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Assessing risk in ERP projects: identify and prioritize the factors Shi-Ming Huang I-Chu Chang Shing-Han Li and Ming-Tong Lin Industrial Management & Data Systems Volume 104 · Number 8 · 2004 · pp. 681–688 q Emerald Group Publishing Limited · ISSN 0263-5577 DOI 10.1108/0263557041056 1672 www.emeraldinsight.co m/0263-5577.htm
But an ERP project is composed of software projects and business processes. The ERP system consists of tightly linked interdependencies of business processes, software systems, and process reengineering (Wright and Wright, 2001; Xu et al., 2002), that presents unique risk factors formed with software systems and its wide applications.
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Software development problems have been a major issue until now. Unfortunately, it appears that software development efforts still suffer from age-old difﬁculties of cost overruns, project delays, and unmet user needs (Wiegers, 1998). A wellknown article by McFarlan (1981) on software risk management was published, one decade ago, with development failure examples just like the ones listed above. He stated that failure to assess individual project risk and to adapt management methods accordingly was a major source of the software problem. Even though McFarlan’s views have been well received by practitioners and researchers, little research has been done to advance our knowledge of software development risks. Alter (1979) identiﬁed eight risk factors: nonexistent or unwilling users, multiple users or implementers, turnover among all parties, inability to specify purpose or usage, inability to cushion impact on others, loss or lack of support, lack of experience, and technical or costeffectiveness problems. Boehm (1991) recommended the use of approximate methods, and proposed a prioritized checklist of ten software risk items: personnel shortfalls, unrealistic schedules and budgets, developing the wrong software functions, developing the wrong user interface, gold plating, continuing stream of requirement changes, shortfalls in externally furnished components, shortfalls in externally performed tasks, real-time performance shortfalls, and straining computer science capabilities. Zmud (1980) states the factors that inﬂuence the outcome of software development project: technological complexity, degree of novelty or structure of the application, technological change, and project size. Davis (1982) identiﬁes four sources of project uncertainty: the task to be supported, the application to be developed, the users, and the analysts. Ewusi (1997) suggests that several sources of uncertainty be taken into account in the management of software development projects: complexity, lack of structure, instability of project objectives, newness of the technology, users, IS management, upper management, and project size. Barki et al. (1993) reveals a high degree of resemblance between what some authors have labeled “risk factors” and what others have called “uncertainty factors”. In these given similarities, the lists of uncertainty and risk factors identiﬁed in the IS literature were examined in order to group factors with shared meanings. ERP projects are unique in that they require the intense collaboration of groups of stakeholders, namely; IS staff, end users and management. Hence ERP projects are organization-oriented activities, and therefore subject to all the vagaries of group dynamics, interactions, coordination, andcommunication. Due to the aforementioned reason, Sumner (2000) held an investigation to a better understanding of the major risk factors associated with enterprise-wide/ERP projects. Wright and Wright (2001) also investigated the risk factors of ERP projects due to ERP systems, which inherently present unique risks associated with its tightly linked interdependencies of business process, relational database, and process reengineering. Sumner (2000) used case studies to describe the experiences of several companies which had implemented enterprise-wide information management systems using SAP, Peoplesoft, and Oracle. Wright and Wright (2001) held a semistructured interview with experienced participants. They found that Insufﬁcient training and re-skilling, Insufﬁcient internal expertise, Lack of analysts with the knowledge of business and technology, Failure to mix internal and external expertise effectively, unable to comply with the standard which ERP software supports, and lack of integration between enterprise-wide systems could be ERP risk factors. Based on previous research, the ERP risk factors are listed in the Table I. Category Risk factors in IS Risk factors unique in ERP Organization ﬁt Organizational environment (resource Failure to support cross-organization insufﬁciency and extent of changes) (Barki design Wright and Wright, 2001 et al., 1993) Skill mix Lack of technical expertise (Ewusi, 1997) Insufﬁcient training and re-skilling (Wright Lack of application knowledge (Barki et al., and Wright, 2001) 1993; Ewusi, 1997) Lack of analysts with business and Inappropriate stafﬁng and personnel technology knowledge (Sumner, 2000) shortfalls (Boehm, 1989; Keil and Failure to integrate internal and external Montealegre, 2000) expertise effectively (Sumner, 2000) Project management and Lack of agreement on project goals (Ewusi, control 1997) Lack of senior management involvement (Ewusi, 1997; Keil and Montealegre, 2000) Lack of effective project management methodology
(Keil and Montealegre, 2000; Ewusi, 1997) Software system design Unclear/Misunderstanding changes in requirements (Rainer et al., 1991; Boehm, 1989; Keil and Montealegre, 2000) Lack of an effective methodology, poor estimation and failure to perform the activities needed(Rainer et al., 1991; Keil and Montealegre, 2000) User involvement and training Lack of user commitment and ineffective communications with users (Rainer et al., 1991; Keil and Montealegre, 2000) Conﬂicts between user departments (Keil and Montealegre, 2000 Technology planning Capability of current enterprise technical infrastructure (Ewusi, 1997) Technology newness,(Rainer et al., 1991; Boehm, 1989; Barki et al., 1993) Technology complexity (Barki et al., 1993) The risk hierarchy of ERP project
Unable to comply with the standard which ERP software supports (Wright and Wright, 2001; Sumner, 2000) Lack of integration between enterprisewide systems (Sumner, 2000; Wright and Wright, 2001) Insufﬁcient training of end-user (Sumner, 2000; Wright and Wright, 2001)
Attempting to link legacy applications (Sumner, 2000; Wright and Wright, 2001)
CRITICAL SUCCESS FACTORS FOR
ERP systems are software packages that enable companies to integrate
User involvement and training, project management and control are the facets concerning the sample. These two facets occupy almost 50 percent of the total factor. Within the user involvement and training risk category – ineffective communications with users, failure to get user support, and insufﬁcient training of end-user are the major causes of ERP project failure (Table V). The other major risk category for project achievement is project management and control. Lack of senior manager commitment to project and lack of efﬁcient project management methodology are the major reasons of project failure in this category. Conventionally, risk analysis is performed at the overall project level. Among the synthesized of 28 risk factors, we summarized the top ten risk factors that affect the ERP projects more than others (Table VI). To implement ERP in the enterprise needs business process reengineering and may change the enterprise environment. It needs a lot of effort to ease the fear of users, and to eliminate the resistance of users. Previous research indicated that user training is a key requirement for ERP implementation. Pertaining to the insufﬁcient training of end-user, Davenport (1998) suggested that ERP systems can empower users by equipping them with real-time data, and Rao (2000) observed that ERP was associated with greater job ﬂexibility by expanding individual awareness, creativity, and innovation. Robey et al. (2002) ﬁgured that the above advantage should be on the premise of training. Before the user could use an ERP system efﬁciently, they need to learn the business processes that were revised followingsystem implementation. They suggested that ﬁrms addressed the need for users to learn new system by providing formal training for users and by taking an incremental approach to system implementation. The training should contain operation skills of new system, procedural training, revised business process and management change. The user training should not only focus on software procedure but also management change and the concepts of process-orientation (Schmidt et al., 2001). The implementation of ERP contains various changes, which may cause conﬂicts of different departments. Without the intervention of senior management, no one will compromise the rearrangement of ERP. Ewusi (1997) stated that the failure of senior management to request and enforce regularly scheduled management review meetings to monitor progress on a project is a major cause of failure. Umble and Umble (2002) suggested that if the top management is not strongly committed to the system, does not foresee and plan for the profound changes necessitated by ERP, or does not actively participate in the implementation, the implementation is at high risk of failure. The implementation of ERP must be viewed as a transformation in the way the company does business. Besides the supports from top management, excellent project management techniques are also required (Umble and Umble, 2002). They indicated that implementation teams should take a disciplines approach to project management, including a clear deﬁnition of objectives, development of a work plan, and establishment of resource requirement plan. Most of all, appropriate project evaluation measures must be included during ERP implementation. The policy of compensation, award, assist, responsibility, and replacement of incapable staff should be preserved and monitored until ﬁnal completion. Umble and Umble (2002) indicated that some of the biggest ERP system implementation failures occur because the new software’s capabilities and needs are mismatched with the organization’s business process and procedures. The mismatch between ERP systems, existing structure, and business process of organization will generate widespread chaos. Robey et al. (2002) suggested that the core team and consultants could aid in solving this kind of problems. In most ﬁrms a core team assumed responsibility for conﬁguring the system, it served as forces promoting new knowledge against the knowledge barriers of the existing organization memory. With the method of stafﬁng core team with experienced business and technology managers could provide needed business and technical expertise. Due to the integrated nature of ERP, data entered into a system may be used throughout the organization. If the inaccurate data is entered into the common database, erroneous data may have a negative domino effect throughout the enterprise. The domino effect will cause the ERP lose credibility and will encourage people to ignore the new system and continue to run the company under the old system (Umble and Umble, 2002). Seven categories of critical success factors were identified from the ERP literature: (1) business plan and vision; (2) change management; (3) communication; (4) ERP team composition, skills and compensation; (5) management support and championship; (6) project management;
The ERP system not only aids in standardizing business processes across an enterprise but also helps management increase their visibility of the business by providing real-time financial and production information. 36). 32. ERP systems enable companies to consolidate the disparate data sources into one database and radically increase the ability to create reports from data originating in multiple departments across the enterprise. ERP Team Composition. 30. 19). The Journal of Computer Information Systems 46. The company's commitment to change will be expressed by its perseverance and determination in solving implementation problems (30). Formal education and training should be provided so users can gain an understanding of how the system works and how it will impact their work (2. 38). their implementation may lack the functionality provided by higher versions of the product or vendors may no longer support their version of the product. and business plan for an ERP project. 11). In order to effectively solve user problems and manage organizational change.) bug. 26. Therefore. 13). firms are able to manage all their resources (i.ENTERPRISE RESOURCE PLANNING IMPLEMENTATION AND UPGRADE Nah. scope and project progress (2. and have representatives of the internal staff as well as consultants . their business processes and all the information relevant to their organization. thus increasing the likelihood of system success. 38). finances. (7) system analysis. 26. 35). physical or intangible assets. During the implementation of an ERP system. A business case should be established for both ERP implementation and upgrade (6). Any feedback offered by users must be seen as being received and acted on (8). 30). Fiona Fui-Hoon. several years later. risks and costs of the project (35). The best people in the organization should make part of the implementation team in order to foster innovation and creativity that are important for success (4. Even though training tends to be one of the areas to be cut in the case of budget overruns. 30. The project also needs a clear vision to guide the ERP implementation (5. 36). 35. Business Plan and Vision It is very important to have a clear vision. The goals and benefits of the project must be clear and well understood (30. ERP customers need to periodically upgrade their system. 4. Business process reengineering will also help companies reduce the amount of customization needed in the implementation (4. or task focused perpectives (3). goal. the project should lead to alignment of the business strategy with IT strategy. Communication Expectations and goals must be communicated effectively among stakeholders and throughout all levels of the organization (2. market segment. human resources. selection and technical implementation. 4. 13. and an enterprise wide structure and culture change should be managed (8. Some companies chose to perform an ERP implementation because of their need to integrate disparate systems throughout the enterprise. 19. Change Management Recognizing the need for change in order to stay competitive is very important (8). etc. costs. With ERP systems. The involvement of the implementor. 13. For example. 3. on-line user manuals) should be in place (38). 35. A justification for the investment in an ERP system should also be made based on the change in work processes to align with the future direction of the business (8). 38). redesign of business processes can increase the complexity. User involvement and feedback in the design of the system is also important (2. 13). constant business process reengineering should take place in order to take advantage of the new system (2. production. This impact can be significant because upgrade is an iterative process that is recurring throughout the life of an ERP implementation. 30. change management strategies. risks and a timeline (38). help desk. Now. a support organization (i. cross-functional. It is very important for stakeholders to understand the capabilities and limitations of the ERP system. The IT workforce should be trained on the new system and processes (3. These team members must be empowered to make quick decisions (30) and performance should be tied to compensation (8). 5 (2006): 99-113. The communication plan should include the rationale for the ERP implementation. It is important that the functional team members in the organization be involved in the project on a full time basis (30). Shared values should emphasize functional. Communication should be complete and open to guarantee honesty. details of the business process management change. demonstration of the software. involving people with both business and technical knowledge into the project is essential for success (2. 26).e. The wave of ERP implementation reached a high point at the turn of the century. Skills and Compensation An ERP project includes all functional areas of an enterprise. Research on ERP upgrade is of the utmost importance because of its impact on companies around the world that are undergoing this major step or process in ERP maintenance. product.) more effectively. Santiago. However.. We conducted a case study of two organizations that had implemented and upgraded ERP systems. The vision and mission of the project must also specify measurable goals and targets (2. 13. A culture of shared values and a strong corporate identity is critical to facilitate change.. 8.The project team should be balanced. many of these companies are faced with issues of maintenance and upgrade. The effort and cooperation of technical and business experts as well as endusers is necessary for the success of an ERP implementation. it is critical to the success of the implementation project as well as the quality of decisions that will be taken based on the system (3. 35). 12). 8. Some companies owned nonY2K compliant software and decided to switch to ERP instead of moving their old system to the next version because of the functionality provided by ERP. Delgado. 30. 5. ERP systems may fail to meet expectations due to "overselling" the software (35). Companies have expressed multiple reasons to implement ERP (20). In consequence. Hence. A second reason why companies implemented ERP systems was due to the Year 2000 (Y2K. vendors and consultants is also critical (10.e. 3. A business plan is very critical (26) and should specify benefits. resources. contact points. 36).
organizations may develop their own middleware (4) or employ Enterprise Application Integration (EAI) which uses special middleware that serves as a bridge between different applications for system integration (15). The project champion should be an advocate for the project (30) and must continually manage resistance and change (19). 30. In order for an ERP implementation project to he a success. especially from vendors and consultants. Some key considerations are whether the system will be centralized or decentralized and how compatible it will be with existing systems (35). development and implementation (19. The importance of a project champion in an ERP implementation is greater than in other IS implementations because the project relies heavily on organizational support perseverance (36). The ERP project must be clearly and explicitly designated as top priority by top management (30. In order to achieve the full benefits of an ERP system. To ease the integration process. 3. 15). Creating incentives and risksharing agreements will help the achievement of common goals (38). Any changes in the original project should be evaluated based on their business benefits and. changes to the scope of the project must be assessed based on the additional time and cost it would entail (36). and system performance. 38). Implementation methodologies and development tools provided by the vendor should be used as much as possible (31. 26. This can be very difficult if one understands that the data can come from a number of disparate data sources in countless different formats (3. the scope of the ERP implementation project also needs to be clearly defined and controlled (3. 25. One of the first and most important steps in an ERP implementation is the selection of an ERP package (3. 30. Problems with data can lead to serious delays in the project. It is critical to have effective troubleshooting if there are errors with the system (13). Having a high ranking official as the champion for the project can facilitate monitoring due to the individual's knowledge of the business and his/her ability to acquire resources in the organization (8. a strong business case on the loss of competitive advantage should be developed (35). The organizational fit of ERP is essential (14. 19. 13. 35). 34) to minimize customization. The commitment of the project champion is critical to drive consensus and to oversee the entire implementation project (26). 35). 35). and must support the organization's business processes (33. In addition. . 30. A fundamental requirement for a successful ERP implementation is the availability and accuracy of the system's data. The success of the project can be gauged by completion dates. if possible. The ERP package selected must meet the information and functional needs of the organization. 35). These resources include time. 13. 35. The project champion must be a high level official in the organization to facilitate goal setting and legitimizing change. Project Management Effective project management is critical to the success of ERP implementation. 28) is essential. Furthermore. 26. 13. Top Management Support and Championship Top management support is a necessary condition for ERP implementation success (27). 4. the top management must be willing to allocate valuable resources to the implementation project (13. 36).30). To justify customizing the system. Customizing an ERP system has been associated with an increase in IT costs. money and personnel necessary for the ERP implementation. Selection and Technical Implementation For an ERP implementation to be successful. Internal integration tools are essential to coordinate activities involving the project team while external integration tools are necessary to facilitate collaboration with external stakeholders and to assure that user and process requirements are being integrated into the system (3). and what it wants to leave out (35). In order to have a comprehensive view of the enterprise's requirements for an ERP system. Due to the large number of parties involved in an ERP implementation. 35. 23. integration of data from previously used systems and with the company's other systems is critical (35). and the inability to benefit from the vendor's software maintenance and upgrades. Before any data is even converted. 26. Customization of the ERP system should be avoided as much as possible (3. implemented at a later time (36.(10. 19. 35). 16. 26). 36). 30. It is critical to have support and approval from top management for an ERP implementation (2. Defining the architecture before the implementation prevents reconfiguration at later stages (38). These tools and methodologies usually lead to a reduction of costs and implementation time and increase the amount of knowledge transferred to the client. it is important for all functional areas to he involved in the selection of the package. costs. 10. timeliness must be enforced and progress must be tracked by monitoring milestones and targets (2. quality. 36). The use of appropriate tools and methods for modeling. The architecture that will run the ERP application also constitutes an important choice. Not only should responsibility for the project be clearly assigned (26). 35). 36). the organization must decide what information will be loaded onto the system. 35). 13. 30. Rigorous and sophisticated testing is very important for the success of the implementation (2. the complexities of existing business legacy systems must be successfully managed (2. System Analysis. The sharing of information. 35. 5. 3. The overall architecture of the system must be configured before the deployment. It is also critical that test scenarios represent as many departments and cover current and future processes (2). The data conversion can be even more difficult if the company does not understand what information it wants to include into the system. it is critical to coordinate project activities across all affected parties (8). 19. is very important and requires partnership trust (9. 38). 19. The milestones and delivery dates of the project must be realistic and clearly stated (2. a longer implementation time. 37).
