Toward catalog of enterprise resource planning (ERP) implementation benefits: An empirical analysis of an indonesian agricultural company

Abstract

Enterprise Resource Planning (ERP) systems are complex mega-packages, integrated, and allencompassing, systems designed to support the key functional areas of the organization. As a complete system, ERP has huge impacts in business especially in helping companies for reaching competitive advantage for their business. The large amount of investment has been made by the company to implement these systems. However, there are various results of ERP implementation in the companies, from those who gain the huge amount of profit to the ones who get huge disaster. Therefore, it is important for the company to know whether their expenses bring benefits to the company or not. This research aims to formulate a catalog of ERP implementation benefits, which later we used to measure the benefits gained from the ERP implementation in an agricultural company. The catalog was developed by using the five dimensions from Shang and Seddon of ERP benefits framework and 73 subcategories of dimension from Ranti's Generic IS/IT value. Our analysis in the company by using our proposed catalog showed that they have gained the benefits of ERP implementation in the following dimension: operational, managerial, strategic, IT infrastructure, and organizational with the total of 25 categories and 41 subcategories were accepted.

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IBIMA Publishing
Journal of Human Resources Management Research
http://www.ibimapublishing.com/journals/JHRMR/JHRMR.html
Vol. 2012 (2012), Article ID 869362, 16 pages
DOI: 10.5171/2012.869362
Copyright © 2012 Nita Arryani Sari, Achmad Nizar Hidayanto and Putu Wuri Handayani. This is an open
access article distributed under the Creative Commons Attribution License unported 3.0, which permits
unrestricted use, distribution, and reproduction in any medium, provided that original work is properly
cited. Contact author: Nita Arryani Sari E-mail: nita.arryani21@ui.ac.id
Toward Catalog of Enterprise Resource
Planning (ERP) Implementation Benefits for
Measuring ERP Success
Nita Arryani Sari, Achmad Nizar Hidayanto and Putu Wuri Handayani
Universitas Indonesia, Depok, Indonesia
_________________________________________________________________________________
Abstract
The growth of information technology (IT) and trend of e-business transform the business and
shifts the business focus from the production into integrated operations. As the impact,
enterprises have to adjust themselves by implementing IT systems in their businesses,
including develop an integrated application infrastructure named Enterprise Resource
Planning (ERP). As a complete, integrated, and all-encompassing systems, ERP are designed to
support the key functional areas of the organization and helping companies for reaching
competitive advantage for their business. The importance of ERP and numbers of ERP
advantages encourages many organizations worldwide to implement the systems and make
large amount of investment. However, the ERP systems huge impact on the organization
coupled with a potentially high risk of project resulting in various outcome for the companies,
from gaining huge amount of profit to get huge disaster. Therefore, it should be imperative that
proper evaluation be undertaken on ERP projects to identify, manage and realize the benefits of
ERP and their contribution to organizations. This research aims to formulate a catalog of ERP
implementation benefits to measure ERP implementation success in the organizations. The
benefits catalog was developed by using the five dimensions from Shang and Seddon of ERP
benefits framework and 73 subcategories of dimension from Ranti’s Generic IS/IT value.
Initiated in an agricultural company Indonesia, the research identify the ERP bring benefit to
the company in five dimension: operational, managerial, strategic, IT infrastructure, and
organizational with the total of 25 categories and 41 subcategories were accepted.
Keywords: Enterprise resource planning, ERP, intangible benefit, business benefit, ERP benefit.
______________________________________________________________________________________________________________
Introduction
Over the past few decades, some
advancements have been undergone in the
business world. The growth of information
technology (IT) recently led us to the trend
of e-business, impacting manufacturers to
automate their internal operations (Foley
et al., cited in Park 2005). As the business
focus shifts and the e-business grows,
enterprises have to adjust themselves by
implementing IT systems in their
businesses. Some efforts to automate
business processes for example through e-
procurement system that's proven to
provide benefits to the organization
(Hidayanto et al. 2012a). In addition, the
development of more sophisticated IT
infrastructure also allows organizations to
focus on their core business through
technology such as Software as a Service
(SaaS) (Hidayanto et al. 2012b), cloud
computing and so on. However, another
effort that had been done for a long time is
through the development of integrated
application infrastructure named
Enterprise Resource Planning (ERP).
The ERP system is an integrated, all-
encompassing (Markus & Tanis, cited in
Sammon 2005) and complex mega-
packages (Gable et al., cited in Sammon
2005) system designed to support the key
functional areas of organizations. ERP

