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INTRODUCTION ERP systems enable a company to increase productivity of the workforce by streamlining business functions, eliminating information silos

or incompatible legacy systems, and providing key workers with the information they need to make business-critical decisions. ERP systems are highly complex and difficult to implement, and often require long implementation time and significant resources. Over the years, many companies have successfully implemented ERP systems and many faced implementation failure. Common Information Technology implementation success factors such as, top management support, user involvement, technically sound systems, user friendliness, etc. have been mentioned by Markus (1983) several decades ago. This research focuses on the dynamic interaction between pre-implementation, implementation, and post-implementation factors. We worked with two Saudi companies to examine dynamic relationships among variables in three implementation stages. In addition, the success or failure of ERP implementation is analyzed in the context of culture and management style of the organization. Case study research approach is a popular approach and examples of information systems case studies are plentiful. It has been identified by researchers that ERP success is harder to achieve when cultural issues are involved. Since most ERP systems that are competing for market share in the Middle East are designed by western software developers, it is possible that organizational, cultural, and managerial difference may dictate implementation process a certain way. Therefore, we believe that understanding the intricacies of ERP implementation in the Middle East may lead to some success/failure factors that are different from the success/failure factors applicable for western companies. The rest of the article is organized as follows. Next section looks at the global and Middle Eastern ERP market followed by the Theoretical model. Cases are

especially since most of the trials and tribulations of MRPII implementation were suffered and learned from in the early 1980‟s with alpha. Failure of ERP implementation The biggest single ERP failure factors are the failure of a successful implementation. Does this mean that you are doomed from the start? Of course not. or the severest of all consequences  Stopping production and/or not delivering orders to your customers. Industry statistics show that >60% of ERP implementation starts historically fail. Conclusion of the report is provided in the Final section. So the pertinent questions are: what are the main causes of ERP failure and what can be done to prevent this from happening to you? Top Management Mistakes in ERP Implementation The propensity of top management to delegate the oversight of an ERP implementation to lower management levels often results in . It is mind boggling to continually encounter companies who make major ERP gaffes in this day and age.presented in the third section. So what constitutes failure? Several things come to mind:     Not making the promised return on investment Inordinately extending the implementation schedule and startup date Running over budget by unconscionable variances Grinding the organization to a crawl pace. if you learn from the mistakes of others. beta and gamma re leases.

This leads to the third greatest cause of ERP implementation failures: poor package selection. Wrong Selection of ERP Package Poor package selection occurs when a company has inadequately developed functional requirements definitions. We have also encountered companies who made major gaffes by selecting a package at the top levels of a company without intimately knowing its characteristics. .  being "out of touch" with critical events. Wrong ERP Requirement Specification Surveys have shown that inadequate definition of functional requirements accounts for nearly 60% of ERP implementation failures. and technical aspects of the project. Another reason we have found is executives familiar with an ERP system from a last job they held. It also occurs when staff members assigned to ERP projects do not take the time to run the screens of the new system. The result is a failure waiting to happen. to find out if the software package features are adequate for their needs. size. implement the same system in their new company without defining functional requirements. or that the package selected takes longer to process daily work tasks. and subsequently. or The lack of understanding of the scope. as they would during their daily work tasks. the proper commitment of time and resources required for a successful implementation. This is simply a matter of not comprehensively and systematically developing a quality set of functional requirements definitions. What often results from this is the ERP package doesn‟t fit the organizational needs.

Resistance to New ERP System The lack of a change management approach as part of the program can prevent a program from succeeding. extending individual workloads to 150%. People burn out after having put in extensive hours over a long period of time. Many companies will attempt to "save dollars" by doing everything on an overtime basis. and Arrogance. A lack of buy in often results from not getting end users involved in the project from the very start. Miscalculation of Implementation Effort . Time and time again we run across this mistake in ERP implementations. Resistance to change is quite often caused by   A failure to build a case for change Lack of involvement by those responsible for working with changed processes    Inadequate communication Lack of visible top management support and commitment. The financial and emotional drain of what seems sometimes to be perpetual extensions.Wrong ERP Resource Selection The fourth greatest reason for ERP implementation failures is inadequate resources. thereby negating their author ship and ownership of the new system and processes. whether or not there are adequate skills within the company. reschedules and delays of implementations takes its toll. This approach can be a "kiss of death" for the program.

