Interdependence and differentiation: Evaluating a structured equation model for Enterprise Resource Planning system business impact using a public sector environment

This research furthered and refined a structured equation model of costs and benefits coming from implementation of Enterprise Resource Planning (ERP) systems. The model, previously developed and tested in a private sector manufacturing environment, was applied here in the public sector. A Delphi panel of experts assisted in adjusting the original instrument for public sector use. Organizational information processing theory, theory of bureaucracy, and organizational open systems theory supported the research. The meta-variables in the model measured two public sector organization levels of subunit interdependence and sub-unit differentiation. Higher levels of interdependence correlated with positive business impacts from ERP, whereas, higher levels of differentiation correlated with negative business impacts. Customization emerged as a key discriminator for success in implementation of public sector ERP packages.