Unpacking the ERP investment decision: an empirical assessment of the benefits and risks

Most leading organizations, in all sectors of industry, commerce and government are dependent upon ERP for their organizational survival. Yet despite the importance of the decision to adopt ERP and its impact on the entire firm’s performance the IT literature has been in the large part silent on the nature of the ERP investment decision. This study is the first of its kind to determine the preference structure of senior managers around the organizational benefits and risks of adopting ERP. We present the results which provide interesting insights into how managers’ perceive the benefit and risk factors salient to the organization’s adoption decision. In line with prior research we found that improved productivity, and information and planning are important drivers of the ERP adoption decision. Moreover our findings reveal that the benefits of ERP are weighted almost twice as important as the risks when making an ERP investment decision. However when it comes to risk, interestingly managers consider issues such as top management commitment and vendor support as more important than financial risks