Misfit of ERP Business Software with Business Processes One of the main causes of ERP implementation failure is the misfit of application soft ware with the company business processes. which are almost always underestimated. ERPrelated training is crucial. Often left out of the total costs are costs of planning.Another cause of ERP implementation failure is the miscalculation of time and effort it takes to accomplish the project. consulting fees. a company doesn‟t stand a chance of achieving the ROI it anticipated. and the learning curve performance drop. when the total costs of the project have been understated. No Good ERP Training and ERP Education Another of the biggest causes of ERP implementation failure is inadequate education and training. Unrealistic ERP ROI Expectation Another significant cause for ERP implementation failure is the unrealistic expectation of benefits and return on investment. and integrate the applications with the business processes accounts for a large percentage of ERP failures. This failure to examine underlying business process flaws. When this happens. training. Companies who treat an ERP selection. as most employees must learn new software interfaces and business processes which affect the operation of the entire enterprise. Software providers are notorious for overstating the benefits in terms of ROI. and . The corporate culture is impacted by changes in the company‟s business processes. evaluation and implementation comparable to buying a washing machine are doomed to failure. testing. data con versions. documentation. replacement staffing.

In an effort to avoid temporary conversion costs. But good communications also allow different parts of the organization to assess how they will be impacted by changes in processes. policies. Communications are a vital part of managing change in a corporate environment. Poor ERP Project Management A major mistake is to shortcut critical events in the project plan. and procedures. It is easier to buy software than to perform the more difficult task of identifying weaknesses and opportunities for improvement. beginning with announcing the reason for the up and coming effort. Wrong Approach Cost Cutting Another of the key causes of ERP implementation failure is ill advised cost cutting. some companies take a very risky route and go live at multi plant sites simultaneously. and continuing to advise the organization of the progress and importance of the ERP implementation to the company. redefining and integrating processes. Others attempt to unrealistically compress the schedule in order to save on expenses. only to eventually run over . subjecting all plants or some plants to a total shutdown.shortchanging this part of the ERP implementation leads to much pain and suffering downstream. or testing before going live. This is suicidal. Another common mistake is made when a company leaves out the self examination of business processes and uses ERP to cover up weaknesses. such as time for documentation. Poor Communications One of the causes of ERP implementation failure is poor project communications.

Data Collection and Clean-Up 4. If the software package is written for your industry. We feel that ROI should take a "back seat" when upgrading an important part of a company‟s infrastructure: the information system. One of the top reasons ERP implementations fail is because the software doesn‟t meet basic industry specific business requirements. Customized solutions are time consuming to implement and add unnecessary cost. Strategic Planning 2. However. improve profitability and keep customers satisfied. Instead of justifying or driving the project primarily for financial gains. the implementation should be treated as an upgrade necessary to maintain or gain a strategic and competitive advantage. Successful ERP implementation Introduction Tougher competition in the marketplace is generating the need to better optimize resources. Companies are increasingly implementing Enterprise Resource Planning (ERP) software solutions to improve operations and provide faster customer response. Training and Testing . you won‟t have to custom design a solution. Choosing an ERP solution that meets your specific business requirements will enable you to have a smoother implementation. 1.both schedule and budget. purchasing an ERP application is only half the battle. Procedure Review 3. A well designed implementation plan is the key to success.