Journal of Human Resources Management Research 2
supports organizations to determine the
logistics of its strategy, management and
culture. Through the advances in
information technology, ERP also hits the
business market and assists organizations
to enhance their decision by increasing
precision in decision making and reaching
competitive advantages (Jeffery &
Morrison; Brady, Monk et al., cited in
Laframboise 2002).
The importance of ERP in supporting
business and supporting organizations’
needs encourages many companies to
make IT investment by implementing ERP
into their IT systems. Since early 1990s,
collective ERP investment by organizations
worldwide has reached the approximate
value in hundreds of billion dollars (Staehr
2007). Furthermore, ERP also one of the
fastest growing markets in the software
industry with long-term growth rates of
36-40% with estimated put the eventual
size of the market by the year 2010 at US$1
trillion (Bingi et al., cited in Park 2005).
This large amount of investment shows
that ERP investment is one of the
important issues in the current industry to
gain the competitive advantage.
Unfortunately, in comparison to its usage,
these large investments are not always
profitable. ERP implementations are
known to be very diverse and risky. Some
organizations are very successful in
implementing ERP systems (Davenport,
cited in Staehr 2006) while many other
organizations, like FoxMeyer, suffered
disastrous business consequences
(Bulkeley, cited in Staehr 2006). As the
value of ERP investments grows and the
ERP implementations’ result tends to be
varied, an evaluation of the ERP systems is
a crucial matter to do. This importance is
shown through a survey conducted to 625
CFOs which it is listed as the second
important issues in organizations (CSC,
cited in Schubert & Williams 2009).
With respect to that, this research aimed to
propose an evaluation method using the
catalog of the benefits of ERP systems,
based on ERP Benefit Dimensions of the
Shang and Seddon (2002) and Information
Systems Benefit Framework of Ranti
(2008), to determine the benefits perceived
by the company after implementing the
ERP systems. The benefit evaluated in five
dimensions, namely: operational,
managerial, strategic, IT infrastructure, and
organizational. In order to get insight of
such catalog of ERP implementation
benefits, we conducted analysis in an
agricultural company in Indonesia that has
implemented ERP for years. Agricultural is
considered as one of Indonesia’s main
export commodities, therefore study on
such sector will give significant impact to
the agricultural development.
The remaining sections of this paper will be
organized as follows. We first describe the
theoretical hypotheses used in this
research. Second, we discuss about the
methodology of ERP evaluation proposed
in this research. Third, we present the
results of the ERP benefit analysis from our
case study. Finally, conclusions and
suggestions for further research are
provided in the last section.
Literature Review
ERP Definition
Recognized as the most imperative
information technology (IT) infrastructure
of modern companies (Shar et al., cited in
Park 2005), ERP has many definitions
proposed by people from all over the
world. However, from the various
definitions proposed, there is no agreed-
upon definition for ERP systems.
Based on Markus and Tanis (cited in
Sammon 2005), ERP systems is an
integrated, all-encompassing, complex
mega packages (Gable et al., cited in
Sammon 2005) designed to support the
key functional areas of an organization. As
from Watson and Schneider (cited in
Sammon 2005), ERP is a generic term for
an integrated enterprise wide standard
information system in the form of
customized, packaged, software-based
system that handles the majority of an
enterprise’s information systems’
requirements and facilitates the flow of
information among all functions within an
enterprise, can be further defined as a