they were collocated to facilitate communication among the team members. The importance of the ERP team also changed throughout the project. This bonus was not offered during the upgrade. During the upgrade. in the departments where senior management did support the implementation. their way of facilitating communication was to move the project team to a rented building in order to create a new work environment. This contact facilitated communication. top management showed their support in both ways. the communication between project team members continued being very important. they were only involved part time in the upgrade project. the managers working in his/her department began to share his/her disdain and communicated it to other employees. Due to the amount of change to business processes and the way information is acquired. the project team didn't emphasize the importance of the project champion during the upgrade. Furthermore. managers and other employees shared their enthusiasm. Expectations for the project and the project's progress were communicated using a number of channels including posters and the intranet. the highest levels of management didn't have to get involved.the people you can't afford to lose. the team members already knew each other and had experience working together. stored. Top Management Support and Championship' was critically important. 'ERP Team Composition. the project can be compromised. the project team of the original implementation became responsible for the system once it was implemented. none of the team members were eligible. Before the start of the project. it is the project team who is implementing the system. During the initial implementation. Both organizations took steps to facilitate and encourage communication between the project team members and stakeholders in the organizations. it wasn't as necessary because the new system would not affect users to the extent that the original implementation did. the project team was relocated to an office with no cubicle subdivisions that one of the module owners called the "bullpen" because it forced them to come into contact with the team members. but due to the relatively smaller amount of resources necessary for this project. In the interviews. 'Top Management Support and Championship' was not as important during the upgrade project. If the group's skills and knowledge are not sufficient. For Public Power Company. In the case of State University. Top management support is one of the few critical success factors that is most important during the Chartering phase of the project and decreases in importance as the project progresses. The amount of involvement of the team members and the incentives to complete the project decreased from the original implementation to upgrade. Due to his negative opinion toward the project. the team members were offered to be eligible for overtime during the original implementation. Both organizations had a project champion who sold the project throughout the organization and was the "cheerleader" or motivator of the project team. both companies tried to have "the best and the brightest. In the case of Public Power Company. . accessed and analyzed." as the CIO of Public Power Company described it. During the implementation. The importance that was given to this factor was demonstrated in State University when top management sent everyone in the project team a letter explicitly describing their commitment to empowering the ERP team during the implementation. Throughout the interviews. the participants either stated that championship wasn't as important or indicated a lower level of agreement on who was the project champion than in the original implementation. In one of the two organizations. Because the people implementing the system were collocated for the duration of the project.. Although conscious steps were not taken to facilitate communication. This occurs both in the implementation and the upgrade of the ERP system. in the same organization. One of the best examples of the importance of senior management support is demonstrated in the case of one of the organizations where a senior manager did not support the ERP implementation. Another factor that was evident for both organizations was the importance they put on empowering the project team. the ERP system might not be implemented at all. Therefore. even though the participants were involved full time in the original implementation. It was necessary to gain the support of management in order to attain the necessary resources. One of the module owners said that even though they did have top management support for the upgrade. It is very important for the success of both the implementation and upgrade projects that the project members are trusted to take hard decisions and not have to constantly ask for approval from their managers. This category of critical success factors was shown to be critical during the project phase. in the project team. On the other hand. Each person had only a desk to facilitate the communication and "overhearing" what are the issues with other parts of the system. In the original implementation. Support can be demonstrated in a number of ways such as publicly communicating support and allocating necessary resources for the project. In the case of both organizations. many of them expressed the feeling of being part of a team. If there is no support for the project from top management at the beginning of the project. 'Communication' is very important in both the implementation and upgrade. channels had already been defined to facilitate this communication.. Communication with stakeholders outside of the project was also very important. Skills and Compensation' is found to be the most important overall for both implementation and upgrade. the participants in both organizations emphasized the importance of the team responsible for both the implementation and the upgrade. it is very important for top management to show its support in order to facilitate change. Championship is very important in the original implementation as well. Its importance in the first phase of the project is due to the need for the allocation of resources that occurs at the beginning of the project. Furthermore. In the case of State University.Of the seven categories of critical success factors. In the end. future users knew that an EPR system was being implemented and when to expect different milestones.
change management remained a very important factor and training was just as important as the original implementation. "We wanted to remain as close to vanilla as possible. classrooms had already been established solely for ERP system training and were leveraged during the upgrade." said the CIO. more critical. were common because of the large amount of functionality provided by ERP. such as training. On the other hand. they might lobby to add functionality to the project. Unless major problems arise with the rollout of the upgraded system. This problem led to increased cost of the project in order to complete it on time. the importance of communication decreases from the Project to the Shakedown phase of the ERP upgrade lifecycle since the system is largely stabilized after the initial implementation. In the case of Public Power Company. 'Project Management' was very important during both the original implementation and the upgrade. During the Project phase. In the case of ERP implementation. In both organizations. one could look at the effects of business process reengineering (BPR) in the organization. In the Chartering and Onward &Upward phases.It is interesting to note that the importance of communication from the Project to the Shakedown phase is different between the implementation and upgrade lifecycles. any requests to expand the project scope had to be evaluated very critically. Therefore. communication with stakeholders decreases from the Project to the Shakedown phase. In the case of State University. it is critical to have training for any users who did not know how to use the system and a support organization to deal with any problems that may arise. User support usually followed a number of tiers in both organizations. training for endusers was done by members of the project team. One organization was not very rigorous at defining or enforcing its milestones during the upgrade project. During the Shakedown phase. in particular those related to an increase in the functionality of the system. it was very critical for the project team to define and enforce clear and reasonable milestones. Both organizations defined "scope creep" as the problem arising from increasing the scope of the project. Proposed changes in the project. many of the manuals for the systems had already been written and only had to be updated to reflect the upgraded functionality. tasks to the operation of the system had been delayed significantly. some tasks. Furthermore. On the other hand. Due to the complexity of the implementation and upgrade projects. It was very important for everyone in the teams to have a clear idea of what was the goal for the project. In order to determine the' type and amount of change an organization is undertaking. If the problem was not solved. it is important because future end-users need to be informed about the changes that will come with the system. There was very little BPR due to the technical nature of the upgrade in both organizations. making sure a user support organization was available for the users proved to be critical during the project. had to be performed in less time because other. Along with training. Furthermore. communication grows in importance from the Project to the Shakedown phase since multiple stakeholders (such as users. Since most upgrades are purely technical and involved only minor changes to user interfaces and business processes. State University changed some of its business processes but maintained some if its own and therefore had to customize its implementation. Staffing may also increase to deal with temporary inefficiencies while users receive further training or retraining. The implementation team works closely with users during the Shakedown phase to fix bugs and to deal with problems that arise in stabilizing the system. it would be sent to a higher level of support. If the problem was not fixed. After the Project phase of the ERP upgrade lifecycle. Another factor of project management that is critical throughout the implementation and upgrade is the coordination of project activities across all affected parties. The importance of change management follows a similar pattern across the four phases of EPR implementation and upgrade. During the Onward &Upward phase. both organizations defined the scope of their projects very precisely. users would have been trained on the upgraded system and the implementation team would have completed the configuration and testing of the upgraded system. Due to the high degree of integration between all the modules in an ERP system. changes are minimal and users are already very knowledgeable and comfortable with the system. In both organizations. During the upgrade. Before the implementation or upgrade project even began. the vendor would be contacted and the problem would be solved. consultants and vendors) play a key part in fine-tuning the system. Another large part of change management is training. Training for IT personnel was slightly different because all employees in the systems administration (Basis) and programming (ABAP) had to go to classes. communication with stakeholders would decrease. If users had a problem. It proves to be most important during the Project and Shakedown phases. they would contact the first level of support. change management is not as critical. For Public Power Company. the organization took a decision at the beginning of the project to change their business processes in order to match those of the ERP system and take advantage of the best practices it offers. both organizations only used a subset. it was critical for any decision or . it wasn't sufficient for the scope to be well defined. Even though ERP software includes a large amount of functionality. the rollout of this service was facilitated due to the existing infrastructure. The tasks in the Chartering phase center around planning and there is very few execution. if people in the project learned about additional functionality that could be incorporated. This increased the risks to the project. probably one of the module owners. Team members would go to training in their particular modules of expertise and come back to the organization to teach the other employees in their area. 'Change Management' is shown to be very important throughout the implementation and upgrade. In both organizations. this decision to include additional functionality was made as a team taking into account its effect on all pieces of the system.
An enterprise resource planning (ERP) system is a packaged business software system that enables a company to manage the efficient and effective use of resources (materials. Among all the factors. the importance of the seven categories of critical success factors across the four phases of the ERP lifecycle is very similar for both the implementation and upgrade projects.' and 'System Analysis. to take advantage of new functionality. Selection and Technical Implementation' are most important during the Project phase. 'Business Plan and Vision' and 'Top Management Support and Championship' are critical during the Chartering phase while 'Communication' and 'Change Management' are very important during the Project and Shakedown phases. Both business and technical knowledge are essential for success (Bingi et al.3 Critical factors for successful implementation of enterprise systems Fiona Fui-Hoon Nah and Janet Lee-Shang Lau and Jinghua Kuang Business Process Management Journal. the upgrade was facilitated because no custom application had to be tested with the new version and no interfaces had to be created. ERP is a very expensive endeavor. 1999). 3. Among the most important attributes of ERP are its abilities to: . and produce and access information in a real-time environment Critical factors of ERP implementation success This section discusses the 11 factors that are critical to ERP implementation success. Vol. and further upgrades. 1999). or two weeks. In comparison. 1999. Wee. or perish. Rosario. 285-296. During the implementation. respond.. Skills and Compensation. In conclusion. 'ERP Team Composition. at the beginning of an ERP implementation or upgrade project. not as many steps were taken to coordinate activities. ERP teamwork and composition is important throughout the ERP life cycle. reducing the amount of work that had to be done. State University facilitated the coordination of project activities by locating its entire project team in the same office to facilitate communication. 2000.' 'Project Management.. the necessary resources might not be acquired. Most of the participants agreed that having a clear business plan and vision for the project was critical for its success. during the upgrade. Having a clear business plan is critical during the chartering phase of both projects because it is with these clear goals that an argument can be made for an implementation or upgrade of the ERP system. 2000). The ERP team should consist of the best people in the organization (Buckhout et al. Both of the companies' systems were not Year 2000 compliant so it made sense to implement a more integrated system such as ERP. The team should have a mix of consultants and internal staff so the internal staff can develop the necessary technical skills for design and implementation (Sumner. 2000). both project teams would meet to discuss issues affecting different modules. # MCB University Press. so unless its benefits can be justified. 'Business Plan and Vision' is found to be critical during the chartering phase of both the implementation and upgrade projects. 'Change Management' and 'Communication' continue to be very important even after the system has been rolled out. Furthermore. Team members need to be assigned . 'ERP Team Composition. efficient use of information technology. Skills and Compensation' play the most critical role in both ERP implementation and upgrade projects. effective business strategy centers on aggressive. and react to the growing demands of the marketplace. and the greatest amount of management and coordination is necessary. the amount of customization must be kept to a minimum in order to facilitate the implementation of the system. 7 No. This was particularly the case for Public Power Company which implemented the system in "plain vanilla" form. the configuration task was very challenging because it involved learning the software and all its functionality. more than ever. In the case of the upgrade projects. pp.automate and integrate an organization's business processes. Finally. business strategy not only determines success. It is during this phase that tasks necessary to operate the system take place. although every week. The importance of project management is the greatest during the Project phase of both the implementation and the upgrade project. it governs business survival. Now. the focus shifts toward the rest of the factors. State University did some customization while Public Power Company did none. finance.) by providing a total. 'Business Plan and Vision' and 'Top Management Support and Championship' should be the focus. a large amount of the configuration was passed over to the new system seamlessly. 2001. The ERP project should be their top and only priority and their workload should be manageable (Wee.. 'System Analysis. Public Power Company sent the project members to a different building to facilitate their communication as well. This category is most important during the Project phase because it deals with the technical aspects of implementing or upgrading the system. 1463-7154 change to be done taking into account its effect on the whole system. The configuration of the ERP modules was most important during the implementation but not as much during the upgrade. etc. It supports a process-oriented view of the business as well as business processes standardized across the enterprise. Building a cross-functional team is also critical. 1999. ERP teamwork and composition As shown in Figure 1. integrated solution for the organization's information-processing needs. human resources. The lack of customization benefited Public Power Company by facilitating the installation of "hot Packs" which assume that the system is a "plain vanilla" installation. In a fiercely competitive environment. share common data and practices across the entire enterprise. For example. Selection and Implementation' is most important during the Project phase of both the implementation and the upgrade of the ERP systems in both organizations. Hence. 1999. Bingi et al. Businesses today face a stark reality: anticipate. As the project progresses. Both organizations then upgraded the ERP system because support for the system was going to be discontinued and as a secondary motivation. Sumner.
Then the project must be formally defined in terms of its milestones (Holland et al. Top management support Top management support is needed throughout the implementation. 2000). New organizational structures. The escalation of issues and conflicts should be managed (Rosario. costs. User input should be managed in acquiring their requirements. 2000). involvement of business units. 2000). 2000).. Partnerships should be managed with regularly scheduled meetings. reactions and approval (Rosario. Wee. 2000). 1999. 2000). There should be a justification for the investment based on a problem and the change tied directly to the direction of the company (Falkowski et al. This includes the amount of the systems implemented. as far as possible.. Project management Good project management is essential. resources. Expectations at every level need to be communicated. Communication includes the formal promotion of project teams and the advertisement of project progress to the rest of the organization (Holland et al. Deadlines should be met to help stay within the schedule and budget and to maintain credibility (Wee. In times of conflict. and between partnering companies is vital and requires partnership trust (Stefanou. 1999). Managers should legitimize new goals and objectives. Middle managers need to communicate its importance (Wee. roles and responsibilities should be established and approved. 1999) and controlled (Rosario. 2000). This involves providing the needed people for the implementation and giving appropriate amount of time to get the job done (Roberts and Barrar. Timeliness of project and the forcing of timely decisions should be managed (Rosario. This will help keep focus on business benefits.. The business plan would make work easier and impact on work (Rosario. A business plan that outlines proposed strategic and tangible benefits. Holland et al. Project management should be disciplined with coordinated training and active human resource department involvement (Falkowski et al. 2000). Project champion Project sponsor commitment is critical to drive consensus and to oversee the entire life cycle of implementation (Rosario. 2000). There should be a high level executive sponsor who has the power to set goals and legitimize change (Falkowski et al. Policies should be set by top management to establish new systems in the company. a clear business plan and vision to steer the direction of the project is needed throughout the ERP life cycle (Buckhout et al.full time to the implementation (Wee. The scope must be clearly defined and be limited. There should be a clear business model of how the organization should operate behind the implementation effort (Holland et al.. 1999). This can be achieved by tying management bonuses to project success (Wee. 1999. The sharing of information within the company. 1999) and align with strategic business goals (Sumner. 2000). and admit change will occur (Sumner. 2000). A shared vision of the organization and the role of the new system and structures should be communicated to employees.. 1999). 1992). there should be planning of well-defined tasks and accurate estimation of required effort. Effective communication Effective communication is critical to ERP implementation (Falkowski et al. Additionally. scope should be established (Rosario. 1999). 2000). 1992). Project mission should be related to business needs and should be clearly stated (Roberts and Barrar. Delivering early measures of success is important (Wee. Sumner. First. Management of communication. 2000). activities and updates. An individual or group of people should be given responsibility to drive success in project management (Rosario. The team should be given compensation and incentives for successfully implementing the system on time and within the assigned budget (Wee. 1998). 2000. the team should be co-located together at an assigned location to facilitate working together (Wee. 2000).. Senior management must be committed with its own involvement and willingness to allocate valuable resources to the implementation effort (Holland et al. 1999). 1999). 1998). 2000). Any proposed changes should be evaluated against business benefits and. 1999). The team should be familiar with the business functions and products so they know what needs to be done to support major business processes (Rosario. A focus on results and constant tracking of schedules and budgets against targets are also important (Wee. comments.. particularly between the implementation partners. As far as possible. 2000). 1998). and amount of business process reengineering needed. Goals and benefits should be identified and tracked (Holland et al. scope expansion requests need to be assessed in terms of the additional time and cost of proposed changes (Sumner.. The critical paths of the project should be determined. 2000). Buckhout. risks and timeline is critical (Wee.. 1998). Top management needs to publicly and explicitly identify the project as a top priority (Wee. 2000). 1999). Someone should be placed in charge and the project leader should ``champion'' the project throughout the organization (Sumner. successive and contained deliverables are critical. 1999).. 1999. education and expectations are critical throughout the organization (Wee. 2000). The project must receive approval from top management (Bingi. Employees should be told in advance the scope. 2000). 1992).. Incentives and risk-sharing agreements will aid in working together to achieve a similar goal (Wee. Additionally. objectives. Rapid. Business plan and vision Additionally. Sumner (1999) states that a . managers should mediate between parties (Roberts and Barrar. 1999). implemented at a later phase (Sumner. 1999). 2000).
