Enterprise Systems: The Quality of System Outputs and their

Perceived Business Value

Ahed Abugabah

Institute College of Technological Innovation, Zayed University, Department of Information Technology,

Khaleifah City Street, Abu Dhabi, U.A.E.

Keywords: Enterprise Systems, Business Value, System Characteristics, System Quality.

Abstract: Organizations are exploring the opportunities offered by information technology to reduce cost and improve

overall performance and gain more efficiency. Enterprise Resource Planning Systems are viewed as powerful

solutions that help improve productivity, performance and overall quality. However, effective use and

beneficial outcomes from such systems are nether guaranteed nor recognized. This study aimed at evaluating

the business value of ERP systems and perceived benefits at the user level. This short paper briefly presenting

some empirical results related enterprise system impacts and benefits. The reported results in this paper are a

part of a larger project investigating business value of Enterprise Resource Planning Systems (ERPs). The

focus of this paper is on technical system factors including system features, system quality, information

quality and their impacts on business value of ERPs perceived by system users on particular aspects such as

efficiency, creativity and effectiveness.

1 INTRODUCTION

Organizations are exploring the opportunities offered

by information technology to reduce cost and

improve overall performance and gain more

efficiency. ERP systems are viewed as powerful

solutions that help improve productivity,

performance and overall quality. However, effective

use and beneficial outcomes from ERP systems are

not guaranteed nor recognized by many

organizations. Existing research investigating ERP

investments and business value reported mixed

results. Huge performance differences have been

observed across ERP adopters, even for organizations

in the same industry that adopted the same ERP

systems from the same software vendors. This could

be for many reasons, despite the fact that prior ERP

productivity studies had their analytical rigor, they

did not include user’s factors and/or user evaluation

of productivity impacts of ERPs. They are at best

focused on firm and business environmental factors,

thereby over- looking the impact of firm-specific

features. This led to lack of research at he user level

in this area where the actual benefits are valued,

and/or ignorance of user evaluations of the ERP’s

impacts and benefits. Current research generally

considers system usage only as the dependent factor

of system impacts without considering the perceived

benefits recognized by individual users. Therefore,

this paper is an attempt to broadly understand the user

viewpoints about ERP systems and how these provide

payback at the user level.

Prior research considered organizational benefits

and impacts as a main business value of information

systems, including financial, economic and market

indicators that are usually measured at the

organizational level. However, we conjecture that the

central tool that creates and perceives the value and

benefits from ERPs is the user. Unfortunately, user

aspects such as user perception, evaluation and

requirements in general did not receive enough

attention from researchers. Furthermore, the history

of ERP systems failures was partially attributed to the

lack of fit between the systems and user needs and

task requirements. For example, previous studies

indicated that many large ERP projects fail due to the

mismatch with user requirements and the inability to

realize expected benefits and outcomes at the user

level (Ahmad and Cuenda, 2013; Abugabah et al.,

2015).

As a consequence, researchers and practitioners

have a strong desire to investigate the causes and

factors that lead to operational benefits of ERP

338

Abugabah, A.

Enterprise Systems: The Quality of System Outputs and their Perceived Business Value.

DOI: 10.5220/0006351203380342

In Proceedings of the 19th International Conference on Enterprise Information Systems (ICEIS 2017) - Volume 1, pages 338-342

ISBN: 978-989-758-247-9

systems. Thus, studying perceived business value and

benefits at the user level in ERP system environments

will help clarify the complexity of the relationship

between ERP systems and payoff of such system,

with the assumption that ERP users are the ones who

should be able to evaluate the systems and judge their

values (Addo-Tenkorang and Helo, 2011; Matende

and Ogao, 2013; Baykasoglu and Golcuk, 2017).

Accordingly, this study used perceived user

evaluation of system characteristics and system

quality as a tool to evaluate ERP systems’ business

value in enterprises.

Research on IT payoff and productivity impacts

of IT reported mixed results and in most cases these

results were anecdotal and/or equivocal (Abdul Kadir

et al., 2015; Hustad et al.2016; Parhizkar and

Comuzzi, 2017; Abugabah and Alfarraj, 2015). A

noteworthy of the main characteristics of previous

studies clear dependence on particular environment

and organizational measures and ignoring impacts

resulted on other essential aspects at the either

organizational unit levels or individual levels, such as

IT on effectiveness, quality and customer

satisfactions among others (Ahmed and Haddara,

2012; Alfarraj and Abugabah, 2017).

In the ERP context, the business value and impact

of such systems deemed to be an important research

topic that drawn a great amount of attention by both

researchers and practitioners with a strong desire to

identify the main contributions and benefits to these

systems to organizations (Bokovec et al., 2015; Ala et

al., 2010; Nwankpa, 2015).

