Application extent of the enterprise resource planning systems

Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 3, No 8, 2012

Application Extent of the Enterprise Resource Planning Systems
(ERP) Main Components in the Jordanian Industrial Public Firms
Firas Naim Dahmash1*, Majed Abdel Majid Qabajeh2, Nidal Mahmoud Al Ramahi 3, Khalil Mahmoud Al Refaee4
1. Accounting Department, the World Islamic Sciences & Education University, Amman, Jordan
2. Accounting Department, Applied Sciences Private University, Amman, Jordan
3. Accounting Department, Al-Zarqa Private University, Amman, Jordan
4. Accounting Department, Al-Balqa Applied University, Amman, Jordan
* E-mail of the corresponding author: firas_dahmash@hotmail.com
Abstract
This study aims to measure the application extent of a four main components of the Enterprise Resource Planning
Systems (ERP) in the Jordanian public industrial firms which are Sales & Marketing, Management & Production,
Accounting & Finance, and Human Resources, and to classify the application extent in these firms to low, medium
and high. The study was applied on a sample of 82 firms. The results indicated that there is a medium application
extent for the four components of Sales & Marketing, Management & Production, Accounting & Finance, and
Human Resources, and the level of application was close for these four components
Keywords: Enterprise Resource Planning Systems (ERP), Application extent, Industrial firms, Jordan.

1. Introduction
Enterprise Resource Planning Systems (ERP) is distinct, and it is a programming designed to create integration
between business activities through the integration of kinds of separated functions. Enterprise Resource Planning
Systems (ERP) environment differ from the traditional systems environment, where the enterprise’s operations are
connected with each other through work processing computerized and relational databases which facilitate direct
procession and limiting of economic events. Many firms increasingly moved towards purchasing software packages
throughout the 1990s. Enterprise Resource Planning Systems (ERP) is comprehensive, and a fully integrated
software packages that provide automated support for most of the standard business processes within firms. A firm’s
investment in Enterprise Resource Planning Systems (ERP) is typically measured in millions of dollars and the total
market for ERP systems is forecast to be over $70 billion dollars by 2002. (Holland & Gibson, 1999).
The research literature of ERP systems has exponentially grown in recent years and many international studies
discussed different aspects of the Enterprise Resource Planning Systems (ERP) area. As for the Jordanian context,
we also find some studies which have been tested some aspects related to the Enterprise Resource Planning Systems
(ERP) area. For example (Abdullah and Qatanani, 2007; Al-Zoubi, 2011; Al-Kasawna, 2012) tested the efficiency
and effectiveness of the firm's accounting information systems for a number of Jordanian firms. Another studies for
(Naash & Khamis 2009) tested the impact of using the accounting information systems on financial performance.
However, there is no previous Jordanian study attempted to investigate and measure application extent of the
applicable parts (components) of the Enterprise Resources Planning Systems (ERP) separately like Sales &
Marketing, Management & Production, Accounting & Finance, and Human Resources in the Jordanian industrial
public firms. According to that, this study came as a continue to the previous Jordanian studies in this area which
will attempt to investigate and measure the application extent of the applicable parts (components) of the Enterprise
Resources Planning Systems (ERP) separately which are: 1- Sales & Marketing, 2- Management
& Production, 3-Accounting & Finance, and 4- Human Resources in the Jordanian industrial public firms listed at
Amman Security Exchange, and to classify these tested industrial firms into three levels (high, medium, and low)
according to their extent of application for the Enterprise Resource Planning Systems (ERP).