1999. as far as possible (Sumner. Organizations should have a strong corporate identity that is open to change. taking into account the most important requirements of the implementation. 2000). patience. There should be a plan for migrating and cleaning up data (Rosario. and money and time should be spent on various forms of education and training (Roberts and Barrar. a large amount of reengineering should take place iteratively to take advantage of improvements from the new system. 1999). Employees need training to understand how the system will change business processes. It is inevitable that business processes are molded to fit the new system (Bingi et al. 2000). monitoring and evaluation come into play at the shakedown phase. and concerns must be addressed through regular communication. 1992). Transformational leadership is critical to success as well. companies may integrate other specialized software products with the ERP suite. An emphasis on quality. 1992). testing and troubleshooting is essential. reskilling and professional development of the IT workforce is critical. which include people. A culture with shared values and common aims is conducive to success. 2000). 2000).g. Broad reengineering should begin before choosing a system. users should be involved in design and implementation of business processes and the ERP system. Interfaces for commercial software applications or legacy systems may need to be developed in-house if they are not available in the market (Bingi et al. 2000). Software should not be modified. This prevents reconfiguration at every stage of implementation (Wee. Business and IT systems involving existing business processes. help desk. 2000).. According to Roberts and Barrar (1992). perseverance. organization structure. 2000)... a stable and successful business setting is essential. There should be extra training and on-site support for staff as well as managers during implementation. beginning in the project phase. architecture and tools are critical. Troubleshooting errors is critical (Holland et al. Vigorous and sophisticated software testing eases implementation (Rosario. Roberts and Barrar also argue that success in other business areas is necessary for successful MRPII implementations. Organizations should be willing to change the business to fit the software with minimal customization (Holland et al. Roberts and Barrar. Management should also have a strong commitment to use the system for achieving business aims (Roberts and Barrar... 2000). In choosing the package. The leader must continually strive to resolve conflicts and manage resistance. The overall ERP architecture should be established before deployment. There is a choice to be made on the level of functionality and approach to link the system to legacy systems. 1999. online user manual) is also critical to meet users' needs after installation (Wee. Proper tools and techniques and skill to use those tools will aid in ERP success (Rosario. Modifications should be avoided to reduce errors and to take advantage of newer versions and releases (Rosario.. Process modeling tools help aid customizing business processes without changing software code (Holland et al. User training should be emphasized. Monitoring and evaluation of performance Finally. 1992). 1999). vendor support and the number of previous implementers should be taken into account (Roberts and Barrar. culture. 2000). 1992). leveraging corporate culture and identifying job aids for different users (Rosario. 2000). Change management program and culture Change management is important. Project . The organization implementing ERP should work well with vendors and consultants to resolve software problems. 1999). working with change agents. It determines the IT and organizational change required for success (Holland et al. 1992). 1999). Sumner. In addition.. 1998). Quality of business process review and redesign is important (Rosario. In conjunction with configuration. Requirements definition can be created and system requirements definition can be documented. Business process reengineering (BPR) and minimum customization Another important factor that begins at the project phase is BPR and minimum customization. A support organization (e. Two criteria may be used (Roberts and Barrar.business leader should be in charge so there is a business perspective. As part of the change management efforts. to best meet business needs. Education should be a priority from the beginning of the project. with heavy investment in training and reskilling of developers in software design and methodology (Sumner.. a strong computing ability. testing and troubleshooting Software development. problem solving and firefighting capabilities are important (Rosario. Scheer and Habermann (2000) indicate that modeling methods. Software development. 1999. and a strong willingness to accept new technology would aid in implementation efforts. Enterprise wide culture and structure change should be managed (Falkowski et al. and information technology affect success. 1999). Users must be trained. Achievements should be measured against project goals. Milestones and targets are important to keep track of progress. and formal education and training should be provided to help them do so (Bingi et al.. Quick response. 1999). Training. The progress of the project should be monitored actively through set milestones and targets. starting at the project phase and continuing throughout the entire life cycle. 1999). organization and culture change (Rosario. 1999). 1999). 2000). Holland et al.. Then when the system is in use reengineering should be carried out with new ideas (Wee. Aligning the business process to the software implementation is critical (Holland et al. Appropriate business and legacy systems Appropriate business and legacy systems are important in the initial chartering phase of the project.
breakthrough reductions in working capital. b) estimates that 96. not as expenditure (Rao. retail and telecommunications sectors. It has been concluded from Table I that a lack of change management. It further illustrates the number of citations for each critical failure factor. b) states that the tangible beneﬁts that accrue due to ERP include: reduction of lead time by 60. Hallikainen et al. Hence.. Shehab Business Process Management Journal Vol. 4. Themistocleus et al. increase of inventory turns to over 30 per cent. 1998. 17 per cent apply to a lack of change management. Acomplex system decreases usefulness. faster transaction processing. time-consuming and expensive project for a company (Shehab et al. b). cycle time cut to 80 per cent and work in progress reduced to 70 per cent.4 per cent of ERP implementations fail. Roy and E. organisations have struggled to implement ERP effectively. despite all of the beneﬁts it offers. One of the most important aspects of modern ERP systems lies in the integration that would be implicit in the design of the software and allows a considerable amount of integration between different elements of the business (Rao.4 Challenges in enterprise resource planning implementation: state-ofthe-art A. (2001) outline some of the beneﬁts of ERP: solutions to the problems of legacy systems. Hence. and implementing a system can be a difﬁcult. Holland et al. Lack of top management support constitutes 10 per cent of the failures cited. And limited training constitutes 8 per cent of the critical failure factors. 4. 2008). 2004). Momoh. .. This is the most popular citation. Critical failure factors The ERP industry has not been performing as originally expected (Tarn et al. alliances and customers as an integrated whole (Muscatello et al. 1999). 2000). Other potential beneﬁts include: abundant information about customer wants and needs. Out of all the failure factors. Consequently. poor understanding of business implications and requirements and poor DQ have received the most attention from researchers. increased global competitiveness. performance should be tied to compensation (Falkowski et al. whereas Themistocleus and Irani (2001) reports that 70 per cent of ERP implementations do not achieve their estimated beneﬁts. There are 52 citations in total. increased business.. Reda.. excessive customisation. b). better customer satisfaction and the ability to view and manage the extended enterprise of suppliers.1-4. insurance. Monitoring and feedback include the exchange of information between the project team members and analysis of user feedback (Holland et al. supply chain information and customer information (Davenport.7. These reports should be produced based on established metrics. companies have ended up exceeding their planned implementation budgets. poor understanding of business implications and requirements and poor DQ. ﬁnancial management and customer service. It must include effective measurable project goals that meet business needs and are reasonable. 2006. costs and quality. From a business standpoint. 2000a. but because there is inadequate understanding of the way that an ERP solution should be implemented. Jacob and Wagner.1108/1463715101106 5919 In the last decade. each make up 13 per cent of the failure factors. 1999). 4. 2000a. Many companies began installing ERP systems in order to eliminate patchwork of their legacy systems and improve the interactions and communications with their customers and suppliers (Kogetsidis et al. The challenges illustrated in this table apply mostly to large organisations. they have recently been introduced to the ﬁnance. They should be looked upon as an asset. aimed at best industry and management practices for providing the right product at the right place. reduced development risk. Mabert et al. 2005).1 Excessive customisation ERP systems are complex.. 2008). Then operational criteria should be used to measure against the production system. ERP software is the backbone of many big enterprises in the world today (Alshawi et al. 2000. human resource information. An indication of the size of the enterprise to which each failure factor applies. 1999). R. 2004. Excessive customisation. 2010 pp. Rao (2000a. dilemma of internal integration. education... the number of organizations going in for ERP systems is growing rapidly (Rao. web-based interfaces and more effective communication (Kogetsidis et al. Hence. b). ERP systems have become one of today’s largest IT investments (Chung and Snyder. improvement of operational performance. There should be an early proof of success to manage skepticism (Rosario. 2003). b). and business efﬁciency. in the last decade. 1998). Hidden costs and misalignment of IT with the business each make up 6 per cent of the discussed challenges. Ehie and Madsen. These commercial packages promise the seamless integration of all the information ﬂowing through a company – ﬁnancial and accounting information. Rao (2000a. 16 No. This is not because ERP solutions are poorly designed. 2008). Management needs information on the effect of ERP on business performance. Hallikainen et al. there has been a lot of clamour over enterprise resource planning (ERP). which also makes users reluctant to work (Chung et al. ERP implementations are notorious for taking a longer time and costing more money than is projected (Davenport. To this effect. is also provided. the beneﬁts that a properly selected and implemented ERP system can offer an organization include time and cost reduction in business processes. management based criteria should be used to measure against completion dates. Enterprise systems appear to be a dream come true (Davenport. 2000a. 1998.. Additionally. 2000). 1998). Reports or processes for assessing data need to be designed. 2002). 2000a. Reporting should be emphasized with custom report development. 1998. 99 per cent on-time shipments... Table I is an illustration of the research conducted on each critical failure factor discussed in Sections 4. report generator use and user training in reporting applications (Sumner.. 1999. dilemma of internal integration.. at least cost (Rao. at the right time.. a large number of companies have cancelled their projects completely. ERP is a software solution integrating the various functional spheres in an organisation – a link through the entire supply chain. 2009). Additionally. 537-565 Emerald Group Publishing Limited 1463-7154 DOI 10. Figure 3 shows the percentage of each failure factor in relation to all the critical factors. and time to implement.
data standardisation. Koh et al. End-to-end process design enables the strengthening of process integration. which may in turn. Laukkanen et al. These are the areas of integration that are most commonly discussed in ERP research. Furthermore. McAdam and Galloway. Youngberg et al. is known as scope creep and this may lead to a lot of customisation. Owing to the fact that ERP modules have been deﬁned based on best practice business processes. internal integration can pose problems. The target is to do the implementation within six months (Arindam and Bhattacharya. the key choice in ERP implementation is to ﬁnd an optimal strategy to balance between customisation of the ERP system versus changing the organisational procedure within the company.. Koh et al.Wheatley (2000) estimates that the average ERP implementation takes 23 months. 2004. Additionally. During this long implementation period. adoption of the underlying business model. 1998. risks and changes involved. Kogetsidis et al. They conducted surveys on 44 organisations of various sizes in order to investigate the relationship of enterprise size to the objectives and constraints of ERP adoption. This challenge will in turn. software and user speciﬁcation change and the technicians who are implementing the package must constantly adapt and make adjustments in order to accommodate these changes (Mendel. 2009). However. (2006) have not discussed the impact of customization on module integration. which has complex management implications. However. 2003). 2000). The concept and importance of ERP internal (or module) integration is sparsely discussed. Aloini et al. the greater the modules selected. and module integration on one another. Ash and Burn (2003) in a global study of ERP implementation. Chung and Snyder 2000). enterprise systemsimpose their ownlogic on a company’s strategy. has led organisations like FoxMayer drugs. (2009) reveal that for businesses. (2006) advise that the strength of ERP systems lies in integrating modules by coupling them. which is expensive and costs heavily in maintenance. 1999). 2005. they discuss ERP Integration in the Literature Review section of their article. Themistocleus and Irani (2001) emphasizes that the non-ﬂexible nature of ERP solutions forces organisations to ﬁt the package and abandon their way of doing business. Although. but also. to bankruptcy (Davenport. found that an added complexity is the integration of ERP environments with non-ERP environments. packaged software is incompatible with the organisation’s needs and business processes. Ehie and Madsen. (2007) caution that the number of implementation modules increases project complexity. It is essential to educate practitioners on the impact of intra-enterprise integration with other functions. Shehab et al. it is imperative that implementing organization’s business processes are correctly mapped to the ERP processes. lead to project failure. Ndede-Amadi (2004) argues that one key to a successful process redesign effort in an ERP implementation is to examine end-to-end processes. Bytheir very ownnature. the close coupling of modules means less responsiveness to the local requirements in particular functional areas. but this strength can be considered its weakness. However. Verma (2007) suggests that completing any additional work which is out of scope.2 Dilemma of internal integration ERP implementations are challenging due to cross-module integration. or restructuring of the organisation’s business processes to ﬁt the software (Aloini et al. 4. care must be taken particularly when modifying the system. to years for ﬁrms attempting to make major modiﬁcations. Muscatello et al. when distorted. Aloini et al. it can impede the internal integration of ERP modules (Themistocleus and Irani. Davenport (1998) and Sumner (1999) also stress that organisations face numerous problems when customising ERP packages. the greater the integration beneﬁts.. Chung and Snyder (2000) estimate that ERP adoption times typically take from a few months for ﬁrms accepting all default settings. (2007) emphasise that often. Helo (2008) argues that from a technical point of view. (2004). as customising the software will avoid the BPR that might result in best practices. Elbertsen et al. their focus is on intra-enterprise integration with other functions and inter-enterprise integration in a supply chain. 2005).. personalisation and adaptation of tools may cause trouble. Implementing these processes incorrectly may lead to very poor integration between the modules in the system. affect the daily operations of the business. it would be useful if practitioners understood the kinds of operational challenges that they may be faced with should their system lack proper module integration. (2008) advise that an implementation approach issue that must be considered is the level of customisation that will be applied on an ERP solution. The consequence is either software modiﬁcation. Aloini et al. 2001. 1998). Some implementations have even exceeded three years. (2006). which are vital to the success of a company. Laukkanen et al. Furthermore. . This problemaffects companies and in some cases. In the case study conducted by Koh et al. (2006) understudied the ERP adoption in six Greek manufacturing companies. particularly if the system is heavily customised. organisation and culture (Davenport. as if a company alters an ERP package. 1999. Shehab et al.. (2007) caution that ERP system implementations may last several years in large companies. It is more beneﬁcial to ﬁt business processes to the ERP package rather than try to customise the package (Sumner. Davenport (1998) discusses the fact that ERP solutions are modular and in light of integration. (2007) stress that if not adequately planned. the greater the costs. to highlight the fact that ERP solutions constitute cross-module integration. which are coherently linked to each other. the ever-expanding amount of information that has to be managed leads to an increase in system integration and complexity. and explored the effects of uncertainty on the performance of these systems and the methods used to cope with uncertainty. (2007) also discuss these types of integration in their paper. compressed implementation schedule and the involvement of a large number of stakeholders (Soh et al. 2007).
