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ERP Systems and Management Accounting Change: Opportunities or Impacts? A Research Note
Abstract
Enterprise resource planning (ERP) systems, such as SAP, have become widely used in recent years, especially in large companies. Although a considerable amount has been written about them in the professional accounting and computing literature, somewhat surprisingly comparatively little attention has been given to them in accounting research journals. However, the field studies which are beginning to appear suggest that ERP systems are having only a relatively moderate impact on the character of management accounting and the work of management accountants. However, it is argued in this paper that as such studies adopt a relatively 'static' approach, they do not explore the processes of management accounting change or study how opportunities are opened up by the implementation of ERP systems. The paper reports a longitudinal case study of the implementation of SAP in the European division of a large US multinational, in which management accounting change is viewed as an evolutionary process. In this case, although there were no fundamental changes in the nature of the management accounting information used following the implementation of SAP, there were changes in the role of management accountants - in particular: (i) the elimination of routine jobs; (ii) line managers with accounting knowledge; (iii) more forward-looking information; and (iv) a wider role for the management accountants. However, it is not claimed that SAP was the driver of these changes; rather it is argued that the characteristics of SAP (specifically, its integration, standardization, routinization and centralization) opened up certain opportunities and facilitated changes which were already taking place within the company. The paper ends with a call for further longitudinal case studies of the implementation of ERP systems to study how these characteristics facilitate and reinforce processes of management accounting change in other companies.
... ERP is a comprehensive software solution that facilitates the smooth integration of various business functions and enables seamless information exchange throughout the entire organization that encompasses a wide range of data, including financial and accounting information, human resource information, supply chain information, and customer information (Klaus et al., 2000;Davenport, 2000;Scapens & Jazayeri, 2003). Using a common database and shared management reporting capabilities, ERP applications assist firms in managing business activities across company lines, facilitating a reduction in processing time, seamless integration of real-time information across all functional domains, and enhancing quality assurance inside the organization (Monk & Wagner, 2012;Scapens & Jazayeri, 2003;Al-Amin et al., 2023). ...
... ERP is a comprehensive software solution that facilitates the smooth integration of various business functions and enables seamless information exchange throughout the entire organization that encompasses a wide range of data, including financial and accounting information, human resource information, supply chain information, and customer information (Klaus et al., 2000;Davenport, 2000;Scapens & Jazayeri, 2003). Using a common database and shared management reporting capabilities, ERP applications assist firms in managing business activities across company lines, facilitating a reduction in processing time, seamless integration of real-time information across all functional domains, and enhancing quality assurance inside the organization (Monk & Wagner, 2012;Scapens & Jazayeri, 2003;Al-Amin et al., 2023). To provide a comprehensive perspective of business from a single information architecture and IT, an ERP system integrates and regulates a whole range of activities and operations (Seres et al., 2019). ...
The public sector has long been criticized because the private sector is often considered more advanced and efficient in achieving its goals. Technological improvements in the public sector are needed to provide benefits to the wider community, one of which is by adopting systems used by advanced companies such as enterprise resource planning (ERP) systems. The purpose of this research is to provide insight into how ERP systems can be used to provide improvements in the public sector. This article uses a systematic literature review to synthesize the benefits and challenges and provides examples of best practices for implementing an ERP system in the public sector. The results show that ERP stands as an essential technical solution to achieve accountability and transparency in the public sector. The public and private sectors differ in the accessibility and disposal possibilities of resources, thus to overcome these challenges, the public sector needs to be guided by the implementation of best practices. The relatively low number of available Scopus-indexed research articles that focus on ERP in the public sector shows that the ERP literature has not developed well in the public sector.
... It has been suggested that digitalization can challenge the roles of the management accounting profession (see Moll and Yigitbasioglu, 2019), as transactions are increasingly recorded automatically in ERP systems (see Granlund and Malmi, 2002;Scapens and Jazayeri, 2003). Furthermore, as noted by Quattrone (2016), reports and charts can be created by artificial intelligence (AI), and this can cause a loss of much of the richness of accounting knowledge. ...
... Our longitudinal case study continues the traditions of research into management accounting roles (e.g., Järvenpää, 2007) and IT and ERP system use (e.g., Orlikowski and Scott, 2008;Scapens and Jazayeri, 2003). In our case a standardized reporting system was in place, and an SAP system-update project was in progress. ...