2. Background
Firms, whether they are large or small, depend on information technology in administrating their processes. While
works grow and develop, corporations work to develop information technology system in order to constantly handle
their needs. Recently, new integrated systems were developed which is the Enterprise Resource Planning Systems
(ERP). This is a packaging programming designed for client server environment, whether this environment is
traditional or depending on the web. It is characterized by providing integrated results to the departments of the firm
and assists these departments to increase the quality of their decisions and to prepare comprehensive integrated plans.
(Brehm & Gomez, 2010). Enterprise Resource Planning Systems (ERP) is large programming packages enable the

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work activities from integrating types of separated functions. Enterprise Resource Planning Systems (ERP) links
relevant work processes one by one through computerizing work flow and relational databases which facilitate to
restrict and manipulate economic events. A comprehensive definition adopted from Klaus, Rosemann, and Gable
(2000: 141), is used in this study, where ERP systems are perceived as “comprehensive packaged software solutions
seek to integrate the complete range of a business's processes and functions in order to present a holistic view of the
business from a single information and IT architecture”. They can link different areas of an organization, such as
manufacturing, order management, financial systems, human resources, suppliers and customers, into a tightly
integrated system with shared data and visibility (Chen, 2001). The process of new Enterprise Resource Planning
Systems (ERP) application in organizations is a complex issue, while it is welcomed as a way to make employees
more sufficiency and competence. Research in this area mostly includes topics such as application procedures,
effective succession elements, risks and complications in applications of Enterprise Resource Planning Systems
(ERP), and the successful strategies to effective applications for these systems. The Enterprise Resource Planning
Systems (ERP) is taken originally from Manufacturing Resource Planning Systems (MRP), where Manufacturing
Resource Planning Systems (MRP) developed when their tracks became basic part from programs structure and
planning for enterprise when planning for corporation became as a part of standardized software activity.

3. Review of the literature
There are many previous studies tested different aspects of the Enterprise Resource Planning Systems (ERP), and the
following are more related to our study topic.

(Al-Khasawna, 2012) evaluated the effectiveness of electronic accounting information systems in the Jordanian
electricity firms under conditions of uncertainty through studying and assessing the availability of properties related
to the quality of accounting information systems, and the ability of accounting information system to provide
appropriate information for planning, control and decision-making under conditions of uncertainty. The finding
indicated that the characteristics of electronic accounting information systems highly influence the performance of
electricity companies of Jordan under conditions of uncertainty, and these systems is effective in providing
information for the purposes of planning under conditions of uncertainty, and in providing information for decision-
making under conditions of uncertainty. A recent Jordanian study by (Al-Zoubi, 2011) tested the effectiveness of the
accounting information system for companies that adopting Enterprise Resource Planning Systems (ERP) that
located in Al-Hassan Industrial Zone, and its relationship with the quality of accounting outputs (information) and
the internal control. His finding indicated that there is an integration of accounting information system within the
ERP system improving the quality of accounting outputs and the internal control in these companies.

A Greek study by (Galani, et al., 2010) investigated users' satisfactions concerning the effect of the Enterprise
Resource Planning Systems (ERP) on the accounting information system and the practices of the accounting
administrative for a sample of Greek companies. The results indicated that the Enterprise Resource Planning Systems
(ERP) increased level of satisfaction for users of the accounting information system, system performance, system
quality, reduce the costs, and improve the overall performance of the firms. Another Jordanian study by (Naash &
Khamis, 2009) tested the impact of accountants in developing
accounting information systems on those systems efficiency and application on financial performance, and to
investigate the effect of the application of those systems on the financial performance for the Jordanian industrial
firms. The findings indicated that there is a significance statistical relationship between participating accountants at
all stages of the accounting information systems and the performance of those systems, and there are significance
statistical differences between performance indicators before and after the application of the system except for sales
operating income. The results also shows that there are statistically significant differences between the financial
performance indicators of companies that apply the computer-based accounting information systems and those
companies financial indicators that do not apply such systems. Also, another Jordanian study by (Abdullah and
Qatanani, 2007) tested the characteristics, variables, and factors that make up the banking environment and to
measure its impact on the efficiency and effectiveness of accounting information systems in Jordanian commercial
banks. The study showed that there is a great influence for each legal factors, professional regulations, technical
factors, administrative and organizational factors, and behavioral factors on the efficiency and effectiveness of
accounting information systems. Also, the efficiency and effectiveness of these systems vary depending on the
different level of the banking management interest of these factors at building, designing and developing accounting
information systems. Finally, (Spathis & Constantinides, 2004) investigated the effect of improvements offered by
the ERP system to the accounting information system, and to identify the ways to develop ERP system in the future.
The study was applied on 26 Greek firms by using a questionnaire. The findings showed that the ERP system

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improves effectiveness of internal control, quality, reliability and motivated management towards better
performance.