they observed that a lack of change management was one of the major causes of implementation failures. not commit the right resources to the project (Kogetsidis et al. even though some of the causes of ERP failures lie with technical challenges.4.and medium-sized companies.. where the CSFs of their SAP implementation were examined. (2006) illustrates this fact amongst other premises by conducting a case study on six manufacturing organisations of all sizes. Aloini et al. such as erroneous data input. these are not the main reason enterprise systems fail. According to Davenport (1998). do not know how to use it and maintain it continually. 2004. (2007) advise that to underestimate the effort involved in change management may result in project failure. when the system is up and running. UK. Worley et al. The critical challenge in ERP implementation has been to ﬁrst identify the gaps between the ERP generic functionality and the speciﬁc organisational requirements (Soh et al. eliminated. Hestresses that the biggest challenges are business problems in the sense that companies fail to reconcile the technological imperatives of the enterprise systemwith the business needs of the enterprise. 2000).. Factors relating to top management support. it also requires to deﬁne how the information system and the actor will be mutually adapted to the other. Langenwalter (2000) stipulates that many companies that attempt to implement ERP solutions run into difﬁculty because the organisation is not ready for integration and the various departments within it have their own agendas and objectives that conﬂict with each other. 2002). Worley et al. Kamhawi. but also with reference to his knowledge and competencies. Thus. known as GUDV NI. assignment of best people to implementation teams. 2005). In this context. conﬂict arising due to the differing needs of stakeholders must be addressed as and when it arises.000 employees across Ireland.. particularly for small. Excel sheets) in order to mitigate the supposed deﬁciencies of the ERP system (Worley et al. therefore. who. task. avoidance and mitigation of risks. Kogetsidis et al. Consequently. resistance to change is reduced and in some cases.3 Poor understanding of ERP business implications and requirements A number of companies that implement ERP do not realise the full beneﬁts that the solution offers because most organisations are not organised in the correct fashion to achieve the beneﬁts (Yusuf et al. it is essential to manage successful ERP implementations as a programof wide-ranging organisational change initiatives rather than as a software installation effort (Yusuf et al. They implemented SAP. 2004). as all the relevant areas are addressed as part of the implementation. not only at the level of the position of a person within the company. They report that human factors constituted a major problem. and strong involvement of people from the ﬁeld are important in reducing the resistance to changes involved in ERP implementation (Cissna. Thus. Although an extensive training and education is considered as a CSF by most authors. Their ﬁndings highlighted the fact that many employees were not trained to use the systems and many were unfamiliar with computers. There are several common problems associated with ERP implementation (Al-Mashari. 2008). Two change management failings that became apparent early on and were rectiﬁed during the ERP project were the lack of communication with the employees. (2005) arrived at this inference through a university case study. partial use of the system or the introduction of local information systems (e. increasing costs of training services offered by the vendors. This approach involves intertwining technology. Among these is the resistance to change. Another problem is related to unplanned cost associated with new requirements emerging after the freezing stage. 2000). Implementation requires extensive employee training (Arindam and Bhattacharya. One of the biggest sins in the implementation of an ERP system is not to understand the true signiﬁcance of what you have taken on and. The essence of the case study was to illustrate how ERP is optimised by adapting business processes to human actors by explicitly . 2005). 2003. 1998).. Additionally. and cultural readiness for an ERP implementation must be carefully planned (McAdam and Galloway. Peoplesoft was implemented at the university. 2009). if a company rushes to install an enterprise system without ﬁrst understanding the business implications.. Europe and the USA. Koh et al. and an apparent failure to recognise the impact and complexity that such a change project would have on the entire business (McAdam and Galloway. Hence. 2005). Consequently. organisational resistance to change is identiﬁed as a CSF (Hong and Kim. 2005). rather than in a summative manner. a number of issues arose. the dream of integration can quickly turn into a nightmare (Davenport. The congruence between ERP systems and organisational culture is the prerequisite to successful ERP implementation (Hong and Kim. Ehie and Madsen. 2002. 2008). A third problem is poor training of end-users. Moreover. (2005) state that the appropriation of the system postimplementation does not only depend on training. 4. (2008) reached this conclusion by conducting a case study on a large Cypriot retail company. is multinational and employs 10. The essence of the case study was to explore the organizational issues involved in implementing an ERP solution as the main approach to change management. an unsatisfactory operation of the system may cause irreversible drifts like demotivation. employee resistance to integration of the ERP system into the business process and the need to hire information technology personnel. structure and culture. Markus and Tanis. the implementation process is transparent and enables the easy identiﬁcation. The manufacturing company. people. poor use of the systems.4 Lack of change management In a case study on a large manufacturing organisation carried out by McAdam and Galloway (2005).g. 1998).
delays in the systemby one department have a direct impact on the operations of the others. (2004) argue that systemimplementation is a challenging management issue and is no less important than system research and development. delivery system and performance criteria. A case study was conducted by Ho et al. which are viewed as prohibitive core changes to the ERP packages (Soh et al. it is often a dynamic process of mutual adaptation between IT and the surrounding environment. Poor quality information can have signiﬁcant social and business impacts (Strong et al. Ho et al. resolving these misﬁts is cumbersome. the role. This framework addresses critical issues according to the dimension into which they fall.5 Poor data quality The integrity of the data used to operate and make decisions about a business affects the relative efﬁciency of operations and quality of decisions made.. technology. maintain data availability all the time. They adopt the Leonard-Barton model as a research framework. Tsamantanis and Kojetsidis (2006) conducted a case study on two medium sized manufacturing companies in Greece in order to examine how both companies introduced ERP in their effort to increase competitive advantage and market share. the business should be able to operate continuously. 2009). They concluded from their ﬁndings that in order to function properly. since ERP integrates different functions of the company and uses data fromseveral departments.1997). ERP implementation is seldom a simple matter of realising a plan. A successful implementation will beneﬁt from the application of all three dimensions.6 Misalignment of IT with the business Ho et al. 2009). Hongjiang et al. system establishment. process adaptation. external partner support and internal staff involvement. As regards the delivery system. (2004) to examine three dimensions of alignment between organisation and ERP systems. it is important to understand the underlying factors that inﬂuence DQ and the underlying problems with old systems need to be investigated. misalignment can occur which can be rectiﬁed through technological measures. instead. 2002). where they applied the framework.. protecting data integrity is a challenging task (Vosburg and Kumar. Information research has demonstrated that inaccurate and incomplete data may severely affect the competitive success of an organisation (Hongjiang et al. competence and knowledge of human resources. To be truly competitive in today’s information era. (2002) conducted a case study in two large Australian organisations in both the transport and mining industries.. Alshawi et al. the issue for performance criteria is performance evaluation. since this requires changing the structure and relationship of the table objects. (2004) advise that during implementation.. project management. and based on the results of their case study surveys. an ERP system has increased demand for information input. and evaluation and integration for legacy system. 2005). organisational measures or a combination of both. Additionally. To this effect. Given the slim possibility of achieving a perfect match between technology and organisation. the whole system becomes suspect. all three dimensions inﬂuence each other. Poor DQ at the operational level increases operational cost because time and other resources are spent detecting and correcting errors (Park and Kusiak. The technology dimension issues are. 4. employee education and training. its issues are: role of the MIS department in organisation. which they developed for the understanding of DQ issues in implementing ERP. adequacy for speciﬁcation. by employing a technology adaptation perspective and case research methodology. They advise that in order to ensure DQ in implementing ERP. 2000). Finally. (2004) argue that data accuracy is an issue in the sense that if the data that goes into a system is not accurate or immediately accessible. They further emphasise that owing to the rapidly changing business environment. . Data misﬁts arise from incompatibilities between organizational requirements and ERP package in terms of data format. and be agile in accessing available data (Bajgoric and Moon. 2001). and not a single one.taking into account. 4.Hongjianget al. they develop an adaptation framework for ERP implementations as shown in Figure 4. (2002) discuss DQ problems. harmonious implementation. One of the issues in information management is getting the right information to the right person at the right time and in a usable form (Youngberg et al. user’s maturity for the application of new technology. There are three dimensions in this framework.
integration and implementation are often overlooked. Potential beneﬁts include drastic declines in inventory.M. top management support. the cost of data conversion is hidden – companies often do not recognise the cost associated with transferring data from the old system to the new package. M. L.4. Soh et al. when successfully implemented. which can be used. 10 No. business process management and development. Asia and South America is not widespread. (2003. to manage and integrate all the business functions within an organisation. along with the ability to view and manage 5 Enterprise resource planning An integrative review E. Sharp. The following types of common hidden cost may increase implementation cost dramatically (Slater. Consequently. the role of the project champion and appropriate business and IT legacy systems. ERP packages touch many aspects of a company’s internal and external operations.co m/1463-7154. change management. sales and . abundant information about customer wants and needs. This may lead to faster ﬂow of information in the logistics chain.5 million (Wheatley. The share of ERP systems in certain geographical markets such as the former Eastern Bloc.emeraldinsight. (2002) argue that cost is a critical part of an ERP implementation for both large and small businesses alike. etc. supply-chain. Supramaniam and T. To support these results. and a cost often overlooked is the notion that the project will end on a certain date. 4. Spedding www. and therefore. Shehab. 2000b). Huang et al. An ERP systemhas an average total cost of ownership of $15 million but rewards the business with an average negative net present value of $1. 2000). breakthrough reductions in working capital. These issues cannot be resolved solely with technical solutions.W.. effective communication. These sets usually include a set of mature business applications and tools for ﬁnancial and cost accounting.A. many ERP customers will require these Web-based ERP systems. The ERP vendors are transitioning to Web-based applications.htm Business Process Management Journal Vol. The emergence of e-commerce will also increase the demand for Web-based ERP systems. included in this cost is the need to modify the data to ﬁt into the new system and the need to hire professionals can send this type of cost higher certain date. plan and vision. successful deployment and use of ERP systems are critical to organizational performance and survival (Markus et al. monitoring and review. maintenancerepair-and-overhaul. 2001): The ERP vendors are continuously expanding the capabilities of their packages by adding functionality for new business functions such as sales force automation.. 1998. high-consulting cost becomes inevitable as a consequence of many companies not budgeting consulting fees properly.7 Hidden costs in ERP implementations Yusuf et al. The results of their study indicate that the complex organisational change issues must be comprehensively addressed. Tarn et al. 4. project management. 2004 Enterprise resource planning (ERP) system is a business management system that comprises integrated sets of comprehensive software.2000): training is the most underrated hidden cost – the cost to train an entire staff on a new system is enormous and often taken for granted. software development and testing. 2004) suggest that in addition to developing the technical aspects of ERP.8 Organisational. There are several reasons why a continued growth of ERP projects is to be expected (Stensrud. They further emphasise that companies that install ERP solutions may underestimate cost that is hidden. data warehousing. management and technical challenges McAdam and Galloway (2005) report that key organisational issues were teamwork. order management. (2004) report that an ERP system has problems of uncertainty in acquisition and hidden costs in implementation. more effort is required in understanding the more complex organisational issues involved.
the ERP adoption time. construction. The observed misﬁts were clustered into three broad categories: data. For instance. Huge storage needs. The different types of ERP system misﬁts (the gaps between the functionality offered by the package and that required by the adopting organisation). an ERP system can be used as a tool to help improve the performanclevel of a supply chain network by helping to reduce cycle times (Gardiner et al. Among the most important attributes of ERP (Nah et al. Soh et al... insurance.pp. not all of them are necessarily best in class applications for a speciﬁc ﬁrm. hotel chains. based on Asian organisations. 359-386 Emerald Group Publishing Limited 1463-7154 DOI 10. Thus. However.1108/1463715041054 8056 distribution. process and output. costly and difﬁcult and that they require large investment in capital and staff and management time (Adam and O’doherty. It costs tens of millions of dollars for a medium sized company and $300-500 million for large international corporations (Mabert et al. materials management. customisation problems did not allow companies to make serious changes on the ERP package. PeopleSoft. Although most ERP systems have business practice processes in their repository. Baan. 2000). as well as to examine new approaches to application integration (AI). The various shortcomings of the ERP systems such as functionality and technicality are shown in Figure 3. Along with obvious costs of an ERP implementation.. 2001). 2002). Implementation of an ERP project is painful. Yen et al. Output misﬁts arise from incompatibilities between organizational requirements and the ERP package in terms of the presentation format and the information content of the output. typically. Thespackages have the ability to facilitate the ﬂow of information between all supply chain processes (internal and external) in an organisation (AlMashari and Zairi. some retailers were reported to face difﬁculties. Additionally.1 Drawbacks of the ERP systems Although ERP systems have certain advantages such as low operating cost and improving customer service. 2000). However. 2001). Indicative of the problems. have been presented by Soh et al. takes from a few months for ﬁrms accepting all default settings. Recently. time-consuming and expensive project for a company. They claimed that ERP systems ampliﬁed the need for integration. 2000). 2000a). or the relationships among entities as represented in the underlying data model. 2000). there is no guarantee of the outcome (Mabert et al. to years for ﬁrms needing to make major modiﬁcations. and integrate both applications and ERP system into the ﬁrm’s IT backbone. Chen. Hence. supply chain. ERP systems are complex. 2001. there are also some possible hidden costs that may include losing some very intelligent employees after the initial implementation is done. when the business condition has been changed. organisations face many problems when customizing ERP packages. . production planning and computer integrated manufacturing. In the manufacturing sector. in line with a traditional software application perspective. a multi-agent system for adaptive inventory control in an ERP system maintenance has been proposed by Kwon and Lee (2001). ERP systems have been expanded beyond manufacturing and introduced to the ﬁnance. it has traditionally been applied in capital-intensive industries such amanufacturing. Because ERP has made it easy to integrate other competing best in class applications. The results of the research conﬁrm AI as a new means of system integration that adds value by placing business logic in the applications network. 2000). 2001. continual implementation and training.. enable implementation of all variations of best business practices with a view towards enhancing productivity. Data misﬁts arise from incompatibilities between organizational requirements and the ERP package in terms of data format.. and implementing one can be a difﬁcult. 2001). retail and telecommunications sectors. ERP implementation has reduced inventories anywhere from 15 to 35 per cent (Gupta. health care. and customisation is costly and time-consuming.. share common data and practices across the entire enterprise in order to reduce errors. the extended enterprise of suppliers. thus creating a more dynamic information system infrastructure. the scale of business process re-engineering (BPR) and customisation tasks involved in the software implementation process are the major reasons for ERP dissatisfaction. when they implement ERP applications that were developed with manufacturers in mind (Chung and Snyder. education. However. alliances and customers as an integrated whole (Chen. One of the aims of implementing ERP systems is to uphold the highest quality standards of the business process. Furthermore. and customer information (Boykin. the privacy concern within an ERP system and lack of trained people may affect ERP’s efﬁciency. Themistocleous et al. 4. even with signiﬁcant investments in time and money. networking requirements and training overheads are frequently mentioned ERP problems. aerospace and defence. Moreover. This means that ERP projects are large.. and produce and access information in a real-time environment to facilitate rapid and better decisions and cost reductions. they have some disadvantages due to the tight integration of application modules and data. Yen et al. (2000). human resource. Some of these shortcomings have been discussed by O’Connor and Dodd (2000). analyse and present the problems of ERP systems. (2002) identiﬁed the following disadvantages of ERP: its high cost prevents small businesses from setting up an ERP system. Functional misﬁts arise from incompatibilities between organizational requirements and ERP packages in terms of the processing procedures required. most ﬁrms either face the high cost of modifying the ERP modules to meet their requirements or simply do not install the applications. the system may not guarantee that the process embedded in ERP is still best. as well as SAP calculate that customers spend between three and seven times more money on ERP implementation and associated services compared to the purchase of the software license (Scheer and Habermann. Their ﬁndings suggest that the “misﬁt” issue may be worse in Asia because the business models underlying most ERP packages reﬂect European or US industry practices. The ﬁrm still needs to select those applications available from software vendors for its speciﬁc requirements. 2001. waiting for return on investment (ROI) and post-ERP depression (Coffey et al. for example. AI securely incorporates functionality from disparate applications and leads to the development of new strategic business solutions for enterprises. (2001) proposed a model to identify. as existing systems have to be incorporated with ERP applications. 2002). 2000) are its abilities to: automate and integrate business processes across organizational functions and locations.
