0061 motwani et al. successful implementation of erp projects

Int. J. Production Economics 75 (2002) 8396

Successful implementation of ERP projects:Evidence from two case studies

Jaideep Motwania,*, Dinesh Mirchandanib, Manu Madanc, A. Gunasekarand

aDepartment of Management, Seidman School of Business, Grand Valley State University, 401 W. Fulton, #409C,

Grand Rapids, MI 49504, USAbSeidman School of Business, Grand Valley State University, 401 W. Fulton, #456C, Grand Rapids, MI 49504, USA

cCollege of Business and Economics, University of WisconsinWhitewater, 5050 Carlson Hall, Whitewater, WI 53190, USAdDepartment of Management, University of Massachusetts, North Dartmouth, MA 02747-2300, USA

Abstract

This research examines what factors facilitate or inhibit the success of ERP projects and what actions can be taken tobring troubled ERP projects under control. It uses a case study methodology grounded in business process changetheory to compare a successful ERP implementation with an unsuccessful one. Data was collected by conducting

interviews at various levels of the subject organizations and by examining their archived records when available. Thestudy proposes that a cautious, evolutionary, bureaucratic implementation process backed with careful changemanagement, network relationships, and cultural readiness can lead to a successful ERP project implementation asopposed to a revolutionary project scope mandated autocratically by top management without organizational readiness

and proper change management. Some actions are also recommended that can help bring troubled ERP projects undercontrol. r 2002 Elsevier Science B.V. All rights reserved.

Keywords: ERP systems; BPC; Project management

1. Introduction

It is well known by now that improperimplementation of Enterprise Resource Planning(ERP) software projects can cause considerableproblems for companies [1]. For instance, HersheyFoods Corporation in 1999 reported a 19% dropin 3rd-quarter prots and a 29% increase in

inventories over the previous year due to order-processing problems caused by its faulty $112million ERP implementation [2]. The city ofOakland too reported problems of missing orerroneous paychecks generated for city employeesby its $21 million ERP project [3]. MillerIndustries reported a $3.5 million operating lossin the 4th-quarter of 1999 due to the costs andineciencies of its ERP system, while WWGrainger Inc. reported a $11 million reduction inoperating earnings from its improper ERP im-plementation [4]. These numbers are startling butwhat is more a cause of concern is that thesereported instances involve the software of all

*Corresponding author. Tel.: +1-61633-67467; fax: +1-

61633-67445.

E-mail addresses: [email protected] (J. Motwani), mirch-

[email protected] (D. Mirchandani), [email protected]

(M. Madan), [email protected] (A. Gunasekaran).

0925-5273/02/$ - see front matter r 2002 Elsevier Science B.V. All rights reserved.

PII: S 0 9 2 5 - 5 2 7 3 ( 0 1 ) 0 0 1 8 3 - 9

primary ERP vendors. Thus fault cannot beattributed to only one vendor. On the other hand,McKesson HBOC has reported a successfulimplementation of its $50 million ERP back-ocesystem that now processes sales orders totaling 1.5million line items and $100 million of businesseach day [5], whereas CaseBook Water & PowerTechnologies, a $30 million manufacturer of waterpurication systems has seen improvements inmaterials management, project management, andemployee productivity due to its ERP system [6].Given the large nancial commitment that an

ERP project requires and the potential benets itcan oer if successfully implemented, it is im-portant to understand what is needed to ensure asuccessful ERP implementation. Thus, two re-search questions are central to this paper: (1) Whatfactors facilitate or inhibit the success of ERPprojects, and (2) what actions can be taken tobring troubled ERP projects under control? Thispaper attempts to answer these questions byexamining the ERP implementation experiencesof two companies one unsuccessful and the othersuccessful. It draws on business process change(BPC) theory [7] as well as escalation theory [8] toidentify what could have been done to turn aroundthe rst project, and to explain the success of thesecond project.

