The document discusses a study on how ERP systems are used for budgeting. It finds that ERP systems are not used for key budgeting activities like construction, reporting, consolidation, and monitoring due to a lack of flexibility. ERP focuses on integration but budgeting requires both flexibility and integration. As a result, spreadsheets and business intelligence tools are used more for budgeting instead of ERP. The implications are that ERP has limitations for certain tasks like budgeting and other systems may be better suited.

1. Understanding the ERP system use in
budgeting
wipawee.uppatumwichian@ics.lu.se
CONFENIS 2012
Ghent, Belgium
September 21, 2012

2. Agenda
• Introduction
• The ERP system literature review
• Theoretical background
• Research method and case description
• Analysis
• Conclusions and implications
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012

3. Introduction
• Research calls on how ERP systems support
– Decision-making
– Management control (Grandlund, 2011; Rom & Rhode, 2007)
• Context - The dual role of budgeting
– Decision making  flexibility
– Management control integration (Simons 1994)
• Research aim
– Uncover how ERP system is used/ not used
– Explain why that is the case
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012

4. The ERP system literature review
• Flexibility
• (-) ERP stabiles org. (Light et al. 2001, Soh et al. 2000)
• (+) ERP improves flexibility from modular infrastructure
(Shange & Seddon 2002, Brazel & Dang 2008)
• Integration
• (-) ERP does not define what integration is (Mouritsen 2005,
Dechow et al. 2007)
• (+) ERP central database enables integration & control
(Quattrone & Hopper 2005, Chapman & Kihn 2009)
• No consensus whether ERP promotes/prohibits flexibility &
integration
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012

5. Theoretical background
• Structuration theory
– Explain system use from a ulitarian perspective
– ST focuses on process so it’s suitable to study
budgeting seen as a “process”.
• Conflict and contradiction
– Oppositions can reveal tensions & ambiguity
– Conflict  activity level
• “struggle b/w actors and collectives in social practices”
– Contradiction  structural level
• “opposition of structural principle” (Giddens, 1979)
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012

6. Research method & case description (1/2)
• Research design
– Interpretative case study
– Multiple case study
• 11 for-profit organizations from Thailand
• Criteria: Listed org. which use ERP & budgeting
• Data collection
– Primary: interviews with 21 business controllers
• e.g., CFO, Accounting VP, Planning VP
– Secondary: internal documents, annual reports
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012

7. Research method & case description (2/2)
No. Case Industry Main activities Owner ERP Spreadsheets BI
1 A Energy Power plant Thai SAP Yes Magnitude
2 B Energy Oil and Petrochemical Thai SAP Yes Cognos
3 C Energy Oil refinery Thai SAP Yes -
4 D Food Frozen food processor Thai SAP Yes -
5 E Food Drinks and dairy Foreign SAP Yes Magnitude
products
6 F Food Drinks Foreign SAP Yes Own BI
7 G Food Agricultural products Thai BPCS Yes -
8 H Automobile Truck Foreign SAP Yes -
9 I Automobile Automobile parts Thai SAP Yes Own BI
10 J Electronics Electronic appliances Foreign JDE Yes Own BI
11 K Hospitality Hotels and apartments Thai Oracle Yes IDeaS
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012

8. Empirical data and analysis (1/5)
• Flexibility
– Definition: discretions over the use of budget system for
decision making through IS technology (Ahrens and Chapman
2004)
– Flexibility is driven by bottom up budgeting to reflect
environmental changes at local unit level.
• Integration
– Definition: standardization of data definitions and structure
using common conceptual schema across collection of data
source (Goodhue et al. 1992)
– Integration is driven by management control to compare
performances against pre-determined standards
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012

9. Empirical data and analysis (2/5)
Construction
Reporting Budgeting Consolidation
Monitoring
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012

10. Constructio
n
Empirical data and analysis (3/5)
Reporting
• Conflict to examine flexibility
– Budget construction
• ERP system is not used (0/11)
– Too generic to support budgeting
– Not flexible to accommodate environmental changes
» More practical to use SSs
– Budget reporting
• ERP is not used for advanced financial report (11/11)
– Not flexible for advanced financial report
» More practical to use SSs
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012

11. Consolidation
Empirical data and analysis (4/5)
Monitoring
• Conflict to examine integration
– Consolidation
• ERP system is not used for consolidation (0/11)
– Not the norm to consolidate on ERP
» More practical to use SSs
– Monitoring
• ERP system is used for monitoring (3/11)
– Complication to set up budgeting along with ERP
» More practical to use SSs
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012

12. Empirical data and analysis (5/4)
• Contradiction to examine budgeting & ERP
– Budgeting operates in term of flex. & intrg.
– ERP operates in term of intg. alone
ERP systems
Integration
2. Consolidation 3. Monitoring
Budgeting
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Other IS technologies Other IS technologies
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012

13. Conclusions and implications
• ERP system is not used to support budgeting
– A contradictory relationship b/w ERP & budgeting
– ERP supports intg. but budgeting calls for flex. & intg.
– Result SSs and BI used in budgeting
• Implications
– Academics
• Explains limited ERP use in budgeting
• Explains that controllers recognizes ERP limitations
– Practitioners
• Take informed decision in IS investments
• ERP is not good for everything
Lund University / Department of Informatics / Wipawee Uppatumwichian / June-2012