operations and senior management. Base the selection on the knowledge of the team not status of the employee. • Examine current business processes and information flow. Make sure you include first line workers as well as management on your team. Examine current business processes: Have the team perform an analysis on which business processes should be improved.5. • Set objectives. . batch tickets and bill of lading for the analysis. i. formulating a training plan. accounting.e. Go Live and Evaluation 1. Each team member should be committed to the success of the project and accountable for specific tasks. purchasing. finalizing objectives. developing a timeline. consider questions such as: Are your procedures up to date? Are there processes that could be automated? Are personnel spending overtime processing orders? Does your sales force and customer service personnel have real-time access to customer information? The team members should also conduct interviews with key personnel to uncover additional areas of improvement needed. Project team: Assign a project team with employees from sales. • Develop a project plan. STRATEGIC PLANNING • Assign a project team. Gather copies of key documents such as invoices. customer service. To start the team discussion.

Examples of objectives would include: Does the solution reduce backlogs? Can the solution improve on-time deliveries? Will you be able to increase production yields? Develop a project plan: The team should develop a project plan which includes previously defined goals and objectives. Ideally. Make sure that you modify the document . Train on every aspect of the ERP software to fully educate the team on capabilities and identify gaps. 2. as well as individual team responsibilities. training procedures. • Identify manual processes. ERP systems are massive and you won‟t be able to implement every function. Determine whether modifications are needed prior to employee training. Review software capabilities: Dedicate 3-5 days of intensive review of the software capabilities for the project team. You need to define the scope of implementation. The end result of the project plan should be a “to do” list for each project team member. Identify manual processes: Evaluate which processes that are manual and should be automated with the ERP system. PROCEDURE REVIEW • Review software capabilities. Develop standard operating procedures (SOPs): for every aspect of your business. • Develop standard operating procedures.Set objectives: The objectives should be clearly defined prior to implementing the ERP solution. These procedures should be documented. the scope should be all inclusive. But practically. timelines. it is very difficult to implement.

This is a huge task. . Create spreadsheets to collect and segment the data into logical tables (Most ERP systems will have a utility to upload data from a spreadsheet to their database).as your SOPs change. Identify the source documents of the data. • Clean-up data. Determine which information should be converted through an analysis of current data. • Review all data input. but it is critical to the success of your implementation. Convert data: You can‟t assume 100% of the data can be converted as there may be outdated information in the system. Examples of SOPs: • How do you handle global price changes? • What are the processes for inputting new customer records? • How do you currently handle the paperwork on drop shipments? • How do we add a new product or formula? DATA COLLECTION & CLEAN-UP • Convert data. • Collect new data. Collect new data: Define the new data that needs to be collected.

Run real life scenarios to test for data accuracy. Train the Trainer: It is less costly and very effective if you train the trainer. Make sure the actual test mirrors the Standard Operating Procedures outlined in step 2. Now is the time for improving data accuracy and re-establishing contact with inactive customers.Review all data input: After the converted and manually collected data is entered into the ERP database. Verify testing. 4. Pre-test the database: The project team should practice in the test database to confirm that all information is accurate and working correctly. Provide additional tools. so it is very important that the data is accurate. Use a full week of real transaction data to push through the system to validate output. Assign project team members to run the in-house training. and determine whether modifications need to make. • Train the Trainer. TRAINING AND TESTING • Pre-test the database. • Perform final testing. Data drives the business. then it must be reviewed for accuracy and completeness. make sure all necessary interfaces are designed and integration issues are resolved to ensure the software works in concert with other systems. Set up user workstations for at least 2 days of training by functional area. such as cheat . Occurring simultaneously with testing. Data clean-up: Review and weed out unneeded information such as customers who haven‟t purchased in a while or are no longer in business. • Verify testing.