2. Theory

Since ERP implementation has come to involvechanging the business processes of companies thatimplement such software [9,10], we felt thatbusiness process change theory may prove usefulin explaining the outcomes of our case studies.BPC is dened as organizational initiative todesign business processes to achieve signicant(breakthrough) improvement in performance (e.g.quality, responsiveness, cost, exibility, satisfac-tion, shareholder value, and other critical processmeasures) through changes in the relationshipsbetween management, information technology,organizational structure, and people [11,12]. Theseinitiatives may dier in scope from processimprovement to radical new process designsdepending on the degree of change undertaken in

each organizational subsystem and their interac-tions. Thus, in any examination of BPC outcomes,consideration should be given to (a) the environ-mental conditions for change and (b) the ability ofthe organization to manage change in theseconditions. Kettinger and Grover [7] have pro-posed a model that considers both these aspects ofBPC management. According to their model, anysignicant business process change requires astrategic initiative where top managers act asleaders in dening and communicating a vision ofchange. The organizational environment, with aready culture, a willingness to share knowledge,balanced network relationships, and a capacity tolearn, should facilitate the implementation of pre-scribed process management and change manage-ment practices. Process and change managementpractices, along with the change environment,contribute to better business processes and help insecuring improved quality of work life, both of whichare requisite for customer success and ultimately, inachieving measurable and sustainable competitiveperformance gains. The individual components ofthe framework (shown in Fig. 1) are describedbelow and applied to the subsequent case analysisto determine if they facilitate or inhibit the successof ERP projects.

2.1. Strategic initiatives

Process change typically begins with strategicinitiatives (often included in the corporate strategicplan) from the senior management team [13].These could be a reaction to a need or a proactivepush to leverage potential opportunities [14].Evidence also exists that strategic change, andarguably process change, is often incremental,informal, emergent, and is based on learningthrough small gains [15] versus being revolution-ary and radical. According to [16], strategicinitiatives can be forced on the organizationthrough mandate (autocratic) or pushed throughconsensus within existing systems of the organiza-tion (bureaucratic). Alternatively, champions ofchange could emerge to seek out creative ideas andmake them tangible [17].

J. Motwani et al. / Int. J. Production Economics 75 (2002) 839684

2.2. Learning capacity

The major goal of learning is to provide positiveoutcomes through eective adaptation to environ-mental changes and improved eciency in theprocess of learning [18]. Adaptation involvesmaking appropriate responses to technologicalchanges and learning from other organizationsthat have achieved the best practices in theindustry [19]. Increased eciency can come fromlearning by doing [20] and accumulation ofknowledge through cross-functional interfaces[21]. Such knowledge accumulation is also calleddeclarative knowledge (i.e., a body of organizedinformation) and can facilitate learning in acollective fashion [22]. According to [23], higherlevel learning occurs when members reect on pastlearning experiences to discover new strategies forlearning (which is also called as deutero learning).Learning can also be brought about by scanning

external information [18]. This can come fromorganizational employees who constantly reviewthe environment for new developments andopportunities (technology gatekeepers), consul-tants who span the boundary between the envir-onment and the organization (boundaryspanners), and from customers.

2.3. Cultural readiness

Organizational culture facilitates (or inhibits)the integration of individual learning with organi-zational learning by inuencing the organizationsability to learn, share information, and makedecisions [24]. According to Guha et al. [18],leadership (top management) support or changeagents (e.g., BPC team) may be consideredimportant prerequisites for business processchange. Further, [25] distinguishes between orga-nizational cultures that are risk seeking and

Fig. 1. Theoretical framework for ERP implementation management (adapted from Kettinger and Grovers model of BPC

Management [7].

J. Motwani et al. / Int. J. Production Economics 75 (2002) 8396 85

aggressive versus those that are more cautious.Open communication and information sharing canpromote a common culture and innovativebehavior in the organization. So also cancross-functional training and personnel movementwithin the organization [18].

