information Systems 18 (Fall): 79–105], a total of 83 firms were identified to report 182 discrete changes during their ERP system post-implementation period. The results suggest that, in general, subsequent changes in ERP systems often help resolve or surface implementation issues that affect subsequent use of and success from the use of such systems. Specific findings indicate that ERP-adopting firms, which initiate early enhancements in the form of either add-ons or upgrades, may enjoy superior differential financial performance in comparison to other ERP-adopting firms' differential performance. Late enhancements and both early and late abandonments lead to apparent differential performance deterioration for the ERP-adopting firms. These findings support the theoretical propositions developed in the study The