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280 Int. J. Business and Systems Research, Vol. 1, No. 3, 2007 Users service quality satisfaction and performance improvement of ERP consultant selections Wen-Hsien Tsai* Department of Business Administration,
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280 Int. J. Business and Systems Research, Vol. 1, No. 3, 2007 Users service quality satisfaction and performance improvement of ERP consultant selections Wen-Hsien Tsai* Department of Business Administration, National Central University, Jhongli, Taiwan 320, Republic of China *Corresponding author Thomas W. Lin Leventhal School of Accounting, Marshall School of Business, University of Southern California, Los Angeles, CA 90089, USA Shu-Ping Chen Department of Business Administration, National Central University, Jhongli, Taiwan 320, Republic of China Shih-Jieh Hung Department of Business Administration, National Central University, Jhongli, Taiwan 320, Republic of China Department of Finance, Yu Da College of Business, Miaoli, Taiwan 361, Republic of China Abstract: Recently, companies have developed Enterprise Resource Planning (ERP) systems. ERP systems will integrate business processes and provide information. However, successful ERP implementation is costly and requires a long time to complete. Companies usually use outside consultants to ensure a successful ERP project. ERP consultant selection is a difficult task for an ERP project implementation. This study examined the users service quality satisfaction in the ERP consultant selection and investigated performance improvement of ERP systems. We illustrated how to apply the Analytical Hierarchy Process (AHP) to set priority weights for consultant alternatives in order to solve the ERP consultant selection problems. Copyright 2007 Inderscience Enterprises Ltd. Users service quality satisfaction and performance improvement of ERP 281 Keywords: information systems; enterprise resource planning systems; ERP consultant selection; information system success model; service quality; analytical hierarchy process; AHP. Reference to this paper should be made as follows: Tsai, W-H., Lin, T.W., Chen, S-P. and Hung, S-J. (2007) Users service quality satisfaction and performance improvement of ERP consultant selections, Int. J. Business and Systems Research, Vol. 1, No. 3, pp Biographical notes: Wen-Hsien Tsai is a Professor of Accounting and Information Systems in the Department of Business Administration, National Central University, Taiwan, Republic of China (ROC). He received a PhD in Industrial Management from the National Taiwan Science and Technology University. He received a MBA and an MS in Industrial Engineering from the National Taiwan University and National Tsing-Hwa University, respectively. His research interests include ERP performance measurement, transportation management and management accounting. He has published several papers in Transportation Science, Journal of Air Transport Management, Family Business Review, Industrial Marketing Management, International Journal of Technology Management, Omega-The International Journal of Management Science, International Journal of Production Economics, Computers and Operations Research, Computers and Industrial Engineering, etc. Thomas W. Lin is a Professor of Accounting in the Marshall School of Business, from the University of Southern California, USA. He received a PhD in Accounting from the Ohio State University, MS in Accounting and Information systems from UCLA and BA in Business Administration from National Taiwan University. His research interests include management accounting and management control systems. He has published papers in the Accounting Review, Journal of Management Accounting Research, Journal of Information Systems, International Journal of Management, etc. Shu-Ping Chen is a PhD candidate in Financial Management at the Department of Business Administration, National Central University, Taiwan, ROC. She has done MBA in Management Sciences from Aletheia University. Her current research interests include ERP performance measurement, project management and corporate finance. Shih-Jieh Hung is a PhD candidate in Financial Management at the Department of Business Administration, National Central University, Taiwan, ROC. He is also a Lecturer in the Department of Finance, Yu Da College of Business, Taiwan, ROC. His current research interests include corporate finance and ERP system management. 