2 STUDY DESIGN AND RESULTS

2.1 Research Model

The current study utilized a quantitative research

approach and collected data from ERP users in the

mean of survey questionnaires in healthcare industry.

This study focuses on two main aspects of ERP

system features including information quality and

system quality and characteristics and how these

aspects contribute to unrecognized business value

from a user perspective. The study is a part of a larger

study, which was conducted in healthcare

organizations utilizing Enterprise Resource Planning

Systems (ERP) with the aim of testing the impacts

played by above mentioned factors and subsequent

measures on user evaluation of the business value of

ERPs implemented (Besik, 2006). Apart of the factors

that were investigated in the whole project are

illustrated in the figure below, representing one stage

only of the study. The study factors and their

proposed relationships in this stage are illustrated in

figure 1.

2.2 Demographics of the Sample

As shown in Table 1, a total of 387 questionnaires

were useable and were analysed for this study. The

gender distribution was different to the general

population, with 21.1% of the study sample being

male, while 72.9% were female.

Figure 1: The study model.

ERPSystem

outputsand

Information

Quality

Relevancy

Accuracy

Timeliness

Appropriate

amount

Accessibility

PerceivedUserImpacts

Efficiency

Effectiveness

Creativity

ERPSystemQuality

andCharacteristics

Reliability

Correctness

Responsetime

Integration

Navigation



BusinessValueofERPsystems

Enterprise Systems: The Quality of System Outputs and their Perceived Business Value

339

Table 1: Demographics of the sample (N=387).

Factor Classification Freq %

Gender

Male

Female

105

282

27.1%

72.9%

Usage type

Once a week

Several times a

week

Once a day

Regular use

298

6.5%

12.1%

4.4%

77%

Experience

with ERP

1-3 years

4-6 years

7-9 years

> 9 years

148

104

102

38.2%

26.9%

26.4%

8.5%

Most of the study participants were regular users

of ERP systems, using the systems on a daily basis

(77% of the study sample), while 4.4% of the

participants used the systems once a day, 12.1% of

the users used the systems several times a week and

6.5% of the users used the systems once a week. In

addition, 38.2% of the users had from 1 to 3 years’

experience with the systems, 26.9% of the users had

from 4 to 6 years’ experience with ERP systems,

26.4% of the users had from 7 to 9 years’ experience

with the systems, while only 8.5% had more than 9

years’ experience with ERP systems. This indicates

that most participants of the study have an appropriate

level of knowledge and usage of the system to

evaluate the main benefits of reflect the real business

value of these systems.

2.3 Validity and Reliability

Factor analysis was also conducted to measure scale

validity and reliability. SQ measures including

reliability, correctness, response time and integration.

As shown in Table 2, all items have high loading with

their respective factors. Thus, all items will be

included in the analysis. Reliability was measured

using Cronbach's alpha was found that all factors

have high reliability. The alpha value was reported in

brackets for each factor.

Factor analysis was conducted for information

quality measures including accessibility,

completeness and timeliness, but accuracy and

relevancy were not included in the analysis as they

were measured by two items only. The analysis was

conducted with these two items and the results

showed that these items were highly correlated, hence

they were retained. As shown in table 3, most items

have high loadings on their corresponding factors.

Two items were dropped from any further analysis as

they did not have high loadings with their respective

factors. The results indicated a high degree of validity

for items used to measure information quality and

ERP outputs.

Table 2: Results of factor analyses of SQ.

Item

*/Factors loading ( = .78)

Integ Rel Res Corr

Integ2 .782 .198 .155 .154

Integ1 .768 .030 .167 .198

Integ3 .581 .140 .247 .257

Relia2 .143 .832 .185 .227

Relia1 .111 .669 .262 .173

Res2 .311 .321 .749 .215

Res1 .222 .245 .733 .241

Corr1 .285 .229 .210 .754

Corr2 .278 .272 .246 .596

*1. Integration, 2. Reliability, 3. Response time, 4.

Correctness

Table 3: Factor analyses of IQ ( = .81).

Item

Factors loading

( = .81)

Acce

Complet Tim

Access2 .827 .268 .228

Access1 .711 .283 .332

Complet1 .400 .500 .302

Complet2 .409 .416 .164

Tim2 .247 .253 .691

Tim1 .336 .407 .453

Similarly, factor analysis was performed for

perceived business value measures including

efficiency, effectiveness and creativity

(innovativeness). As shown in Table 4, all measures

loaded highly on their respective factors indicating a

high level of validity of the scale measures.

Table 4: Factor analysis for ERP business value.

Item

Factors loading ( = .83)

Effici Effec Crea

Effici1 .810 .229 .253

Effici6 .785 .459 .202

Effici2 .767 .213 .363

Effici4 .765 .470 .165

Effici3 .765 .339 .241

Effici7 .745 .558 .233

Effici8 .692 .567 .276

Effici5 .655 .267 .337

Effec1 .412 .715 .434

ICEIS 2017 - 19th International Conference on Enterprise Information Systems

340

Table 4: Factor analysis for ERP business value (cont.).

