McKinzey 7S ERP

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A McKinsey 7S Model-Based Framework for ERP Readiness

Assessment
Article in International Journal of Enterprise Information Systems · October 2011

DOI: 10.4018/jeis.2011100103 · Source: DBLP
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International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 23
A McKinsey 7S
Model-Based Framework for
ERP Readiness Assessment
Payam Hanafizadeh, Allemeh Tabataba’i University of Tehran, Iran
Ahad Zare Ravasan, Allemeh Tabataba’i University of Tehran, Iran
ABSTRACT
Implementing Enterprise Resource Planning (ERP) systems is a complex, lengthy and expensive process which
usually faces serious challenges and failures. Thus, it is necessary to perform a readiness assessment at the
initial stage of an ERP implementation project to identify weakness areas which may encounter the project
with failure. This paper proposes a new framework for assessing readiness of an organization to implement
the ERP project on the basis of McKinsey 7S model using confirmatory factor analysis. Through this method,
the construct of ERP readiness is proposed based on 7 dimensions namely “structure”, “strategy”, “systems”,
“skills”, “style/culture”, “staff”, and “shared values/ superordinate goals”. Using the framework, the cur-
rent situation of the organization can be determined and necessary changes can be made prior to system
implementation. The proposed framework is then applied to 2 real Iranian banking cases and the advantages
of the framework over available frameworks are illustrated.
Keywords: Confirmatory Factor Analysis (CFA), Critical Success Factors (CSFS), Enterprise Resource
Planning (ERP), ERP Readiness Assessment (ERA), McKinsey 7S Model, Multidimensional
Constructs
INTRODUCTION business (Koch, Slater, & Baatz, 2001). Al-

though, ERP systems can bring many benefits
ERP systems are described as “computer-based to organizations, the high failure rate is a ma-
systems designed to process the transactions of jor concern (Davenport, 1998). It is said that,
an organization and facilitate integrated and about 70 percent of ERP implementations fail
real-time planning, production, and customer to deliver anticipated benefits (Al-Mashari,
response” (O’Leary, 2000). These systems are 2000) and three quarters of these projects are
designed to address the problem of fragmenta- unsuccessful (Griffith, Zammuto, & Aiman-
tion as they integrate and streamline internal Smith, 1999; Hong & Kim, 2002; Kumar,
processes by providing a suite of software Maheshwari, & Kumar, 2003). These projects
modules that cover all functional areas of a are on the average 178% over budget, took 2.5
times longer than intended and deliver only 30%
of the promised benefit (Zhang, Lee, Huang,
DOI: 10.4018/jeis.2011100103
Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.
24 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011
Zhang, & Huang, 2005). These statistics imply system besides identifying the weakness areas
that ERP projects are one of the most difficult which must be improved prior to later stages.
system development projects. To avoid such Thus, the aim of this paper is introducing the
costly failures, much effort has been done by concept of ERA and developing and validating
researchers. Some researchers have provided a practical framework for such an assessment.
valuable insights into the process of ERP imple- In practice, the results of the paper would en-
mentation (Holland & Light, 1999; Mandal & able managers to achieve a comprehensive
Gunasekaran, 2002; Motwani, Mirchandani, understanding of ERP project and help them to
Madan, & Gunasekaran, 2002; Soja, 2008; make a proper decision on initiating the ERP
Subramanianh & Hoffers, 2005; Wang, Shih, project. In addition, they would be aware of their
Jiang, & Klein, 2008; Yusuf, Gunasekaran, & weakness areas prior to project implementa-
Abthorpe, 2004) and others have identified tion. Therefore, they can effectively manage
a variety of critical factors affecting either the potential risks and costs associated with
on success (Al-Mashari, 2003; Hanafizadeh, the project and avoid most of the challenges
Gholami, Dadbin, & Standage, 2010; Nah & in later stages of the implementation.
Delgado, 2006; Nah, Zuckweiler, & Lau, 2003;
Zarei & Naeli, 2010; Zhang et al., 2005) or
failure (Aladwani, 2001; Amoako-Gyampah & LITERATURE REVIEW
Salam, 2004; Bradford & Florin, 2003; Hong
Two basic elements of the present research are
& Kim, 2002; Somers & Nelson, 2004; Umble
the ERA and the McKinsey 7S model which are
& Umble, 2002) of ERP projects.
well described. Also, a brief review on avail-
Considering the importance of ERP, some
able renowned models in the field is presented.
works conducted in this area are reviewed
Finally the most important factors in ERA are
here. Esteves and Pastor (2001) in their work
extracted from the most relevant literature and
summarized and grouped ERP literature until
the conceptual framework is developed based
2000 according to what they term as “the ERP
on these factors.
lifecycle framework”. The lifecycle consisted
of adaption, acquisition, implementation, usage ERP Readiness Assessment
& maintenance, evolution, and retirement (Es-
teves & Pastor, 2001). They showed that most Failures of ERP implementation can be caused
of the literature published prior to 2000 focused by multiple factors. But, studies suggest that
on implementation approaches. Other studies failure is largely due to organizational and
conducted considering categories proposed by social, rather than technical factors (Fitzgerald
Esteves and Pastor (2001) approved these results & Russo, 2005). However, there are extensive
and suggested that literature on implementa- challenges in the implementation of ERP sys-
tion dominates others, i.e., 38% of total papers tems which sometimes turn the project into a
published between 2000- 2005. According to complete failure. These challenges affect the
the results, just 2% of all papers devoted to success of ERP project in the implementation
studies on adaption phase (Dery, Grant, Harley, stage and must be identified at the beginning
& Wright, 2006). So, it is clear that there is a of the project to avoid potential risks in latter
dearth of studies in the pre-implementation stages. Thus, it would be necessary to assess
phases such as ERP selection, readiness assess- and analyze the preparedness of an organization
ments, ERP acquisition planning, etc. before initiating the project. Without proper
This paper, as a potential contribution to readiness, the project probably fails or faces
knowledge, is intended to consider the subject intensive challenges. That’s why ERA is usually
of ERP Readiness Assessment (ERA). Such introduced as a separate stage for ERP projects
an assessment determines the current state of which must necessarily be conducted prior to
organization’s readiness to implement an ERP project kick-off (Leon, 2007). The success of
Table 1. Definition of the elements of McKinsey 7S model (Peters & Waterman, 1982)
Dimension Definition
Strategy Actions a company plans in response to changes in its external environment
Structure Basis of specialization and co-ordination influenced primarily by strategy, size, and diversity
of organization
Systems Formal and informal procedures that support the strategy and structure
Style / Culture Consisting of two components as below:
• Organizational culture: the dominant values, beliefs, and norms which develop over time
and become relatively enduring features of organizational life.
• Management style: more a matter of what managers do than what they say; how do com-
pany managers spend their time; what are they focusing on
Staff The people/human resource management- processes used to develop managers, socialization
processes, and ways of introducing young recruits to the company
Skills The distinctive competences- what the company does best
Shared Values Guiding concepts, fundamental ideas around which a business is built- must be simple, usu-
ally stated at abstract level, have great meaning inside the organization even though outsiders
may not see or understand them.
an ERP implementation greatly depends on the It is believed that for long-term benefit,
state of readiness of the company. Higher assess- these variables should be changed to become
ment scores indicate higher level of readiness more congruent as a system. Effective organi-
that enhances the likelihood of achieving suc- zations achieve a fit between these seven ele-
cess in the project (Razmi, Sangari, & Ghodsi, ments. These elements are categorized in so-
2009). Such an assessment not only identifies an called hard S’s and soft S’s. The hard elements
organization’s current capability to implement (strategy, structure, and systems) are feasible
an ERP project, but also identifies weakness and easy to identify. The four soft S’s (shared
areas that must be improved to achieve a bet- values, skills, staff, and style) however, are
ter state of readiness for ERP implementation. hardly feasible. The external environment is
not mentioned in the McKinsey 7S model, al-
McKinsey 7S Model though the authors do acknowledge that other
variables exist and that they depict only the
The McKinsey 7S Model was developed in most crucial variables in the model (Peters &
the early 1980s by Tom Peters and Robert Waterman, 1982). The main sources of aca-
Waterman, two consultants working at the demic work on the 7S model (Pascale & Athos,
McKinsey& Company consulting firm and has 1981; Peters & Waterman, 1982; Waterman,
been used to analyze over 70 large organiza- Peters, & Phillips, 1980) can be used for more
tions, since then. The model was created as a studies about the model.
recognizable and easily remembered model in Regarding the high capability of the 7S
business. The seven variables, which the authors model to give a comprehensive view of every
termed “levers” all beginning with the letter organization, authors have exploited the model
“S” include “structure”, “strategy”, “systems”, in developing their conceptual framework. This
“skills”, “style”, “staff”, and “shared values/ would help them have a proper and comprehen-
superordinate goals” (Peters & Waterman, sive look on organizational diverse dimensions
1982). Table 1, summarizes the definition of and their associated factors.
the model elements.
Table 2. Categories and factors of Razmi’s framework (Razmi et al., 2009)
Categories Factor
Project • Project championship
• Resource allocation
• Assign responsibilities
• Project team
• Project scope
Vision and Goals • ERP implementation vision
• ERP mission and goals
Systems and Processes • Existing systems
• Existing processes
Culture and Structures • Culture
• Decision mechanism
• Organizational structure
• Communication
Human Resources • Top management
• Personnel
Related Works chains have been gathered through 24 case

studies and have been analyzed and classified
There are some ERP or enterprise system (ES) into the reference framework cells (Wognum et
readiness assessment frameworks proposed al., 2004). The framework is developed for use
either by practitioners or scholars, but the scope in all kinds of ESs rather than specific ERPs.
of this part is limited to only those frameworks
that were peer-reviewed or scholarly and pub- Razmi’s Framework
lished widely in the literature. Hence, through
an exhaustive literature review, the most related This framework has 3 aspects as the main ar-
frameworks are identified as below: eas of ERP readiness. That is, organizational
readiness, project management readiness, and
BEST Framework change management readiness. Also, 15 factors
are identified as the assessment factors and
The BEST (Better Enterprise SysTem imple- are classified into five categories as “project”,
mentation) framework, used for analyzing “vision and goals”, “systems and processes”,
CEAO (cause–event–action–outcome) chain, is “culture and structures”, and “human resources”
based on a process-based model of organizations illustrated in Table 2. The global weights of the
(Wognum, Krabbendam, Buhl, Ma, & Kenett, categories and factors are calculated using fuzzy
2004). The BEST assessment tool is aimed at ANP algorithm. Finally, the proposed model
analyzing the preparedness of an organization at has been applied in financial affairs department
the start of an enterprise system implementation of an Iranian power holding company (Razmi
project. This framework has 3 dimensions of et al., 2009).
permanent business process, design and tun-
ing of the new enterprise system, and project Raymond’s Framework
management. Furthermore, there are 6 aspects
in the framework, namely strategy and goals, The framework is proposed for evaluating the
management, structure, process, knowledge and level of readiness for ERP adoption in manu-
skills, and social dynamics. A total of 264 CEAO facturing SMEs. It has 4 dimensions including
Table 3. Dimensions and factors of Raymond’s framework (Raymond et al., 2006)
Dimensions Factors
Organizational Context • Availability of resources
• Operational methods
• Competitive strategy
• Sophistication of existing IT use
• Procurement methods
Business Processes • Operational
• Managerial
• Integration
Perception of ERP • Complexity/cost
• Benefits/strategic advantage
• Desire to implement
External Forces • Business environment
• Power of customers
organizational context, external forces, percep- ERP Readiness Factors