4. Methodology

4.1 Research Hypothesis
Based on the previous studies, it's noted that there is an existence and usage for the Enterprise Resource Planning
Systems (ERP) in the Jordanian firms in general. However, there is no clear information about the nature of these
systems, application extent, main components, and classifications of its application extent. According to that, this
study will attempt to investigate and measure the application extent of the applicable parts (components) of the
Enterprise Resources Planning Systems (ERP) separately (one by one) which are: 1- Sales & Marketing, 2-
Management & Production, 3- Accounting & Finance, and 4- Human Resources in the Jordanian industrial public
firms. In addition to that, this study will classify the tested industrial firms into three levels (high, medium, and low)
according to their application extent of the Enterprise Resource Planning Systems (ERP) in these firms. According to
that, we can formulate the following main hypothesis as follows:

HA(1): There is an application extent for the four applicable parts (components) of the Enterprise Resource Planning
Systems (ERP) which are: 1- Sales & Marketing, 2- Management & Production, 3- Accounting & Finance, and 4-
Human Resources in the Jordanian public industrial firms.

Based on this primary hypothesis, we can derive from it another four sub hypotheses as follows:

Ha1.1: There is an application extent for the Sales and Marketing Systems as a part of the four applicable parts
(components) of the Enterprise Resource Planning Systems (ERP) in the Jordanian public industrial firms.
Ha1.2: There is an application extent for the Production and Management Systems as a part of the four applicable
parts (components) of the Enterprise Resource Planning Systems (ERP) in the Jordanian public industrial firms.

Ha1.3: There is an application extent for the Finance and Accounting Systems as a part of the four applicable parts
Ha1.4: There is an application extent for the Human Resources Systems as a part of the four applicable parts

4.2 Data collection method, population and sample
We developed an integrated questionnaire to be our primary tool for collecting the required data for this study. The
developed paragraphs (questions) and parts of the questionnaire have been developed to cover all the detailed
variables of: Sales & Marketing, Management & Production, Accounting & Finance, and Human Resources. The
questionnaire has been designed of two parts. The first part consists of group of general questions related to the
respondent's himself like qualification, specialization and experiences. The second part (technical part) of this
questionnaire consists of a number of questions, which is formed in its total the four' parts (components) of all the
detailed variables of: Sales & Marketing, Management & Production, Accounting & Finance, and Human Resources.
The questions were designed and organized to be clear and integrated as much as possible to guarantee a high
acceptance level of understanding for every question by the respondents. We used the well known five degrees
(Likert Interval Scale) from number one to number five. Number one represent the very low degree of application to
number five which representing the very high degree of application for the systems. Every number (group) of
questions in the questionnaire represents one of the previous mentioned four sub-systems (components) of the total
Enterprise Resource Planning Systems (ERP). The following Table (1) illustrated the number of questions in the
questionnaire for each part (component).

Table (1) Number of questions for every (part) component
Number of questions Component
for each (part) component name
1-8 Sales & Marketing
9-20 Management & Production
21-32 Accounting & Finance
33-42 Human Resources
42 Total number of questions

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The tested industrial firms were classified according to their application extent of the mentioned four components of
the Enterprise Resource Planning Systems as follows: A high application extent of the four components of the
Enterprise Resource Planning Systems (ERP), a medium application extent of the four components of the Enterprise
Resource Planning Systems (ERP), and a low application extent of the four components of the Enterprise Resource
Planning Systems (ERP).

