Investment in Enterprise Resource Planning: Business Impact and Productivity Measures

Enterprise Resource Planning (ERP)software systems integrate key business and management processes within and beyond a firm's boundary.Although the business value of ERP implementations has been extensively debated in trade periodicals in the form of qualitative discussion or detailed case studies, there is little large-sample statistical evidence on whether the benefits of ERP implementation exceed the costs and risks. With multiyear multi-firm ERP implementation and financial data, we find that firms that invest in ERP tend to show higher performance across a wide variety of financial metrics. Even though there is a slowdown in business performance and productivity shortly after the implementation, financial…