tion of ERP, and business processes with 13
associated factors. Through a field study of 11 In this study, a comprehensive review of the
manufacturing SMEs, the framework classified relevant literature was conducted in 2009 and
these firms in three clusters of “committed 2010. Articles from journals, conference pro-
adopters”, “uncommitted adopters”, and “late ceedings, doctoral dissertations, and textbooks
adopters” (Raymond, Rivard, & Jutras, 2006). were identified, analyzed, and classified. Since
Each dimension and their related factors are there are numerous factors affecting ERP
listed in Table 3. projects implementation, it was necessary to
By reviewing the presented frameworks, search through a wide range of studies from
one can infer that they concentrate on some different sources. So, the scope of the search
important factors, while overlooking some was not limited to specific journals, confer-
others. For example, BEST framework does ence proceedings, doctoral dissertations, and
not consider technological issues in ES imple- textbooks. Management, IT, and IS are some
mentations, besides it is not customized for common academic disciplines in ERP research.
ERPs. Razmi’s framework does not have any Consequently, the following online journals,
factor for assessing the current users and conference databases, dissertation databases,
managerial skills required to implement the and textbooks were searched to provide a com-
system. And finally, Raymond’s framework prehensive bibliography of the target literature:
does not take into account factors associated ABI/INFORM database, ACM Digital Library,
with strategy, skills and human resources. Emerald Fulltext, J Stor, IEEE Xplore, ProQuest
Hence, it is observable that these models have Digital Dissertations, Sage, Science Direct,
focused on some aspects of organizations using and Web of Science. The literature search was
their own viewpoint, while a holistic and com- based on the descriptors, ‘ERP critical success
prehensive approach is absent there. Consider- factors’, ‘ERP implementation success’, ‘ERP
ing lack of a holistic assessment framework in success factors’, ‘ERP readiness assessment’,
the literature, authors intend to present a new ‘ERP readiness assessment factors’, ‘ERP re-
framework encompassing a comprehensive set quirements’, and ‘ERP prerequisites’. While
of dimensions and associated factors using the the 7S model has been used as the basis of the
McKinsey 7S model in this paper. proposed framework, McKinsey 7S question-
naires have been used for discovering other & Light, 2001) and should be related to
associated factors in each dimension. The time business needs including a justification for
frame was based on the availability of the re- the investment (Ngai, Law, & Wat, 2008).
sources in these online databases. They must be well understood across the
An initial search through the literature organization (Shanks et al., 2000; Somers
yielded 353 articles. The actual selection of & Nelson, 2001) and should be clearly
the article for inclusion in the compilation stated in the business plan (Holland &
was dependent upon the researcher’s decision Light, 1999; Nah et al., 2003; Zhang, Lee,
after reading the article abstract and title. As Zhang, & Banerjee, 2003).
mentioned earlier, readiness assessment had to Goals / objectives. Goal is a general aim in
be conducted at the pre-implementation phase line with the company’s mission (John-
of an ERP project. Therefore, those articles son & Scholes, 1999). The initial phase
including factors attended especially in the pre- of any project should begin with a con-
implementation phase of an ERP project would ceptualization of the goals and possible
be identified for further investigations. Based ways to fulfill them (Somers & Nelson,
on preliminary investigations, 113 articles were 2001). Davenport (2000) attributed the
selected for further studies. Table 4 shows the high failure rates of ERP projects to poorly
distribution of the articles under the categories defined goals. The goal statement should
of journals, conference proceedings, textbooks, include critical business needs the system
and dissertations. is supposed to address and the business
Through this method, 23 factors were values it is intended to deliver (Razmi et
identified in 7 main dimensions. Each main al., 2009; Soja, 2008). Goals should also be
dimension and associated factors are explained measurable (Al-Mashari, Al-Mudimigh, &
below. Zairi, 2003) and well-understood across the
organization (Shanks et al., 2000; Somers
Strategy & Nelson, 2001). In addition to project
goals, the scope of the ERP project must
A risk repeatedly identified in the literature is also be clearly defined (Bajwa, Garcia, &
lack of alignment between the organization Mooney, 2004; Rosario, 2000; Shanks et
strategy and the chosen ERP software (Daven- al., 2000; Somers & Nelson, 2001).
port, 1998, 2000). Organizations must be aware Strategic IT plans. The alignment of IS plan-
of why an ERP system should be implemented ning and business planning is one of the
and what critical business goals it will address top problems reported by executives and
(Umble & Umble, 2002). Hence, identifying IS managers (Ho & Lin, 2004; Somers &
business goals, determining the strategic busi- Nelson, 2003). It is believed that the align-
ness issues and strategic requirement identifica- ment of IT with business plans supports
tion are essential elements of an ERP project organizations to use IT as a competitive
prior to initiating the project. This study focuses weapon (Kearns & Lederer, 2001) and
on vision and mission, goals/objectives of the boosts organizational performance (Oh &
project, and strategic IT plans. Pinsonneault, 2007). Today, businesses
need strategic planners to continually
Vision and mission. It is essential to have a evaluate business goals and define the
clear vision and mission for the ERP sys- information systems capabilities required
tem (Esteves & Pastor, 2000; Law & Ngai, to support these goals (Stratman & Roth,
2007; Nah & Delgado, 2006; Nah, Lau, & 2002). Strategic IT planning addressing
Kuang, 2001). The vision and mission are this issue, characterizes an organization’s
needed to guide the ERP implementation competence in matching IT capabilities
(Buckhout, Frey, & Nemec, 1999; Holland with the changing business requirements
Table 4. Distribution of articles by journals, conference proceedings, textbooks, and dissertations
No. of
Publication Type/ Title
Articles
Conference 14
Americas Conference on Information Systems (AMCIS) 4
European conference on information systems 1
Annual BIT conference 1
International Conference on Information Systems 2
Hawaii international conference on system sciences 4
IEEE International Conference on Management of Innovation and Technology 2
Journal 92
Academy of Management Review 1
ACM SIGMIS Database 1
Advanced engineering informatics 1
Advances in Engineering Software 1
Automation in construction 1
Business Process Management Journal 11
Business World 1
Communications of the ACM 3
Communications of the AIS 1
Computers in Industry 2
Construction Management and Economics 1
Datamation 1
Decision Sciences 1
Decision Support Systems 2
European Journal of Information Systems 1
European Journal of Operational Research 4
Harvard business review 1
IEEE Engineering Management Review 1
IEEE software 1
Industrial Management 1
Industrial Management & Data Systems 4
Information & Management 9
Information Management & Computer Security 1
Information Systems 1
Information Systems Frontiers 1
Information systems management 4
International Journal of Accounting Information Systems 1
International Journal of Enterprise Information Systems 3
continued on following page
Table 4. continued
International Journal of Human-Computer Interaction 1
International Journal of Information Management 2
International Journal of Operations & Production Management 2
International Journal of Production Economics 3
International Journal of Production Research 1
International Journal of Project Management 1
Journal of Computer Information Systems 2
Journal of Engineering and Technology Management 1
Journal of Enterprise Information Management 4
Journal of Global Information Technology Management 1
Journal of Management Information Systems 2
Journal of Manufacturing Technology Management 1
Journal of Strategic Information Systems 1
Knowledge and Process Management 1
Management science 2
MIS Quarterly Executive 4
Omega 1
Technovation 1
Textbook 6
Dissertation 1
Total 113
of the enterprise. It helps ensure that IT and formalization have been used in assessing
development goals in general and ERP technology-structure relationships (Morton &
goals in particular are aligned with the Hu, 2004). In this study, authors focused on the
needs of the organization. centralization, specialization, and formalization
aspects, which are believed to be adequate for
Structure assessing technology- structure relationships
(Donaldson, 2001). In addition, organization
The structure of an organization is consid- size and CIO position in organization have
ered very important for firms adopting ERP been studied here.
(Davenport, 1998, 2000; Hong & Kim, 2002).
According to Daft (1998, p. 15), “Structural Centralization. When decisions are kept at
dimensions provide labels for describing the the top, an organization is centralized,
internal characteristics of an organization. whereas in decentralized organizations,
One can mention commonly cited structural decisions are delegated to lower organi-
dimensions as centralization, specialization, zational levels among its members (Daft,
standardization, formalization, hierarchical 1998; Mintzberg, 1980). In the case of ERP
levels, and span of control”. Different research- projects, centralization refers to the extent
ers used specific dimensions based on their to which project decisions are controlled
research purposes; for example, centralization by the top management or project manage-
ments. Tight control over project decisions It seems that, larger firms have bigger
can ensure that system implementation is pools of sophisticated professionals and
consistent with the organization’s goals and are able to house larger IT departments
conflicts can be efficiently resolved. On than do smaller firms (Hunton, Lippincott,
the other hand, centralization restrains the & Reck, 2003; Laukkanen et al., 2005).
innovativeness of the project team members Furthermore, other researchers imply that
and may restrain their participation in the success of IT projects increases in larger
project (Chien, Hu, Reimers, & Lin, 2007). organizations because of more availability
However, it seems that organizations with of resources (Ein-Dor & Segev, 1978;
high levels of centralization may favor ERP, Hunton et al., 2003). Organization size has
in contrast to decentralized ones (Morton & been described differently in the literature.
Hu, 2004; Strong, Volkoff, & Elmes, 2001). However, it seems that the concept can be
Specialization. Specialization is the extent to assessed using employee workforce, and/
which tasks are subdivided into separate or annual turnover/sales (Buonanno et
jobs in an organization. If specialization al., 2005; Laukkanen et al., 2005). Here,
is extensive, it is likely for each worker authors chose to use both annual revenues
to perform a narrow range of works. ERP and number of employees for assessing the
systems might be more suitable for firms organization size.
having distinct and specialized functions CIO position. The role of the chief informa-
or tasks (Strong et al., 2001). It’s believed tion officer (CIO) has grown in importance
that ERP systems may be more useful in just as the role of IT within organizations
organizations where operations and tasks in recent years (Enns, Huff, & Golden,
are explicitly defined. The reason is that 2003; Preston, Leidner, & Chen, 2008).
ERP enforces a disciplined behavior for Today, CIOs are executive-level leaders
adopting organizations in such a way to that generally report directly to the CEO
make procedures clear (Morton & Hu, (Chun & Mooney, 2009). Today, the role of
2004; Strong et al., 2001). Therefore, CIO has evolved into the one responsible
organizations with high level of special- for providing IT infrastructure and capabili-
ization may favor ERP, in contrast to less ties to ensure effective business operations
specialized ones. (DellaVechia, Scantlebury, & Stevenson,
Formalization. Formalization is defined as 2007; Leidner & Mackay, 2007). They help
the standardization of work processes planning and implementing IT strategies in
and documentation (Donaldson, 2001). In organizations. In successful ERP projects,
other words, formalization is the degree the CIO must be able to build strong rela-
to which rules and procedures are clearly tionships with her/his business executive
documented and are made known to all peers, must behave as a strategic partner
employees. Just like specialization, it is with the business, and be able to align IT
believed that where organizational opera- investments with strategic business priori-
tions and tasks are explicitly formalized, ties (Willcocks & Sykes, 2000).
ERP systems may be more useful (Morton
& Hu, 2004; Strong et al., 2001). Systems
Size. Evidence suggests that the success of IT
projects in general and ERP projects in Systems refer to formal and informal proce-
particular may be impacted by organiza- dures and systems that support the strategy
tion size (Bernroider & Koch, 2001; Bu- and structure (Peters & Waterman, 1982). For
onanno et al., 2005; Laukkanen, Sarpola, assessing this dimension, authors used three
& Hallikainen, 2005; Lee & Xia, 2006). following factors:
IT Infrastructure. Adequate IT infrastructure, adjustments should be made prior to ERP