• Users will have assistance during their first live transactions. Comparing . Evaluation: Develop a structured evaluation plan which ties back to the goals and objectives that were set in the planning stage. • Vendor is available for go-live day.sheets and training documentation. Final Testing: The project team needs to perform a final test on the data and processes once training is complete and make any needed adjustments. You won‟t need to run parallel systems. if you have completed a thorough testing. Refresher training should also be provided as needed on an ongoing basis. Sample Final Go Live Countdown Checklist Sample • Physical inventory process is complete. • Any transition issues are addressed. • Evaluate the solution. • Beginning balance entry procedures are developed for all modules. In addition. • Executives and department‟s heads are fully trained. 5. GO LIVE AND EVALUATION • Develop a final Go-Live Checklist. • Documents & modifications are tested thoroughly. a post-implementation audit should be performed after the system has been up and running for the first week for reconciliation purposes and three to six months following to test whether or not the anticipated ROI and business benefits are being realized.

RESEARCH MODEL As mentioned before. Upper management and project team members should be committed for the company to realize the benefits of successful ERP. On the other hand. Western management style is generally „participative‟ while Middle Eastern management style is largely paternalistic and supported by greater power distance between managers and workers.add value to the business. inhibit the development of professional skills. main components of the research model consists of three phases. Important contextual factors for each phase are identified and provided in Figure 1. organizational. Cultural. found that the centralized management style could impede individual creativity and thereby. . and managerial factors influence all three phases. • Test software across departments.actual numbers with previously established benchmarks will reveal if the software tool does what it is intended to do . however. It is important to periodically review the system's performance to maximize ROI. In Summary • Set reasonable goals and objectives. Earlier research suggests that firms which tend to employ Western management style favor allowing workers to enhance their professional skills. • Make project team members accountable for implementation. we believe that the influence of these three factors in preimplementation and implementation phases mainly dictate the outcome in the post implementation phase. • Constantly evaluate to maximize the return on your investment. You will hit bumps in the road and you need to be patient.

Training .Satisfaction Organizational and Managerial Factors CASE STUDIES Two ERP implementation cases are examined.Delegation of Authority .Vendor Selection . Data for these cases were collected from senior Information Technology as well as other managers of respective companies.Cultural Factor Pre-Implementation Phase . Company documents were examined and few interviews were conducted in the process.Management Support .ERP Utilization .Resource (HR & Hardware) .Problems/Issues . These cases include a petrochemical company (identified as „Company A‟) and an Aluminum manufacturing & Installation Company (identified as „Company B‟). The company was established in late 90s and currently has more than 200 gas stations .Project Scope .Alternate proposal Implementation Phase Post-Implementation Phase . CASE 1: COMPANY A Company A is a privately owned limited liability company (LLC) headquartered in Eastern Province of Saudi Arabia and operates throughout the Kingdom.BPR .

Inventory. the company considered developing customized software instead of purchasing a commercial off-the-shelf ERP system. Vendor selection was also influenced by the owner.31 Desktop (16 in HQ and 5 in each branch office). Pre-Implementation Phase After approving the initial proposal.100 Mbps Ethernet LAN within HQ . Implementation cost figure was not available. The chairman of the company was interested in various summary reports and the directors needed forecasting capabilities.around the country. Diesel and Car Care products. Hardware and network components that were added for the project are shown below: .8 Mbps WAN Connection with branch offices Implementation Phase . and Human Resource (HR) management automation were also other driving factors behind ERP implementation. company owners downsized the implementation scope to cut down implementation cost. the company settled in on Oracle E-Business Suite. budgeting. payroll. 9 Printers . The main products and services of the company include Distribution of Petrol. Management approved spending on required hardware purchase and network enhancement. However.Oracle Application Server . purchasing functions and to bring operations of satellite stations under one umbrella. Implementation Objectives Objectives behind ERP implementation were to integrate costing. after much deliberation. At the beginning. Reporting and forecasting capability was not available in the current system. Implementation phase was 6 months long. The company has 550 to 600 employees.