The population of this study represented all the Jordanian listed industrial public firms at Amman Security Exchange,
that is, and because of the characteristics of this sector like size, data availability and firms homogeneity, we
distributed the questionnaires to the information technology managers for these firms. The study sample was selected
on a comprehensive basis of all the Jordanian listed industrial public firms at Amman Security Exchange for the year
2011 (Amman Stock Exchange Thirteen's Annual Report, 2011) after excluding the firms under liquidation.
According to that, one hundred thirty questionnaires were distributed, whereas only one questionnaire was
distributed to each firm. Eighty two questionnaires were returned back and it was accepted for the analysis, which
forms a response ratio of approximately 79.6%.

5. Data analysis and results presentation
We tested the validity and quality of the questionnaire by a number of professional and academic arbitrators, and we
tested the reliability of the questionnaire by using the (Alpha Cornbach) test to measure scale tool consistency. The
Alfa value was equal to 86%, which considered an excellent ratio as being higher than the accepted ratio of 60%.

The analysis of the first part of the questionnaires data indicated that 91% of tested sample are from information
technology and computer specialization, and the rest ratio of 9% is from various specializations. This indicates that
the sample includes scientifically qualified persons and they have the ability to deal with the Enterprise Resource
Planning Systems (ERP). The analysis of the questionnaires data indicated that a percentage of (72%) of the
respondents have a bachelor degree, and a percentage of (19%) of the respondents have master degree, and the rest
have a diploma certificate. Analysis for the experiences showed that (42%) of the respondents have an experience
from five to less than ten years, and (33%) of the respondents have an experience from one year experience to less
than five years experience, and (18%) of the respondents have an experience from ten years to less than fifteen years
experience, and lastly (7%) of the respondents have an experience which exceeds twenty years.

5-1- Hypothesis testing results

Table (2) below illustrated the simple linear regression analysis results for measuring the application extent of the
detailed independent variables of: Sales & Marketing, Management & Production, Accounting & Finance, and
Human Resources.

Table (2) Application extent results for the four components of the Enterprise Resource Planning Systems (ERP)
Component Calculated Standard T-test Sig.
Mean Deviation
Sales & Marketing 64% 0.133 2.111 0.033a
Management & Production 57% 0.116 2.426 0.011a
Accounting & Finance 61% 0.121 2.343 0.021a
Human Resources 67% 0.112 2.273 0.042a
*T tabulated value is equal to: 1.671 at significant level of 5%.

Table (2) shows the results of measuring application extent for the four components of the Enterprise Resource
Planning Systems (ERP). The statistical results for the first component of the Sales & Marketing Systems, indicated
that the (calculated T = 2.111) is higher than the (tabulated T = 1.671) and according to that, we accept the first
alternative sub-hypothesis (Ha1-1) and reject the null sub-hypothesis (H01-1), and that means that there is an
application extent for the Sales and Marketing Systems as a part (sub-system) of the four applicable parts
(components) of the Enterprise Resource Planning Systems (ERP) in the Jordanian public industrial firms. The
calculated mean value for the same first component is equal to 64%, and that means that there is a medium
application extent for the first component (sub-system) of the Sales & Marketing Systems in the Jordanian public
industrial firms. Statistical results for the second component of the Management & Production Systems, indicated

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that the (calculated T = 2.426) is higher than the (tabulated T = 1.671) and according to that, we accept the second
application extent for the Management & Production Systems as a part (sub-system) of the four applicable parts
(components) of the Enterprise Resource Planning Systems (ERP) in the Jordanian public industrial firms. The
calculated mean value for the same second component is equal to 57%, and this ratio is considered also as a medium
application extent for the Management & Production Systems (sub-system) in the Jordanian industrial public firms.