1 Introduction As the world becomes more fluid, networked and complex, companies will continue to be more mobile than ever before (e.g. Liebowitz, 2007). In response to growing global competition, many companies have developed new information systems. Most of these new systems are Enterprise Resource Planning (ERP) systems (e.g. Lee et al., 2006; Mabert et al., 2000; Tsai et al., 2005b). ERP system is a packaged software which designed to integrate the business processes of an enterprise. An ERP applications in the modern e-business world include Supply Chain Management (SCM), Customer Relationship Management (CRM), Product Lifecycle Management (PLM), 282 W-H. Tsai et al. E-procurement and Financial Management (FM), etc. (e.g. Barthorpe et al., 2004; Cheng et al., 2007; Tsai et al., 2006a). Numerous companies have adopted ERP systems to integrate their Information Technology (IT) and seek out greater process efficiency (e.g. Raymond et al., 2006). In addition, ERP systems can increase competitiveness, promote the ability of quick responsiveness, enable easy access information and rapid retrieval of information or reports, improve the quality of information used for strategic planning and operational controls and achieve other benefits (e.g. Mirani and Lederer, 1998; Olson et al., 2005). Implementing ERP systems can bring benefits for companies, such as reducing cycle time, improving flow efficiency, rapidly generating financial information, contributing to e-business and assisting in the development of new organisational strategies. Implementing ERP also involves the entire business and requires changes throughout the firm (e.g. Kocakulah et al., 2006). However, a successful ERP project is usually costly and takes a long time to implement (e.g. Mabert et al., 2000). Some enterprises are under estimating or misunderstanding the risks in ERP project (e.g. Al-Mashari et al., 2006; Tsai et al., 2005a). Holland and Light (1999) and Davenport (1998) also indicated that ERP projects were failure due to cost and organisation changing problems. There are 65% managers consider that ERP project s failure will lead to damage of company (e.g. Scott, 1999). In addition, an unsuccessful ERP project will cause company s bankruptcy such as FoxMeyer Drug Company (e.g. Dong, 2001; Volkoff and Sawyer, 2001). FoxMeyer Drug Company sets up SAP R/3 system and hires Andersen Consulting Company to help ERP project implementation. Dell Company also abandons their implementation project for over budget (e.g. Bingi et al., 1999). Because of ERP projects require significant expenditures, ensuring a successful ERP project is essential. Wei et al. (2005) showed that a successful ERP project involves business process change management, ERP software system and cooperative vendor s selection, system implementation and investigation on practicality of the new system. Stefanou (2000) also indicated that a successful ERP implementation process needs to consider company financial condition, system vendor training and specialised ability of consultant companies. Companies usually use outside consultants during the ERP implementation stage to ensure the successful ERP implementation. Outside consultants can use their experience, detailed knowledge of certain modules and experience with the software application to help companies to set-up, install and customise their software (e.g. Dolmetsch et al., 1998; Piturro, 1999). Consultants also use the requirement analysis as the tool to recommend company clients for some suitable solutions. In ERP implementation stage, consultants play an essential role during the latter stages (e.g. Thong et al., 1994). ERP consultant selection needs to identify some alternative projects and achieve net benefit for companies. However, these consultant selection problems are multicriteria decision problems. Selecting the best set of ERP consultants is difficult because the existence of lots of multiple factors, such as consultant s experience, consultant s reputation, consulting firm background, comprehensive knowledge of certain modules and experience with the software applications. If the variously interdependent factors among the ERP consultants are not considered, the selection of the ERP consultant may result in bad ERP implementation. As a consequence, a lot of models and methodologies for dealing with multicriteria decision problems are developed. As business became global, many management consultancy offered their services internationally (e.g. Caruana et al., 1998). Recently, ERP consultants also provide professional services in intensely competitive environments. Service quality is the most Users service quality satisfaction and performance improvement of ERP 283 researched area of services marketing (e.g. Fisk et al., 1993). DeLone and McLean (2003) also incorporated Service Quality into their updated information system success model. Zeithaml and Binter (1996) indicated that service quality affects user s satisfaction. Consultant s service quality affects user s satisfaction of Information Systems (e.g. Bailey and Pearson, 1983). Employees use ERP system frequently as they have high satisfaction with system. A successful ERP project was costly and requires a long time to complete. Employees use ERP system frequently means ERP project s success. Therefore, we use the aspect of service quality to examine user s satisfaction of ERP consultant selection. Consultant firms can use their domain knowledge and experience to solve business problems, and their ability will directly affect the project performance. Bingi et al. (1999) stated that the consultant selection problem