Middle Management did not cooperate as expected. Accumulative effects of several management decisions such as. Top management reduced total hours of staff training to cut cost. Even after recommendations from consultants. was blamed for poor organizational work efficiency. In some occasions. As a result. owners and the top management failed to delegate authorities to the middle and lower management. not providing adequate training. not delegating some authority to lower level management attributed to the unsatisfactory results in the post-implementation phase. the ERP system. ERP modules were not fully utilized. company owners were not interested in recruiting required number of IT personnel for administration and maintenance of the ERP system. As mentioned before Middle Eastern culture is largely paternalistic and the influence of paternalistic culture can also be seen in autocratic management style.In some cases top management were not ready to implement business process reengineering (BPR) to adjust or modify business rules required by the ERP system. decisions against BPR that was required by the Oracle E-Business Suite. Post-Implementation Phase After implementation. for a certain period of time. not recruiting adequate number of IT personnel. The case shows existence of greater power distance between managers and workers. Analysis Reasons that outcomes of the implementation were not satisfactory are both cultural and managerial. The Oracle database backup failed multiple times and the IT Manager was unable to solve the issue at the beginning. CASE 2: COMPANY B .

the proposal was not successful. it manages three other warehouses located in the Central. 18 Printers .however.11g Wireless .The Company is one of the leading Aluminum Manufacturing & Installation Companies in Saudi Arabia. introduce an efficient project management solution. forecasting. Hardware and network components that were added for the project are shown below: . Implementation cost figure was not available. The company does not have any branch office. and biometric access control device. Implementation Objectives ERP implementation objectives were to replace the existing stand-alone production management package. central warehouse and the corporate head quarter of the company all are located in the Eastern Province of Saudi Arabia.MS Office.1000 Mbps Ethernet LAN within HQ with IEEE 802. Auto CAD.Servers required for the Epicor ERP systems . The Company manufactures and fabricates aluminum sheets and bars and other aluminum related products. 4 Plotters. Pre-Implementation Phase After signing agreement with Epicor. The company selected Epicor ERP Solutions. fabrication factory. Company B was also interested in factory automation. Management approved spending on required hardware purchase and network enhancement. payroll. and to replace the isolated Inventory package with an appropriate high-tech integrated Enterprise Resource Solution. 3D MAX . Western and Southern Region. top management proposed to replace Epicor ERP by Oracle E-business suite. However.37 Desktop. The company was established in late 90s due to a spinoff action by the original Aluminum Company. Implementation phase went on for about 8 months. The main aluminum plant. The company has 250 to 300 employees.

therefore. CONCLUSIONS The results of this study have implications for both academics and practitioners. Adequate and timely employee training was arranged and completed by the organization. Top management agreed that the system increased overall business efficiency. For academics. Post-Implementation Phase In this case. Analysis Despite largely autocratic managerial style. No major technical or operational problems were detected after the implementation of Epicor ERP systems. minimum financial authorities to lower management were not delegated. first.Implementation Phase Major BPR initiatives were approved by the management while a few minor business processes adjustments had not been approved. Company B‟s ERP implementation was successful. at the end. second. this research provides real-world examples of interdependencies among ERP implementation factors in different stages of implementation. the project was deemed successful. Even though financial authority was not delegated to lower level managers. Company B experienced a highly satisfactory post-implementation phase. third. the major components of the system were fully utilized. adequate and timely employee training was provided. As an evidence of successful implementation. Several critical decisions were responsible behind the success. BPR was allowed to match Epicor business functions. Management allowed hiring of recommended number of IT personnel. management allowed hiring of recommended number of IT personnel. organizational and regional . The project was affected due to delay in payment to ERP vendor. The whole process is affected by management style. Middle management was not comfortable with the idea of allowing lower level management make financial decisions.

Findings of this research can help practitioners compare implementation issues in Middle Eastern companies with that of Western Companies.culture. . The findings in two cases suggest that BPR initiatives. lead to better planning and preparation. This research attempts to highlight ERP implementation concerns in the industries in another part of the world. and hiring of right people are key for the successful ERP implementation. and thereby. appropriate employee training.