2.4. Information technology leveragibility andknowledge-sharing capability

The role of Information Technology (IT) in thebusiness process change project could be eitherdominant or as an enabler. Evidence suggests thatIT led projects often fail to capture the businessand human dimensions of processes, and are likelyto fail [26]. A case is often made for the socio-technical design approach which suggests a mu-tual, bidirectional relationship between IT and theorganization [27]. Such an approach recommendssynergy between the business, human and ITdimensions of an organization and could bepromoted through cross-functional teams.Communication technologies have also been

proven to facilitate learning and knowledge devel-opment through a process of coordinated interac-tion among individuals. The ability to shareknowledge enhances an organizations tendencyto change [28] as transparent data access empow-ers individuals and knowledge workers to reinforceone anothers expertise. Thus, ITs communicationinfrastructure and the extent of knowledge sharingcan create an environment that facilitates success-ful business process change.

2.5. Network relationships

Research indicates that under most circum-stances cooperative, interpersonal and groupbehavior results in superior performance [29].However it is possible that competitive contro-versy within generally competitive groups canresult in greater openness, knowledge and under-standing [30]. In terms of inter-organizationalprocesses, research indicates the benets of part-nering with external suppliers [31]. Organizationsthat can manage these aspects of competition andcooperation continuously can benet from em-

ployee incentives and controls, as well as instillchange more eectively [18].

2.6. Change management practice

Change management involves eectively balan-cing forces in favor of a change over forces ofresistance [32]. Organizations, groups, or indivi-duals resist changes that they perceive threatenthem [18]. It has been suggested that corporatetransformation require a general dissatisfactionwith the status quo by employees who have tochange (i.e. a readiness to change), a vision of thefuture, and a well-managed change process.Revolutionary and evolutionary change theoristspropose contrasting tactics for accomplishingchange [33] which vary depending on the type ofemployee involvement, communication about thechange, and leadership nature.Thus, the pattern of change (formal versus

informal), managements readiness to change (i.e.being committed to it, participative in the process,or resistant to it), scope of change (continuousimprovement versus radical change), managementof change (alleviation of dissatisfaction, topmanagements vision for change, well managedprocess of change, and use of evolutionary versusrevolutionary change tactics) are the key con-structs in practicing change management [7].

2.7. Process management practice

Process management is dened as a set ofconcepts and practices aimed at better stewardshipof business processes [34]. It combines methodo-logical approaches with human resource manage-ment to improve the outcome of BPC [18].Successful process management uses process mea-surement (use of process metrics, process informa-tion capture, improvement feedback loop, andprocess audit), tools and techniques (e.g. qualitycontrol tools, data ow diagrams, CASE tools,and simulation) and documentation (e.g. processow chart analysis, shbone and root causeanalysis). Evidence also supports the use ofteam-based structures both for the implementingthe project and for designing the new process [18].


3. Methodology

Case study analysis was chosen to investigatetwo research questions that are central to under-standing what makes one ERP implementationsuccessful and another unsuccessful, i.e.,

(1) What factors facilitate or inhibit the success ofERP projects? and

(2) What actions can be taken to bring troubledERP projects under control?

Two criteria were used to select the sites for thecase studies:

* The sites should use ERP software from thesame vendor.

* The sites should have dierent success experi-ences in implementing the ERP software.

Two such sites were identied. Both were willingto share information about their ERP implemen-tations but requested condentiality. In the paperthey will be referred to as Company A andCompany B. Data collection methods includedstudying archival data and conducting interviewsat various levels of the organizations. Literatureregarding ERP and BPC projects, including dataon company performance, was used as a backdropto data collection. This approach enhanced theconstruct validity of the study. Given the explora-tory nature of the research, explanation buildingand pattern matching were used to provideevidence of links between constructs. The qualita-tive data also provided content and discovery ofelements that surround each construct to identifythose facilitating and inhibiting factors that lead toultimately successful or unsuccessful ERP projects.