hardware and networking are crucial for implementation (Yang et al., 2007). Also,
the success of an ERP project (Al-Mashari, a clear understanding of business process
2003; Al-Mashari et al., 2003; Chuang & should be achieved in ERP projects (Ho
Shaw, 2008; Finney & Corbett, 2007; Jarrar, & Lin, 2004; Motwani, Subramanian, &
Al-Mudimigh, & Zairi, 2000; Ngai et al., Gopalakrishna, 2005; Murray & Coffin,
2008; Peslak, 2006; Soja, 2006; Umble, 2001; Ward, Hemingway, & Daniel, 2005).
Haft, & Umble, 2003; Verville, Bernadas, & Data. One of the important requirements of
Halingten, 2005). Before ERP implementa- the success of an ERP system is the avail-
tion, current IT situation have to be care- ability and timeliness of accurate data.
fully evaluated to determine the problems Since ERP system modules are intricately
that an organization may encounter during integrated, improper data input into one
implementation (Holland & Light, 1999). module will adversely affect the function-
The more the complexity of organizational ing of other modules. Thus, data quality
legacy systems (e.g., multiple platforms and accuracy is a major determinant of
in enterprise applications), the higher the ERP success (Bajwa et al., 2004; Somers
amount of technical and organizational ef- & Nelson, 2001, 2004; Umble et al., 2003;
forts required in ERP implementation, and Xu, Nord, Brown, & Nord, 2002; Yusuf et
vice versa. So, it’s crucial for organizations al., 2004; Zhang et al., 2005). One of the
to overcome the problems arising from IT main data-related problems in organiza-
legacy systems. Moreover, completeness, tions is that data are not kept in a single
compatibility, usability and integrality of database; rather, they spread across doz-
the current systems should be achieved ens of separate databases, which hinders
(Yang, Wu, & Tsai, 2007) and current the project success (Davenport, 1998).
infrastructure might be upgraded (Kumar Data-related challenges include finding
et al., 2003; Palaniswamy & Frank, 2002). the proper data to load into the system and
Business processes. Business processes is converting disparate data structures into a
considered as one of the important factors single, consistent format before system use
in ERP literature (Al-Mashari et al., 2003; (Somers & Nelson, 2004). Some authors
Bajwa et al., 2004; Kræmmergaard & also pointed to data quality controls in the
Rose, 2002; Palaniswamy & Frank, 2002; project (Xu et al., 2002). Also, educating
Somers & Nelson, 2004; Umble et al., 2003; users on the importance of data accuracy
Yusuf et al., 2004). Since, modifications and correct data entry procedures should
of the ERP software should be avoided be a top priority in an ERP project (Umble
to reduce errors and to take advantage of et al., 2003).
newer versions and releases of the system,
aligning the business process to the soft- Style / Culture
ware implementation is a must (Holland &
Light, 1999; Sumner, 1999). It is inevitable Style mainly refers to organizational culture and
that business processes are identified, management style (Peters & Waterman, 1982).
documented, improved and molded to fit Three factors are extracted here as below:
the new system (Bingi, Sharma, & Godla,
1999; Yang et al., 2007). Usually, exten- Organizational culture. Cultural attributes are
sive reengineering efforts is necessary cited among important factors affecting
before choosing a system (Kremers & Van ERP projects and many researchers have
Dissel, 2000; Somers & Nelson, 2003). suggested that the corporate culture can
Hence, the processes needing improve- cause mismatch problems during the ERP
ment should be identified and necessary implementation process (Al-Mudimigh,
2007; Bozarth, 2006; Häkkinen & Hilmola, 2008; Law & Ngai, 2007; Sarker & Lee,
2008; Ke & Wei, 2008; Krumbholz & 2003). Communication includes the formal
Maiden, 2001; Peslak, 2006; Soh, Kien, promotion of ERP project team and report-
& Tay-Yap, 2000; Soja, 2006). Some ing the project progress to the staff (Holland
researchers suggested that successful & Light, 1999). In order to avoid failures in
technological innovations require that communication, an open and honest infor-
both the technology be aligned with the mation policy communicated to the users
organization culture and the culture be (Bancroft, 1996; Kumar et al., 2003; Nah
reshaped to fit the demands of the new et al., 2001; Sarker & Lee, 2003) and a free
technology (Cabrera, Cabrera, & Barajas, flow of information (Sheremata, 2000) are
2001; Yusuf et al., 2004). Dimensions of needed. Therefore, it is necessary to have a
organizational culture can be characterized communication plan in place for all stages
as learning and development, participative of the project which should include project
decision making, power sharing, support goals (Al-Mashari et al., 2003; Holland &
and collaboration, and tolerance of conflicts Light, 1999; Rosario, 2000; Shanks et al.,
and risk (Ke & Wei, 2008). 2000; Somers & Nelson, 2001), project
Top management support. Top management tasks, change management strategies, and
support is the most frequently cited CSF the project scope (Al-Mashari et al., 2003;
for ERP implementation (Al-Mashari et al., Bancroft, 1996; Sumner, 1999).
2003; Chuang & Shaw, 2008; El Sawah,
Tharwat, & Rasmy, 2008; Finney & Cor- Staff
bett, 2007; Häkkinen & Hilmola, 2008;
Hanafizadeh et al., 2010; Law & Ngai, Staff refers to people/ human resource related
2007; Remus, 2007; Snider, Da Silveira, issues. Three factors have been identified here
& Balakrishnan, 2009; Soja, 2006; Umble as factors affecting staff:
et al., 2003; Yusuf et al., 2004; Zhang et
al., 2005). The ERP project must receive Human resource management. Qualified staff
approval and support from top manage- is one of the most valuable resources of ev-
ment particularly early in project life (Al- ery organization. The ability of an organiza-
Mashari et al., 2003; Bingi et al., 1999; tion to implement an ERP system is largely
Sarker & Lee, 2003; Shanks et al., 2000; dependent on its ability to recruit, select,
Somers & Nelson, 2001). She/he must be place, appraise and develop appropriate
willing to become involved and to allocate employees. So, it’s crucial for organizations
required resources to the project (Holland to exploit proper mechanisms to recruit and
& Light, 1999; Nah et al., 2003). Since preserve qualified employees, and nurture
ERP projects affect many stakeholders in and maintain a high level of employees’
an organization, top management needs to morale and motivation among them (Kim,
mediate between various interest groups Lee, & Gosain, 2005; Metaxiotis, Zafei-
to resolve conflicts when necessary (Dav- ropoulos, Nikolinakou, & Psarras, 2005;
enport, 1998). Management must also be Skok & Legge, 2002; Umble et al., 2003;
involved in every step of the ERP project, Verville et al., 2005; Willcocks & Sykes,
monitor the progress of the project and lead 2000). It seems that the current situation
the project teams (Bancroft, 1996; Nah et of staff is a very effective factor in new
al., 2001, 2003). technology developments in organizations.
Communication. Clear and effective communi- It is suggested that older and less educated
cation is cited among the important factors workers will be more resistant than younger
required for ERP systems implementation and more educated ones (Herold, Farmer,
(Achanga, Shehab, Roy, & Nelder, 2006; & Mobley, 1995).
Al-Mashari et al., 2003; Chuang & Shaw,
Training and education. Users’ training is Havenhand, 2002; Bajwa et al., 2004;
another most widely cited critical success Bingi et al., 1999; King & Burgess, 2006;
factor (Achanga et al., 2006; Al-Mashari Shanks et al., 2000; Somers & Nelson,
et al., 2003; Aladwani, 2001; Amoako- 2001, 2004; Sumner, 1999). The project
Gyampah & Salam, 2004; Bingi et al., team should be balanced, cooperative, cross
1999; Bozarth, 2006; Häkkinen & Hilmola, functional, and have the full time basis
2008; Ngai et al., 2008; Soja, 2006; Somers key people (Nah et al., 2001; Rao, 2000a;
& Nelson, 2003; Umble et al., 2003; Xu Shanks et al., 2000). Their performance
& Ma, 2008; Yusuf et al., 2004). Some should be fairly compensated (Umble et
researchers have specifically mentioned al., 2003). In addition, the decision maker
the need for project team training (Kumar in the project team should be empowered
et al., 2003) while others have focused on to make quick and effective decisions
user training (Bingi et al., 1999; Kumar et (Shanks et al., 2000). Also, project team’s
al., 2003; Mandal & Gunasekaran, 2003; prior experience in large IT projects can be
Robey, Ross, & Boudreau, 2002; Trimmer, characterized as another facilitator in the
Pumphrey, & Wiggins, 2002). Training al- project (Allen et al., 2002; Marsh, 2000).
lows employees to understand the overall The availability of these elements in orga-
concepts of the ERP system. It should nizations or organizational capabilities in
encompass the development of business acquiring them can help achieving success
practices and processes (Legare, 2002; in ERP projects.
Ngai et al., 2008; Robey et al., 2002), as
well as IT (Tarafdar & Roy, 2003; Voordijk, Skills
Van Leuven, & Laan, 2003) and ERP
skills (Stratman & Roth, 2002). Training Skills are the distinctive competences and what
should be a priority from the beginning of the company does best (Peters & Waterman,
the project and required money and time 1982). ERP systems are complex technologies
resources should be allocated to it (Nah that require specialized skills. Several studies
et al., 2001). Also, a proper plan for ERP have showed that it is essential to have skilled
training facilities (Finney & Corbett, 2007; people to assure the success of a project (Daven-
Rao, 2000a, 2000b) and a well-documented port, 2000; Skok & Legge, 2002; Sumner, 1999;
education and training strategy (Mabert, Wateridge, 1997). Tadinen (2005) identified 7
Soni, & Venkataramanan, 2003) are other key people in ERP project implementation team
vital considerations. as management, IT personnel, top management,
Project team. Project team competences is consultants, vendors, IT consultants, and end
another most widely cited critical success users. This classification has been selected here
factor (Bozarth, 2006; Finney & Corbett, for investigating the situation of skill dimension.
2007; Kumar et al., 2003; Mandal & Gu- Since the focus of the study is internal factors of
nasekaran, 2003; Metaxiotis et al., 2005; organizations, external key people for organiza-
Nah et al., 2001; Peslak, 2006; Rao, 2000b; tion are excluded here. Also, management and
Shanks et al., 2000; Soja, 2006; Somers & top management group are merged into one as
Nelson, 2001, 2004; Willcocks & Sykes, management. Hence, three key people groups
2000). ERP project needs the best organiza- as management, IT personnel, and end users
tion employees assigned to the project team are investigated:
(Bingi et al., 1999; Rosario, 2000; Shanks
et al., 2000). Involving people with both Management’s skills. Management’s skills
business and technical knowledge into the has been identified as one of the important
project team is critical to achieve success factors in ERP projects (Appleton, 1997;
(Al-Mashari et al., 2003; Allen, Kern, & Bancroft, 1996; Kræmmergaard & Rose,
2002). Several skills are cited by research- Shared Values/Superordinate Goals

