Enterprise resource planning and the price of efficiency: the trade-off between business efficiency and the innovative capability of firms

Paul Trott, Andreas Hoecht

Research output: Contribution to journalArticlepeer-review

Abstract

Enterprise Resource Planning (ERP) business software offers the integration of business functions and can reduce data collection and processing duplication efforts. It has become one of the most successful products in the world. For many firms such as Microsoft, Owens-Corning, ICI, UBS and Procter Gamble, it has changed the way they work (see Gartner, How Procter Gamble runs its global business on SAP, CS-15-3473, Research Note, 25 February 2002). The market leaders in this highly lucrative business-to-business market are SAP, Oracle, Baan and PeopleSoft. This paper reviews the ERP and innovation management literature in order to shed light on the potential problems that may exist in rigid ERP systems. It seems there is increasing evidence that firms fail to obtain the benefits of these investments within the anticipated timeframes (B. dos Santos and L. Sussman, Improving the return on IT investment: the productivity paradox, International Journal of Information Management, vol. 20, No. 6, 2000, pp. 429-440). Moreover, and possibly of greater concern is the affect on the firm's innovative ability. Especially in some creative working environments where previously autonomous and creative individuals are now being restricted to what's on offer via 'pull-down' menus.
Original languageEnglish
Pages (from-to)367-379
Number of pages13
JournalTechnology Analysis & Strategic Management
Volume16
Issue number3
DOIs
Publication statusPublished - 2004

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