will affect a successful ERP implementation. We also used DeLone and McLean s (1992) information system success model to develop ERP performance measures (e.g. Tsai et al., forthcoming) in order to explore the important factors, in the ERP consultant selection, affecting ERP performance improvement. In this study, we examined the users service quality satisfaction and business performance of consultant selection by using the questionnaire survey and ANOVA analysis. In this questionnaire, SERVQUAL measured user s service quality with consultants (Figure 1). ERP consultant selection is a multicriteria problem. To solve this problem, we also illustrated how to apply Saaty s (1980) Analytical Hierarchy Process (AHP) to set priorities for multiple criteria or objectives and for consultant alternatives. The evaluation criteria in the AHP hierarchic framework were selected according to the results of questionnaire survey. Figure 1 Research framework We organise the remainder of this paper as follows. In the next section we review the relevant literature. We describe data selection and methodology in Section 3, and we report the results in Section 4. In Section 5, we present an example of the AHP application. Finally, in Section 6 we offer concluding remarks. 284 W-H. Tsai et al. 2 Literature review 2.1 Service quality Service quality is the most researched area of services marketing (e.g. Fisk et al., 1993). In ERP implementation stage, ERP consulting firms provide their offering and focus on service quality to gain competitive advantage. ERP consultants also provide their professional services which include IT strategy planning, software evaluation, ERP system implementation, training and change management. Professional consultant services are often delayed, and usage is often irregular (e.g. Hite and Fraser, 1988). Definitions of service quality are result of the comparison that customers make between their service prospect and service conception (e.g. Gronroos, 1984; Lehtinen and Lehtinen, 1982; Lewis and Booms, 1983; Parasuraman et al., 1985, 1988). The concept of service quality was investigated in an extensive series of focus group interviews conducted by Parasuraman et al. (1985). Numerous authors assumed that perceived service quality is the degree and direction of discrepancy between the consumers perceptions and expectations. Service quality has enabled the development of SERVQUAL (e.g. Parasuraman et al., 1988) which includes five dimensions: 1 Tangibles: physical facilities, infrastructure, equipment, appearance and personnel. 2 Reliability: ability to ensure reliable, proper service. 3 Responsiveness: willingness to help customers and provide prompt service. 4 Assurance: knowledge and courtesy of employers and their ability to inspire trust and confidence. 5 Empathy: care for the client, attention to individual clients, individualisation of service. In this study, we used service quality to examine the users satisfaction in the ERP consultant selection. 2.2 Consultant selection Cheung et al. (2002) used the AHP multicriteria evaluation model to examine problems of architectural consultant selection. They used following five selection criteria: firm background, past performance, capacity to accomplish the works, project approach and consultant fee. Firm background includes company reputation, technical competence/qualification and experience with similar projects. Past performance includes cost control, quality of work and time control. Capacity to accomplish the work includes present workload, availability of qualified personnel and professional qualification/experience. In relation to project approach, the selection criteria included approaches to time schedule, approaches to quality and design approach/methodology. The last selection criterion was consultant fee. To ensure successful ERP implementation, companies should select appropriate consultants to help in this area. Users service quality satisfaction and performance improvement of ERP Methodology 3.1 Sample and data collection To explore the status of ERP implementation, this study examines the ERP implementation experiences of the Top 5000 Largest Corporations in Taiwan. Our questionnaire survey includes ERP systems problems and resolutions in implementation stage, the considerable selection factors of ERP system vendors and consultants. We mailed 4300 questionnaires and received 625 usable responses with 14.53% response rate. In this study, we use part of survey data in this questionnaire to examine users service quality satisfaction in ERP consultant selection and investigate performance improvement of ERP systems. In 625 useable responses, we analysed the survey data from 304 companies that have implemented all the planned modules or the partial planned modules. In 304 company responses, we analysed the survey data from 253 companies that have implemented ERP software package. SERVQUAL measured users service quality satisfaction with vendors and consultants. Finally, we use DeLone and McLean s (1992) information success measurement category to develop ERP performance. 