ers as required managerial skills such as po-
litical and personal skills (Walsham, 1995), The terms shared values/ superordinate goals are
communication, and team-building skills described as guiding concepts and fundamental
(Appleton, 1997). They should preferably ideas around which a business is built (Peters
have experience with ERP implementation, & Waterman, 1982). In ERP projects, the term
business and managerial skills (Bancroft, refers to the degree to which a project team
1996). Kræmmergaard and Rose (2002) accepts and believes the project goals (Pinto et
summarized ERP competences for manag- al., 1993). A superordinate goal enhances the
ers as organizational, strategic, business likelihood of finding good quality solutions
process, project management, technology, in a timely manner that should be organized
ERP systems, human resource, leadership, in a manner that enables the project team to
and communication competences. describe in detail what the company strives
IT staff’s skills. The IT staff’s skills are cited to achieve (Chien et al., 2007). Three factors
among the important factors required for have been identified here as affecting factors
the success of IT systems in general and on shared values:
ERP systems in particular (Essex, Magal,
& Masteller, 1998; Esteves & Pastor, 2001; Project champion. The need to have a project
Lee & Lee, 2004). Several ERP stud- champion is considered as another rela-
ies (Davenport, 2000; Holland & Light, tively important factor (Bancroft, 1996;
1999; Lee & Lee, 2004; Markus & Tanis, Legare, 2002; Nah et al., 2001; Sumner,
2000; Sumner, 1999; Willcocks & Sykes, 1999). Champions are critical to drive
2000) have suggested that the skills of IT consensus and to oversee the entire life
professionals must be adequate to ensure cycle of ERP project (Rosario, 2000). The
success with ERP project. It seems that project champion must be a high level of-
IT systems are more likely to succeed in ficial in the organization (Sumner, 1999).
organizations where general IT skills and S/he must continually manage resistance
relevant in-house IT expertise is high (Lee and change during the implementation
& Lee, 2004). So, the availability of skilled (Murray & Coffin, 2001). They should
IT professionals and their participation possess strong leadership skills (Mandal
in the project is valuable to organization. & Gunasekaran, 2003), and business,
Users’ skills. The quality of end users and technical, personal, as well as managerial
their general IT skills are considered as competencies (Kræmmergaard & Rose,
one of the critical factors necessary for IS 2002; Somers & Nelson, 2001). Hence,
success (Essex et al., 1998; Lee & Lee, it can be expected that the existence of
2004; Peslak & Boyle, 2010; Razmi et al., a project champion in ERP projects can
2009). It is more likely for skilled users to enhance implementation processes and the
understand the need for process changes possibility of project success.
than less skilled ones and in organiza- Company-wide commitment. Since ERP
tions where users have required skills and systems are enterprise-wide and cross
expertise, it is reasonable to suggest that functional systems, it is imperative to get
ERP implementation success will be higher support from all functional segments of an
compared to where such expertise is lack- organization (Law & Ngai, 2007; Somers
ing (Duplaga & Astani, 2003; Essex et al., & Nelson, 2001, 2004; Yusuf et al., 2004;
1998; Lee & Lee, 2004). Zhang et al., 2005) and the project success
Figure 1. Proposed framework for ERP readiness assessment
requires commitment and cooperation of of ERP. Knowing this, they can develop
personnel from all segments of the busi- mechanisms such as communication and
ness (Zhang et al., 2003). The personnel training plans to minimize those gaps.
must be convinced and justified that the
organization is committed to implement Developing the Conceptual
the ERP system (Umble et al., 2003). They ERA Framework
must recognize the need for change and be
properly prepared for changes to prevent There are many readiness models in the litera-
resistance at the implementation stage. ture described as multidimensional constructs
When personnel involvement is low, they (Beebe, Harrison, Sharma, & Hedger, 2001;
may not psychologically ready to change Chilenski, Greenberg, & Feinberg, 2007; Ed-
and accept the new ERP system (Wang & wards, Jumper-Thurman, Plested, Oetting, &
Chen, 2006). Swanson, 2000; Fathian, Akhavan, & Hoorali,
Shared beliefs. Shared beliefs refer to a belief 2008; Hanafizadeh, Hanafizadeh, & Khoda-
about the overall impact of the system on bakhshi, 2009; Lai & Ong, 2010; Lehman,
the organization with regard to its benefits. Greener, & Simpson, 2002; Razmi et al., 2009).
It is a shared belief with employees and The advantage of using multidimensional con-
managers regarding the benefits of the structs is that the contribution of each dimension
ERP system (Amoako-Gyampah & Salam, in a higher level construct can be assessed as
2004). It is believed that if employees have compared to setting all items in a single com-
a shared understanding of why a technology posite score. If all items are posited in a single
is being implemented, it is likely to foster first-order construct, then it would be difficult
trust and cooperation among them that can to ascertain the contribution of each domain on
lead to implementation success (Amoako- the overall construct (Koufteros, Babbar, & Kai-
Gyampah & Salam, 2004). Thus, it is im- ghobadi, 2009). With respect to this advantage,
portant for managers to be aware early in there are many multidimensional constructs
the project whether different members of proposed by authors in different subjects, but
the organization have different perceptions there are few multidimensional constructs in
on the shared beliefs about the concept which the overall relations of the construct
Figure 2. The research steps
with its specific dimensions are well explained RESEARCH METHODOLOGY

(Law, Wong, & Mobley, 1998). There are three
ways in which multidimensional constructs The research steps including ERP Literature
can be conceptualized. First, the latent model review, ERA factors extraction, instrument de-
in which multidimensional constructs exist velopment, data collection, data analysis using
at deeper levels than their individual dimen- CFA, developing the model, Extracting factor
sions. Second, the aggregate model in which assessment questions, and finally applying the
multidimensional constructs are formed based model on 2 cases is shown in Figure 2.
on algebraic functions of their dimensions.
And the third one is the profile model which Instrument Development
designates multidimensional constructs formed
as different profiles of their dimensions (Law et The questionnaire used for data collection
al., 1998). Using this taxonomy, the latent model contained scales to measure the various factors
seems relatively appropriate for defining ERP of the research model. The survey instrument
readiness construct. Latent variables cannot asked the respondents to rate the impact of 23
be directly observed and have to be assessed identified factors on ERP readiness using a 7
by observable measures. The direction of the point scale with items ranged from 1 (strongly
relationship can be either from the construct low) to 7 (strongly high). Face or content valid-
to the measures known also as reflective, or ity of the questionnaire is conducted through
from the measures to the construct known as the literature review and experts judgment
formative measurement (Edwards & Bagozzi, (Straub, 1989). Content validity refers to the
2000). Based on the review conducted on mul- extent to which the items on a test adequately
tidimensional constructs above, the readiness reflect the domain of the content for which
model are proposed as a latent or reflective they were written (Nunnally, 1978). To ensure
multidimensional model which has 7 main this, at first six ERP project managers of high
dimensions or constructs with their associated academic levels and more than 5 year experi-
factors in each. The proposed model for ERP ence reviewed the questionnaire. They had some
readiness assessment is indicated in Figure 1. comments on the length and the clarity of each
question. Their suggestions were incorporated considerations (Kelloway, 1998). Confirma-