3 Journal of Human Resources Management Research
strategic business solution that integrates
all business functions, including
manufacturing, financial, and distribution.
According to Kumar et al (cited in Eckartz
2000), ERP systems are packaged software
applications that support most of a
company’s information needs within and
across functional areas in an organization.
Meanwhile Nah and Lau (cited in Al-Fawaz,
2008) defined ERP as “a packaged business
software system that enables a company to
manage the efficient and effective use of
resources (materials, human resources,
finance, etc.) by providing a total,
integrated solution for the organization’s
information-processing needs”. Similar
with Nah and Lau, Hect et al. (2011) also
defined ERP system as integrated
information system software compromised
of several modules share a central database
that helps automate and integrate business
processes and practices within a firm, and
provides support for core organizational
activities such as manufacturing, finance
and accounting, sales and marketing, and
human resources. This software facilitates,
if well-implemented, the integration of all
the functional information flows across the
organization into a single package with a
common database. Therefore, it allows easy
and immediate access to information
regarding inventory, product or customer
data, and prior history information (Shehab
et al. 2008)
ERP Benefit
Due to the widespread use of ERP systems,
with various backgrounds such as technical
gains e.g. replacing legacy systems, or for
business reasons e.g. improving
operational performance and efficiency
(Nicolaou, cited in Elragal & Al-Serafi
2011), many researchers have high interest
in investigate the issue of ERP benefits.
Using a number of approaches, including an
experiment, archival, financial data analysis
and interview, several research studies
have identified various important benefits
the ERP systems bring to organizations.
One of the ERP benefits is operational
improvement. As a collection of highly
integrated subsystems, ERP systems can be
described as ‘tightly coupled’. To be sure,
tight coupling facilitates coordination
among subsystems and solves the
fragmentation of information (Davenport,
cited in Park 2005). As a result, it
streamlines a company’s data flow and
provides management with direct access to
a wealth of real-time operating
information. For many companies, these
benefits have translated into dramatic
gains in productivity and speed of business
operations.
Another ERP benefit is stated by O’Leary
(cited in Al-Fawaz 2008). O’Leary (cited in
Al-Fawaz 2008) stated ERP as a system
integrates the majority of the business
processes and allows access to the data in
real time. Furthermore, ERP improves the
performance level of a supply chain by
helping to reduce cycle times (Gardiner et
al., cited in Al-Fawaz 2008). ERP also
allows easy and immediate access to
information regarding inventory, product
or customer data, and prior history
information (Shehab et al., cited in Al-
Fawaz 2008)
In brief, by implementing the ERP system,
an organization may enjoy intangible
benefits including, better customer
satisfaction, improved vendor
performance, increased flexibility, reduced
quality costs, improved resource utility,
improved information accuracy and
improved decision-making capability
(Siriginidi, cited in Al-Fawaz 2008).
ERP Benefit Measurement
There are so many ERP benefits that have
been claimed by research studies.
Nevertheless, from all the benefits stated,
not all the benefits can be gained by the
organizations. Even a successfully adopted
and implemented ERP system does not
automatically guarantee full benefits. It is
important that ERP is operated as planned
and thus provides the real-time
information with a desired level of process
integration. Any ERP system pushes a
company toward full process integration
and solves the fragmentation of
information (Park & Kusiak 2005).
However, Companies often fail to reconcile

Journal of Human Resources Management Research 4
the technological imperatives of ERP with
the business needs of the enterprise itself
(Bingi et al., cited in Park 2005) that lead to
out-of-control or failed ERP projects
(Davenport, cited in Park 2005).
Research indicates poor realization of the
benefits received from the implementation
of ERP systems in the organizations.
Rutherford (cited in Sammon 2006)
observed that only around 10% to 15% of
ERP implementations deliver the
anticipated benefits. Furthermore, research
reported that 51% of organizations that
attempted an ERP implementation were
dissatisfied with the results with 40% of
the projects failed to achieve their business
case within one year of going live (Jahnke,
cited in Sammon 2006). Numerous factors,
either internal or external organization's
aspects (Elragal & Al-Serafi 2011), from
unclear business strategies; cost overrun;
project delay; underestimation of the
required efforts for change management,
risks, to overestimating of benefits become
the reason why more than 70% of ERP
implementations fail to achieve their
estimated benefits (Nafeeseh 2011).
Considering its huge impact on the
organization, coupled with a potentially
high risk of project failure, it should be
imperative that proper evaluation be
undertaken on ERP projects (Teltumbde,
cited in Sammon 2006). Therefore, identify,
manage and realize the benefits of ERP and
their contribution to business value then
maximize the value got from the ERP
investment are ongoing challenges for both
research and the practical (Williams &
Schubert, cited in Nafeeseh 2011).
However, justification of technology,
including ERP, investment is never easy. An
inappropriate investment appraisal can
victimize a company in an overwhelming
way (Borges & Tan 2007). This far, most of
evaluation of technology investment done
by evaluating the tangible benefits such as
ROI methods, Cost-benefit analysis, Return
on management, and information
economics or any tangible evaluation
methods (Wen & Sylla, cited in Mahmood et
al 1999). Justification of technology
investment should not be limited to
tangible benefits evaluation but also
including the intangible benefit, which
could not be captured or converted into
quantitative value, to an organization’s
business value (Murphy & Simon, cited in
Nafeeseh 2011). The intangible benefit
evaluation done for determining all
potential benefits company gets from an
ERP implementation, including the benefits
that are not derived from the ERP system
itself but from the various ways the system
can be implemented and used.
In 2002, Shang and Seddon develop a
framework for assessing intangible benefit
brought by the implementation of ERP
system. This evaluation framework, called
ERP benefits framework, was developed
from a study of 233 vendor success stories
published on the web, and interviews with
managers in 34 organizations using ERP
systems. The framework was validated
subsequently using in depth case studies in
four Australian utility companies (Staehr
2007). The framework provides a
convenient means of identifying the
business benefits an organization has
realized in the post-implementation phase
of the ERP system life cycle by presenting
five dimensions of business benefits:
operational, managerial, strategic, IT
infrastructure, and organizational and
multiple business benefit categories within
each dimension. Table 1 summarizes ERP
benefits framework by Shang and Seddon
(2002).