The statistical results for the third component of the Accounting & Finance, indicated that the (calculated T = 2.343)
is higher than the (tabulated T = 1.671) and according to that, we also accept the third alternative sub-hypothesis
(Ha1-3) and reject the null sub-hypothesis (H01-3), and that means that there is an application extent for the Accounting
& Finance Systems as a part (sub-system) of the four applicable parts (components) of the Enterprise Resource
Planning Systems (ERP) in the Jordanian public industrial firms. The calculated mean value for the same third
component is equal to 61%, and this result is close to the mean value of the first component, so we can also say that
there is a medium application extent for the Accounting & Finance Systems (sub-system) in the Jordanian industrial
public firms. Finally, The statistical results for the fourth component of the Human Resources indicated that the
(calculated T = 2.273) is higher than the (tabulated T = 1.671) and according to that, we also accept the last fourth
application extent for the Human Resources Systems as a part (sub-system) of the four applicable parts (components)
of the Enterprise Resource Planning Systems (ERP) in the Jordanian public industrial firms. The calculated mean
value for the same fourth component is equal to 67%, and this value is also closed to mean value of the first part
(sub-system) of the Sales and Marketing, so, we can say also that there is a medium application extent for the Human
Resources Systems (sub-system) in the Jordanian industrial public firms.

6. Conclusions
This study aims to measure the application extent of a four main (parts) components of the Enterprise Resource
Planning Systems (ERP) in the Jordanian public industrial firms, and these (parts) components are Sales &
Marketing, Management & Production, Accounting & Finance, and Human Resources. In addition to that, classify
the application extent in these firms to low, medium and high. The final sample was equal to 82 firms and based on
the analysis of the results, the following conclusions can be made: First, there is a real level of usage and application
for the four (parts) components of the Enterprise Resource Planning Systems (ERP) in the Jordanian public industrial
firms which are: Sales & Marketing, Management & Production, Accounting & Finance, and Human Resources.
Second, there is a medium application extent for these four sub-components of the Enterprise Resource Planning
Systems (ERP) in the Jordanian public industrial firms.

7. References
Abdullah, K. A., Qatanani, K. (2007), "Banking Environment and its Impact on the Efficiency and Effectiveness of
Accounting Information Systems: Analytical Study on the Commercial Banks of Jordan", Journal of Applied
Sciences, Applied Sciences University, Issue 1, Volume 10.

Al-Khasswna, Reem, (2011), "Electronic Accounting Information Systems Efficiency in Energy Sector under
Conditions of Uncertainty: A Field Study Electricity Companies in the Hashemite Kingdom of Jordan", Research
Journal of Finance and Accounting, Volume 3, Issue 5, 2012.

Al-Zoubi, Ali, (2011), "The Effectiveness of the Accounting Information System Under the Enterprise Resources
Planning (ERP): A Study on Al Hassan Qualified Industrial Zone’s (QIZ) Companies", Research Journal of Finance
and Accounting, Volume 2, Issue 11, 2011.

Amman Stock Exchange, the Thirteen's Annual Report, Amman, Jordan, 2011.

Brehm, Nico & Jorge, Marx Gomez, (2010), "Federated ERP-systems on the Basis of Web Services and P2P
Networks", International Journal of Information Technology and Management, Volume 9 Issue 1, October, USA
P75-89.

Chen, I.J. (2001), “Planning for ERP systems: analysis and future trend”, Business Process Management
Journal, (7), p. 374.

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Galani Despina, Efthymios Gravas & Antonios Stavropoulos, (2010), "The Impact of ERP Systems on Accounting
Processes", World Academy of Science, Engineering and Technology, issue 66, Australia, P418-423.

Holland, P., Light, B. and Gibson, N. (1999), “A Critical Success Factors Model for Enterprise Resource Planning
Implementation”, Proceedings of the 7th European Conference on Information Systems.

Klaus, H., Rosemann, M., and Gable, G. G. (2000). “What is ERP?” Information Systems Frontiers, (2:2), pp.141-
162.

Naash, M. S, & Khamis, (2009), "The impact of Post of Accountants in the Development of Accounting Information
Systems on the Success of Those Systems and the Impact Applied to the Financial Performance of Companies",
Jordan Journal of Business, Amman, Jordan, Issue 2, Volume 5.

Nash, K.S. (2000), “Companies don’t learn from previous IT snafus”, ComputerWorld, 30 December, 32-33.

Spathis, C. & Constantinides, S., (2004), “Enterprise Resource Planning Systems’ Impact on Accounting Processes,"
Business Process Management Journal, Issue 10 (2), UK, P234-247.

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Application extent of the enterprise resource planning systems

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