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Investments in enterprise integration technology: An event study

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Abstract

This study examines stock market reactions to investments in enterprise resource planning and enterprise application integration technologies, using signaling theory concepts as explaining theory. The empirical results presented in this paper indicate that financial markets differentiate among technologies that companies invest in to integrate their information systems. In addition, this study confirms that technology maturity, financial health of the investing company, and stock market conditions are important factors influencing the stock market reaction.

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Acknowledgments

An earlier version of this paper was presented at the 2008 Hawaii International Conference on System Sciences (HICSS 2008). The feedback received from the conference participants is greatly appreciated.

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Authors and Affiliations

  1. School of Business, State University of New York at New Paltz, 75 S. Manheim Blvd., New Paltz, NY, 12561-2443, USA

    Narcyz Roztocki

  2. School of Business, Virginia Commonwealth University, Snead Hall, 301 West Main St., Richmond, VA, 23284-4000, USA

    Heinz Roland Weistroffer

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  1. Narcyz Roztocki
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Correspondence to Narcyz Roztocki.

Appendix

Appendix

1.1 Examples of investment announcements

1.1.1 Example 1: EAI investment announcement

Business Wire

February 23, 1998

Sara Lee Corporation (SLE)

Sara Lee Hosiery Selects TSI Software’s Mercator to Speed SAP R/3 Implementation

Mercator enables seamless integration of legacy systems with SAP’s R/3 n

TSI International Software Ltd. (NASDAQ:TSFW), a leading provider of enterprise application integration solutions, today announced that the hosiery division of Sara Lee Corporation (NYSE:SLE) has selected TSI Software’s Mercator software to assist in R/3 implementation and simplify maintenance of R/3 interfaces to existing systems. Sara Lee is using Mercator to seamlessly integrate business data such as employee benefit information and personnel statistics from its legacy human resource (HR) system with SAP R/3’s HR component. Sara Lee is also using Mercator to interface employee data from R/3 into a legacy payroll system. “Mercator for R/3 allowed us to build powerful interfaces to integrate the human resource component of R/3 with our legacy systems,” said John Zaski, director of IT for Sara Lee’s hosiery division. “Using Mercator for R/3, we were able to build interfaces much faster and react to format changes more quickly than with manually written code. Its tight integration with SAP R/3 made Mercator a very effective tool for us. We plan to use Mercator to integrate the financial and manufacturing modules of R/3 with our legacy systems.” Mercator enables SAP customers to fully leverage the R/3 Business Framework—SAP’s open, component-based architecture that acts as the enterprise IT backbone—without manual coding. Mercator’s SAP-specific extensions are certified by SAP and utilize R/3 strategic interface technologies such as BAPIs and ALE. Using Mercator, R/3 interface formats are captured automatically and transformed graphically, significantly reducing the time and cost associated with R/3 implementation. “Sara Lee’s selection of Mercator to integrate its legacy systems with R/3 validates Mercator’s powerful application integration features,” said Connie Galley, president and CEO of TSI Software. “Reducing the time and cost associated with interfacing and data conversion means our customers such as Sara Lee can go live with R/3 sooner and begin to realize its benefits that much faster.”

1.1.2 Example 2: ERP investment announcement

May 12, 2009

TendersInfo

Cintas Corp. (CTAS)

Cintas Selects itelligence as SAP ERP Implementation Consultant

itelligence today announced that it is was selected as the consulting partner for SAP ERP implementation at Cintas Corporation, a company that designs, manufactures and implements corporate identity uniform programs for customers throughout the U.S. and Canada. In addition, they provide document management, fire protection and first aid and safety programs in the same markets. Cintas chose itelligence to replace legacy systems with a core SAP ERP 6.0 foundation that will help accomplish Cintas key business drivers.

1.1.3 Example 3: ERP investment announcement

July 22, 2009

RTT News (United States)

Reynolds (RAI)

Reynolds Selects Lawson ERP System to Help Support Business Cost Improvement Initiatives

Lawson Software (LWSN) announced that Reynolds has licensed the Lawson M3 Enterprise Management System. Reynolds selected the Lawson ERP system to help support its operating and business cost improvement initiatives as well as the company’s growth plans.

The contract was signed during Lawson’s fourth quarter of fiscal 2009, which ended May 31, 2009. The company intends to use the new Lawson M3 ERP system to help enhance and improve operating processes and system capabilities. The system will also help pave the way for future improvements to the business and enhance the service Reynolds brings to its customers.

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Roztocki, N., Weistroffer, H.R. Investments in enterprise integration technology: An event study. Inf Syst Front 17, 659–672 (2015). https://doi.org/10.1007/s10796-013-9451-8

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