today Web-based technologies and community networks are changing the basis of competition. Furthermore. counteract the standardisation and system integrity that was originally required. such as activity-based costing (ABC). the development of security issues needs to be addressed. 1998. for example. Also. Since most ERP vendors are moving towards Internet Web-based applications to fulﬁl the e-commerce era. they lack the capabilities of the advanced techniques for dealing with uncertainties such as fuzzy logic. Each technique has drawbacks as discussed in Section 6. and Karl Wills Independent IT Consultant. Appleton. and offer a constant state-of-the-art IT capability through upgrades (Price Waterhouse. these packages are implemented on client/server architectures that are more ﬂexible and scalable than mainframe systems. From this point of view. including implementation. Currently. While these benefits are debatable. Conclusion and implications for future research ERP systems are sets of integrated applications that can provide a total solution to an organisation’s information system needs by addressing a large proportion of business functions including ﬁnancial. organisations may be left waiting for the next upgrade from their ERP software vendor when they require further functionality. While in the past many SMEs were acting on local markets. UK . The new implementation model should take the SMEs into consideration. by modifying source code. this recreates the legacy problems and disregards the advantages of a standard package-based IT strategy. Furthermore. supply chain and customer information. can increase development speed. Single vendor-based enterprise resource planning (ERP) systems dominate the IT landscape but have proved problematic for some organisations. Recently. a comprehensive review of the recent research work in ERP systems has been presented. Further research is necessary to develop a new technique for adopting the ERP system to overcome the shortcomings of the current approaches. PeopleSoft is linked with a good human resources module and Oracle with ﬁnancials. current ERP systems are still expensive. it has been observed that from the year 2000 till date an increasing number of papers about ERP packages has been published. mass customisation. Although in recent years most ERP system suppliers have increased their focus on SMEs. and offers potential directions for the development of the ERP systems. In contrast. UK Christopher P. BoB and the emergent strategy of different applications and platforms being used throughout an organisation are different. organizational learning. increase staff requirement during and after implementation. Many papers have been written on this topic. 1997). Holland Manchester Business School. the emergent strategy is often technically and 6 ERP and best of breed: a comparative analysis Ben Light Information Systems Institute. it is crucial that SMEs continuously improve their competitiveness to assert themselves in the market. reduce capability to take upgrades. organisations implement an ERP system but change the implicit business model. University of Salford. state-of-the-art techniques such as neural networks and genetic algorithm should also implement in the existing ERP systems. radically changing standard software will: increase development time. Therefore. there are two approaches for the implementation of ERP systems namely moulding the business process to match the ERP software or vice versa. The Business Process Management Journal.IT and business managers also argue that ERP suites tend only to have one best in class application. SMEs are the backbone of the economy. UK. Further research effort is required to incorporate these new techniques in ERP systems. reduce development staff requirement. human resources. Hampton. In most countries. have been suggested by Al-Mashari (2003) and Gupta (2000). Most ERP systems still lack the more advanced product costing techniques.e. ERP software still requires many resources and efforts to integrate all of the major business functions in the initiating ﬁrm. near ERP capabilities built into a product and sold at an affordable price.1. In addition. Future trends in ERP. SMEs are moving towards ERP packages. Research effort is required to provide an ERP system that has the ﬂexible assurance capabilities to evolve with the dynamic changes of a company. however. the aim is for enterprise integration and a process orientation. A customer relation management (CRM) module should be included in the ERP packages. 1999a. BoB is a stated strategy. Standard packages. For instance. 1996). We hope that this paper reinforces the ongoing research. competitive advantage and organizational structure. they cannot afford them. Salford. infrastructure. As the ﬁnancial resources of SMEs are clearly limited. provides a broad view of the current status in ERP systems research. ERP systems are generally implemented to overcome the maintenance difficulties associated with custom developments as they offer a clean slate through a common data set and suite of integrated applications (Holland and Light. If. Manchester. life-cycle costing and target costing. There is a need to provide micro ERPs. They support a process-oriented view of the business as well as business processes standardised across the enterprise. In this paper. accounting. More and more SMEs are now exposed to the forces of global competition. including developments such as Web-based procurement applications and outsourcing of ERP applications. Davenport. Journal of Information Technology and the Communications of the ACM were the journals where majority of the papers on this subject were published. i. Some of the topics will be on the impact of ERP on organizational alignment.
2001). 2001). team leaders. 7 ERP implementation factors A comparison of managerial and end-user perspectives Kwasi AmoakoGyampah Business Process Management Journal Vol. These interests and power can be used to inﬂuence the . Why perceptions might differ Differences have been known to exist in the perceptions and attitudes of different organizational members toward innovations and innovation related activities. BoB approaches have the potential to require higher degrees of maintenance due to the complex connections made between different components. and connections between components. scope and BPR requirement. An ERP system is a software system that aims to provide an integrated application environment with a fast and seamless access to single uniformed information throughout the entire organization (Al-Mashiri. human resources. The stakeholders might have their own interests and wield different amounts of power. we wish to understand if differences exist between end-users and management level employees on why the ERP system was being implemented and the technology’s beneﬁts. However. trainers. of single vendor ERP systems is largely outsourced to the vendor. whereas BoB offers the chance for organisations to recognize existing ways of work and make trade offs with stakeholders. required levels of business process alignment and maintenance. consultants and vendors. These include top management. and to see if differences exist in other critical success factors for the implementation. Eastman. project managers. 7 No. ERP requires a clean slate approach. The differences between BoB and single vendor ERP approaches have been discussed and the issues organisations need to consider when deciding on a strategy have been shown to centre on the complexity of implementation. and Monsanto (Al-Mashari. Hoechst. Speciﬁcally. This is an important distinction as the BPR associated with BoB can facilitate implementation and the management of complexity. 10 No. 1989).Business Process Management Journal. Further research in this area is essential due to the criticality of enterprise systems to organisations and also the limitations of what can be presented here. 2004 pp. Both approaches are undoubtedly complex due to their scale. Vol. if differences exist on the extent of personal relevance of the ERP system. 216-224. Du Pont. differences on the perceptions on the effectiveness of the training that was provided. 2. whereas maintenance of components. The software has the ability to integrate data from several different core functions of an organization such as ﬁnance. Another important difference is that ERP systems do not offer the same levels of flexibility. Several stakeholders are involved during ERP implementation. and manufacturing. This paper highlights an alternative approach to enterprise IT infrastructure development. the IT function and competitive advantage are excellent starting points. with regard to human resource (HR) innovations. differences on the effectiveness of the communication mechanisms used. pp. it has been observed that hierarchical levels are better predictors of acceptance of HR innovations than other variables such as gender or marital status (Kossek. and potentially. leading to the reinforcement of functional silos. the trade off is likely to be concerned with the future maintenance requirements.. end-users. The implications of various strategies on systems development approaches. a product of the German software company SAP AG. # MCB University Press. BoB is based on the integration of standard software from a variety of vendors. logistics. 1463-7154 organisationally fragmented. the responsiveness associated with BoB. 3. 2001. is the most dominant of the ERP systems currently in the market and has been implemented by companies such as Dow Chemical. In fact. The speciﬁc ERP system studied is SAP R/3. 171-183 q Emerald Group Publishing Limited 1463-7154 DOI Single vendor ERP and BoB-based enterprise system strategies represent a range of implementation challenges. SAP R/3.
Managers design interventions. we consider the institution of training programs and communication mechanisms to facilitate understanding of the technology as part of managerial interventions. and usually the appropriateness of these interventions will most often be based on the perceptions of managers. 2000). Wee. might think that an appropriate means of communicating about the project will be the minutes of project team meetings that are disseminated to employees. A closer examination of the responses showed that the biggest differences in perceptions occurred with regard to whether the technology was world-class and whether the ERP system would facilitate better customer service. Holland and Light. and even the use of various communication mechanisms between managers. for every dollar spent on ERP software. user involvement and strong teams (Amoako-Gyampah. that it would enhance the ability of the company to handle new business opportunities. the argument for changing the technology. For example. Dong (2001) argues that lack of shared IT vision. and whether it would facilitate better customer service compared to the legacy system it was replacing. 6.. 1999. 7. training. In addition.. project communication (Nah et al. Thus. and the mediation efforts of consultants (Westrup and Knight. The argument for change measure can be thought of as representing the business justiﬁcation for the technology. employees not being part of project teams might consider minutes of team meetings as being inadequate and might desire more effective communication mechanisms. 2000). the perceived personal relevance of the technology. Table II indicates that the difference in perceptions between managers and end-users on the argument for changing the technology was highly signiﬁcant. 1999). 2001). 1997). 2001). can contribute to implementation difﬁculties. 1999. This is important considering the tremendous amount of money and other organizational resources that are spent on BPR and change management practices that are carried out as part of the ERP implementation effort. because they are part of project team leadership. 4. Argument for change We measured argument for changing the technology by asking questions on whether the respondents perceived the ERP technology as being world-class. top management support (Bingi et al. 1999. A comprehensive review of the literature on ERP implementation and other related issues can be found in Esteves and Pastor (2001). we identiﬁed seven variables as being of interest in our comparison of user-manager and end-user perspectives. 2. On the other hand. project communications. as well as the literature on technology acceptance. the roles of different stakeholders.1108/1463715041053 0244 outcomes of the implementation process (Markus and Keil. and shared beliefs about the beneﬁts of the technology. the perceived ease of use. We wish to extend the above argument by proposing that lack of a shared understanding on the project beneﬁts. They are: 1. Bingi et al. studies have shown that. For example. properly deﬁned roles for all employees including chief information ofﬁcers and functional managers (Willcocks and Stykes.10.. 3. training of employees (Aladwani. Among these are a strong business justiﬁcation for the project (Laughlin. 1999). managers. satisfaction with the technology. there is lack of congruence and this might contribute to implementation difﬁculties because implementation efforts might be directed inappropriately. For example. Study variables Several factors have been identiﬁed as being important to the successful implementation of ERP systems. Schaaf. 1994). and other employees. 5. critical success factors. on the other hand. if managers believe that training is the most important critical success factor while end-users believe that their level of involvement is more important. Thus. shared understanding between senior business ofﬁcers and senior IT ofﬁcers about an innovation and its contributions to organizational competitive advantage contribute to implementation difﬁculties (Dong. on the one hand. 2001. understanding the differences in perceptions (if any) will be important to designing appropriate interventions that might lead to effective ERP implementation. Based on the above. 3-10 dollars might be required for the training of users (Cooke and Peterson. allow various functional units in the organization to work better with each other. in order to understand the implementation process completely we need to understand how different stakeholders perceive the importance of different implementation success factors. 1999. For example. 1999. 2000). 2001. There was less disagreement on the ERP system’s ability to allow the company to handle new business opportunities and also the ability of . effective ERP implementation requires putting in place appropriate managerial interventions as part of the implementation. Sarker and Lee. Holland and Light. Dong. 2000).
They also felt that learning to use the system would be easy. the user-managers were more positive about the ERP system being personally relevant than the end-users. following implementation may help to alleviate the concerns of these users. timely. Personal relevance of technology Personal relevance dealt with perceptions on the extent to which employees felt the ERP system will be useful in their job. At the same time. User-managers. Replacing legacy systems means that people have to “relearn” new skills and their reluctance to do so might lead them to perceive the ERP system as being difﬁcult to use. Understanding the perceptions of ease of use is beneﬁcial because it is thought to lead to users’ perception of the usefulness of the technology and to the development of favorable attitudes that lead to eventual acceptance and usage of the technology (Davis et al.the technology to enable functional units to work closer together. can have simultaneous organization-wide implications. They are designed as integrated information systems that eliminate multiple sources of data. In fact. The biggest difference was with regard to productivity. compared to end-users. is the world-class nature of the technology that was selected. Because they have been using these systems for quite a while. The users of these legacy systems typically have vested interests. The differences between the two groups were highly signiﬁcant. What is less understood. This can be a source of anxiety for end-users and not recognizing these anxieties could lead to implementation problems. Ease of use Managers. compared to the end-users. It is understandable that the users will be concerned about their ability to do things quickly using the new system and hence assurances by senior level employees that productivity measures might not be focused on. This phenomenon is more likely to be observed among end-users than user-managers. about twice as many people expected to spend a greater portion of their time using the ERP system. The above reasons provide explanations for the differences in the perceptions between usermanagers and end-users and thus. every employee becomes a new employee”. and the extent to which the system will be responsive to their changing job demands. ERP systems are designed to provide “one common source” of data. the more familiar an individual is with the legacy system the less likely the person will perceive the ERP system as being easy to use. at least in the minds of the end-users. Comparatively. some learning is still expected to occur and thus assurances that they are not going to be held to the same productivity standards during this learning period will help alleviate concerns. Whereas usage of the legacy system was voluntary. in interviews with personnel as part of an exploratory study. by recognizing the differences and reasons. at least initially. perceived that the technology would be easy to use. Satisfaction with the technology Measures of user information satisfaction have been based on an information system’s ability to provide integrated. about 53 percent of the respondents expected to spend over 80 percent of their work time using the new system. A knowledge gap thus exists between usermanagers and end-users. The data integration means that an incorrect entry by. Again. Additionally.. increase their productivity on the job. managers can tailor intervention mechanisms to address those issues. 1989). ERP systems are transaction systems meant to provide companies with a seamless integration of data for organizations and it appears that this beneﬁt is likely to be understood by company employees regardless of their position within the organization. It could be possible that the users expect to spend more time on the system because they did not feel conﬁdent about the training received and thus. ERP systems are designed to replace legacy systems. eliminate multiple data entries and provide more accurate and timely data. valuable experience and know-how in those systems. more so than end-users. Thus. only 24 percent of the respondents were spending over 80 percent of their work time using the legacy system. usage of the ERP system is expected to be mandatory and this naturally raises concerns and anxieties for the users. a common comment was “with SAP. When users were asked how much time they expected to spend on the ERP system. and . The end-users were less certain about the ability of the system to increase their productivity on the job although they perceived it as being useful as a whole. say a customer service employee. Another factor that might be contributing to end-users’ concerns about the productivity levels is the expected mandatory usage of the ERP system. although users might have been trained on the system or its prototype. A possible explanation for this gap might be the allegiance that end-users have toward the legacy systems that ERP systems are meant to replace. We discuss concerns about training in greater detail later in this paper. mandatory usage might not account for all the increase in the amount of time users expected to spend on the system. expect to spend time ﬁguring out how to use the system to carry out their job functions. In other words. accurate. In other words. they are perhaps intimately familiar with the technology and it would take a great deal more convincing them that any replacement technology would necessarily be superior. felt more conﬁdent about their abilities to get the ERP system to do what they wanted.
Overall. behavior. The implementation of an ERP system requires a lot of process changes. both users and usermanagers did not think the training was adequate. Communication ERP systems are very expensive and. end-users were not as enthusiastic about the ERP system’s ability to provide accurate. Training users too early might lead to forgetfulness. performance and acceptance of the technology (Galletta et al. End-users . the biggest gap in perceptions was with regard to whether the ERP system would be better than the legacy system it was replacing.51 and 4. and the conﬁdence that the users got after going through the training program. In other words. the number of users that might need to be trained makes this extremely difﬁcult. Our results show that a perception about the frequency and effectiveness of the communication was one of the areas where large differences existed between the user-managers and end-users.reliable information and whether a new system is expected to be better than the one it is replacing. the decision to adopt these technologies is very likely to come from senior managers. the ability to inﬂuence behavior. What is important is how that justiﬁcation is translated to lower level employees so that they feel motivated to go along with the implementation and not resist the changes that will occur. Also. Of the different items that were used to assess satisfaction with the system. Presenting the business justiﬁcation for the ERP system is usually not difﬁcult. it was statistically signiﬁcant. The completeness. might not be seeing the “forest from the trees” because they are more concerned about the system’s ability to facilitate their daily jobs rather than say the system’s ability to provide integrated data. Before user-managers can design an appropriate training program they need to understand how their perceptions about what is being proposed differ from the perceptions of endusers. End-users. expect the ERP system to be better than the legacy system. Thus. Thus. Some of the largest differences between end-users and user-managers were with regard to the length and detail of the training. reliable and timely information as the user-managers. communication is one of the key enablers for process change (Lewis and Seibold. all aimed at keeping various stakeholders informed about the project. managers have to become aware of these differences and take measures to address these differences so that favorable attitudes that lead to the acceptance of technology can be developed. it is expected that perceptions about the usefulness of the technology will also be dependent on the amount and perceived quality of communication that is provided. As indicated earlier. In fact.. respondents to the questionnaire were asked to state agreement or disagreement on the effectiveness of these communication mechanisms. timing. Finally. therefore. 1993).05 respectively for usermanagers and end-users. 1995). length and detail. There was less disagreement on the knowledge level or helpfulness of the trainers and the increase in their level of understanding after the training program. the training mechanisms. training represents a high component of the implementation budget. end-users felt less conﬁdent about their ability to use the system after going through the program than user-managers did. etc. Although the difference in perceptions might not be large practically (it was the smallest difference among all the other factors studied). vendors. training has been identiﬁed as one of the important critical success factors for ERP implementation success. senior management. the length and the detail of training that is provided as part of the implementation process. It is possible that user-managers. Training during technology implementation is important because of the potential of training to inﬂuence user attitudes. To begin with. 2000). on the other hand. 1998). if gaps exist in the perceptions of end-users and user-managers on the adequacy of the training. Since the outcome of this communication. Effective communication will lead to the development of trust and exchange of information needed for those process changes and ultimately the acceptance of the technology. there are several “unknowns” in an ERP implementation environment and improved communication can lead to more acceptance of these unknowns and the reduction of needless anxiety (Al-Mashiri and Zairi. is dependent on factors such as the frequency and accuracy of information. Under such a scenario they will have a better understanding of the technology and its capabilities and thus. Additionally. either because of their participation as project team members or because of their interactions with consultants. Readers may recall that the scales were such that higher scores represented less positive responses. As part of project communications the company instituted “roadshows” and demonstrations.. and also began the publication of a newsletter. At the same time it is important that both user-managers and end-users have a common understanding of the purpose of the training. hence the need for greater communication than perhaps occurs in other project environments. Training users for a longer period might be costprohibitive. and even who to train is an ongoing concern for companies implementing an ERP system (Slater. as evidenced by the relatively high average scores of 3. Training Respondents trained on the system or its prototype were asked to assess their perception of the training program. are likely to have had more exposure to the technology than end-users. Other implementation activities might hinder an organization’s ability to wait till just before implementation to train users. Once managers make that decision they have to use communication to explain and justify their actions.
