A Satisfaction Model of ERP Implementation Failure and Recovery Shih-Wen Chien 2002/4/15

Abstract  In this research, we develop a satisfaction model of ERP implementation failure and recovery based on an implementation framework that integrates concepts of ERP implementation satisfaction and social justice literature, using prospect theory and mental accounting.  With the results achieved from this study, we expect to provide suggestions for firms that have ERP implementation failure/recovery and furthermore to increase the likelihood of success in ERP implementation.

Introduction  Information systems (IS) are pervasive in all forms of business organizations. Recent several researchers concerned about the IS success or failure and the success measures (Lyytinen and Hirschheim, 1987; DeLone and McLean, 1992; Ballantine et al., 1996; Markus et al., 2000; Scott and Vessey, 2002).  Lyytinen and Hirschheim(1987), Scott and Vessey(2002) once reported some IS or ERP systems failure cases. Chien(2002) also found some ERP adopters had implemented ERP twice because of ERP implementation failures in Taiwan.

Introduction  Failures of ERP system implementation may lead to organization bankruptcy (Bulkeley, 1996; Davenport, 1998; Markus and Tanis, 2000).  Thus when, why and how an organization abandons its ERP system is an important issue.  Although failure cases have been reported in the literature, no author has yet clearly defined ERP system failure.

Introduction  This research will attempt to identify failure context, recovery methods and multiple- justice indicators in order to explore the behavior after ERP implementation failure. Prospect theory (Kahneman and Tversky, 1979; Tversky and Kahneman, 1992) and mental accounting (Thaler, 1985) will be used in this research.  Therefore, this research finally is to develop a satisfaction model of ERP implementation failure and recovery.

Systems failure notion  Lyytinen and Hirschheim(1987) define four major notion or categories of IS failures as follows: –Correspondence Failure: When the systems design objectives are not met, the information system is considered a failure. It is generally believed that design goals and requirements can be specified clearly in advance, and that their achievements can be accurately measured.

 Process Failure: A process failure occurs when an IS cannot be developed within an allocated budged, and/or time schedule. There are two likely outcomes of process failure. – Firstly, an outright failure occurs when no workable system can be produced. –Secondly, a more common outcome is when an information system is developed with massive overspending in both cost and time, thus negating the global benefits of the system.

 Interaction Failure: The level of end-user usage of the information system is suggested as a surrogate in IS performance measurement. –Some related measures of IS usage include user attitudes and user satisfaction, the amount of data transferred or the frequency of use. However, heavy usage does not necessarily mean high user satisfaction and improved task performance, and there is little empirical evidence supporting such a claim.

 Expectation Failure: The notion of expectation failure view IS failure as the inability of a system to meet its stakeholders ’ requirements, expectations, or value. Failure, therefore, does not only involve the system ’ s inability to meet design (technical) specifications. –Expectation failure is perceived as the difference between the actual and desired situation for the members of a particular stakeholder group.

Research Framework Failure context Type of failure Magnitud e of failure Recovery Attributes Compensation Re- implement Cutoff Retraining Justice Distributive Procedural Interaction Disconfirmati on Satisfaction With ERP Implementation

Hypothesis:  H0: Failures context of ERP system implementation have no effect on the recovery attributes.  H1: Recovery attributes of ERP system implementation have no effect on the different justice method.

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