into the final version of the questionnaire. The tory Factor Analysis (CFA) is a widely used
content validity of the instrument was thereby application of SEM to test the construct. It
addressed. Also, for evaluating the reliability of is one of the most prevalent SEM techniques
the questionnaire, test-retest method was used. in the evaluation especially in the social and
Test-retest determines whether an instrument behavioral sciences (Mueller, 1996). Here,
will produce the same scores from the subjects CFA using LISREL 8.54 (Jöreskog & Sörbom,
every time (Cronbach, 1951; Nunnally, 1978; 1989) was employed to perform the analysis.
Nunnally & Bernstein, 1994; Peter, 1979). For Prior to factor analysis, a test was conducted
conducting test- retest method, authors asked to verify the adequacy of the data for CFA.
15 project managers in a 14-day interval to The Kaiser-Meyer-Olkin (KMO) measure of
participate in the study. The resulted Cronbach sampling adequacy is a popular measure for
alpha estimated to be 0.87 (greater than 0.7) assessing the extent to which the indicators of
that implies good reliability of the instrument a construct belong together (Kaiser, 1974). The
(Nunnally, 1978). KMO is 0.73 which is above the “Mediocre”
threshold of 0.5 (Kaiser, 1974). Large values
Data Collection for the KMO indicate that a factor analysis of
the variables is a good idea.
Since readiness assessment factors are diverse
in organization, human, and technical contexts,
it needs experts familiar with all 7 main dimen- RESULTS
sions to do data gathering. It seems that project
managers involved in business and technical The results of data analysis consist of three
issues in ERP projects are so familiar with main sections as first order CFA, second order
success and failure causes of these projects CFA, and proposing the ERA framework.
and have the highest merit to participate in the Furthermore, theoretical comparison of the
research. Hence, the target of this study was proposed framework with available models is
ERP project managers in organizations that had conducted in this part.
adopted a reputable ERP system located in Iran.
In order to gather data from the eligible experts, First Order CFA
the following procedure was performed: first,
First order CFA has been performed for assess-
the eligible firms and related project managers
ing measurement model, construct validity,
were identified and their contact information
convergent validity, and discriminant validity.
were gathered; second, authors asked their
The concern of construct validity is that instru-
project managers to participate in the study;
ment items selected for a given construct are,
third, the questionnaire were sent to them, and
considered together, a reasonable operational-
finally, they filled the questionnaire. Totally, 237
ization of the construct (Cronbach & Meehl,
questionnaires were sent, 159 questionnaires
1968). It can be examined by observing the
were gathered and 153 usable questionnaires
factor loading of each item. A factor loading
were used for the analysis. The response rate
of less than 0.40 signifies lack of reliability, in
was 0.67.
which case the item should be dropped (Hinkin,
Data Analysis Method 1995). Just 2 out of 23 items dropped from
the initial items namely “centralization” and
The Structural Equation Modeling (SEM) “specialization” both belonging to structure
approach was used to validate the research construct. It might be because of that there is a
model. SEM is a powerful multivariate data high level of covariance among formalization,
analysis tool that estimates a complete model centralization and specialization factors. Gener-
incorporating both measurement and structural ally, high levels of formalization may lead to
high levels of centralization in the organization to assess whether McKinsey dimensions are
and more distinct and specialized functions or good measurements for ERA or not. To this end,
tasks, implying high levels of specialization. second order CFA has been conducted. Perhaps
Convergent validity adds to our confidence the greatest advantage of CFA using LISREL is
in measuring a variable. Convergent validity that it offers an index of how well the proposed
means the items measuring the variable are model fits the given data set (Greenspoon &
indeed theoretically related to each other and Saklofske, 1998). The result of the analysis is
the relation is confirmed if the items within the shown in Figure 3.
construct are significantly correlated with one As can be seen from the figure, all loading
another, particularly when compared to items values are exceeding the threshold value of 0.4.
in other constructs. The presence of convergent Considering the complexity of the model, eight
validity can be determined using multiple indi- fit indices were used as goodness of fit index
cators. This is often done by examining the com- (GFI), adjusted goodness of fit index (AGFI),
posite reliabilities of the constructs. Measures comparative fit index (CFI), normed fit index
exceeding 0.70 are generally recommended (NFI), non-normed fit index (NNFI), p- value,
(Bagozzi & Yi, 1988; Fornell & Larcker, 1981; root mean square error of approximation (RM-
Hair, Anderson, Tatham, & Black, 1995; Nun- SEA), and χ2/df which are very common in the
nally, 1978). Construct reliability can be further literature. The results of the analysis and ac-
assessed using cronbach alpha exceeding 0.70 cepted thresholds are summarized in Table 7.
(Bagozzi & Yi, 1988; Hair et al., 1995; Nunnally, As can be seen from Table 7, all indices
1978) and Average Variance Extracted (AVE) are significant. Totally, the results of both first
exceeding 0.50 (Fornell & Larcker, 1981). In and second order CFA imply that the first order
this study, cronbach alpha values ranged from factors are good measures for McKinsey dimen-
0.77 to 0.89, and all AVE values were above sions and the dimensions are good measures
0.53, providing strong evidence of measure for the ERA construct.
reliability. Discriminant validity refers to the
degree to which measures of different constructs Developing the Practical
are distinct from each other (Hair et al., 1995). ERA Framework
For adequate discriminant validity the square
root of AVE must exceed the correlations of the Based on the results obtained in the first and
constructs (Chin, 1998; Fornell & Larcker, 1981; second order CFA, the readiness model is
Gefen & Straub, 2005) which AVE reflects the proposed as a latent multidimensional model
variance captured by the factors here. In Table which has 7 main dimensions or constructs
5, all results are summarized and appear to be with 3 associated factors in each. Also, for en-
acceptable as well as significant. hancing the applicability of the model, authors
Table 6, summarizes the results of dis- have identified and proposed some questions
criminant validity of constructs. As it can be extracted from the literature for assessing the
seen from the table, all of these values exceed current situation of every factor. These questions
the correlation values of the constructs. Hence, are more assessable through organizations even
it can be inferred that identified factors (items) by less specialized people. The factors, associ-
are good measures for McKinsey dimensions ated assessment questions, and their references
(constructs). are appeared in appendix A. Based on these
questions, a questionnaire is developed which
Second Order CFA is appeared in appendix B. There are at least 3
questions for assessing every factor and there
The results of first order CFA imply that identi- are qualitative as well quantitative questions
fied factors are good measures for McKinsey in the questionnaire. The higher values in the
dimensions. The goal of second order CFA is scores for all of the questions are desired.
Table 5. Factor Loading (FL), Cronbach Alpha (CA), Composite Reliabilities (CR), and AVE
Results
Mckinsey Factors or Items FL CA CR AVE

Dimensions
Strategy (STG) Vision and mission (STGVIS) 0.85 0.81 0.83 0.62
Goals/ objectives (STGOBJ) 0.60
Strategic IT plans (STGSTG) 0.77
Structure (STR) Formalization (STGFRM) 0.70 0.77 0.77 0.53
Size (STGSIZ) 0.69
CIO position (STGCIO) 0.79
Systems (SYS) IT Infrastructure (SYSINF) 0.62 0.79 0.79 0.56
Business processes (SYSPRC) 0.87
Data (SYSDAT) 0.74
Style (STY) Top management support (STYMNG) 0.91 0.82 0.83 0.62
Communication (STYCOM) 0.76
Organizational culture (STYCUL) 0.68
Staff (STF) Human resource management (STFMNG) 0.84 0.89 0.89 0.72
Training and education (STFLRN) 0.91
Project team (STFTEM) 0.80
Skills (SKL) Management’s skills (SKLMNG) 0.73 0.86 0.87 0.68
IT staff’s Skills (SKLITP) 0.85
Users’ skills (SKLUSR) 0.89
Shared Values Shared beliefs (SHVBLF) 0.60 0.81 0.83 0.62
(SHV)
Company-wide commitment (SHVCOM) 0.82
Project champion (SHVCHM) 0.91
Table 6. Discriminant validity of the constructs (square root of the AVE and correlations)
Shared Structure Strategy Systems Style Staff Skills

Values
Shared values 0.80
Structure 0.42 0.73
Strategy 0.53 0.52 0.75
Systems 0.43 0.42 0.42 0.75
Style 0.41 0.36 0.39 0.40 0.79
Staff 0.43 0.30 0.45 0.37 0.39 0.85
Skills 0.44 0.31 0.45 0.35 0.43 0.44 0.82
Note: (a) The bold fonts in the leading diagonals are the square root of AVEs,
(b) off-diagonal elements are correlations among constructs.
Figure 3. The results of second order CFA
Table 7. The results of goodness of fit assessments and accepted thresholds
Fit Indices Observed Values Accepted Reference

Thresholds
GFI 0.93 > 0.90 (Chau, 1997; Segars & Grover, 1993)
AGFI 0.91 > 0.80 (Chau, 1997; Segars & Grover, 1993)
CFI 0.94 > 0.90 (Hatcher, 1994)
NFI 0.92 > 0.90 (Bentler & Bonett, 1980; Chau, 1997)
NNFI 0.93 > 0.90 (Chau, 1997)
p- value 0.09 > 0.05 (Hu & Bentler, 1998)
RMSEA 0.054 < 0.06 (Hu & Bentler, 1998)
χ2/df 1.47 < 3.00 (Chau, 1997; Segars & Grover, 1993)
Table 8. The result of the theoretical comparison of the proposed framework with available models
Mckinsey Factors Best Framework Razmi’s Framework Raymond’s

Dimensions Framework
Strategy • Vision and mission •- • ERP implementation •-
vision
• Goals/ objectives • Strategy and goals • ERP mission and •-
goals
• Project scope
• Strategic IT plans •- •- •-
Structure • Formalization • Structure (tasks, • Organizational •-
authorities and structure
• Size • Availability of
responsibilities)
resources
• CIO position •-
Systems • IT infrastructure • Structure of the • Existing systems • Sophistication of
enterprise system existing IT use
• Business processes • Process • Existing processes • Operational
methods
• Procurement
methods
• Operational busi-
ness processes
• Managerial busi-
ness processes
• Integration of busi-
ness processes
• Data •- • Decision mechanism •-
Style • Top management • Management • Top management •-
support • Resource allocation
• Assign responsibili-
ties
• Communication •- • Communication •-
• Organizational •- • Culture •-
culture
Staff • Human resource •- • Personnel •-
management
• Training and educa- •- •- •-
tion
• Project team •- • Project team •-
Skills • Management’s skills • Knowledge and •- •-
skills
• IT staff’s skills •- •-
• Users’ skills •- •-
Table 8. continued
Shared • Shared beliefs • Social dynamics •- • Perception of the

