Enterprise Resource Planning Implementation and Management Accounting Change in a Transitional Country Ahmed O Kholeif, Magdy G Abdel-Kader and Michael J Sherer Enterprise Resource Planning This page intentionally left blank Enterprise Resource Planning Implementation and Management Accounting Change in a Transitional Country by Ahmed O Kholeif Lecturer in Accounting and Auditing, School of Accounting, Finance and Management, University of Essex, UK Magdy G Abdel-Kader Senior Lecturer in Accounting, Brunel Business School, Brunel University, UK and Michael J Sherer Professor in Accounting and Auditing, School of Accounting, Finance and Management, University of Essex, UK © Ahmed Othman Rashwan Kholeif, Magdy Abdel-Kader and Michael J Sherer 2008 All rights reserved No reproduction, copy or transmission of this publication may be made without written permission No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988 First published 2008 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y 10010 Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St Martin’s Press, LLC and of Palgrave Macmillan Ltd Macmillan® is a registered trademark in the United States, United Kingdom and other countries Palgrave is a registered trademark in the European Union and other countries ISBN-13: 978–0–230–51601–4 hardback ISBN-10: 0–230–51601–7 hardback This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin A catalogue record for this book is available from the British Library A catalogue record for this book is available from the Library of Congress 10 17 16 15 14 13 12 11 10 09 08 Printed and bound in Great Britain by CPI Antony Rowe, Chippenham and Eastbourne This book is dedicated to … My Mother, Aml, Aida, Mayada, and Gaber Magda Abou-Seada and Mohamed Abdel-Kader Denise Sherer This page intentionally left blank Contents List of Tables xii List of Figures xiii List of Abbreviations xiv Preface xvi Chapter 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 Chapter 2.1 2.2 2.3 Introduction Introduction Management accounting change and ERP Research objectives and questions Theoretical framework – selection and justification 1.4.1 The selection of theoretical framework 1.4.2 Justification of selected theoretical framework Research methodology and methods Egypt as a transitional country and ERP The significance of the research The structure of the book Literature Review 6 10 12 13 15 17 Introduction Enterprise Resource Planning (ERP) systems 2.2.1 Scope of ERP systems 2.2.2 Life cycle of ERP systems 2.2.3 Benefits and limitations of ERP systems ERP and management accounting innovations: opportunities and limitations 2.3.1 Business Process Re-engineering 2.3.2 Total Quality Management and the cost of quality 2.3.3 Activity-based costing and management 2.3.4 Benchmarking 2.3.5 Strategic management accounting and balanced scorecard 2.3.6 Value chain analysis and supply chain management 2.3.7 Theory of constraint and throughput accounting 2.3.8 Just-in-Time systems and materials resource planning vii 17 17 20 21 22 22 25 25 26 27 28 30 31 32 viii Contents 2.4 2.5 2.6 Philosophical and theoretical approaches to management accounting change 2.4.1 Pure approaches 2.4.2 Mixing research approaches (Triangulation) Research issues on ERP and management accounting change 2.5.1 ERP systems as a change agent 2.5.2 Empirical evidence on ERP and management accounting change and stability 2.5.3 Gaps in literature and research questions Summary and conclusions Chapter 3.1 3.2 3.3 3.4 3.5 3.6 Theoretical Framework Introduction Structuration theory: core concepts Structuration theory and management accounting change and stability 3.3.1 Social change and stability in structuration theory: critical evaluation 3.3.2 Structuration theory and management accounting stability 3.3.3 Burns and Scapens’ institutional framework as an extension of structuration theory to address management accounting change Structuration theory and information technology 3.4.1 IT status in structuration theory: a critical evaluation 3.4.2 IT models in IS literature 3.4.3 Structuration theory and empirical evidence on IT in accounting literature Structuration theory and its extensions: implications for the current study 3.5.1 Structuration theory and the current study 3.5.2 IT models in IS literature and their role in the current study 3.5.3 New institutional sociology theory and the current study 3.5.4 Burns and Scapens’ (2000) framework in relation to the current study 3.5.5 The theoretical framework and research questions Conclusion and summary 34 34 50 51 51 54 57 59 62 62 62 66 67 70 70 77 78 79 82 83 83 84 86 87 89 90 Contents ix Chapter 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 Chapter 5.1 5.2 5.3 5.4 5.5 Research Methodology and Methods Introduction Research methodology, theory and research method selection Case study method: definition and justification Pilot study Multiple-case design and site selection Data collection methods 4.6.1 Design of interview questions and theoretical framework Limitations of the case study method Summary and conclusion Background of the Empirical Study: The Transformation of Extra-Organisational Institutions in Egypt Introduction The privatisation programme and the transformation of extra-organisational institutions governing public sector enterprises 5.2.1 The privatisation programme 5.2.2 Background information on state-owned enterprises under study The Industrial Modernisation Programme and the transformation of extra-organisational institutions governing industrial sector enterprises 5.3.1 The Euro-Mediterranean Partnership and the Industrial Modernisation Programme 5.3.2 Background information about government agencies under study: Industrial Modernisation Centre State-budget reform programmes and the transformation of extra-organisational institutions governing governmental units 5.4.1 The Egyptian Ministry of Finance and state budget reform programmes 5.4.2 Background information about government agencies under study: Egyptian sales tax department Conclusion 91 91 91 93 96 98 101 105 108 109 111 111 112 112 115 119 119 122 126 126 130 133 ... accumulation, analysis, preparation, interpretation, and communication of information (both financial and operating) used by management to plan, evaluate, and control within an organisation and to assure... financial information Both financial information and non-financial information are necessary in managing day-to-day business operations The balanced scorecard has been introduced to link financial... use of accounting techniques As a result, cost management practices cover both management accounting innovations and operations management innovations In this regard, almost each operations management