5 Journal of Human Resources Management Research
Table 1: ERP Benefits Framework (Shang and Seddon 2002)
Benefit Dimension Benefit Categories
Operational Cost reduction
Cycle time reduction
Productivity improvement
Data quality improvement
Customer service improvement
Managerial Better resource management
Better decision making
Better performance control
Strategic Support current and future business growth plan
Support business alliances
Support business innovation
Support cost leadership
Support product differentiation
Support external linkages
Enables world wide expansion
Enables ebusiness
IT Infrastucture Increased business flexibility
IT cost reduction
Increased IT Infrastructure capability
Organizational Support business organizational changes
Facilitate business learning and broaden employee skills
Empowerment
Changed culture with a common vision
Changed employee behavior with a shifted focus
Better employee morale and satisfaction
There are many frameworks that can be
used for assessing benefit driven from ERP
system implementation, including Ranti’s
Generic IS/IT Business Value Category
(2008). Generic IS/IT Business Value
Category is a framework proposed by Ranti
(2008) as the result of his research in
identifying IS/IT business value resulting
from the implementation of various IS/IT
projects in various organizations in
Indonesia. This research was done by
conducting report from 60 cases of various
IS/IT project implementation, including ten
cases of ERP implementation, in various
organizations in Indonesia using
hermeneutic methods. The research shows
the added values brought by the
implementation of IS/IT projects to the
organizations and classify those values into
13 categories and 74 subcategories as can
be seen in Table 2. These categories and
subcategories comprises various benefits
brought by the IS/IT implementation that
help the organizations to improve their
organizational performance.

Journal of Human Resources Management Research 6
Table 2: Ranti’s Generic IS/IT Business Value Category (Ranti 2008)
Categories
Sub Categori
es
Reducing Cost of
travelling cost, staff/operator/employee cost, meeting cost, service failure
cost, application development cost, delivery cost, training cost per employee,
returning cost for incorrect delivery, cost of money, office supplies and
printing cost, subscription cost of certain reading materials or subscription
cost per employee, space rental cost, device rental cost, inventory cost,
research failure cost
Increasing
Productivity caused by
restructuring job function, accelerating mastering p
roduct knowledge, ease
of analysis, increasing employee satisfaction
Accelerating Process
of
production process, stock procurement process, report making process, data
preparation process, order checking process, debt payment process,
transaction process, decision making process
Reducing Risk of
price miscalculation, unrecoverable claim, inventory lost, rejected goods,
data lost, incorrect data, penalty, losing potential employee, forgery,
administration fraud, incorrect payment, asset mismanagement
Inc
reasing Revenue
caused by
increasing business capacity, increasing report quality, increasing customer
trust, widening market segment, increasing other incomes
Increasing Accuracy of
billing, analysis, data, planning, decision
Accelerating Cash
-
in
caused by
accelerating billing dispatching
Increasing External
Services of
reducing order cancellation, knowing customer’s problems, adding point of
services, personalized services, customer satisfaction
Increasing Image
caused by
increasing service quality,
offering substantial discounts, complying with
regulations, using branded systems
Increasing Quality of
better supplier/vendor management, work result, services, products
Increasing Internal
Services of
shared services, matching employee’s right and resp
onsibility, employee
services, proper schedule and training material
Increasing
Competitive
Advantage caused by
forming business alliances, accelerating the execution of new business
opportunities, increasing switching cost
Avoiding Cost (ACO) of
reserve
d fund, maintenance cost, lost and delay cost
Research Design and Methodology
Our research comprised of two main
phases. In the first phase, we formulated
the catalog of ERP implementation benefits.
This benefit catalog was developed by
mapping the ERP benefits framework from
previous studies. The second phase was
framework validation, which was done by
using the proposed catalog on a case study
in a agricultural company that already
implemented ERP system for years.
The Proposed ERP Implementation
Benefit Catalog
We proposed ERP implementation benefit
catalog to provide finer granulation of ERP
benefits that can be used by the
organizations as the reference for
evaluating the benefit comes from ERP
implementation and utilization. The
proposed catalog was developed based on
two frameworks from the previous study,
ERP benefits framework (Shang and
Seddon 2002) and Generic IS/IT Business
Value Category (Ranti 2008). This mapping
process is performed to create a
comprehensive catalog that overcomes the
previous framework limitations. ERP
benefits framework of Shang & Seddon
(2002) has broad coverage of ERP impacts
on organizations manifest in the five
dimensions: operational, managerial,
strategical, IT infrastructure. It also
identifies and defines a number of benefit
categories. Nevertheless, it has narrow
level of detail (Eckartz et al. 2009). Unlike
Shang & Seddon’s ERP benefits framework,
Ranti’s Generic IS/IT Business Value
Category is more general. Ranti’s Generic
IS/IT Business Value Category can be used
for assessing benefit from various IS/IT
projects implementations, incuding ERP
system. Ranti’s Generic IS/IT Business
Value Category does not have classified
dimension but it also identify number of
benefit categories like Shang and Seddon