the organization-wide beneﬁts it might provide. The extent to which user-managers thought the entire organization (themselves. otherwise. if large and signiﬁcant gaps exist in the perceptions of user-managers and end-users then it is important that these should be recognized by the management and appropriate steps should be taken to mitigate these differences. and the extent to which they thought their peers believed in the beneﬁts of the system. cut across functional boundaries and are organization-wide information systems. we did not look at the timing of training and its impact on the . Moreover. As with any research there are some limitations in our study. Thus. Conclusion This study has compared the perceptions of user-managers and end-users on different ERP implementation success factors and has conﬁrmed that signiﬁcant differences do exist in the perceptions of these groups. and how difﬁcult it might be to use the technology. the results of this study show that different groups of organizational members have different perceptions of the beneﬁts associated with an innovation and also have different perceptions of the effectiveness of implementation activities that are instituted as part of the implementation process. the effectiveness of communication mechanisms and their level of satisfaction with the technology than end-users. it is important that large gaps in perceptions on the effectiveness of these activities do not occur. by identifying where differences might exist and the possible reasons for those differences we are conﬁdent that it will help managers devise appropriate interventions that minimize end-user anxieties. by their very nature. Shared beliefs refer to a belief about the overall impact of the system on the organization with regard to its beneﬁts. Thus. understanding differences in perceptions is important so that they can develop appropriate intervention mechanisms that can lead to successful technology implementation. otherwise their potential impact might be diminished. These types of systems are deliberately designed to provide a uniﬁed view of the pulse of the organization from a business perspective. Also differences exist on the perceived effectiveness of the training provided as part of the implementation effort. While implementation activities such as training and communication might be useful in bridging the gaps and building consensus so as to achieve implementation success. They might also have more conﬁdence in the effectiveness and adequacy of implementation techniques such as training and communication because of their closeness to these implementation activities. user-managers had more favorable perceptions on the beneﬁts of the technology. as shown in Table II. the extent to which they thought their management team believed in the beneﬁts of the system. Because of their closeness to the decision-making process they might “buy in” to the innovation faster than end-users. Hence. the use of roadshows to demonstrate aspects of the conversion process and newsletters to inform them about the project’s progress and changes were as effective (compared to the perceptions of user-managers). cooperation and the development of a common sense of purpose that can lead to implementation success. their superiors and others) believed in the beneﬁts of the system was higher than the extent to which end-users thought the organization believed in the beneﬁts of the technology. Shared beliefs ERP systems. we draw attention to the fact that in the implementation of an ERP system knowledge gaps might exist on the usefulness of the technology. This research has some important implications for practitioners. First.did not think that the communication aimed at explaining the beneﬁts of the technology. personal satisfaction with the technology and the perceived ease of use of the technology. it is important for managers to be aware if different members of the organization have different perceptions on the shared beliefs about the beneﬁts of the technology and to develop mechanisms such as communication to minimize those gaps. In contrast. It is this shared sense of beliefs regarding IS project beneﬁts that allows organizational participants to ﬁnd common grounds and a shared sense of purpose about the project. the belief in the beneﬁts of the ERP system is a belief shared with peers and managers regarding the beneﬁts of the ERP system. it is possible that the perceptions of managers on the effectiveness of these mechanisms might be inﬂuenced by their (managers’) roles in designing those interventions and thus. Second. The difference in the perception of shared beliefs for the user-managers and end-users was signiﬁcant. build trust and consensus so as to accomplish the technology implementation goals. It is possible that higher-level personnel in an organization might have a greater understanding of why a speciﬁc technology is being implemented. In particular. they might lead to implementation failures (Al-Mashiri and Zairi. We assessed the perceptions about shared beliefs by asking questions on the extent to which respondents believed in the beneﬁts of the ERP system. perceptions of the effectiveness of those interventions might be clouded. This type of belief differs from individual beliefs that relate to the performance of the individual and how a particular system would enhance his or her job performance. foster greater cooperation. If organizational members have a shared sense of understanding of why a technology is being implemented it is likely to foster trust. 2000). Based on the implementation of an SAP R/3 system. For example. It is clear that to achieve implementation success a sense of mutual trust and commitment must develop between participants so that free exchange of beliefs and opinions are possible. For practicing managers. their implementation inevitably requires the inclusion of users across the organization and across various levels.
Set up conference room pilots during the project: meetings during which the people affected by the project can learn about the new system.). Ensure that the training provided for the whole organization is complete. researchers might examine how communication might be integrated into the technology acceptance model (Davis et al. etc. ease of use. At the head of the team. (Koch et al. Right from the outset of the project. which must start as soon as possible. Future research should also explore the incorporation of some of the factors examined in this research into either existing theoretical or new theoretical models on technology implementation and acceptance. before the whole organization is ready. It is indispensable to recruit from different sectors of the company in order to create a multidisciplinary team. within a single computer system Set up a simple. Ensure that the team has adequate decision-making power. the actors must be freed up from their other duties as much as adapted to meet businesses’ needs possible.1108/1463715091096 0620 perception of training effectiveness. Do not start the transition prematurely. effectiveness of training and user acceptance and user satisfaction. 1989) and then empirically examine such an extended model in an ERP implementation environment. 15 No. as technological solution that is best must the company’s management.. Identify the risks and deﬁne mitigation plans. Ehie and Select members who are inﬂuential in the organization. Ecole Polytechnique. for efﬁciency and effectiveness The study found that the actions contributing to the composition and work of the implementation team factor were as follows: when it comes to information Get management directly involved in supporting the team and transferring authority and responsibility. all of the company’s operating and Formally document all members’ roles. company’s information needs Integrate experienced consultants. Ensure that executives accept the new system. enterprise Project teamwork and composition resource planning (ERP) systems The composition of the project team aroused a good deal of interest. Begin efforts to reduce resistance to change at the very start of the implementation. management. Manage expectations concerning the system’s functionalities. Organizational culture and change management Change management. Montreal. for their ability to integrate all of a Free up members from constraints unrelated to the project (for example. train the project leader to handle change management problems. tasks. Paris. but it does demand a major human effort and strong management involvement. Circulate information on the beneﬁts and changes that an ERP system will produce. obligations related to their usual positions). If additional compensation is not possible. the project manager must have adequate authority and become involved as soon as possible. Speciﬁcally. For example. central communication system (calendar. assess the organization’s capacity to accept change. management a better overview of Organize documents efﬁciently on the company’s computer system. communication has the potential to inﬂuence perceptions about the usefulness of technology. paradoxically it does not require a full-time manager. for example). Make up a multidisciplinary team. 371-394 Emerald Group Publishing Limited 1463-7154 DOI 10. selecting representative elements from all of the company’s departments.. Although this factor is deemed critical for a successful go-live. Formally evaluate the scope of the change in order to control its impacts and risks. 2005). Madsen. this gives Encourage members to get involved and learn during the project. 3. authorities. Therefore. These software packages are known Ensure that the team leader possesses authority that is recognized throughout the company. managing activities. in return. 1999. and Mario Bourgault and Robert Pellerin Department of Mathematics and Industrial Engineering. in addition to the broad roles as users or user-managers it will be worthwhile to look at how role speciﬁcity affects perceptions of intervention mechanisms such as training and communication. The actions supporting the organizational culture and change management factor are: Formally obtain support from opinion leaders.8 ERP implementation through critical success factors’ management Olivier Francoise INEUM Consulting. Set up a clear personnel policy regarding changes. given that this is the factor for which the professionals suggested the have been acknowledged to be the most new actions. decisions. 2009 pp. Consolidate employees’ motivation throughout the project (regular information sessions. Top management support . Also. responsibilities and competencies. Canada Business Process Management Journal Vol. France. needs to get under way by obtaining the support of mid-level managers (who are too often neglected) and opinion leaders. For a number of years.
Set up a management committee. The actions supporting the business plan and long-term vision factor are: Identify and formally communicate the link between the ERP and the company’s strategy. it must always start with the creation of a communication plan. Make executives accountable for the achievement of organizational goals. as some people consider it to be indispensable while others feel it is undesirable. both formally and informally. it must be remembered that if their performance is to be measured. Ensure that initial intentions of support are adequately reﬂected by actions during the project. At the end of the study. it is important to ensure that initial intentions are adequately expressed in daily operations. Re-evaluate the achievement of goals throughout the project. Although no departmental targets should be set. Depending on the organization. Stimulate management’s interest in the new system. Get top management directly involved in the project follow-up activities. the actions presented for the top management support factor are: Inform selected members of top management of the details of the processes to be undertaken and the project’s impacts on the organization. In addition. Have top management intervene from time to time in the ongoing decision-making process. the project must remain a priority and should not become mired in conﬂicts over resources or capital. Deﬁne the ERP implementation as the organization’s most important project. involvement by management should ﬁrst identify the ofﬁcers concerned. and determine the goals to be met and their feasibility. the actions that favor effective communication are: At the start of the project. Opt for minimal customization of the application. which formalizes direct and regular exchanges. it is advisable to get management involved in the decision-making process when necessary. and then communicate the desired level of involvement. the existing system must be audited ﬁrst. Validate the new processes with management. Business plan and long-term vision The company’s business plan and long-term vision will make it possible to link the ERP project to organizational strategy. Next. Further to the study. Effective communication Communication is a key factor in any project. it may take different forms. For example. Conﬂicts can become a major drag on the project and must be correctly managed. Identify the top management members concerned by the project. . These people must then be trained regarding the project processes and issues. Identify the goals of the ERP implementation and assess its ﬁnancial. The target processes designed must be validated by management. The actions related to the BPR and code modiﬁcation factor are: Formally identify the limits of reengineering and customization of the application before starting the conﬁguration activities. Although the creation of a dedicated team cannot be a majority-rule decision. Get top management directly involved in choosing the type of involvement. The ERP must be correctly positioned and it is important to be aware that the decisions made will have consequences over the long-term. the formalization of the extent of reengineering and the minimum customization of the system are critical.As an indispensable condition for the project launch. Make the managers of each business sector accountable for the success of the project to ensure that they will be motivated and will support it. Nevertheless. and organizational feasibility. technical. create a communication plan. The language used must be easy for everyone to understand. BPR activities must be recorded in the plan. Record speciﬁc reengineering activities in the project plan. Business process reengineering (BPR) and customization BPR continues to be a controversial ﬁeld. Plan for monthly or twice-monthly meetings with management. Achieve consensus in advance from the whole management team regarding the goals of the implementation.
Project management There is no question that effective project management must start with the deﬁnition of the requirements for the project leader position. Set up a formal and informal conﬂict and resistance resolution process. In that sense. Document all custom developments. Integrate development activities into the work plan. Set up a formal risk management process. Of course. His or her ﬁrst task must then be to deﬁne the perimeter of the project. Ensure that material. and the related activities must be detailed in the project plan. At the start of the project. Carry out all testing activities with future users. Each objective must be reﬂected in one or more indicators that are updated regularly and are associated with an adequate correction of disparities. Set up a development team that has the necessary knowledge of ERP systems. which may or may not be reﬂected in an in-depth study. Risk management plays an essential role. it is essential to deﬁne a monitoring plan from the outset.). Be able to react quickly to any problems after the go-live. Make the team formally aware. Conﬁrm the project scope with the manager (schedule. Monitoring and evaluation of performance In order to be able to pilot the project. Assign a full-time project manager. Use a development and test methodology. Perform technical tests. particularly on peripherals. Set up a system for managing and monitoring critical factors identiﬁed during the initial planning. Do real load tests on all the modules installed. right from the start. testing. etc. Use language that members of all departments can understand. and to monitor it attentively as the project advances. human and ﬁnancial resources will be available. the most important point related to software development is the creation of a competent technical support team that is able to react quickly after the go-live. This point is essential inasmuch as it is often untenable to continue testing as long as errors remain. Formally deﬁne the scope of the implementation as soon as the project starts. using real data. These processes will facilitate communication with management and allow true transparency. Deﬁne the requirements for the project manager position. Project management is based on the following actions: Continuously monitor the project to make sure that it does not overﬂow the deﬁned scope. formally identify all the development requirements regarding the other project areas. Formally evaluate the project manager’s competencies before the project is launched. Such an approach must be supported by the use of monitoring tools that everyone can use. one must put indicators in place that will allow for adequate visibility. . Deﬁne and document use proﬁles. resources. Centralize information for a common understanding of decisions. of the need for open and ongoing communication. Carry out speciﬁc activities to follow up on development activities. Predeﬁne the test sets to be validated before the development or integration of a third-party product. one must also ensure that the development team possesses the appropriate knowledge. Software development. depending on the corporate culture. and troubleshooting Paradoxically. The list of actions on which the software development and testing factor is based are: Set up a competent technical support team before the go-live. risks. Deﬁne a development and testing plan. Obtain management’s agreement with any change in project scope.
Dispense training in two steps: overview early on in the project and detailed as the go-live approaches. among other things. . the chosen strategy. Favor project monitoring tools that all participants can understand. Identify ways of getting users involved during the development of the system Collect and integrate users’ requirements. Ensure that the champion(s) will promote the project throughout the organization. training must start at a time that will enable it to end when the project goes live. specifying the monitoring methodology. the actions to be performed in relation to the performance monitoring and assessment factor are: . as each respondent had speciﬁc suggestions. the trainers’ experience. Project champion The champion plays a key role in the project. technology. the actions supporting the end-user involvement factor are: Deﬁne a training plan that takes account of users’ knowledge and their needs. it will deﬁnitely be necessary for the main project’s stakeholders to initiate a thorough reﬂection about the changes the system may require and/or bring about from an organizational perspective. End-user involvement Many ways in which end-users should become involved were proposed. Be transparent with top management. At the end of the study. Deﬁne a monitoring plan at the start of the project. Establish performance review and gap correction processes. Beyond training. their needs. Managers tend to consider that an ERP must be capable of adapting to any structure. modiﬁcations and validation. apart from small upgrading sessions. Organizational structure The audit of the organization structure should play a more important role. the technology to be implemented. It is necessary to be transparent with them concerning the real contributions the system will make. Ensure that the champion(s) is available. Finally. Ideally there should be only one champion. reports. Plan training so that it will end before the application is launched. snowballing training provided by key users is appropriate in this case. Appoint a champion(s). Ensure that the champion(s) is a (are) member(s) of top management. Train the champion(s) beforehand on the impacts and objectives of the implementation. who may be accompanied by one or more other sponsors in very large jobsites. Put in place tools and quick updating practices for the register of tasks to be performed.Further to this study. Carry out formal information activities for users concerning the contributions the new system will make. which will allow him or her to give the project appropriate support. It should be recalled that one preliminary action is crucial: a training plan must be deﬁned. Ensure that trainers or the training team have a good knowledge of the software and operations. For each objective. Ensure that users are properly involved in processes where the project team does not possess all the necessary expertise. Involve the champion(s) in every stage of the project. bearing in mind the users’ know-how. However. etc. This person must obligatorily be a member of top management. but this phase is often neglected. it is important to get users involved during the development of the system and to make use of their knowledge in areas where the team lacks expertise. especially in the earliest days of the implementation. The project champion factor is based on the following actions: Involve the champion(s) in conﬂict resolution. etc. Formally deﬁne the champion’s (or champions’) level of authority. The only action to be retained for the organizational structure factor is: ensure that the structural constraints of the implementation and the business’s strategic organizational plan are aligned. deﬁne an indicator that will make it possible to measure progress.