3.1. Brief background

3.1.1. Company A (pharmaceuticals industry)Company A is one of the nations largest

manufacturers of over-the-counter (non-prescrip-tion) pharmaceutical and nutritional products forthe store brand market. Store brand products aresold by national and regional supermarkets,drugstore and mass merchandise stores undertheir own labels to advertise with nationally

advertised brands. The companys products in-clude over-the-counter pharmaceuticals such asanalgesics, coughs and cold remedies, antacids,laxatives, feminine hygiene, smoking cessationproducts, vitamins, nutritional supplements andnutritional drinks. Its customers include Wal-Mart, K-Mart, Meijer, Rite-Aid, Albertson andKroger. Customers have their own custom madelabels and some even have additional customcomponents such as bottles, caps, or dosagedroppers. Thus, in total Company A maintainsabout 30,000 stock keeping units (skus) for itsdierent customers.Over the years, Company A has seen substantial

growth with net sales now exceeding $900 million.To serve its customers better, the companyrecently decided to upgrade its inventory manage-ment process that ran on an AS/400 system. AnERP solution seemed to be the logical answer,providing the ability to integrate accounting,inventory, production planning and materialsmanagement. However, the company under-esti-mated the overall complexity of the implementa-tion. For the rst quarter of the scal yearimmediately following the ERP implementation,the company showed a loss from operations of$14,075,000. The complexity of the ERPs inven-tory management applications necessitated thedevelopment of a completely new storage nomen-clature system. Bugs in the software complicatedthe issue further. Finished goods from productionwere shipped to the logistical center for distribu-tion as normal. However the ERP system wasassigning bin locations for products that wereeither non-existent, already occupied, or could notbe found. When orders were to be shipped to thecustomers, the problem compounded. Warehousepersonnel would proceed to a bin location directedby the ERP system and nd the product not there,or a dierent product in its place. Often the wrongproduct would be shipped by mistake. Customerservice touched an all point low. In one instance, adisgruntled customer visited the logistical centerlooking for Ibuprofen Suspension, a high marginchildrens analgesic. Aided by customer servicemanagers, the customer walked isle by isle, row byrow searching the seven football eld longlogistical center and found his product in the


wrong bin location. Eventually, a physical inven-tory was the only way to correct the errors of theERP implementation.

3.1.2. Company B (footwear industry)Company B is a leading designer, manufacturer,

and marketer of a broad line of casual shoes, workfootwear, and constructed slippers and moccasins.The company employs approximately 6600 pro-duction, oce and sales employees. Products aredistributed domestically to over 65,000 depart-ment stores, footwear chains, catalogs, specialtyretailers, and mass merchant accounts. Theproducts are also distributed worldwide in 134markets through licensees and distributors. Thecompany sold over 38 million pairs of its footwearin 1999. Prior to the implementation of ERP, thesales, marketing and operations functions of thecompany ran on an AS/400 system. The systemrequired an extremely long time to complete atask, from shipping an order to entering aproduction schedule for the factory. To obtaineven the most basic information, a 68 hourprocess was necessary. If a customer placed anorder and asked if the inventory was available,customer service representatives would be able toanswer the customer only the following day orprovide an uninformed answer. The inventoryreports would only show current on hand inven-tory unadjusted for orders already in the system.Promises were made to customers without know-ing if the gross available inventory was earmarkedfor another customer. Production schedules werebatched and run through the system each week-end. Thus if a customer placed an order on aMonday and wanted delivery at once, productionwould not begin for at least a week. The companyrealized that adding a week or even a few days tothe lead time in the highly competitive footwearindustry was unacceptable.The drawbacks of the legacy AS/400 system

were the driving forces behind the implementationof the ERP system. The company chose to follow aphased implementation process. First the nanceand marketing functions were converted to thenew system, giving users time to get used tothe new system. This was followed by convertingthe operations function to the ERP system. The

implementation process has been successful andCompany B has started to realize the benets ofthe ERP system.

4. Research ndings

This section covers each construct of theresearch model [7] with summative ndings foreach case. Whenever appropriate, respondentsstatements are quoted to illustrate the construct.Consistent with the research objectives, specicquestions were asked concerning each construct.The research ndings are summarized in Table 1.

4.1. Strategic initiatives

4.1.1. StimuliBoth the Companies (A and B) were strategi-

cally reactive to the environment and the needs oftheir customers. Company A realized that itneeded a new inventory system to keep track ofits more that 30,000 stock keeping units. CompanyB realized a need to reduce production lead timesand to provide real time order information tocustomers.

