Understanding the Returns from Integrated Enterprise Systems: The Impacts of Agile and Phased Implementation Strategies

Abstract

How do firms benefit from integrated enterprise systems (IES), and how does the IES implementation strategy influence the returns from IES? We investigated the implementation strategy that firms should follow to integrate multiple enterprise systems regarding the timing of adoption and the richness of modules. Borrowing theories from software development literature and enterprise system implementation literature, we developed two IES implementation strategies, i.e., the agile strategy (simple, quick, and flexible) and the phased strategy (rich, phased, and pre-determined). We collected a sample of 675 public firms from 1997 to 2004 at the module level, enabling us to distinguish enterprise resource planning (ERP) systems from customer relationship management (CRM) and supply chain management (SCM) systems. Our data contained the timing of purchase and “go-live” events of these system modules, helping us understand firms’ detailed implementation decisions. We found that IES returns depend on the choices of ERP and CRM/SCM module foundation, ERP-CRM/SCM sequential connection, and the continued adoption of ERP and CRM/SCM modules. Fewer ERP or CRM/SCM modules at CRM/SCM go-live events, a quicker connection between ERP and CRM/SCM go-live events, and the continued adoption of ERP or CRM/SCM modules all were found to enhance IES returns. Our findings show that the agile strategy leads to more returns from IES than the phased strategy and suggest that firms should integrate multiple enterprise systems by going live with advanced system modules quickly after going live with basic enterprise system modules and by continually adding new modules.