Rao.. further validating the research effort undertaken here. Injazz J. &Sheu. and cost efficient manner (Olson. 1995. and the ability to view and manage the extended enterprise of suppliers. and customers as an integrated whole (Muscatello. 2002. One of the primary objectives for installing ERP is the ability to integrate business processes (Brakely. 2004). Welti. Whirlpool. However. 1997. will ﬁnd a place for itself in a climate that favors the exchange of information within the team and the company. 9 Enterprise Resource Planning (ERP) Implementations: Theory and Practice Muscatello. it is essential that firms must have strategic goals in place before undertaking an ERP implementation (Motwani et al. 1999). Operational problems at Hershey Foods. 1999. ERP also has the reputation of being notoriously over-sold and underdelivered (Millman. As many people as possible should be trained by the consultants so the company can become autonomous in using the software package. improving efficiency. The constructs developed by the authors are very similar to the ones developed by Stratman and Roth (2002). ERP systems offer tremendous opportunities to more consistently provide information to organizations in a standardized. Deﬁne a support program with the consulting ﬁrm. 1998. Cliffe (1999) even reported that 65% of executives believed that ERP could be harmful to their organizations. 2004). and a great deal of organizational change. 2003). alliances. In addition. Gupta. knowledge management. Set up activities so that users will be involved in BPR. 2005). Implementation of an ERP does not come without significant technical and managerial challenges. Chen. Choose the most experienced trainers available. 1 (Jan-Mar 2008): 63-77. they are . Small. International Journal of Enterprise Information Systems 4. It is consistently identified as the most important success factor in ERP system implementations (Bancroft. &Sprengel. 2005). 2004). ERP has also been found to be effective in reducing inventory costs. Carr. and more recently Hewlett Packard. 2000. and software selection and support. centralized. 2002). The ability to use the information to drive the business is the key to successful integration. 1995. Brakely. Knowledge management The last factor. Seip. 1999. At the end of the study. Sharma. 1999. Davenport. the knowledge management factor is characterized by the following actions: Create a climate propitious to the exchange of information within the project team. project support and communications. &Chen. Bingi. Performance measurements must be developed to measure the impact of the ERP system on the business. 2000). Have as many people as possible trained on the new system by the consultants in order to gain sufﬁcient autonomy. huge financial investments. Davenport &Brooks. Promote interpersonal exchanges throughout the organization. information technology. ERP has been credited with reducing manufacturing lead times (Goodpasture. Many industry reports extol the virtues of ERP and its multiple benefits for those firms that can successfully implement these systems. End-to-end processes that transfer information from module to module will not in themselves improve cost effectiveness and efficiency. THEORETICAL CONSTRUCTS This section identifies key factors of ERP implementations based on a critical review of both scholarly and managerial literature. Davenport 1998. &Godla. executive commitment. and increasing profitability (Appleton. Other potential benefits of ERP include drastic declines in inventory. It can be inferred from the literature that executives and managers believe that ERP systems help their company achieve greater business benefits. 1998.. have been blamed on poor implementations of ERP solutions (BecerraFerandez et al. human resources. Joseph R. Executive Commitment Top management is often advised to look beyond the technical aspects of the project to the organizational requirements for a successful implementation. Melnyk &Stewart. Sumner. abundant information about customer wants and needs. Therefore. These constructs include strategic initiatives. 1999. training. It has been suggested that an ERP system that is not strategically tied into the supply chain will lack the ability to provide the type of business intelligence that is needed to grow the business (Hickes &Stecke. breakthrough reductions in working capital. business process. Collect as much of the organization’s undocumented knowledge as possible (especially from the workers). Chae. 2000). project management. Koch. FoxMeyer Drugs. 1999. Davenport &Brooks. Strategic Initiatives Successful integration of the internal functions of the business does not necessarily guarantee business success. 1999.
such as moving from an IBM mainframe to a Sun Microsystem. Unlike any other software project. upgrading.mystified as to how to design. If a wholesale change is required. Fortune 500 companies are beginning to sound like children in the back seat of a car on a long drive-"Are we there yet? Are we done yet? No! We're not there and we are not done. therefore. 1997). Human Resources The most recurring theme in management literature concerning the failure of ERP systems is the inability of firms to take into account the new organizational. Therefore. In many cases of ERP implementations. it is essential for firms to clearly define change control procedures and hold everyone to them." when processes or functions are added after the project has begun. must fully understand the degree of the changes and supports needed for the new project and be comfortable with the fact that the decisions their planners make will have a profound impact on the entire supply chain (Chen. when they are carefully conceived and executed. not a sprint. module. firms need to make sure a project charter or mission statement exists. 1999). they may consequently report a lower significance on technology training for ERP implementation. from identifying what business needs the ERP system must meet to preparing for postimplementation maintenance and user support (Musson. Because some firms may not be willing to change current technology. 1999). unanticipated circumstances are the norm. report writers. it may lead to a sense of frustration and anger at the system and in some cases total abandonment. When it comes to ERP projects. the project will not be successful if the project team is trying to hit a constantly moving target (Trepper. And we may never be done" (Koch. If a firm's existing technology will run the new ERP system. or department after the project has been scoped and started may lead to a "never ending" project. customer relationships. Tight change control procedures may end up causing tension between the project team and those who do not get the changes they want. and manage an ERP project. In fact. though. As mentioned. a piecemeal approach to integrating the typically expensive ERP systems into their facilities (Ferman. A survey by the Meta Group found that it takes an average of 31 months before an ERP system will show benefits (Muscatello. some firms have selected their ERP systems based on their current technology and business process. Unintended consequences include the emotional fallout when employees are suddenly given much greater responsibilities. then an in-depth hardware and software training program must be implemented. To prevent scope problems. 2000). 1999). and research has showed this approach to be a mistake since it is very limiting (Anderson. However. Managers cannot minimize the importance of technology training regardless if it is an upgrade of current software and hardware or a complete technology change. It is paramount to nail down the project requirements and have them documented and signed by the senior management and users. implement. An upgrade of current software usually includes new file structures. Project Management A project team must be flexible and deal with the problems as they arise in the implementation process. 1999). There is no magic in implementing ERP systems. consultants are required to help meet the projects' needs (Muscatello et al. It is a long journey of fine-tuning. 1999). Information Technology Deloitte Consulting (2000) reports that the second largest ERP implementation challenge related to people issues is internal staff adequacy. wholesale changes such as adding an additional process. In many companies. it changes the way they do their jobs and how the company does business. and personnel aspects of work organizations. Firms who account for business processes first and technology fit second reflect IT training positively (Davenport. 2001). however. 1998). Many executives are having a hard time understanding that ERP implementation is not simply a package installation. Ultimately. Managers sometimes neglect to assess not only the skill development needed by employees but also the organizational changes required of them (Appleton. Top management. 2003).. Any executive planning the implementation of an ERP system needs to make some savvy decisions. at best. it would now be unthinkable to manage financials.' It is also felt that the low information technology (IT) staff levels in smaller enterprises are inadequate for the rigorous and extensive IT training and development requirements of an ERP project (Hill. and supply chains without ERP (Oliver. functional modules. interdepartmental. then the technology training may be an upgrade of the skill set. and . This can be very difficult for employees as the project seems to be 'never ending. Anyone who revisits the charter documents of a large-scale ERP project will see that the ultimate product is almost always shaped by unanticipated and late breaking circumstances. 1999). and continual learning. Furthermore. It is a fact of business life that important things come up later rather than earlier in complex new projects (Cliffe. an ERP system does not merely change employees' computer screens the way previous generations of software did. Small firms often lack financial resources and may be forced to adopt. 2000). 1997). but. ERP systems can radically changed the way companies do business. these interruptions should not encourage "scope creep.
2002. 1998. In most cases. Firms that analyze their software "fit" and individual module needs can enhance the likelihood of a successful ERP implementation (Yusuf. reengineering of business process activities focuses the firm on identifying and improving the efficiency of critical operations. 2003. 1997). (2005) found that it is necessary to inform organizational employees of how the system can help them do their jobs better. a firm implementing ERP engages in two types of training: fundamental ERP systems education and technical training in the usage of the ERP software (Evangelista. Needless to say. Motwani et al. a firm is more likely to minimize uncertainty and achieve success. keeping the industry-wide needs and best practices in mind (Kumar et al.. Motwani et al. Assessing the needs for training usually uncovers several training and skills deficiencies. Hill. 2002.. One of the major challenges an adopting organization faces is that software does not fit all their requirements (Davenport. Olson et al. Business Process As suggested by Hammer and Champy (1993). 2000. While some firms declared their ERP . improvement becomes a shared task (Hill. Carton &Adams 2003. 2000). then a much larger commitment must be undertaken to insure that the proper employees can manage the technology after going live. Muscatello. Effective communication and ongoing support has also been noted by several researchers (e. They also found that all retained employees are going to find their jobs changed. 1998). managers have found ERP implementation projects the most difficult systems development projects (Kumar et al. Project Support and Communications ERP applications lock the operating principles and processes of the adopting organization into software systems. Sarkis &Sundarraj. Using reengineering techniques to develop a homogeneous vision depicting the company's processes after the ERP implementation. 1998. 2000). Thus.. Davenport. managers must be proactive in securing the technology training to insure that their technical employees can run the ERP system effectively. the logic of the system may conflict with the logic of business processes (Davenport. Yusuf.other changes. People are naturally resistant to change and it is very difficult to implement a system within an organization without some cooperation. In international cases.. 2003).. Where there is a lack of internal knowledge of ERP systems and their operating requirements (either at the corporate or division level). 2001. An upgrade of current hardware usually involves a re-installation of the operating system or at least installing the operating system changes. on restructuring important non-value-adding operations. hiring of new personnel with substantial knowledge in ERP systems. Millman. 2000). Rectification of training deficiencies can be accomplished in three ways: reassignment. management should solicit the help of knowledgeable outside consultants for the assessment (Chen. Olsen et al. and new modules. 2003). 2004). Booker.g. Reengineering should be undertaken to insure that the strategic objectives mentioned earlier are feasible. 2003.. If organizations fail to reconcile the technological imperatives of the enterprise systems with their business needs. Sarkis &Sundarraj. If a complete technology change (hardware and/or software) is required. &Althorpe. CONCLUSION Enterprise resource planning systems have experienced a phenomenal growth over the past decade. language and cultural barriers can be a technical hindrance that requires additional training (AlMashari. 2004. The reengineering effort should create a uniform response from all aspects of the business. 2003). 2004. and on eliminating inefficient processes. and hardware that are required to achieve the desired level of systems integration.. 2005). new functionality. A systematic "needs assessment" therefore must be commissioned to determine the specific ERP modules. The consequences of not having enough technical training can be catastrophic and lead to outright failure of the ERP system (Evangelista. subsystems. 1999). 2003). Software Selection and Support ERP systems are software packages generically designed. 1998). 2002.. Researchers have found a strong correlation between the attention paid to business process improvement and the likelihood of ERP success (Muscatello et al. When goals are common. Training ERP skills have been in acute shortage because of the high demand for people with good understanding of business and ERP systems. or training of managers and key employees. outsourcing or replacement of staff. Muscatello et al. In either case. This and the radical process changes brought about by ERP implementation have made providing sufficient and timely training to project persons and users a critical requirement in ERP implementation (Davenport. Gunasekaran. upfront and ongoing communication to all employees affected by the new ERP system is a must.
Kemp and Low. the commitment towards achieving mutual goals and the shared mentality of the two contactors are of crucial importance for successful implementation.10 Factors affecting ERP system implementation effectiveness Dimitrios Maditinos Dimitrios Chatzoudes Charalampos Tsairidis Journal of Enterprise Information Management Vol. Conclusions The present study has proposed a conceptual framework that investigates the main factors leading in the effective implementation of an ERP system.. 2012 pp.. To the best of our knowledge. King. reduced operating costs (lower inventory control cost. 2007. Scott and Kaindl. These constructs can also help guide future research for academics and practitioners in the ERP environment. 5. rapid access to information for decision making and managerial control. it provides a clear picture of the beliefs of current ERP implementation. 2007. It would be advisable for adopting . 2003. it is the ﬁrst empirical evidence that demonstrates the relationship between human inputs. Basic statistical methodology was used on this empirical data to examine the adaptation of the various concepts. This is in stark contrast to studies as recent as 5 years ago. it is realized that this effort cannot completely explain all of the issues surrounding an ERP implementation. Umble et al. 2000. however. these results suggest that firms are realizing that ERP implementations are a long journey and that results may not be readily apparent until well into the future. 2005. so as to enhance their clarity and avoid any possible misinterpretation. 25 No. but should also have a broad understanding of the individual business practices and a genuine commitment towards resolving every-day issues considering ERP system implementation. shared and exchanged among users who are working at different business divisions (Amoako-Gyampah. since the experience of consultants in similar business contexts. Since consultant support is a factor with such a signiﬁcant inﬂuence on ERP system effective implementation.. therefore. With these developments. Additional insights may be revealed through longitudinal studies and by building empirical models. lower marketing costs. In general. Amoako-Gyampah. 1. have based their research on a small number of case studies. The assistance provided by external consultants is essential. complicated operational procedures across the company (Nah et al. Chang (2004) and Finney and Corbett (2007). 2004. The contribution of the consultants’ involvement and support in the implementation process has also been veriﬁed in the studies of Wang and Chen (2006). Most of these authors. 60-78 q Emerald Group Publishing Limited 1741-0398 DOI 10. A cross sectional mail survey of business executives with ERP implementation experience was used to capture the degree of adoption of these concepts. Nevertheless. Although this analysis was based on simple statistical methods. Efforts towards consultant selection should not be viewed as a time wasting procedure. This is likely a result of the documented cases of ERP implementation failure where firms failed to take stock of their internal competencies and shortcomings. increased efﬁciency in doing business. there has been a significant amount of research that seeks to identify the success factors associated with the implementation of ERP systems. which concluded that firms believed that the ERP software would automatically drive the strategic and tactical changes. Firms now realize that business process changes and project management are strongly linked to the success of the ERP implementation. and support of strategic planning (through the planning of available resources). the literature has identiﬁed the following potential beneﬁts of ERP system implementation (Al-Mashari et al. 2003): improved coordination across functional departments. lower help desk support costs).1.1108/1741039121119 2161 implementation success. Consultant support The study empirically shows that the support of external consultants is crucial for the effective implementation of ERP systems. The examination of the conceptual framework was made with the use of a newly developed structured questionnaire and the results offer interesting implications to ERP adopting companies. aimed to understand the critical constructs of ERP implementation using a large scale survey. 2008). 2001). variables that are connected with the ERP implementation process and the ﬁnal outcome of this process. This research has provided insight into the current practice of ERP implementations. ERP system acquisition and implementation generally enhance productivity and working quality. Moreover. In summary. the results show that the implementation of ERP systems has grown from the belief that it was a simple information system implementation of new software into a realization that it is a strategic and tactical revolution which requires a total commitment from all involved. Another new finding is that firms now strongly believe that the use of outside consultants to supplement internal staff is an acceptable and desirable practice. many others reported negative results. companies should focus on hiring the right consultant group for the speciﬁc business environment. Moreover. even more important than that provided by top managers. Chang. they are as important as software and hardware knowledge. information can easily be transferred. facilitation of day-to-day management. It has paved a solid foundation on which to build future research in this area. Taken together. The presentation of the conclusions follows a structured path. lower production costs. This study. Consultants should not only acquire technical skills. since the system offers standardization and simpliﬁcation in multiple.