... Management control is an information channeling system offering reports on the company's activity through cost analysis and the cross-checking of information collected from operational staff and the various departments, with the aim of establishing a model to the operation of the company which results in performance measurement indicators or KPIs (Key Performance Indicators) (Boutgayout & El Ghazali, 2020). Furthermore, as per (Scapens & Jazayeri, 2003) Advances in information technology have been noted as a key force in changing management accounting. ...
It is well known that firms nowadays operate in a VUCA (volatile, uncertain, complex and ambiguous) environment urging them to obtain a lasting competitive advantage sourced mainly from a technological innovation in order to ensure their prosperity and sustainability. New technologies play a pivotal role as they offer the potential of increasing efficiency, improving communication, streamlining business processes for more productivity and collaboration, from this perspective, cloud computing is a state-of-the-art technology that can provide valuable insights and support decision-making. It can have a significant impact on how businesses operate and compete in today’s fast paced and ever-changing business environment which makes it a source of competitive advantage, yet it raises concerns over data security and cybersecurity as well as it alters the day-to-day operational tasks arising from management control practices. In this paper we briefly review the literature in order to address and examine the impact of cloud computing technology in the banking sector on management control.
... More human-oriented studies describe management accounting changes by looking at power (Markus & Pfeffer, 1983;Scapens & Roberts, 1993;Burns, 2000;Tsamenyi et al., 2006;Nor-Aziah & Scapens, 2007), culture (Chenhall, 2003;Busco et al., 2006;Busco & Scapens, 2011), and management accountants' behaviour (Scapens & Jazayeri, 2003;Yazdifar & Tsamenyi, 2005;Abernethy et al., 2010;Jansen, 2011;Seo et al., 2012;Bassani et al., 2021). ...
This paper explores the use and influence of regulatory information requirements on management accounting systems, focusing on a sample of Italian electric and gas utilities. Despite a growing interest in factors driving change in management accounting, yet relatively little is known about the external influence of regulatory authorities in the context of public utilities. The aim of this paper is twofold. First, it seeks to understand whether management accountants use regulatory information for decision-making and control. Second, through an institutional lens, this paper explores how the regulatory pressure imposed by the Italian energy regulatory authority (ARERA) has influenced utilities' management accounting systems. Based on an online survey from 33 Italian electric and gas utilities and complementary interviews, this paper shows that the majority of the sampled firms use regulatory information for control purposes, though there are differences between utilities according to the size and the extent of regulatory pressure. Additionally, this exploratory study reveals that regulatory pressure has influenced management accounting systems in a radical or incremental way. The findings underline the role of the regulator, suggesting that regulatory requirements can lead to the development of a loop learning process.
... Enterprise Resource Planning (ERP) ERP este o platformă informatică unică, utilă pentru monitorizarea, controlul și managementul integrat ale tuturor activităților, proceselor și operațiunilor derulate într-o instituție. ERP e un set de module de aplicaţii integrate care acoperă cele mai multe funcţii ale organizației, inclusiv contabilitate şi audit[25]. Toate informaţiile gestionate ERP sunt stocate într-o singură bază de date, oferind utilizatorilor posibilitatea de a accesa, prelucra şi genera informaţii în timp real. ...
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. In particular, the internal public auditing takes the form of a functionally independent and objective activity of assurance and advice for the decision-makers of the organization, designed to add value and improve the activities of the public entity. The present paper is intended to be a retrospective look at how the internal public audit activity was organized and carried out in the Romanian local public administration, as well as an anticipation of future challenges, from the perspective of the digitalization of public administration.
The principal aim of this study is to investigate the accounting benefits of the adoption of an ERP system in relation to
ERR user satisfaction. This study explores the impact of the ERP system on accounting information and practice. This
study also examines whether differences exist between accountants and IT professionals concerning how each group assesses
ERP accounting benefits and ERP user satisfaction. The participants of this study consist of 75 accountants and 130 IT
professionals from 48 companies in India. The empirical evidence confirms a number of accounting benefits derived from
ERP systems particularly for accounting process. Furthermore, this research identifies factors related to accounting which
affect the level of ERP user satisfaction. The results of this study will provide stimulus for consequent research in the field.