4.1.2. Formulation scopeCompany A formulated and maintained a

strategy of revolutionary change from the start.They envisioned a sweeping all-at-once ap-proach of replacing the legacy system with theERP system. Company B on the other handstarted out by implementing the ERP system inonly their Marketing and Finance functions onadvise from the ERP vendor. They envisioned anincremental, phased approach of introducing thesystem into the company.

4.1.3. Decision makingThis construct indicates an important dierence

in the top management styles of the two compa-nies. Company As managerial style may bedescribed as autocratic with the top managementmandating initiative without taking into consid-eration the majority sentiment of the company. Asone interviewee candidly remarked:


We (Company A) tried to prepare ourselvesfor the implementation in every means possible.Thousands of hours of training classes werecompleted and selected individuals were polled

for their opinion of readiness for the go-livedate. However, upper management ultimatelymade the decision to throw the ON switchbefore the employees believed in or understood

Table 1

Comparison of approaches of Company A and B

Construct Company As approach Company Bs approach

Strategic Initiatives

Stimuli (proactive or reactive) Reactive Reactive

Formulation scope (incremental or revolutionary) Revolutionary Incremental

Decision making (autocratic, bureaucratic, or

champion emergence)

Autocratic Bureaucratic

Strategy led (from onset, eventually, or not) Not strategy led From onset

Learning capacity

Adaptation (response to technology change, or learning

from others)

Response to technology change Response to technology change

Learning from others

Improved eciency Learning by doing Learning by doing

Declarative knowledge Did not develop knowledge base Developed knowledge base

External information use (technology gatekeepers,

boundary spanners, or customers)

Boundary spanners Technology gatekeepers

Customers Boundary spanners

Customers.

Learning type Deutero Deutero

Cultural readiness

Change agents and leadership Senior management Senior management

Change agents (teams)

Risk aversion (aggressive versus cautious) Aggressive Cautious

Open communications Low High

Cross-training Some Some

IT leveragibility and knowledge-sharing

IT role (enabling, sociotechnical, or dominant factor) Enabling Enabling

Use of communication technology Medium High

Network relationships

Inter-organizational linkages Low High (with vendor)

Cross-functional cooperation Medium High

Change management

Pattern of change Semiformal process Formal phased process

Management readiness to change Committed Committed

Scope of change Radical Improvement

Management of change (alleviate employee

dissatisfaction, vision for change, well-managed change

process, evolutionary or revolutionary change tactics used)

Inadequate Adequate

Process management

Process measurement Little Use of process metrics

Tools and techniques High High

Team based No Yes


the software. The result was extremely costly,not only in dollars, but also in lost customersand customer service. Many employees won-dered why the switch was ever made from thelegacy AS/400 system to the ERP. Employeeswere disturbed and frightened by the new andcomplicated ERP system.

On the other hand, a team-approach wasfollowed at Company B that eventually receiveda bureaucratic consensus to proceed as a corpo-rate-level initiative. According to one manager:

The stang of the project was the rstchallenge at hand. A strategic thinking teamwas assembled to assess the benets and draw-backs of the ERP software. The crew attendedseminars and spent countless hours discussingalternative systems. At least one representativefrom each function of the business was includedin the group and at least one individual fromeach division. The group decided to implementthe ERP in only the marketing and nancefunctions of the business. Only the basics of theERP were implemented. The idea was tointroduce the system, stabilize the system, andbuild upon the foundations to optimize thesystem.

4.1.4. Strategy ledCompany As approach to implementing the

ERP in retrospect seems to be hurried and notstrategically thought out. The company tried tointroduce a complex new system all-at-oncewithin a time frame of only six months ofpreparation (January 1998 through July 1998).They did not take into account that disruptions tothe information systems in their peak productionseason of September through December couldprove fatal. As one manager described:

Our demand patterns are seasonal, with alarge portion of sales coming from the cough,cold and u season. Retailers generally begin tostock for this season in the fall. To meetdemand, we begin heavy production schedulesin late August and continue to run at near fullcapacity until December. Nearly 12 million

units of product are produced every weekduring these months. There was not a worsetime to switch to the new ERP system thatSeptember 1. Even though most end-users didnot believe they had been adequately trained anddid not feel comfortable with the new system, thedecision was made by upper management to ipthe switch and chaos ensued.