7 Journal of Human Resources Management Research
framework. Moreover, it provides great
level of benefit detail shown in its
subcategories. The combination of both
frameworks make the proposed benefit
frameworks have a broad coverage of
dimensions, greater number of benefit
categories and greater level of detail shown
in subcategories.
Ranti’s
+
Shang & Seddon’s
=
Proposed Benefit Catalog
Categories
Sub
-
categories
Dimensions
Categories
Dimensions
Categories
Sub
-
categories
Figure 1: Mapping Process to Develop ERP Implementation Benefits Catalog
The catalog is structured by mapping
Ranti’s Generic IS/IT Business Value
categories and sub-categories into Shang
and Seddon dimensions and categories.
The first step is finding mutual benefit
categories between Ranti’s and Shang and
Seddon’s framework then mapping the
mutual categories from Ranti’s into Shang
and Seddon. Then, the mapping continues
by mapping subcategories to appropriate
categories. The mapping process can be
seen in Figure 1.
After all mapping process done, the
comprehensive catalog is obtained. The
comprehensive catalog consists of five
dimensions and 25 categories from Shang
and Seddon’s Framework plus 73
subcategories from Ranti’s Framework as
can be seen in Table 3.
Table 3: The Proposed ERP Implementation Benefits Catalog
Benefit
Dimension
Benefit Categories Benefit Sub-Categories
cost reduction Reducing Cost of
communication cost
travelling cost
staff/operator/employee cost
Operational meeting cost
service failure cost
delivery cost
training cost per employee
returning cost for incorrect delivery
cost of money
office supplies and printing cost
subscription cost of certain reading materials or
subscription cost per employee
space rental cost
device rental cost
inventory cost
research failure cost
Avoiding Cost (ACO) of
reserved fund
maintenance cost
lost and delay cost
cycle time reduction Accelerating Process of
production process
stock procurement process
report making process
data preparation process
order checking process

Journal of Human Resources Management Research 8
debt payment process
transaction process
productivity improvement Increasing Productivity caused by
restructuring job function
accelerating mastering product knowledge
ease of analysis
increasing employee satisfaction
data quality improvement
Reducing Risk of
price miscalculation
data lost
incorrect data,
Increasing Accuracy of
Data
customer services
improvement
Increasing External Services of
reducing order cancellation
customer’s problems
personalized services
customer satisfaction
Better resource
management
Reducing Risk of
Managerial unrecoverable claim
inventory lost
rejected goods
Penalty
losing potential employee
incorrect payment
asset mismanagement
Better decision making
Accelerating Process of
decision making process
Increasing Accuracy of
Analysis
Planning
Decision
Better performance control Reducing Risk of
Forgery
administration fraud
Support current and future
business growth plan
Increasing Revenue caused by
Strategic increasing business capacity
increasing report quality
increasing customer trust
Increasing Quality of
better supplier/vendor management
work result
Services
Products
Increasing Competitive Advantage caused by
accelerating the execution of new business
opportunities
Support business alliances Increasing Competitive Advantage caused by
forming business alliances
Support business
innovation
Support cost leadership
Accelerating Cash-in caused by
accelerating billing dispatching
Increasing Revenue caused by

