Understanding the ERP system use in budgeting

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Wipawee Uppatumwichian, Understanding the ERP system use in budgeting

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Understanding the ERP system use in budgeting

  1. 1. Understanding the ERP system use in budgeting wipawee.uppatumwichian@ics.lu.se CONFENIS 2012 Ghent, Belgium September 21, 2012
  2. 2. Agenda• Introduction• The ERP system literature review• Theoretical background• Research method and case description• Analysis• Conclusions and implicationsLund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
  3. 3. Introduction• Research calls on how ERP systems support – Decision-making – Management control (Grandlund, 2011; Rom & Rhode, 2007)• Context - The dual role of budgeting – Decision making  flexibility – Management control integration (Simons 1994)• Research aim – Uncover how ERP system is used/ not used – Explain why that is the caseLund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
  4. 4. The ERP system literature review• Flexibility • (-) ERP stabiles org. (Light et al. 2001, Soh et al. 2000) • (+) ERP improves flexibility from modular infrastructure (Shange & Seddon 2002, Brazel & Dang 2008)• Integration • (-) ERP does not define what integration is (Mouritsen 2005, Dechow et al. 2007) • (+) ERP central database enables integration & control (Quattrone & Hopper 2005, Chapman & Kihn 2009)• No consensus whether ERP promotes/prohibits flexibility & integrationLund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
  5. 5. Theoretical background• Structuration theory – Explain system use from a ulitarian perspective – ST focuses on process so it’s suitable to study budgeting seen as a “process”.• Conflict and contradiction – Oppositions can reveal tensions & ambiguity – Conflict  activity level • “struggle b/w actors and collectives in social practices” – Contradiction  structural level • “opposition of structural principle” (Giddens, 1979)Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
  6. 6. Research method & case description (1/2)• Research design – Interpretative case study – Multiple case study • 11 for-profit organizations from Thailand • Criteria: Listed org. which use ERP & budgeting• Data collection – Primary: interviews with 21 business controllers • e.g., CFO, Accounting VP, Planning VP – Secondary: internal documents, annual reportsLund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
  7. 7. Research method & case description (2/2) No. Case Industry Main activities Owner ERP Spreadsheets BI 1 A Energy Power plant Thai SAP Yes Magnitude 2 B Energy Oil and Petrochemical Thai SAP Yes Cognos 3 C Energy Oil refinery Thai SAP Yes - 4 D Food Frozen food processor Thai SAP Yes - 5 E Food Drinks and dairy Foreign SAP Yes Magnitude products 6 F Food Drinks Foreign SAP Yes Own BI 7 G Food Agricultural products Thai BPCS Yes - 8 H Automobile Truck Foreign SAP Yes - 9 I Automobile Automobile parts Thai SAP Yes Own BI 10 J Electronics Electronic appliances Foreign JDE Yes Own BI 11 K Hospitality Hotels and apartments Thai Oracle Yes IDeaS Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
  8. 8. Empirical data and analysis (1/5)• Flexibility – Definition: discretions over the use of budget system for decision making through IS technology (Ahrens and Chapman 2004) – Flexibility is driven by bottom up budgeting to reflect environmental changes at local unit level.• Integration – Definition: standardization of data definitions and structure using common conceptual schema across collection of data source (Goodhue et al. 1992) – Integration is driven by management control to compare performances against pre-determined standardsLund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
  9. 9. Empirical data and analysis (2/5) Construction Reporting Budgeting Consolidation MonitoringLund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
  10. 10. Constructio n Empirical data and analysis (3/5)Reporting • Conflict to examine flexibility – Budget construction • ERP system is not used (0/11) – Too generic to support budgeting – Not flexible to accommodate environmental changes » More practical to use SSs – Budget reporting • ERP is not used for advanced financial report (11/11) – Not flexible for advanced financial report » More practical to use SSs Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
  11. 11. ConsolidationEmpirical data and analysis (4/5) Monitoring• Conflict to examine integration – Consolidation • ERP system is not used for consolidation (0/11) – Not the norm to consolidate on ERP » More practical to use SSs – Monitoring • ERP system is used for monitoring (3/11) – Complication to set up budgeting along with ERP » More practical to use SSsLund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
  12. 12. Empirical data and analysis (5/4)• Contradiction to examine budgeting & ERP – Budgeting operates in term of flex. & intrg. – ERP operates in term of intg. alone ERP systems Integration 2. Consolidation 3. Monitoring Budgeting n tio 4. uc re po str rti on ng 1.c Flexibility Other IS technologies Other IS technologiesLund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
  13. 13. Conclusions and implications• ERP system is not used to support budgeting – A contradictory relationship b/w ERP & budgeting – ERP supports intg. but budgeting calls for flex. & intg. – Result SSs and BI used in budgeting• Implications – Academics • Explains limited ERP use in budgeting • Explains that controllers recognizes ERP limitations – Practitioners • Take informed decision in IS investments • ERP is not good for everythingLund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
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