Item

Factors loading ( = .83)

Effici Effec Crea

Effec2 .449 .609 .407

Effec3 .547 .599 .383

Crea1 .256 .234 .914

Crea1 .244 .256 .833

2.4 Analysis and Findings

Regression analysis was used to assess the impacts of

system features and characteristics measures on

perceived business value of ERP recognized by users.

As shown in the 5, ERP system factors affect business

value of ERP systems significantly and positively (β

= .697, P < .01). The analysis revealed a regression

function (R = .643). ERP users indicated that system

features are critical factors that contribute to business

impacts of ERP systems. The results indicated a

significant relationship between system features and

characteristics and business value of ERP systems as

shown in table 6, confirming what DeLone and

McLean (2003) proposed in their original model

related to system impacts, and signifying the

importance of ERP technical characteristics for users

when evaluating such a system. By utilizing these

advantageous features ERP users indicated that their

task can be done easier and faster and the y are able

to provide solutions to daily routine problems more

efficiently in addition to improving their ability in

providing more creative ideas to complicated

situations as the system provides complete and full

information in timely manner.

Table 5: Results of regression analysis.

Factors* B S.E β R R

F Sig

Constant

SQ: H

.033

1.23

.189

.059

697 .643 .586 516.4

.798

.001

Constant

IQ: H

.450

1.21

.278

.076

.590 .678 .437 218

.190

.002

In relation to the impacts of information quality

and ERP outputs on perceived business value of ERP

systems the relationship was found significant as the

whole model was significant (F = 198, R = .678, P <

.01; R2 =. 437, β = .580), as shown in the table 5.

System outputs play a critical role in helping users

perform their job and task efficiently. The format of

the outputs, and the completeness of the information

make their performance more effective. ERP system

stratifies a firm wide information needs and

requirements and ensure that all needed information

is available to those who need it when they need it.

This becomes true as users indicated that accessibility

of the information saves time and enhances task

accomplishment. Furthermore, users also indicated

that their performance efficiency and effectiveness

have been significantly improved as a result of

information completeness and updated in a timely

manner.

3 CONCLUSIONS AND

IMPLICATIONS

The findings demonstrated that ERP systems have

significant benefits and impacts recognized by users.

The results of the analysis showed that all factors

contribute to perceived values of ERPs by users.

Previous studies indicated that SQ and IQ are very

important factors that affect benefits of use (Ifinedo

and Nahar 2006).

ERP users reported significant improvement in

process and task performed and experienced thereby

increased efficiency of their work. Furthermore,

system features contribute in enhancing quality and

efficiency and help users being creative and able to

solve problems and generate new ideas related to their

work. The results provided a satisfactory level of fit

between ERP systems and user requirements and

work needs taking into account sophisticated

characteristics of the systems. System compatibility

and integration were fount to essential for users and

help improve the impacts of the system in a

remarkable way. Therefore, system vendors and

designers should always consider such characteristics

when developing and designing the system package

in different industries to fit exactly the business

process, user needs and task requirements as well as

different types of users.

Prior research highlighted the importance of the

fact that organizations are willing to continue

implementing ERP systems, if perceived benefits

surpass perceived risks and costs. Therefore, these

organizations must look into benefits gained at the

user level and mining ERP users’ perceived benefits,

in order to evaluate the actual ERP project and their

payoff. As such, this study offers a useful approach

towards understanding the business value and

benefits of ERP systems and the payoff of system

usage at the user level by covering relatively different

factors to evaluate the actual individual impacts

received by different types of ERP users.

Enterprise Systems: The Quality of System Outputs and their Perceived Business Value

341

This study highlights some more clarifications

and about the potential benefits of the ERP’s outputs

for users in business organizations. This is becoming

important as organizations are spending huge

amounts and countless hours in adopting and

installing ERPs. The study is deemed to be useful in

explaining how users perceive information systems

value and draw practitioners and researchers’

attention to consider other factors such as users

beliefs, evaluation and values recognized by users

when evaluating IT implementations and projects

payoff, not only financial, economic and marketing

measures and how business values can be obtain from

ERP systems.

Like other studies, this study has some limitations.

Firstly, factors included in this study deemed to be

important. However, other factors not covered in this

study might be also important and contribute

significantly to system value and impacts such as

usage types, user jobs and managerial levels.

Notwithstanding of the relationships between ERP

systems’ factors and business value and user

evaluation, such relationships may not apply to other

environments. Therefore, it would be useful to

determine if these relationships will work in the same

way in different industries with different types of

users. Lastly, the results reported in this study and the

factors included in the study model represent only a

part of a larger undergoing project investigating the

value of ERP systems in health care organizations.

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