Profitability Risks in Enterprise Resource Planning Projects from the Vendor’s Perspective
Prior research on risks in information technology (IT) projects mainly focuses on risks in software development projects from the client’s perspective. Risks in enterprise resource planning (ERP) projects from the vendor’s perspective have not received any attention in prior research. This represents a research gap that suggests four research demands. First, risks in ERP projects should be investigated from the perspective of an external IT service provider (i.e., vendor). Second, ERP projects should be investigated because they have specific characteristics that question whether research results from other IT projects (e.g., software development projects) are applicable to ERP projects. Third, the triangulation of archival data is a promising avenue to complement the dominant questionnaire-based research with research based on longitudinal data. Fourth, the static perspective should be complemented with a dynamic perspective that incorporates temporal differences of risks in ERP projects.
The goal of this project is to develop an explanatory model that links risks in ERP projects to project profitability. This model will help to understand the causal relationship between risk and profitability in ERP projects. Specifically, this project has four major goals. The first goal is to investigate the impact of risks in ERP projects from the vendor’s perspective. The second goal is to incorporate the specific characteristics of ERP projects and critically reflect research results from software development projects. The third goals is to complement questionnaire-based research with research based on archival data. The fourth goal is to complement static analyses with dynamic analyses.
This project comprises seven work packages and four research methods: literature review, case studies, causal modeling, and questionnaire-based research. The literature review consolidates existing research and derives propositions. These propositions are tested in multiple case studies. The results of the case studies lead to the development of causal models. The causal models are tested using data collected with questionnaires.
- Consolidate prior research on risks in ERP projects from the vendor’s perspective and derive propositions.
- Develop a conceptual model that describes the impact of risks on profitability in ERP projects in multiple case studies.
- Develop a static structural model based on the conceptual model and test this model with archival data.
- Develop a dynamic structural model based on the conceptual model that incorporates a temporal perspective (i.e., the dynamic model may differ for different project phases) and test this model with archival data.
- Test the static and dynamic structural models with data collected through questionnaires from European ERP vendors.
- Compare the results from the previous work packages and derive implications for theory and practice.
- Discuss the results from the previous work packages with business experts and method experts to obtain feedback regarding the work packages and ensure the relevance of the results for practice.
This project results in an empirically substantiated and tested, theoretical explanatory model about the relationship between risk and profitability in ERP projects from the vendor’s perspective. For theory, this model implies a research agenda that points to fruitful avenues for further research in the field of ERP project risk management. For practice, this model provides guidelines for managers of ERP projects.
Technische Universität München, Chair for Information Systems (Prof. Dr. Krcmar)