What happens with control when fundamentals change? : A study of how an ERP implementation may affect management control by causing changes among supporting roles and activities

University essay from Högskolan i Jönköping/IHH, Företagsekonomi; Högskolan i Jönköping/IHH, Företagsekonomi

Abstract:

As the society becomes more internationalized and companies spread operations to multiple locations in different countries, there is a growing need for systems that can link information between different company departments and make it available for users at any time. Over the years, companies have used several information systems for different business activities and purposes, but due to complexity and high costs, a need for an integrated platform has emerged. A system that can connect different business functions within a company, and at the same time link systems owned by customers and suppliers through modern technology is an Enterprise Resource Planning (ERP) system.

Today, management control may be regarded as an information intensive company process where managers can improve control by working with relevant and accurate information. An ERP system represents a natural bearer of that information, and because of that, it becomes interesting to analyze the effects on management control when its fundamentals (the ERP system) change. As previous publications mostly have examined organizational changes and effects of ERP implementations from a more general perspective, the authors realize a need for addressing ERP systems in relation to management control. Though prior research indicates that implementation of ERP systems have affect on management control, there is still uncertainty how it may be affected. The aim for this study is therefore to create understanding of how a major change such as an ERP implementation may affect management control by causing changes among supporting roles and activities.

In order to achieve the purpose for this work, the authors have exemplified an ERP implementation through a case study of a manufacturing company implementing Electronic Invoice Processing (EIP) as a part of a larger ERP change. By using a scientific research approach characterized by an iterative process that moves between theory and empiricism, some valuable outcomes can be drawn from the analyzed case material. These outcomes become in the end target for a broad interpretation of roles, activities, and how changes among them may affect management control on a more generalized ERP level.

Analyzing the case, the authors have been able to identify three distinctive roles that may be affected by an ERP implementation; the Executor, the Supervisor, and the Supporter. These three roles have been found to carry out five prime activities; Information Assembling, Information Verification, Information Registration, Information Presentation, and Information Storing. Finally, the changes and altering of focus between these roles and activities were found to potentially affect management control positively through five prime aspects; Timeliness, Accuracy, Accessibility, Richness, and Control.

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