- 1451 - Finding the Business Value after Successful Erp Implementation : Making the Case for Gross Margin

We make the case that ERP-related profitability improvements first manifest themselves in gross margin. Using regression discontinuity analysis, we compared “SAP Successes” with their matched competitors before and after their SAP implementation periods and found that the gross margin of SAP successes improved significantly but not their operating margin. These results proved robust across two different matching strategies, and the regression equations explained nearly all of the variance in gross margin. The strength of these results is likely due to the ideal position gross margin occupies along a firm’s value chain where productivity and profitability intersect.