9 Journal of Human Resources Management Research
increasing other incomes
Increasing Accuracy of
Billing
Increasing Competitive Advantage caused by
increasing switching cost
Support product
differentiation
Support external linkages
Increasing Image caused by
increasing service quality
offering substantial discounts
complying with regulations
using branded systems
Enables world wide
expansion
Increasing Revenue caused by
widening market segment
Increasing External Services of
adding point of services
Enables ebusiness
IT Infrastructure Increased business
flexibility
IT cost reduction
Increased IT Infrastructure
capability
Organizational
Support business
organizational changes
Increasing Internal Services of
shared services
matching employee’s right and responsibility
employee services
Facilitate business learning
and broaden employee
skills
Empowerment
Increasing Internal Services of
proper schedule and training material
Changed culture with a
common vision
Changed employee behavior
with a shifted focus
Better employee morale and
satisfaction
Framework Validation
To validate the proposed ERP
implementation benefit catalog, a case
study research was conducted in an
agricutural company in Indonesia. This
research conducted to identify the benefit
gap perceived by the company before and
after the ERP systems implementations
using the proposed benefit catalog as the
research instrument. The research is
undertaken using qualitative approach,
which focusing on operational and
intangible benefit to get better outline of
the relationship between ERP system and
the business performance (Velcu, cited in
Elragal & Al-Serafi 2011), with the primary
sourced data from in-depth interviews.
Interviews were performed according to
the proposed benefit catalog, which then is
operationalized into 75 open ended
questions aligned with the categories of the
implementation and the operation of ERP
system in five dimensions: Operational,
Managerial, Strategical, IT Infrastructure,
Organizational.
For the interview, some key informants
have been chosen. The selected informants
come from various divisions and positions
that related to the implementation and
operation of ERP system in the company.

Journal of Human Resources Management Research 10
The key informants are Reporting &
Corporate Planning Manager, Head of
Business Support Subdivision, Accounting
Staffs, Marketing Staffs, Procurement staffs,
and IT staffs. The key informants are the
employees that have been directly involved
in ERP project planning, ERP System
implementation or the operation of ERP
system. Each informant has a different and
specific role. Furthermore, every informant
have different experience and obtain
different advantage from the ERP system
implementation. Reporting & Corporate
Planning Manager has the role in planning
phase and directly involved in planning and
the implementation process. As one of the
top level management, he also is affected
by ERP implementation and gains
advantages of it. Head of Business Support
Subdivision is the one who is responsible in
the implementation and the operation of
ERP. He is responsible to make sure that
ERP system supports the business need. In
this sense, he also understands the benefit
brought by the ERP in both business and
technical perspectives. For the staffs, either
the accounting, marketing, or procurement,
they are ERP system users. As their works
are fully supported by the ERP system, they
also get some benefits of ERP
implementation. The IT staffs, they are in
charge of technical support for the ERP
systems operational. They acknowledge
ERP impacts in technical perspective,
including the infrastructure.
Profile of Case Study
The case study research was held in an
Indonesia top leading company enganged
in agricultural sector. The company, named
PT.XYZ to preserved anonimity, is a public
company incorporated in one of top
international companies group that has
been focused on palm oil business for
decades. As one of the top companies
incorporated in international group
companies, PT. XYZ constantly encouraging
development and improvement to manage
its business and meet its vision“to be most
productive and innovative agricultural
company in the world”.The company’
development including the information
technology and information system area.
The IS/IT development performed by PT.
XYZ with implementing the ERP Systems.
The ERP Systems implemeted to transform
the company systems from the sole system
to integrated systems and expected to
support company in improving the
coordination and information management
aspects to meet the demand of high-quality
data. Start planned at 2004, the ERP
Systems finally operated by the company in
2007 after the implementation phases
completed at the head office and more than
40 branch offices located in all over
indonesia from Sumatra, Java, Kalimantan
to Sulawesi island. After more than four
years utilization, the company willing to
evaluate the benefits of the ERP Systems to
measure the ERP implementation success.
Therefore, this case study was conducted in
PT.XYZ to measure the company ERP
implementation success through the
catalog of ERP benefits formulated.
Analysis and Discussion
The following section describes the results
of validation of our proposed ERP
implementation benefits catalog in the
selected company. As in the our proposed
catalog, the benefits of ERP implementation
in the case study were analyzed and
classified into 5 dimensions based on
Shang and Seddon's framework. Each
dimension is further detailed into several
categories and subcategories. A
subcategory benefit was concluded to be
perceived by the company if more than half
of the respondents are agree about the
benefit.
Operational Dimension
ERP system implementation in PT. XYZ has
impacts on various dimensions, including
the operational dimension. The
implementation of ERP system
transformed the operational processes in
the company, from manual and stand-alone
operation to become automated and
integrated operation. Thus, this
transformation gave the company several
benefits. One of the benefits brought by the
ERP implementation in operational
dimension according to the informants is
cost reduction. The followings were
informants’ response regarding our

