Research on Economic Benefit from ERP-Evidence from Y Software Company's Users

ERP (Enterprise Resources Planning) users often refuse to pay off the balance of payment because they think the software vendors fail to complete the targets, for which the true reason is that the boundaries or standards on the effectiveness and economic benefits of ERP is not clear. So it is necessary and important to effectively measure the benefits brought by ERP to the users, which is favorable for both users and software vendors. This paper adopts an empirical research method and analyzes on the information of ERP users of a Chinese well-known software company from Shanghai and Shenzhen Stock Exchange. The study finds that the corporations who introduce the ERP system are generally better in performance than non-ERP users. The study also finds that the total assets of the ERP users in tested group are increased and the asset-liability ration is stable after introducing ERP and, meanwhile, the total assets of the non-ERP users in controlled group are not increased and the asset-liability ration is decreased. It might show that ERP can help users maintain and strengthen their business strength. However, the study finds that both of inventory turnover and account payable turnover of the ERP users have been slowed down instead of speeding up in the first two years after introducing ERP. The decrease of inventory turnover represents that ERP system might need a long time for running-in. The reasons for account payable turnover decreasing might be two. One is that ERP is in the stage of running-in. The other probably is that ERP helps the users become stronger so that they can defer the payments to vendors in order to making use of more non-cost funds.