Values complexity/ cost of
ERP
• Perception of
benefits/ strategic
advantage of ERP
• Desire to imple-
ment ERP
• Company-wide com- •- •- •-
mitment
• Project champion •- • Project championship •-
- •- •- •- • Competitive
strategy
• Business environ-
ment
• power of customers
The scores of factors are achieved by doing Theoretical Comparison of

a simple average on the scores of associated the Proposed Framework
questions. Then, based on the weights achieved with Available Models
in second order CFA (Figure 3) the readiness of
each dimension and finally the ERP readiness of In this section, a comparison is done among
the enterprise can be assessed (Diamantopoulos, proposed framework and available frameworks.
Riefler, & Roth, 2008). Since, the assessment This comparison not only highlights the weak-
questionnaire is based on a 5 point scale, the nesses of available frameworks in covering a
score of every question is a value between mini- comprehensive set of factors affecting organiza-
mum 0 and maximum 1 (0-0.25-0.50-0.75-1). tion readiness, but also indicates the strength,
For example, suppose that the average comprehensiveness, and applicability for the
readiness score achieved through assessment purpose of the proposed framework. The result
questionnaire are 0.27, 0.28, and 0.76 for of the comparison is summarized in Table 8.
STGVIS, STGOBJ, and STGSTG factors, As can be seen from Table 8, there are some
respectively. Since weighing values of the issues that have not been addressed in available
factors are 0.84, 0.65, and 0.66 (Figure 3), the frameworks. In a first look, it can be said that
readiness score for the strategy construct is 21 related factors in the proposed framework
calculated as below: made it more comprehensive than the available
models with their less articulated factors. It is
(0.84×0.27+0.65×0.28+0.66×0.76)/ obviously noticeable especially in the soft fac-
(0.84×1+0.65×1+0.66×1) = 0.42 tors like skills and staff contexts. It is clear that
available frameworks are focused on some key
It is clear that the values of “1” in the de- aspects of the readiness concept using their own
nominator, demonstrates the maximum scores viewpoint, not a holistic approach. The privilege
achievable in the assessment (scores ranged of using 7S model in the proposed framework
from 0 to 1). The method is the same for other over available frameworks is that it encom-
factors and dimensions. It is clear that the final passes different aspects of every organization
score for ERP readiness construct will be a needed to being studied in such an assessment.
number between 0 and 1. Also, Raymond’s framework has noticed some
external and environmental factors that have Both banks have implemented some island
not been studied in the proposed framework. and disintegrated systems in their back office
The reason is that 7S model naturally concen- (or staff vs. line). To overcome the problem,
trates on inter-organizational factors, not ex- managements of both banks care ERP imple-
ternal ones that are out of the control of an mentation. Hence, the readiness assessment
organization and are somehow the same for all of these two banks for ERP implementation is
organizations. Therefore, external factors have conducted here to gain the model validity. For
not been studied here. investigating readiness situation of the banks,
Another advantage of the proposed 3 IT managers with extensive experience in a
framework over others is that it provides an number of large IT projects in each bank are
85 item self-assessment questionnaire, thor- consulted. These experts are interviewed in
oughly extracted from the literature that can general organizational subjects as well as techni-
be fulfilled by organizations for assessing their cal issues. Then, based on the results of these
ERP readiness. Also, the proposed framework interviews and referring to some of the related
enjoys drill down capability which can show organizational documents such as number of
weakness points of the organization. This can employees, annual revenues, and budgeting
help organizations directly focus on their weak- values, the assessment questionnaire was filled.
nesses and find solutions for improving them. It has been tried to achieve a sufficient level of
Through this, organizations can drill down their consensus among experts in filling qualitative
weakness areas from 7S dimensions to factors questions.
and from factors to their associated assessment The results of these efforts are exhibited
questions. All of these imply high applicability in Table 10. The readiness score is calculated
of the framework compared to available ERP in a way that is illustrated before. The final
readiness frameworks. readiness scores are also calculated in the same
way. The method is illustrated as an example
for the factors of the strategy dimension in
ILLUSTRATIVE EXAMPLES Table 9. The scores of factors (e.g., 0.08 for
vision and mission factor) are the simple aver-
Banking industry is heavily dependent upon
age scores of related questions (0.25, 0, and 0
IT (Chowdhury, 2003) and is considered as the
for the questions of vision and mission). For
most IT-intensive industry in the USA (Berger,
calculating the scores of dimensions, it needs
2003). These systems have penetrated in Iranian
connection weights (Figure 3). With regard
banking industry over the last decade, too. In
to weighing values of the factors (0.84, 0.65,
this respect, 2 Iranian banks are selected as the
and 0.66) and their related scores (0.08, 0.10,
illustrative examples of the paper.
and 0.70), the readiness score for the strategy
Bank A has been established in 1980. It
construct is calculated as below as an example:
is one of the greatest Iranian state banks that
provide service to more than 15 million custom-
(0.84×0.08+0.65×0.10+0.66×0.70)/
ers through approximately 1900 branches, 2500
(0.84×1+0.65×1+0.66×1) = 0.28
Automated Teller Machine (ATM), and 19 mil-
lion customer cards. The number of employees
Hence, the readiness score of the strategy
is 25,000. Also, bank B as one of the greatest
dimension for Bank A is 0.28. The method is
Iranian private banks has been established in
the same for other constructs and factors.
1988. The bank serves more than 6.2 million
The final scores of bank A and bank B is
customers through approximately 600 branches,
0.57 and 0.51, respectively, implying almost
650 ATM, and 10 million customer cards. The
similar readiness situation. Considering the very
number of employees is almost 6,500.
weak situations in some factors (e.g., goals/
objectives), one can infer that they should go in their subsequent factors. However, regarding
to plan and do some pre-implementation proj- the results, both banks face crucial challenges
ects. Hence, both cases need special attention in some dimensions and should plan to conduct
on some factors. some short term projects in order to improve the
Finally, readiness scores for 7 dimen- ERP system adaption. For instance, both banks
sions of the two cases are appeared as a radar face real challenges in their human resources
diagram in Figure 4. It is clear from the figure training and education situation. It is strongly
that the readiness scores of bank A are greater needed to develop a proper training strategy and
than relevant scores of bank B in all of the 7 plan. Training programs should be arranged for
dimensions, except for the strategy dimension the personnel and it must be tried to familiarize
and both banks face real challenges in strategy them with the project. It is suggested to focus
and staff dimensions. on business processes and IT fundamental train-
ings as well as ERP concepts trainings. Using
e-learning tools can facilitate learning process
DISCUSSION in both banks. Also, it is strongly recommended
to revise the existing rules and procedures for
The results presented in Table 10 show that
employees’ recruitment especially in the ERP
the overall readiness of constructs “structure”
project team members in order to build a strong
and “shared values” look well for two cases.
project team.
Besides, there are no considerable weaknesses
Table 9. The results of the ERA for the strategy dimension in Bank A
Factors Question Scores*

Questions Factors
Vision And 1. Existence of the documented vision and mission of the ERP project 0.25 0.08
Mission
2. The degree to which vision and mission of the ERP project are 0
well-understood across the organization
3. Existence of the business plan including a justification for the 0
investment
Goals/ 4. Existence of the carefully defined goals of the ERP system 0.25 0.10
Objectives
5. Existence of the measurable goals of the ERP system 0
6. The degree to which goals of the ERP project are well-understood 0
across the organization
7. Existence of the carefully defined project scope 0.25
8. Established realistic and achievable milestones for the ERP project 0
Strategic IT 9. The degrees to which information technology systems of the firm 0.5 0.70
Plans support its strategic goals
10. Existence of the continuous and up to date strategic IT plans 0.75
11. Existence of the written guidelines to structure strategic IT plans 0.50
in the organization
12. The degree to which top management is involved in strategic IT 0.75
plans
13. Existence of inputs from all functional areas of the strategic IT 1
plans
*Values range from 0 to1.
Figure 4. Radar diagram for readiness scores in 7 dimensions for the two cases
In the case of strategy dimension, project is that organizational data are spread across
vision, mission, and goals must be clearly several separate databases that make integrating
defined in both banks. The project scope, af- databases a real challenge. With respect to this
fected business processes and functional units kind of problems, it is strongly recommended
involved in the project should be determined that both banks involve in the cleaning up of
prior to project start-up. It should be well- suspect data, matching, reformatting, and updat-
communicated and understood throughout the ing information from one system to prevent the
banks using open communication tools and problems arises from data inconsistencies. Also,
methods. Bank A conducted its IT master plan data in their systems should be validated and
2 years ago. There were no review of its IT and converted into a single and consistent format
business plans and strategic goals after that. So, before going to implement the system. Educat-
the bank should evaluate and refine its business ing users on the importance of data accuracy
goals and define the IT capabilities required to and correct data entry procedures should also
support these goals. Bank B looks good in its be another top priority.
IT strategic plans. It is mainly due to the fact Another weakness area identified through
that this bank recently conducted enterprise readiness assessment is related to user’s skills.
architecture project and has documented and IT skills are reported in a medium situation and
updated its business and IT plans. both banks need some plans to improve them.
Another relative weakness area in both It can be made possible through employing
cases is related to the situation of systems dimen- new highly educated and qualified employees
sion. One of the main data issues is related to as well as conducting training programs for
data accuracy and completeness. It means that current personnel. Regarding the time, budget
organizational data stored in databases is not and human resources constraints of the two
proper, regarding information fields supposed cases, the suggested projects can be planned
to be filled. For example, the specifications of and implemented in a short term period. Weaker
IT assets or other organizational assets in both areas should be concentrated upon. The im-
banks is not properly filled in the forms and provements achieved in readiness levels can
sometimes is not accurate. The same situation be evaluated by re-performing the assessment
happens for human resources and financial data. after a few months.
It is said that garbage in garbage out in ERPs.
So, as a first step, all information fields in the
current information systems should be checked CONCLUSION
and completely re-filled if required. Another
This paper, first, elaborated on the importance of
data problem relates to data integration. One of
readiness assessment prior to initiating an ERP
the main data-related problems in both banks
project. It was shown that this is a complex task,
Table 10. Readiness assessment scores for 2 cases
Dimensions Dimension Scores Factors Factor Scores