11 Journal of Human Resources Management Research
question to cost reduction aspect, that we
used as the basis to conclude whether the
company feels the benefit of ERP
implementation or not in such aspect.
Head of Business Support Sub Division:
“Before the ERP implementation, some
sites were still using the manual process
and the other sites were using sole system.
If the head office needs transaction data
from a particular site, it cannot be directly
accessed. The head office needs to call the
site and the call will be forwarded to many
parties which are responsible for the data.
However, in some cases, the head office
often cannot get the transaction data
required. After the implementation of ERP,
some processes change. The transaction
data have to be inputted to the system
every day, so that whenever the head office
needs the data, they can obtain the data
directly as the site is connected directly to
the head office. Hence, the calls needed
from the head office to the site can be
minimized. As the impact, the
communication costs can be reduced.”
Procurement Staff:
“After using ERP systems, PO (purchased
order) and PR (purchase requisition) can
be directly accessed by the site without the
head office needs to call the procurement
division on every site in Java, Sumatera,
Kalimantan, and Sulawesi.”
Accounting Staff:
“The accounting division is responsible for
making monthly report. The head office
makes the report based on monthly report
from the site. Before using ERP systems,
accounting division needs to call the sites
for asking the monthly reports as these
sites often late to sending the report. After
using the ERP system, there is a deadline
for inputing the data and generating the
monthly report. All sites have to input the
data on time or they cannot input the data
at all, hence we do not have to call the sites
and asking for the report.”
After analyzing these informations and
other responses regarding the
communication cost reduction, it can be
concluded that the company perceives
benefit in communication cost reduction
category. Other aspects can be concluded
with the similar way.
The further details for the operational
dimension benefits obtained by the
company are summarized in Table 4.
Symbol “” in the third column indicates
that the company perceives benefit as
shown in the second column.

Journal of Human Resources Management Research 12
Table 4: Benefits Perceived by PT. XYZ in Operational Dimension
Benefit Categories
Benefit
Sub
-
Categories



cost reduction
Reducing Cost of
communication cost

travelling cost
staff/operator/employee cost
meeting cost
service failure cost
delivery cost

training cost per employee
returning cost for incorrect deliv
ery
cost of money
office supplies and printing cost

subscription cost of certain reading materials or subscription cost per
employee
space rental cost
device rental cost
inventory cost

research failure cost
Avoiding Cost (
ACO) of
reserved fund
maintenance cost
lost and delay cost

cycle time reduction
Accelerating Process of
production process
stock procurement process
report making process

data preparation process

order checking process

debt payment process
transaction process

productivity improvement
Increasing Productivity caused by
restructuring job function

accelerating mastering product knowledge
ease of analysis

increasing employee satisfaction

data qu
ality improvement
Reducing Risk of
price miscalculation

data lost

incorrect data,

Increasing Accuracy of
D
ata

customer services improvement
Increasing External Services of
reducing order cancellation

customer’s problem
s
personalized services
customer satisfaction

From 37 benefit sub-categories listed, there
are 19 sub-categories earned by the
company in the operational dimension.
Moreover, we also can see that the
company also feels the benefits of ERP in 5
categories. Most of benefits perceived by
the company are in the operational
dimension.
Managerial Dimension
Implementation of ERP system also has
some impacts on managerial dimension. As,
a multifunctional system, ERP supports
many company’s bisnis processes including
managerial processes. The integrated
system and functions provided bring the
process improvement to the company and
help the managerial to perform better
resource management, more accurate
decison making and better performance
monitoring.
The detail about the managerial dimension
benefits obtained by the company is
presented in Table 5.

13 Journal of Human Resources Management Research
Table 5: Benefits Perceived by PT. XYZ in Managerial Dimension
Benefit Categories
Benefit Sub
-
Categories



Better resource ma
nagement
Reducing Risk of
unrecoverable claim
inventory lost

rejected goods
P
enalty
losing potential employee
incorrect payment

asset mismanagement

Better decision making
Accelerating Process of
decision makin
g process

Increasing Accuracy of
A
nalysis

P
lanning

D
ecision

Better performance control
Reducing Risk of
F
orgery

administration fraud

From 13 benefit sub-categories listed, there
are 9 sub-categories earned by the
company in the managerial dimension and
from 3 benefit categories listed the
company gets all benefits of these
categories.
Strategical Dimension
ERP system also has influence on
strategical dimension. ERP system is
capable to improve company’s strategic
dimension that supports company’s future
growth. Table 6 shows the ERP benefit on
strategical dimension.
Table 6: Benefits Perceived by Pt. Xyz in Strategical Dimension
Benefit Categories
Benefit Sub
-
Categories