Recently, the Malaysian Accounting Standards Board has issued several new regulation standards to replace the previous standards for harmonization of financial reporting. One of the new standards is the Malaysian Financial Reporting Standard (MFRS) 15 Revenue from Contracts with Customers. By focusing on the telecommunication company, the objective of this study is to review the impact of MFRS 15 adoption and the organizational change process. This study adopted frameworks by Dillard et al. in (Acc Audit Acc J 17:506–542, 2004) and Burns and Scapen in (Manag Acc Res 11(1):3–25, 2000) to have a better understanding of the organisational change process due to MFRS 15 adoption especially at the intra-organisational level. The findings of this study present a general view on the understanding of the effect of MFRS 15 adoption in which the cause from external pressure leads to the changes in the rules and routines in a telecommunication company. This study will contribute to the existing accounting literature related to MFRS 15 especially within the telecommunication industry.
This paper provides exploratory empirical evidence on 143 firms' degree of success with ABC and on implementation variables that are associated with ABC success. There are four primary results. First, there Is considerable variation in the degree of success firms have with ABC. Second, several behav-ioral and organizational variables are important to explaining cross-sectional variation in ABC success, particularly top management support, link to competitive strategies, link to performance evaluation and compensation, training, ownership by nonaccountants, and adequate resources. Third, these implementation variables are used in patterns that can be interpreted as behavioral and organizational implementation strategies. Fourth, ABC success is not significantly associated with the use of four technical implementation variables, specifically canned software, custom software, external consultants, and stand-alone vs. integrated system. Finally, this paper offers several suggestions for future research.
If they want employees to take
collective responsibility for
customers, managers must do
more than reorganize.
This paper describes a case study which traces the introduction of a new accounting control system into the unit companies of a division of a large multidivisional company and explores the antecedents and consequences of the resistance encountered by the project development team. The objectives of the study are to explore the complex web of social processes which comprise accounting change, to illustrate their historical and contingent character, and to illustrate how the process of change can inadvertently create the conditions which defeat the content of the change. It is important not to dismiss resistance to accounting change as illogical and emotional. Such resistance is probably informed by a whole variety of very real concerns and fears. It is only by exploring the organisational and historical contingencies which influence the process of accounting change that resistance can be understood. In this case we see how, in an organisation characterised by an ambiguous form of decentralisation, the failure to secure the legitimacy of a new system, coupled with an inability to find a workable relationship between the languages of production and accounting, lead to resistance to accounting change.
The message of this paper is that researchers should not become unduly concerned about comparisons of management accounting practice against theoretical 'ideals'. Rather, they should focus more closely on the study of management accounting practice per se. The paper outlines some of the challenges to mainstream economics, and particularly to neoclassical theory which forms the basis of management accounting's conventional wisdom. It then outlines alternative institutional economic approaches, distinguishing between 'new' institutional economics which has developed as an extension of neoclassical theory and 'old' institutional economics which developed in opposition to neoclassical analysis. It is argued that the latter, old institutional economics, is a potentially useful framework for the study of management accounting practice.
Despite the large investments recently made in ERP systems, many companies are beginning to admit that the real impact of ERPs on management styles and practices is actually well below expectations, especially on the front of organizational integration. It is argued that ERP systems possess integrating capabilities only at a potential stage: their simple physical implementation is not enough to activate their inner potentialities. ERP systems can enact substantial organizational integration, only if they rely on a sound business process architecture. When the process dimension is absent from the implementation, the integration potential of ERP systems is frozen. It is argued that this situation can be unfrozen by making processes visible: the introduction of a process-based performance measurement system can help to unleash the power of integration, by making the processes visible to people.
The interaction between external financial reporting requirements and management information has been a topic of debate both in the literature of management accounting, associated with the ideas of ‘relevance lost’, and in the literature of accounting regulation, where managerial action has been seen as one source of potential economic consequences. This paper presents the results of a postal questionnaire survey which collected the views of professionally qualified management accountants working in U.K. industrial and commercial firms. The paper documents the results from the survey on issues such as the respondents' beliefs about the influence of requirements for external financial accounting reports on internal systems design and decision-making within organizations. The paper also presents findings on areas of regulatory change having greatest impact on U.K. companies and reporting of information within these organizations. The survey is an initial part of a larger study in which the primary investigation is being undertaken through longitudinal case studies within a number of U.K. companies.