3.2 Users service quality satisfaction This study uses ANOVA analysis to examine the users service quality satisfaction in the ERP consultant selection. To examine the users satisfaction, this study uses SERVQUAL to determine the service quality with five dimensions (see Table 1): 1 training materials offered by consultants 2 reliability of consultants service 3 response to users demand in time 4 trusted professional knowledge offered by consultants 5 understanding users demand. Table 1 SERVQUAL scale dimensions Dimension Tangibles Reliability Responsiveness Assurance Empathy Questionnaire description Training materials offered by consultant Reliability of consultants service Response to users demand in time Trusted professional knowledge offered by consultant Understanding users demand 3.3 DeLone and McLean information system success model We also used DeLone and McLean s (1992) information system success measurement category to develop ERP performance measures in order to explore the important factors, in the ERP consultant selection, affecting the ERP performance improvement. Table 2 gives the schema. 286 W-H. Tsai et al. We used following equations to determine the performance improvement levels of the six dimensions: system quality, information quality, system use, user satisfaction, individual impact and organisational impact. The composite performance improvement and performance improvement level of the jth dimension for the ith respondent s company: W P = P, i = 1 to N and j = 1 to 6 W lj jk ij ijk lj k= 1 k= 1 jk W jk = ( N i= 1Wijk ) N (1) (2) 6 lj Pij k 1W = jk Pi =, i = 1 to N 6 lj j= 1 j= 1 k= 1W jk (3) P ij is the performance improvement level of the jth dimension for the ith respondent s company. In Equation (1), W jk is the average importance level score of the kth measure of the jth dimension as perceived by N respondents, P ijk is the performance improvement level score (1 to 7) of the kth measure of the jth dimension for the ith respondent s company and lth is the number of chosen measures for the jth dimension. P i is the composite performance improvement level for the ith respondent s company, whose equation is shown in Equation (3). In Equation (3), P ij, W jk and lth are defined as above. Table 2 Measurement category of ERP systems effectiveness System quality Information quality 1.1 Data accuracy 2.1 Reliability 1.2 Database content 2.2 Timeliness 1.3 Data currency 2.3 Usableness 1.4 System accuracy 2.4 Understandability 1.5 Response time 2.5 Relevance Using ERP systems User satisfaction 3.1 Amount of use/duration of use 4.1 Information satisfaction 3.2 Charge for system use 4.2 Software satisfaction 3.3 Number of reports generated 4.3 Software interface satisfaction 3.4 Number of inquiries 4.4 Overall system satisfaction 3.5 Amount of connect time 4.5 ERP project satisfaction Users service quality satisfaction and performance improvement of ERP 287 Table 2 Measurement category of ERP systems effectiveness (continued) Individual impact 5.1 Individual performance 5.2 Individual productivity 5.3 Individual decision quality 5.4 Problem identification 5.5 Accurate interpretation Organisational impact Financial perspective Internal-business-process perspective 6.1 Inventory cost 6.7 Inter-departments data transmission 6.2 Purchasing cost 6.8 Inter-department interaction 6.3 Inventory turnover ratio 6.9 Response time to environment change Customer perspective Learning and growth perspective 6.4 On-time delivery of 6.10 Understanding of workflows products/service 6.5 Response time to customer 6.11 Employee satisfaction complains 6.6 On-time delivery of invoice 6.12 New product development 3.4 Analytical hierarchy process AHP is a multicriteria decision-aid method designed by Saaty (1980, 1985, 1990) and Saaty and Kearns (1991). It is a method of solving socio-economic decision-making problems which is used to solve numerous problems (e.g. Dweiri and Al-Oqla, 2006; Tsai et al., 2006b; Wei et al., 2005). Partovi (1992) demonstrated that it is a decision-aiding tool for dealing with complex and multicriteria decisions. The AHP helps with making appropriate choices in the face of multiobjective, multifactor and multicriteria decisions. Saaty (1980, 1985, 1990) and Saaty and Kearns (1991) also outlined seven steps for applying the AHP. 1 4 Results of questionnaire survey This section has two parts. First part presents users service quality satisfaction in the ERP consultant selection. The second part presents the performance improvement of the consultant selection in the ERP project implementation. 4.1 Users service quality satisfaction in the ERP consultant selection In ERP project implementation stage, the ERP consultant plays an important role. This study uses ANOVA analysis to examine the users service quality satisfaction in the ERP consultant selection. Table 3 considered frequencies of consultant selection criteria in questionnaire survey data. There are 253 companies in our survey dat
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