Support current and fu
ture business growth plan
Increasing Revenue caused by
increasing business capacity

increasing report quality

increasing customer trust

Increasing Quality of
better supplier/vendor management
work result

S
ervice
s

P
roducts

Increasing Competitive Advantage caused by
accelerating the execution of new business opportunities

Support business alliances
Increasing Competitive Advantage caused by
forming business alliances
Support business innovation

Support cost leadership
Accelerating Cash
-
in caused by
accelerating billing dispatching

Increasing Revenue caused by
increasing other incomes
Increasing Accuracy of
B
illing
Increasing Competitive Advantage caused by
increasing switching cost
Support product differentiation
Support external linkages
Increasing Image caused by
increasing service quality

offering substantial discounts
complying with regulations
using branded systems
Enables wo
rld wide expansion
Increasing Revenue caused by
widening market segment
Increasing External Services of
adding point of services
Enables ebusiness

Journal of Human Resources Management Research 14
Among 19 benefit sub-categories and 8
benefit categories listed, the company
perceives 10 sub-categories and 4 benefit
categories respectively in the strategical
dimension.
IT Infrastructure Dimension
IT infrastructure dimension is one of the
dimensions that also affected by the
implementation of ERP system. According
to our mapping, there are three benefits of
ERP system in this dimension. However,
based on our interview, the company only
considers 1 benefit as the impact of ERP
system which is ERP increases IT
Infrastructure capability.
Table 7: Benefits Perceived by PT. XYZ in IT Infrastructure Dimension
Benefit Categories
Benefit Sub
-
Categories



Increased business flexibility
IT cost reduction
Increased IT Infrastructure capability

Organizational Dimension
We also proved whether the company
perceives benefits of ERP system or not in
the organizational dimension. According to
our proposed catalog, we have 5 categories
and 7 subcategories. Among these
categories and sub-categories, the company
perceives benefits of ERP system in 5
categories and 5 sub-categories as can be
seen in Table 8.
Table 8: Benefits Perceived by PT. XYZ in Organizational Dimension
Benefit Categories
Benefit Sub
-
Categories



Support business organizational changes
Increasing Internal Servic
es of
shared services

matching employee’s right and responsibility
employee services
Facilitate business learning and broaden
employee skills
Empowerment
Increasing Internal Services of
proper schedule and training material

Changed cult
ure with a common vision

Changed employee behavior with a
shifted focus

Better employee morale and satisfaction

Study Limitations
This study only considers the intangible
benefit of ERP implementation perceived
by the organization. To gain more
understanding on ERP implementation
benefits, there should be also more
extensive study on tangible benefits. The
validation of our proposed ERP benefit
catalog is also conducted in one company.
To get more general conclusion, we still
need to involve many organizations in our
study. However, as the main objective of
this study is to provide a catalog for ERP
benefit evaluation, and the ERP catalog
benefits can be applied in the organization,
this ERP catalog benefit seems likely to be
useful for in evaluating ERP intangible
benefit in organizations. For future study, a
similar study with combination tangible
benefit would allow more comprehensive
evaluation of ERP benefit in organization.
More detail study also can be taken to
know the factors that make those benefits
gain by the organizations.
Conclusion
This research aims to propose a catalog of
ERP implementation benefits that can be
used by organizations to measure the
success of their ERP implementation. The
proposed catalog was developed by
combining five dimensions of Shang and

15 Journal of Human Resources Management Research
Seddon’s ERP benefits framework and 73
subcategories of Ranti’s Generic IS/IT
Business Value Category, thus it produced
25 categories and 73 sub-categories of ERP
implementation benefits. In order to see
the applicability of our proposed catalog,
we tested it through a case study in
agricultural manufacture company. Based
on the analysis we performed, it can be
concluded that the ERP implementation in
the company provides benefits in
operational, managerial, strategical, IT
infrastructure, and organizational
dimensions. Although the company does
not gain all proposed benefits in the
catalog, they still perceive benefits of ERP
system in 19 categories and 41 sub-
categories. Of the five dimensions we
evaluated, the company gains most of
benefits in operational dimension. The
results of our analysis confirm the
applicability of our proposed catalog of
ERP implementation benefits. Thus, it can
be applied in any companies to evaluate the
performance of ERP implementation.
Acknowledgment
This research is supported by Universitas
Indonesia through ‘Riset Madya’ grant No.
2139/H2.R12/HKP.05.00/2012. It is a
pleasure to convey our gratitude to our
university for their continuous support,
particularly for Research and Public
Service Directorate for their excellent
services. We also thank to IMHERE project
officers for their support in disseminating
the results of this research. We hope that
we can produce high quality results from
this research.
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