Bank A Bank B Bank A Bank B
Strategy 0.28 0.34 Vision and mission 0.08 0.08
Goals/ objectives 0.10 0.10
Strategic IT plans 0.70 0.90
Structure 0.81 0.72 Formalization 0.75 0.67
Size 0.92 0.67
CIO position 0.75 0.83
Systems 0.59 0.55 IT infrastructure 0.75 0.67
Business processes 0.50 0.67
Data 0.50 0.33
Style 0.62 0.54 Top management support 0.81 0.69
Communication 0.50 0.42
Organizational culture 0.55 0.50
Staff 0.38 0.29 Human resource management 0.42 0.33
Training and education 0.11 0.07
Project team 0.55 0.40
Skills 0.63 0.52 Management’s skills 0.75 0.58
IT staff’s skills 0.71 0.63
Users’ skills 0.46 0.38
Shared Values 0.70 0.64 Shared beliefs 0.75 0.58
Company-wide commitment 0.58 0.58
Project champion 0.75 0.75
not only because of the newness of the system comprehensiveness in covering organizational
to the organization, but also due to many dif- diverse dimensions. These 7 dimensions include
ferent aspects that need to be considered at the “structure”, “strategy”, “systems”, “skills”,
same time. One of the main problems in ERP “style/ culture”, “staff”, and “shared values”.
projects is focusing on technical and financial 23 factors contributing to these dimensions
aspects of a project and neglecting to take into have been identified after an in-depth study
account the non-technical issues like people on ERP literature. Then, first and second order
(Botta-Genoulaz & Millet, 2006), while many CFA were conducted on the data gathered using
information systems studies indicate that fail- questionnaire from 153 ERP project managers
ure is largely due to organizational and social, in organizations that have adapted a reputable
rather than technical factors. Therefore, in order ERP system located in Iran.
to appropriately deal with this problem, McK- Based on the results of CFA, ERP readiness
insey 7S model has been employed due to its assessment framework has been proposed based
on the 7S McKinsey model with 21 associated Another limitation is the limited number of
factors. In order to enhance the applicability of available ERP experts specially project manag-
the model, 85 questions were extracted from the ers as a result of low degree of ERP penetration
literature for assessing the associated factors in organizations to date in Iran. This limitation
in readiness model. Using this framework, the made data gathering a tremendous effort for
current state of readiness of an organization to authors.
implement an ERP project and possible areas Future works can be done in assessing
of improvements can be identified prior to sys- readiness of different organization in diverse
tem implementation. The proposed framework industries that can be helpful in fine-tuning of
was then applied to two Iranian banks. With the framework. Also, future works may follow to
regard to the readiness assessment results, it investigate the target or To-Be situation of each
was suggested that the banks are better to do dimension or factor for encountering the least
some preliminary projects to increase the prob- potential problems. They may concentrate on
ability of project success prior to initiating the benchmarking the readiness assessment results
ERP project. It is noted that the cost of using with pioneering companies to gauge where they
such frameworks is justifiable for an enterprise are (in terms of ERP readiness) with respect to
compared to the huge costs of implementing their competitors. In other words, the desirable
an ERP system and even probable costs of the level of dimensions, factors and even assessment
project failure. questions might be investigated in future works.
In addition, some comparisons were done
among available frameworks and the pro-
posed framework. It has been shown that the ACKNOWLEDGMENTS
framework has some advantages over avail-
The authors would like to thank the anonymous
able frameworks such as comprehensiveness,
reviewers and the editor for their insightful
multi-dimensionality, and higher applicabil-
comments and suggestions
ity. Another contribution of the work is that
it incorporates McKinsey 7S model with the
concept of ERP readiness assessment. Finally,
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Payam Hanafizadeh is an Assistant Professor of Industrial Management at Allameh Tabataba'i

University in Tehran, Iran and a member of the Design Optimization under Uncertainty Group
at the University of Waterloo, Canada. He was a visiting research fellow at the University of
Canberra, Australia in 2010 and a visiting scholar at the University of Waterloo, Canada in 2004.
He received his MSc and PhD in Industrial Engineering from Tehran Polytechnic University and
pursues his research in Information Systems and Decision-making under Uncertainty. He has
published in such journals as the Information Society, Systemic Practice and Action Research,
Management Decision, Journal of Global Information Management, Telecommunications Policy,
Mathematical and Computer Modeling, Expert Systems with Applications, International Journal
of Information Management, Energy Policy to name only a few.
Ahad Zare Ravasan is a PhD student in Information Technology Management in the School of
Management and Accounting at Allameh Tabataba’i University in Tehran, Iran. His research
interests include ERPs, artificial neural networks, and business intelligence.
APPENDIX A.
Table 11.
Factors Questions Scale

Vision and Mission 1. Existence of documented vision and mission of the ERP project Very Low to Very High
2. The degree to which vision and mission of the ERP project are well under- Very Low to Very High
stood across the organization
3. Existence of business plan including a justification for the investment Very Low to Very High
Goals/ Objectives 4. Existence of carefully defined goals of the ERP system Very Low to Very High
5. Existence of measurable goals of the ERP system Very Low to Very High
6. The degree to which goals of the ERP project are well understood across Very Low to Very High
the organization
7. Existence of carefully defined project scope Very Low to Very High
8. Established realistic and achievable milestones for the ERP project Very Low to Very High
Strategic IT plans 9. The degrees to which information technology systems of the firm support Very Low to Very High
the strategic goals of the firm
10. Existence of continuous and up to date strategic IT plans Very Low to Very High
11. Existence of written guidelines to structure strategic IT plans in the Very Low to Very High
organization
12. The degree to which top management is involved in strategic IT plans Very Low to Very High
13. Existence of inputs from all functional areas the strategic IT plans Very Low to Very High
Formalization 14. The degree to which rules and procedures are clearly documented Very Low to Very High
15. The degree to which rules and procedures are made known to all employees Very Low to Very High
16. The degree to which rules and procedures are considered in decision making Very Low to Very High
Size 17. Number of employees (<100, 100-500,500-
1000, 1000-10000,
>10000)
18. Annual revenues (in million US $) (<50, 50-200, 200-500,
500-1000, >1000)
19. Availability of human and financial resources assigned to the project Very Low to Very High
CIO Position 20. Existence of empowered CIO in the organization Very Low to Very High
21. Existence of CIO reporting directly to the CEO Very Low to Very High
22. Existence of strategic rather than supportive role of the CIO in the or- Very Low to Very High
ganization.
IT Infrastructure 23. Existence of adequate hardware infrastructure. Very Low to Very High
24. Existence of adequate software and application Very Low to Very High
25. Existence of adequate networking infrastructure Very Low to Very High
Business Processes 26. Existence of documented business processes Very Low to Very High
27. Existence of business processes improvements Very Low to Very High
28. Existence of Business process understanding and perception among people Very Low to Very High
Data 29. Existence of high quality and accurate data Very Low to Very High
30. Existence of data structures converted into a single one Very Low to Very High
31. Existence of data quality control methods. Very Low to Very High
Table 11. continued

Top Management 32. The degree to which functional managers willingly assign resources to the Very Low to Very High
Support ERP project as they are needed
33. The degree to which the need for long-term ERP support resources is Very Low to Very High
recognized by management
34. The degree to which executive management is enthusiastic about the Very Low to Very High
possibilities of ERP
35. The degree to which all levels of management support the overall goals Very Low to Very High
of the ERP project
Communication 36. The degree to which open and honest information policy is communicated Very Low to Very High
to the users
37. Existence of free flow of information in the organization Very Low to Very High
38. Existence of the scope, objectives, and change management strategies, in Very Low to Very High
the communication plan
Organizational Culture 39. Existence of a learning and development culture Very Low to Very High
40. Existence of a participative decision making culture Very Low to Very High
41. Existence of a support and collaboration culture Very Low to Very High
42. Existence of a power sharing culture Very Low to Very High
43. Existence of tolerance for conflicts and risk culture Very Low to Very High
Human Resource 44. Existence of proper mechanisms to recruit and preserve qualified employ- Very Low to Very High
Management ees, nurture and maintain a high levels of employee morale and motivation
among them
45. Existence of high rate of younger employees in the organization (The (<10, 11-20, 21-30, 31-
number of employees with less than 30 years old per total) 40, >41)
46. Existence of the high rate of more educated employees in the organization (<10, 11-20, 21-30, 31-
(The number of employees with BS or higher educational degrees per total) 40, >41)
Training and Education 47. Existence of planning for ERP training facilities Very Low to Very High
48. Existence of a clear education and training strategy Very Low to Very High
49. Existence of the identified training needs. Very Low to Very High
50. Existence of a formal training program to meet the requirements of ERP Very Low to Very High
system users
51. Existence of customized training materials for each specific job. Very Low to Very High
52. Targeting the entire business task, not just the ERP screens and reports Very Low to Very High
by training materials
53. The degree to which users have been trained in basic ERP system skills (<10, 11-20, 21-30, 31-
(training hours per employee) 40, >41)
Project Team 54. Existence of the both business and technical knowledge into the project team Very Low to Very High
55. Existence of a balanced, cooperative, cross functional and full time Very Low to Very High
project team
56. The degree to which project team performance is fairly compensated Very Low to Very High
57. Existence of the empowered project team members. Very Low to Very High
58. The degree to which project team have prior experience in large IT projects. Very Low to Very High
Table 11. continued

