What Happens After ERP Implementation: Understanding the Impact of Interdependence and Differentiation on Plant-Level Outcomes

We present a model of the organizational impacts of enterprise resource planning (ERP) systems once the system has gone live and the “shake-out” phase has occurred. Organizational information processing theory states that performance is influenced by the level of fit between information processing mechanisms and organizational context. Two important elements of this context are interdependence and differentiation among subunits of the organization. Because ERP systems include data and process integration, the theory suggests that ERP will be a relatively better fit when interdependence is high and differentiation is low. Our model focuses at the subunit level of the organization (business function or location, such as a manufacturing plant) and includes intermediate benefits through which ERP’s overall subunit impact occurs (in our case at the plant level). ERP customization and the amount of time since ERP implementation are also included in the model. The resulting causal model is tested using a questionnaire survey of 111 manufacturing plants. The data support the key assertions in the model.