Stewart A. Leech

A review of ERP research: A future agenda for accounting information systems

ABSTRACT: ERP systems are typically the largest, most complex, and most demanding information systems implemented by firms, representing a major departure from the individual and departmental information systems prevalent in the past. Firms and individuals are extensively impacted, and many problematic issues remain to be researched. ERP and related integrated technologies are a transformative force on the accounting profession. As the nature of business evolves, accounting expertise is being called on to make broader contributions such as reporting on nonfinancial measures, auditing information systems, implementing management controls within information systems, and providing management consulting services. This review of ERP research is drawn from an extensive examination of the breadth of ERP-related literature without constraints as to a narrow timeframe or limited journal list, although particular attention is directed to the leading journals in information systems and accounting information systems...

Complementary controls and ERP implementation success

Abstract Many organisations have sought to improve their competitiveness by investing in advanced information technology, such as Enterprise Resource Planning (ERP) systems. They have implemented ERP systems for a variety of reasons, including solving year 2000 issues, reengineering business processes, and facilitating e-business. The implementation of an ERP system and associated changes in business processes, however, is not straightforward. ERP implementation projects are but another example of an information systems development project that needs to be controlled, yet the implementation of an ERP system is significantly different than a traditional system implementation. Control can be exerted by both formal and informal means [Kirsch, L.J., V. Sambamurthy, D-G. Ko, and R.L. Purvis. 2002. Controlling information systems development projects: The view from the client. Management Science. 48(4): 484–498]. Research has demonstrated that single modes of control are not sufficient, rather that a portfolio of control modes should be utilized. We expand upon this concept and suggest that this need for a mix of overlapping and redundant control mechanisms identified in the literature is explained through the use of the theory of complementarity [Milgrom, P. and J. Roberts. 1990. The economics of modern manufacturing: Technology, strategy and organization. American Economic Review 80: 511–528; Milgrom, P. and J. Roberts. 1994. Comparing equilibria. American Economic Review 84: 441–459; Milgrom, P. and J. Roberts. 1995. Complementarities and fit: Strategy, structure, and organizational change in manufacturing. Journal of Accounting and Economics. 19: 179–208; Topkis, D.M. 1998. Supermodularity and Complimentarity. Princeton University Press]. Surveys of chief information officers and internal auditors were conducted to obtain data on the controls used in ERP implementations. We find that groups of complementary controls need to be employed in the implementation of ERP systems to achieve a successful implementation.

The differential use and effect of knowledgebased system explanations in novice and expert judgment decisions

Explanation facilities are considered essential in facilitating user interaction with knowledge-based systems (KBS). Research on explanation provision and the impact on KBS users has shown that the domain expertise affects the type of explanations selected by the user and the basis for seeking such explanations. The prior literature has been limited, however, by the use of simulated KBS that generally provide only feedback explanations (i.e., ex post to the recommendation of the KBS being presented to the user). The purpose of this study is to examine the way users with varying levels of expertise use alternative types of KBS explanations and the impact of that use on decision making. A total of 64 partner/ manager-level and 82 senior/staff-level insolvency professionals participated in an experiment involving the use of a fully functioning KBS to complete a complex judgment task. In addition to feedback explanations, the KBS also provided feedforward explanations (i.e., general explanations during user input about the relationships between information cues in the KBS) and included definition type explanations (i.e., declarative-level knowledge). The results show that users were more likely to adhere to recommendations of the KBS when an explanation facility was available. Choice patterns in using explanations indicated that novices used feedforward explanations more than experts did, while experts were more likely than novices to use feedback explanations. Novices also used more declarative knowledge and initial problem solving type explanations, while experts used more procedural knowledge explanations. Finally, use of feedback explanations led to greater adherence to the KBS recommendation by experts-a condition that was even more prevalent as the use of feedback explanations increased. The results have several implications for the design and use of KBS in a professional decision-making environment.

The effect of experience and complexity on order and recency bias in decision making by professional accountants

Recently, questions have been raised regarding the impact of experience on the susceptibility of professional accountants to judgment bias-particularly order and recency biases as predicted in the Belief-Adjustment Model. The Belief-Adjustment Model predicts recency effects will always exist in complex decision domains (regardless of experience). Complexity is defined within the model as a function of task familiarity and information load. The prior studies on experience and bias in accounting domains have focused on varying task familiarity and have found that task familiarity can mitigate order/recency bias. In this study, complexity is operationalised through heavy information load (a condition more consistent with professional accounting environments) while maintaining a high level of task familiarity. Two experiments were conducted. The first experiment utilised a going concern decision using highly experienced partners and managers. The second experiment was conducted in the insolvency domain and used 87 experienced insolvency practitioners. The results indicate that experience does not mitigate order/recency bias under conditions of heavy information load.