Management’s Skills 59. Existence of communication skills Very Low to Very High
60. Existence of controlling skills Very Low to Very High
61. Existence of leadership skills Very Low to Very High
62. Existence of planning skills Very Low to Very High
63. Existence of IT management skills Very Low to Very High
64. Existence of interpersonal skills Very Low to Very High
IT Staff’s Skills 65. Existence of communication skills Very Low to Very High
66. Existence of IT management skills Very Low to Very High
68. Existence of technical skills Very Low to Very High
69. Existence of ERP experience Very Low to Very High
Users’ Skills 71. Existence of interpersonal skills Very Low to Very High
72. Existence of communication skills Very Low to Very High
74. Existence of technical skills Very Low to Very High
75. Existence of ERP experience Very Low to Very High
Shared Beliefs 77. The extent to which employees believe in the benefits of the ERP system. Very Low to Very High
78. The extent to which management team believe in the benefits of the system. Very Low to Very High
79. The extent to which employees and management believe in the benefits Very Low to Very High
of the system is alike
Company-Wide 80. The extent to which project gets support all functional segments of the Very Low to Very High
Commitment organization.
81. The extent to which organizational overall goals are preferred to individual Very Low to Very High
segments goals
82. The extent to which personnel involvement and participation in the Very Low to Very High
project are assured
Project Champion 83. Existence of the proper project champion in the organization Very Low to Very High
84. Existence of the business, technical, personal, and managerial competen- Very Low to Very High
cies of the project champion
85. Existence of a project champion with high official level in the organization Very Low to Very High
APPENDIX B.
The structure of the ERP readiness assessment questionnaire (Using 5 point scale, with values
0, 0.25, 0.50, 0.75, 1).
Table 12.
.
Factors Question Reference
Vision and Mission 1. Existence of the documented vision and mis- (Buckhout et al., 1999; Holland & Light, 2001).
sion of the ERP project
2. The degree to which vision and mission of (Shanks et al., 2000; Somers & Nelson, 2001).
the ERP project are well understood across the
organization
3. Existence of the business plan including a (Holland & Light, 1999; Nah et al., 2003; Zhang
justification for the investment et al., 2003)
Goals/ Objectives 4. Existence of the carefully defined goals of the (Razmi et al., 2009; Soja, 2008).
ERP system
5. Existence of the measurable goals of the ERP (Al-Mashari et al., 2003).
system
6. The degree to which goals of the ERP project (Shanks et al., 2000; Somers & Nelson, 2001).
are well understood across the organization
7. Existence of the carefully defined project scope (Bajwa et al., 2004; Bingi et al., 1999; Holland &
Light, 1999; Rosario, 2000; Shanks et al., 2000;
Somers & Nelson, 2001).
8. Established realistic and achievable milestones (Al-Mashari et al., 2003; Bajwa et al., 2004;
for the ERP project Holland & Light, 1999; Murray & Coffin, 2001;
Shanks et al., 2000).
Strategic IT Plans 9. The degrees to which information technology (Fiedler, Grover, & Teng, 1996; Sampler, 1998).
systems of the firm support the strategic goals
of the fir.
10. Existence of continuous and up to date (Stratman & Roth, 2002).
strategic IT plans
11. Existence of written guidelines to structure (Stratman & Roth, 2002).
strategic IT plans in the organization
12. The degree to which top management in- (Stratman & Roth, 2002).
volves in strategic IT plan.
13. Existence of inputs from all functional areas (Stratman & Roth, 2002).
the strategic IT plans
Formalization 14. The degree to which rules and procedures are (Daft, 1998; Robbins, 1991).
clearly documented.
15. The degree to which rules and procedures are (Daft, 1998; Robbins, 1991).
made known to all employees
16. The degree to which rules and procedures are (Daft, 1998; Robbins, 1991).
considered in decision making
Size 17. Number of employees (Kimberly, 1976; Swamidass & Kotha, 1998).
18. Annual revenues (Choe, 1996; Ein-Dor & Segev, 1978; Raymond,
1990).
19. Availability of human and financial resources (Grover, Jeong, Kettinger, & Teng, 1995; Nah &
assigned to the project Delgado, 2006; Reel, 1999; Remus, 2007).
Table 12. continued
CIO Position 20. Existence of empowered CIO in the organiza- (Chun & Mooney, 2009).
tion
21. Existence of CIO reporting directly to the (Chun & Mooney, 2009).
CEO
22. Existence of strategic rather than supportive (Chun & Mooney, 2009; Willcocks & Sykes,
role of the CIO in the organization. 2000).
IT Infrastructure 23. Existence of adequate hardware infrastructure (Al-Mashari, 2003; Al-Mashari et al., 2003;
Chuang & Shaw, 2008; Finney & Corbett, 2007;
24. Existence of adequate software and applica- Jarrar et al., 2000; Ngai et al., 2008; Peslak, 2006;
tion Soja, 2006; Umble et al., 2003; Verville et al.,
25. Existence of adequate networking infrastruc- 2005).
ture
Business Processes 26. Existence of documented business processes (Bingi et al., 1999; Yang et al., 2007).
27. Existence of business processes improve- (Bingi et al., 1999; Yang et al., 2007).
ments
28. Existence of understanding of business pro- (Ho & Lin, 2004; Motwani et al., 2005; Murray &
cess among people. Coffin, 2001; Ward et al., 2005).
Data 29. Existence of high quality and accurate data (Bajwa et al., 2004; Somers & Nelson, 2001,
2004; Umble et al., 2003; Xu et al., 2002; Yusuf et
al., 2004; Zhang et al., 2005).
30. Existence of data structures converted into a (Somers & Nelson, 2004).
single one
31. Existence of data quality control methods (Xu et al., 2002).
Top Management 32. The degree to which functional managers (Stratman & Roth, 2002).
Support willingly assign resources to the ERP project as
they are needed
33. The degree to which the need for long-term (Stratman & Roth, 2002).
ERP support resources is recognized by manage-
ment
34. The degree to which executive management is (Stratman & Roth, 2002).
enthusiastic about the possibilities of ERP
35. The degree to which all levels of management (Stratman & Roth, 2002).
support the overall goals of the ERP project
Communication 36. The degree to which open and honest infor- (Bancroft, 1996; Kumar et al., 2003; Nah et al.,
mation policy communicated to the users 2001; Sarker & Lee, 2003).
37. Existence of free flow of information in the (Sheremata, 2000)
organization
38. Existence of the scope, objectives, and change (Al-Mashari et al., 2003; Bancroft, 1996; Holland
management strategies, in the communication & Light, 1999; Rosario, 2000; Shanks et al., 2000;
plan Somers & Nelson, 2001; Sumner, 1999).
Organizational Culture 39. Existence of the learning and development (Ke & Wei, 2008).
culture
40. Existence of the participative decision making (Ke & Wei, 2008).
culture
41. Existence of the support and collaboration (Ke & Wei, 2008).
culture
42. Existence of the power sharing culture (Ke & Wei, 2008).
43. Existence of the tolerance for conflicts and (Ke & Wei, 2008).
risk culture
Table 12. continued
Human Resource 44. Existence of the proper mechanisms to recruit (Bingi et al., 1999; Kim et al., 2005; Metaxiotis
Management and preserve qualified employees, nurture and et al., 2005; Skok & Legge, 2002; Trimmer et al.,
maintain a high levels of employee morale and 2002; Umble et al., 2003; Verville et al., 2005;
motivation among them Willcocks & Sykes, 2000).
45. Existence of the high rate of younger employ- (Herold et al., 1995).
ees in the organization
46. Existence of the high rate of more educated (Herold et al., 1995).
employees in the organization
Training and Education 47. Existence of the planning for ERP training (Finney & Corbett, 2007; Rao, 2000a, 2000b)
facilities.
48. Existence of the clear education and training (Mabert et al., 2003).
strategy
49. Existence of the identified training needs. (Stratman & Roth, 2002).
50. Existence of a formal training program to (Stratman & Roth, 2002).
meet the requirements of ERP system users
51. Existence of customized training materials for (Stratman & Roth, 2002).
each specific job
52. Targeting the entire business task, not just the (Stratman & Roth, 2002).
ERP screens and reports by training materials
53. The degree to which users have been trained (Stratman & Roth, 2002).
in basic ERP system skills
Project Team 54. Existence of the both business and technical (Al-Mashari et al., 2003; Allen et al., 2002; Bajwa
knowledge into the project team et al., 2004; Bingi et al., 1999; King & Burgess,
2006; Shanks et al., 2000; Somers & Nelson,
2001, 2004; Sumner, 1999).
55. Existence of a balanced, cooperative, cross (Nah et al., 2001; Rao, 2000a; Shanks et al., 2000)
functional and full time project team
56. The degree to which project team perfor- (Umble et al., 2003).
mance fairly compensated
57. Existence of the empowered project team (Finney & Corbett, 2007; Shanks et al., 2000)
members.
58. The degree to which project team have prior (Allen et al., 2002; Marsh, 2000).
experience in large IT projects
Management’s Skills 59. Existence of communication skills (Tadinen, 2005).
60. Existence of controlling skills
61. Existence of leadership skills
62. Existence of planning skills
63. Existence of IT management skills
64. Existence of interpersonal skills
IT Staff’s Skills 65. Existence of communication skills (Tadinen, 2005).
66. Existence of IT management skills
68. Existence of technical skill.
69. Existence of ERP experience
Users’ Skills 71. Existence of communication skills (Tadinen, 2005).
72. Existence of interpersonal skills
74. Existence of technical skills
75. Existence of ERP experience
Table 12. continued
Shared Beliefs 77. The extent to which employees believe in the (Amoako-Gyampah & Salam, 2004).
benefits of the ERP system
78. The extent to which management team (Amoako-Gyampah & Salam, 2004).
believe in the benefits of the system
79. The extent to which employees and manage- (Amoako-Gyampah & Salam, 2004).
ment believe in the benefits of the system is alike
Company-Wide 80. The extent to which project gets support all (Law & Ngai, 2007; Somers & Nelson, 2001,
Commitment functional segments of the organization 2004; Yusuf et al., 2004; Z. Zhang et al., 2005).
81. The extent to which organizational overall (Yusuf et al., 2004; Zhang et al., 2005).
goals are preferred to individual segments goals
82. The extent to which personnel involvement (Mandal & Gunasekaran, 2002; Yusuf et al.,
and participation in the project are assured 2004).
Project Champion 83. Existence of the proper project champion in (Bancroft, 1996; Legare, 2002; Nah et al., 2001;
the organization Nah et al., 2003; Sumner, 1999).
84. Existence of the business, technical, personal, (Kræmmergaard & Rose, 2002; Somers & Nelson,
and managerial competencies of the project 2001).
champion
85. Existence of a project champion with high (Falkowski, Pedigo, Smith, & Swanson, 1998;
official level in the organization Sumner, 1999).
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A McKinsey 7S Model-Based Framework for ERP Readiness

Article in International Journal of Enterprise Information Systems · October 2011

Payam Hanafizadeh Ahad Zare Ravasan

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INTRODUCTION business (Koch, Slater, & Baatz, 2001). Al-

Table 2. Categories and factors of Razmi’s framework (Razmi et al., 2009)

Related Works chains have been gathered through 24 case

Table 3. Dimensions and factors of Raymond’s framework (Raymond et al., 2006)

organizational context, external forces, percep- ERP Readiness Factors

Table 4. Distribution of articles by journals, conference proceedings, textbooks, and dissertations

continued on following page

IT Infrastructure. Adequate IT infrastructure, adjustments should be made prior to ERP

2002). Several skills are cited by research- Shared Values/Superordinate Goals

Figure 1. Proposed framework for ERP readiness assessment

Figure 2. The research steps

with its specific dimensions are well explained RESEARCH METHODOLOGY

question. Their suggestions were incorporated considerations (Kelloway, 1998). Confirma-

Mckinsey Factors or Items FL CA CR AVE

Shared Structure Strategy Systems Style Staff Skills

Figure 3. The results of second order CFA

Table 7. The results of goodness of fit assessments and accepted thresholds

Fit Indices Observed Values Accepted Reference

Mckinsey Factors Best Framework Razmi’s Framework Raymond’s

continued on following page

Shared • Shared beliefs • Social dynamics •- • Perception of the

The scores of factors are achieved by doing Theoretical Comparison of

Factors Question Scores*

Table 10. Readiness assessment scores for 2 cases

Dimensions Dimension Scores Factors Factor Scores

Payam Hanafizadeh is an Assistant Professor of Industrial Management at Allameh Tabataba'i

Factors Questions Scale

continued on following page

Table 11. continued

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Table 11. continued

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Table 12. continued

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Table 12. continued

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Table 12. continued

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