wipawee.uppatumwichian@ics.lu.

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CONFENIS 2012
Ghent, Belgium
September 21, 2012
Understanding the ERP system use in
budgeting
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
Agenda
Introduction
The ERP system literature review
Theoretical background
Research method and case description
Analysis
Conclusions and implications
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
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 case
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
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 &
integration
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
Theoretical background
Structuration theory
Explain system use from a ulitarian perspective
ST focuses on process so its 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
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 reports
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
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
products
Foreign SAP Yes Magnitude
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
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 standards
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
Empirical data and analysis (2/5)
Budgeting
Construction
Consolidation
Monitoring
Reporting
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
Empirical data and analysis (3/5)
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
Constructio
n
Reporting
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
Empirical data and analysis (4/5)
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 SSs
Consolidation
Monitoring
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
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
Integration
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2. Consolidation 3. Monitoring
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Flexibility
ERP systems
Other IS technologies Other IS technologies
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Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012
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 everything