since top managers assist only in the resolution of conﬂicts (a factor that has no relationship with ERP system effective implementation). . On the other hand. but established a relationship between conﬂict resolution and ERP system success. furthermore. the adopting company should appoint its most prominent employees (from all functional business areas) to follow the implementation procedure step by step. In general. as well as conﬂict resolution among organizational members of Greek companies. Moreover. since it is difﬁcult for consultants to pass the knowledge to computer illiterate employees. On a practical level. understand that with the use of an ERP system every employee is being continuously trained. companies should provide opportunities for employees to enhance their skills by providing training opportunities on a continuous basis. System users not only need to be taught the newly implemented ERP technology. no matter how expensive and elegant. In other words. Finally. since passive attitude is not a path that leads to successful ERP implementation. or even fail miserably.. the transfer of knowledge from the consultants may raise the level of user know-how. 5. In order to do so. while user support inﬂuences both communication effectiveness and.companies to make a contractual connection between the fees paid to the consultant team and the improvement in certain areas of business activity. knowledge transfer (a factor tha is related with ERP system effective implementation). ﬁrstly. The consultants may improve the performance of ERP systems directly.. 5. the adopting company should organize computer seminars prior to the implementation of the new ERP system. conﬂict resolution and ERP system effective implementation. contribute to the speciﬁcations of the system. then users subsequently should be able to successfully maintain and further modify the ERP system without consultant engagement. especially since the consulting fees are quite signiﬁcant. If system users adopt a negative attitude towards working together with a professional team of consultants. 5. so as to be able to play the role of the “internal consultant” after the withdrawal of the professionals. From the above. (2007) has produced the same results. through their experience and technical expertise and indirectly through the effective transfer and sharing of ERP system knowledge among various inter-organizational members. Therefore. need to learn more about their new organizational responsibilities. Therefore. every ERP system. since the literature recognizes the limited consultation period as a factor that undermines possible positive effects (Nah et al. participate in the implementation process. (2007).3 Top management support According to the statistical analysis. and collect various rewards upon successful use of the implemented ERP system. On the same vain. but they. 2001). the adopting company should make sure that the knowledge transfer procedure is not short or inconclusive. it is apparent that ERP adopting companies should build the necessary structures in order to facilitate the procedure of knowledge transfer. the adopting company should. the study of Wang et al. the role of top management support seems to be of less important that the one provided by users. practical efforts in hiring the right consultants are essential. they should actively try to acquire maximum results from the use of the ERP system.2 Knowledge transfer The present survey has statistically indicated that knowledge transfer is a signiﬁcant factor for ERP system success. the above imply that a company needs to ensure user support in order to be led into a successful ERP implementation. Without the active participation and the overall acceptance of its users. the incorporation of knowledge concerning technical aspects of ERP systems is more important than effective handling of communication. in order to meet the changing and complex needs of the business environment (Bingi et al. more importantly. the implementation procedure will surely produce poor results. This can be achieved by allowing future users to: report their views on the necessity of the implementation. 1999). the present study argues that consultant support and knowledge transfer are the two key factors for ERP system success. Furthermore. also found no relationship between communication effectiveness and ERP system success. the consultant group should be viewed as a valuable “ally” in the ERP implementation process: consultants need the support and the acceptance of the company personnel in order to be able to fully integrate their valuable expertise and make a substantial difference in the implementation of ERPs.4 Overall conclusions In general. Moreover. Wang and Chen (2006). is destined to produce less positive results that the ones anticipated. no signiﬁcant relationship was found between communication effectiveness. These ﬁndings are in line with the corresponding ones in the studies of Wang and Chen (2006) and Wang et al. Apparently. Moreover.
therefore. The personnel (or the human run into costly and sometimes fatal resources) cost is by far the largest and most expensive. Whirlpool and Samsonite that have The ﬁnancial commitment is substantial. unfortunately many companies have not seen this until it was too late. (10) project champion. b). (3) top management support. efﬁcient use of information technology. ERP is not intended for every business. the “human” cost is not (Davenport. (9) monitoring and evaluation of performance. 17. (6) effective communication. culture. (5) business process re-engineering and minimum customization. 2000). ERP implementation costs are incurred in three areas: software. hardware. a business case must be developed to acknowledge the software packages provide an understanding of ERP.11 Success and failure factors of adopting SAP in ERP system implementation Vidyaranya B. critical to ERP implementation success. but also the non-ﬁnancial factors. the only factor that needs to be considered. The can expect to achieve. switch”. The analysis must consider not only the obvious cost/beneﬁt analysis.. JoAnn stores. for this reason the ERP systems have are highly integrated.. The beneﬁts of ERP them successfully worldwide systems. (2001). but at the same time has been the area given the least amount of consideration. “Flipping the (2) change management program and culture. The technical aspect is not such as Hershey. Enterprise-wide resource planning Enterprise resource planning systems (ERP) system software packages An effective business strategy centers on an aggressive. and ERP system will streamline processes within a company and improve its overall effectiveness. (4) business plan and vision. Gargeya and Cydnee Brady Business Process Management Journal Vol.1108/1463715051061 9858 ERP adopting companies should improve their knowledge management capabilities in order to successfully facilitate the transfer of knowledge from consultants. once the pains of implementation are over. Even companies There are many factors to be considered in making the decision of whether to implement an SAP system or not. and personnel. 2000a. companies provided in Table I. companies need to develop their internal knowledge capabilities before implementing an ERP system. identiﬁed 11 factors that were these packages. Non-ﬁnancial systems are capable of functioning beneﬁts include information visibility and ﬂexibility (Sandoe et al. Vol. complex emerged as the core of successful information management. and (11) appropriate business and information technology legacy systems. The 11 factors noted by them are (1) ERP teamwork and composition. establishment an executive management . (8) software development. and support strategic initiatives (Sandoe et al. appeal to companies. A successful systems for businesses. (Koch. C. 5. 2001). 2001). and subsequent maintenance of Nah et al. and structure should be reinforced to address this necessity (Nonaka and Takeuchi. 1995). CIO. (7) project management. (1996). however. suffered through classic disasters. based on a study of earlier papers (most of which were normative/prescriptive in nature). 501-516 q Emerald Group Publishing Limited 1463-7154 DOI 10. increase responsiveness to customers. The difﬁculties with the implementation software and hardware costs are often easily quantiﬁable. chief executive ofﬁcers and senior executive teams must be deeply involved. When considering the decision to invest in an ERP system. and troubleshooting. testing. A more complete listing of tangible and intangible beneﬁts is as advertised. however. 1996). 2005 pp. The building of these capabilities will ensure that the knowledge offered by consultants is properly disseminated throughout the organization. and the enterprise backbone of the organization (Nash. 9 No. 11 No. Umble and Umble (2001) expressed their views on 14 success factors (deﬁnition of business goals. while providing a means to externally enhance thousands of businesses are running competitive performance. Simply put. Organizational practices. Koch. and to formally assess the beneﬁts that the company – as an individual entity apart from its competitors – are able to handle the job. In order to pursue a successful ERP implementation and gain sustainable competitive advantage.
unrealistic expectations about implementation. higher quality data for decision making. 2000). can undertake. on average.5 times as long as intended and delivered only 30 percent of the promised beneﬁt (Zhang et al. improved coordination throughout the supply chain. extensive education and training. and no fear for change) and nine failure factors (top management failure. They are actually intertwined with one another. Many beneﬁts have been mentioned by researchers and practitioners. and individualize each point. 178 percent over budget. A Standish Group report on ERP implementation projects reveals that these projects were. Mabert et al. It appears that the work of Umble and Umble (2001). and better customer service (Gattiker and Goodhue. Hence. it can be noted that the factors that contribute to the success of SAP implementation are not necessarily the same as the factors that contribute to failure. a complete and thorough examination must be indelibly considered prior to undertaking the task of implementing an ERP system. As noted. The process has to be part of the business objective. 2005). however. establishment of aggressive achievable schedules. It is clear that most companies implement ERP systems just to stay competitive. the weakness is that not all the factors might have been reported. thinking of implementation as research and development. it would be more feasible for a company to understand that it takes the whole system to complete an implementation through diligent research. regardless of size. and those who implement only for an immediate return on investment are in for a rude and expensive awakening. and project team/management support/consultants) for successful implementation of SAP are different from the primary factors (inadequate internal readiness and training. This fateful date. The articles/books studied might have reported status of the ERP system (in the form of SAP) implementation at a particular point in time. alignment of everyone’s interest by giving mid-level management hands-on responsibility. 2001).) by providing a total integrated solution for the . measurement of the right things. the adoption of ERP has not been without problem. inaccurate data. attempt to automate existing redundant or non-value-added processes. poor project management. and technical difﬁculties can lead to implementation) in ERP implementation. lack of education and training. The main regret in ERP implementations seems to be that there was not enough time and attention devoted to the internal readiness factor and their changes during the implementation process (Davenport. (2001) put the total implementation cost at “tens of millions” of dollars for a medium-sized company and US$300-500 million for large international corporations. are hard to separate or isolate. worker resistance and readiness for change were the primary reasons for implementation failure. better data analysis. Given the high-expenses and low-success rate. though normative/prescriptive for failure and success of ERP implementations. The current research does have its limitations. mismatch between the business and ERP system selected. management with data. human resources. Rather than list the ways to approach a project. Secondary reporting (as opposed to self-reporting) could increase objectivity. In spite of the many beneﬁts.. 2000). stocking implementation teams with the best and smartest workers. and at many times. It has been noted that the primary factors (working with SAP functionality and maintained scope. and inappropriate planning and budgeting) that contribute to failure of SAP implementation. This is true for all companies that have had implemented an ERP system. While one or two criteria were recognized more frequently in this paper. reduced inventories. Hence. use of cross-functional teams. excellent project management. took 2. whether it is SAP or any other vendor. it became apparent through analyzing the literature that factors leading to success or failure are complex and do not occur alone. choice of partners. etc. It is absolutely imperative for companies to be responsive to their “internal customers” while they are creating systems that will help them deal more efﬁciently with “external customers”.planning committee. constant communication with teams and end users. it is necessary that longitudinal studies (over a longer period of time) at each of the organizations should be undertaken. Management support and commitment is a primary strategy necessary to create the environment necessary for a successful introduction of the changes brought about by an ERP system (Aladwani. is not based on a systematic analysis of ERP implementations in different organizations. but rather only a milestone along road to the true goal – realizing the beneﬁts (Davenport. 2005). ﬁnance. causes of these problems or failures need to be 12 Successful enterprise resource planning implementation: taxonomy of critical factors Shahin Dezdar and Ainin Sulaiman Industrial Management & Data An enterprise resource planning (ERP) system is typically deﬁned as a packaged business software system that facilitates a corporation to manage the efﬁcient and effective use of resources (materials. and it has to be clear that a successful “go-live” is not the brass ring. This points out that management should be focusing on one set of factors of avoid failure and another set of factors to ensure success. The organizations that may not have successfully implemented SAP may have been successful at a later point in time with appropriate modiﬁcations in their respective implementation strategies. ERP is arguably the single biggest information technology (IT) investment an organization can make (Teltumbde. The data analyzed is from secondary sources published in the press (in the form of books and articles). While this research project was limited in scope. 2000). Conclusions Six factors were identiﬁed for success and failure of SAP implementations in this paper. people do not want new system to succeed. Implementing an ERP system is one of the most challenging projects any company. cannot be viewed as the end goal or even the end of the project. Success does not come easily. ERP systems can potentially allow a company to manage its business better with potential beneﬁts of improved process ﬂow. set early on in project planning.
and ERP adopting organization” Because this kind of classiﬁcation gives a chance to stakeholders (chief executive ofﬁcer. Different measures have been employed by prior researchers for deﬁning ERP project success. vendor.” Some of prior researchers categorized CSFs based on the “ERP project life cycle” (Al-Mashari et al. 3 No. “ERP software. budgets. etc.H. Also. ERP user. 2004).) of ERP implementation project to highlight the area in which problem may occur and evaluate ERP implementation success from ﬁve collective points of view. Somers and Nelson. i.” Esteves and Pastor (2000) classiﬁed CSFs into “organizational and technological. We adopted the model of Markus et al. 7. “ERP adopting organization” and “ERP system.).” Further analysis was made and the categories were found to be representing two different environments. etc. we linked all these 17 CSFs to ERP project success.S. pp. time to market reduction.. chief information ofﬁcer.” We then re-categorised the ﬁve different categories to enhance the model. organization.Systems Vol.1108/0263557091099 1283 organization’s informationprocessing requests. Therefore. a taxonomy of CSFs for ERP implementation is formulated. 2009 pp. (2000). This study categorized the ERP implementation CSFs into ﬁve main factors of an ERP implementation projects. through a process-oriented view consistent across the company (Nah et al. Nah. Kerimoglu et al. J. i. (2000) distinguished between two types or dimensions of success for ERP systems implementation: project success metrics (in terms of meeting the project due dates. Business Process Management Journal. 2004). (2001). By analyzing all the CFSs mentioned in the literature during the last ten years (1999-2008). and External Expertise” as “ERP system” (Figure 1). Holland and Light (1999) categorized ERP implementation CSFs into “strategic and tactical. 1037-1052 q Emerald Group Publishing Limited 0263-5577 DOI 10. We then classiﬁed “Organization. Earlier taxonomies have provided dissimilar classiﬁcations of CSFs. Vol. and Kuang. 2003. understood and solutions leading to success need to be found (Calisir and Calisir.e. ERP expertise. 2001). ERP Project. which was recently used by Kamhawi (2007).. (2008) presented a model of three common categorization of an ERP project. and user. and ERP User” under the “ERP adopting organization environment” and “ERP Technology. for this taxonomy. and scope and performance expected) and business value metrics (in terms of business improvements such as inventory reduction. Lau. “External Expertise” and “ERP Project. “Critical factors for successful implementation of enterprise systems”. L.e. i. 109 No. ERP project. .” This study included these categorisation as well as two other categories. 285-96. Markus et al.e. F. cycle times reduction. since we were to classify the critical factors for success of ERP implementation projects. 8. it was needed to consolidate previous taxonomies and present a holistic and comprehensive picture of CSFs for the ERP implementation projects. consisted of “technology..
” It is strategic and must be approached as such. 2001). It should be noted that ERP systems are integrated applications with an impact on the entire organization. strategic. Decision makers will be able to formulate better strategies to enhance ERP implementation. 2000). and. they can make more proﬁt. 2006). we reviewed the recent works.. managerial. and comparative analysis with prior researches. It is important to point out that ERP systems are different from other IT systems (Davenport. Among the possible uses for the proposed taxonomy are the following. Al-Mashari and Zairi (2000) believe that many problems that have led to . Little work has been done on companies in developing countries. scope.” “Data management. Finally. content analysis of constructs. For example.” but this particular researcher may not know that very related concepts have appeared under the titles of “Data migration. practitioners may use the taxonomy to recognize the areas that may have to be considered in order to successfully implement the ERP system.” and so on. complexity. There are some critical ﬁndings from the in-depth study of prior researches.Conclusion Identifying factors leading to success or failure of ERP systems is of increasing importance (Haines and Goodhue. In addition.” “Data acquisition. 2003). Furthermore. frequency analysis of CSFs. while vendors will build ERP products that satisfy their customers. 2000) because ERP implementation includes technological. project costs. ERP systems differ from traditional systems in many ways. Therefore. operational. understanding the determinants of ERP implementation will be of beneﬁt to both adopting companies and software vendors. an ERP implementation project is not merely a “computer project.” “Data ﬁt. and need for business process re-engineering (Somers and Nelson. investigating CSFs in the ERP implementation projects. therefore. From a practical point of view. case study research on the taxonomy itself could be conducted by researchers in different countries to obtain a deep understanding of each of the categories and their characteristics within changeable organizational contexts. and organizational related components (Markus and Tanis. such as scale. a researcher may want to examine prior studies on the concept “Data analysis and conversion. article reading. journal editors and reviewers may use the taxonomy to make sure that submitting authors have been comprehensive in their approach. Research shows that ERP technology faces additional challenges and increasing dependencies in developing countries (Al-Mashari et al. In this study. organizational changes. Using comprehensive data collection. Researchers in the literature review stage can use the taxonomy to ﬁnd out other associated concepts for each CSF. we classiﬁed all CSFs mentioned in literature in 17 broad categories and ﬁnally developed taxonomy of CSFs for ERP implementation. The literature in ERP implementation has a heavy emphasis on companies in the developed countries from Europe and North America. The different studies were analyzed from a CSF point of view to highlight critical factors and their importance for ERP projects success.
the ERP vendors are now trying to extend their market to companies in developing countries. like MRPII could be included in the search items. A next step for researchers in the ﬁeld might be to collect supplementary data to expand this taxonomy. it might be a very high critical factor when adopting an ERP in a developing country. Finally. further databases. the aforementioned subject in the previous paragraph is signiﬁcant about small and medium-sized enterprises (SMEs). It seems that some CSFs have a different priority in different countries. . Furthermore. “organizational culture” ranked in the middle.failure of IT adoption have occurred when trying to adopt Western-developed IT applications in organizations in developing regions. An empirical study could be carried out in the future in order to validate the 17 broad categories of the CSFs. Dawson and Owens (2008) believe that. This study was conducted considering some limitations. other researchers could consider this important point to develop a taxonomy based on the CSFs relating to ERP projects in developing countries. According to Pairat and Jungthirapanich (2005). research on the taxonomy itself could be conducted by other researchers to obtain a deep understanding of each of the categories and their characteristics. In future. In addition. considering that some of the CSFs in a category might be related with other categories. Therefore. The taxonomy generated in this article is just the beginning. those conducting research on SMEs might compile a different set of CSFs to those conducting research on large originations. it will also be valuable to prepare a taxonomy based on the CSFs relating to ERP projects in SMEs. In such case. some prior form of ERP. Future research can be carried out based on expanding the time period constraint from the last ten years to last 20 years. SMEs. journals and conference proceedings could be utilized to enlarge the number of articles in the data-collection phase. While in our frequency analysis (Table II).
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