ERP implementations and their impact upon management accountants

This paper considers the impact of ERP implementations upon the role of management accountants, upon management accounting in general, and upon business processes. It does so in the context of the perceived success of the ERP implementation. A postal questionnaire was circulated to almost 700 management accountants working in large UK-based organisations. It finds that under successful ERP implementations, management accountants have time for other, less mundane activities and their role becomes more enriching. In contrast, when the implementation is unsuccessful, the role of the management accountant increases: the ERP system deficiencies require increased activity on their part without any noticeable reduction in the tasks they traditionally perform.

Explanation Provision and Use in an Intelligent Decision Aid

Intelligent decision aids have been widely adopted by organizations in an effort to capture, retain and disseminate the knowledge of individuals within the organization. To date, these efforts have met with mixed results. Two primary limitations have been the usability of systems (users either cannot or do not wish to use systems) and the inability to transfer knowledge from such systems to less expert decision makers. Explanation capabilities have been perceived as a potential means for improving the effectiveness of such systems in terms of both usability and knowledge transfer. In this study, four advancements are put forth. First, a working prototype system for highly complex decision making is used as the foundation for implementing a full-scale, embedded explanation facility. Second, the development of the explanation facility is carefully grounded in the extant prescriptive literature on explanation types and delivery processes—including feedforward and feedback. Third, a development strategy is formulated and demonstrated as a generalized process of explanation development and integration. Fourth, high-level professional decision makers use the system and provide evaluative feedback on the usability and value of the explanation facility. Overall, the results of the development efforts and subsequent evaluation are very positive and provide a solid foundation for future research and practice efforts related to explanation provision within the context of intelligent systems. Copyright

A Big-4 Firm’s Use of Information Technology to Control the Audit Process: How an Audit Support System is Changing Auditor Behavior

This study investigates auditors’ reactions to a new audit support system that was designed by a Big-4 firm as a response to a stricter regulatory regime. The system’s features guide audit teams to comply with the firm’s methodology and auditing standards. Understanding auditors’ reactions is important because they influence the effectiveness of the system as a control. Our analysis of internal documents from the firm and interviews we conducted with auditors identifies that although many of the system’s features could have been used as a coercive control, this was not the case. The auditors view the system positively and reported that it enables the effective delivery of audit engagements. Two primary factors explain their reaction: (1) management’s interventions during system deployment, and (2) how the system’s design ensures compliance by providing audit teams with constrained choices in applying the system’s recommendations. These factors developed an auditor’s sense of empowerment by leveraging their skills and knowledge. Empowerment became stronger following management interventions that encouraged audit teams to challenge the system’s recommendations. We compare how auditors reacted to the new system with prior research, and document how this system’s features are changing auditor behavior and increasing the frequency and timeliness of audit team interaction. This analysis demonstrates that when used as a process control, an audit support system can have unintended consequences for auditor behavior and interaction. More generally, this study highlights that to understand how technology impacts auditor behavior, it is important to examine the technology’s design and deployment.

Second-Wave Enterprise Resource Planning Systems: Enterprise System Implementation Risks and Controls

Introduction Some organizations report success and significant process gains resulting from enterprise system implementation, while many others encounter significant losses. It is readily apparent that the implementation of packaged enterprise system software, and associated requisite changes in business processes, has proved not to be an easy task. As many organizations have discovered, the implementation of enterprise systems can become a recipe for disaster unless the process is carefully handled. The following headlines provide a glimpse of the troubles encountered by organizations, ‘SAP: Whirlpools Rush to Go Live Led to Shipping Snafus’ (Collett, 1999), ‘Delays, Bugs, and Cost Overruns Plague PeopleSofts Services’ (Olsen, 1999) ‘ERP Project Leads to Court Fight’ (Stedman, 1999) and ‘PeopleSoft Problems Persist, Cleveland State Looks for a New Project Manager’ (Olsen, 2000). In 1995, US firms incurred an estimated

A generalized model of decision‐making processes for companies in financial distress

59 million in cost overruns on information system projects and another

Uncertainty techniques in expert system software

81 million on cancelled software projects (Johnson, 1995). Furthermore, it is estimated that approximately 90% of enterprise system implementations are late or over budget (Martin, 1998). Enterprise system (ES) implementations are different from ‘traditional’ system analysis and design projects (Davenport, 2000). Among the significant differences are the scale, complexity, organizational impact, and the costs of ES projects and subsequent business impact if the project does not succeed. An ES implementation impacts the entire organization, whereas a traditional project impacts often only a limited area of the organization. Furthermore, ES projects are often associated with the reengineering of business practices.