Company B on the other hand devised astrategic plan tied in with its ERP and BPC eortsthat focused on incremental improvements. Theyheeded the suggestions of the ERP vendor to havea phased implementation over a period of one anda half years. Adequate time was allowed for usersto be ready for the new system. The projectmanagers decided that the optimistic projectcompletion date was January 10, 1999. Theydetermined the critical path to be the process ofcustomizing the system to the companys specica-tions. Other than this, it was the training that mostconcerned the managers. As it turned out, theproject completion date was the end of April. Theproposed cut over date of January 10 waspostponed because the managers were not com-fortable with the operation of the system. Intensetesting took place between January and April,which led to the cut over being a success.

4.2. Learning capacity

4.2.1. AdaptationBoth the companies showed some tendency to

create a learning environment based on appro-priately responding to technological changes orlearning from other organizations that hadachieved best practices in the industry. Thoughcompany A was aware of the ERP mishaps ofother companies they assumed that they would beeasily able to adapt to the new technology with thehelp of ERP consultants, some training and alive system in place. But they seriously under-estimated the complexity of the new technology.One end-user commented:

Consultants and training experts were broughtin-house to streamline the switch to the ERPsystem. Testing of the new system began in thespring of 1998 with 200 selected end-users


representing all aspects of the business. Alongwith this testing, those individuals were to gainsome advance knowledge of using the ERP.However this testing/training was poorly orga-nized and left many of the end-users frustratedand bemoaning the complexity of the newsystem. Processes that earlier could be com-pleted in a single transaction now took severaltransactions, and departments that used to passalong information to another department werenow forced to enter the information into thesystem themselves. When the formal training ofall the end users began in the late spring, theconfusion mounted quickly. Many of the end-users did not have strong computer skills tobegin with and the complexity of the ERPsystem dumbfounded them. Even people with astrong understanding of computer processescould not understand the strange congurationsof the ERP system.

Company Bs management however chose tolearn from the experiences of other companies thathad implemented ERP unsuccessfully. They alsoresponded to the new technology with adequate,self-motivated training. The project was veryclosely monitored and disruptions carefully ironedout. One manager described this process:

With all the training, testing, system develop-ment, and assessment, every employee withinthe company was involved with the ERP tosome degree. It took many hours to implementthe system. Time constraints were evaluatedand considered when this project began. Anydisruption in daily operations was unaccepta-ble. The training was designed to be veryecient. The trainers were responsible forwalking the groups through the system andproviding handouts. Each user had ERP train-ing access at his or her desktop computer.Much of the learning process was left up to theindividual.

4.2.2. Improved eciencyBoth Company A and B had a tendency to

improve learning eciency through learning bydoing. After the initial shock of being thrown

into the new system, Company As employeesgradually became more comfortable with thesystem. By February of 1999, they were startingto master the transactions needed to completenormal business operations, and production andshipment levels returned to normal levels. Com-pany Bs employees were ready in time for Phasetwo of the implementation process. This involvedbringing live additional features the ERP systemhad to oer that had not been fully recognized inPhase one.

4.2.3. Declarative knowledgeCompany As approach of bringing the ERP

system live all-at-once did not allow for thebuilding of a collective knowledge base (ofexperiences) for the company. On the other hand,Company Bs phased implementation of the ERPsystem into the Marketing and Finance areas inPhase one allowed for the Operations area to learnfrom their experiences in Phase two of theimplementation.

4.2.4. External information useBoth Company A and B made use of external

information to enhance their learning capacity.While Company A used consultants, who acted asboundary spanners, they also listened to thevoice of the customer. Company B made use oftechnology gatekeepers who were company em-ployees aware of the advantages and pitfalls ofnew technology. They too widely used consultants(boundary spanners) and surveyed customers toassess gaps in customer service.

4.2.5. Learning typeBoth companies adopted a deutero type of

learning, and were willing to adopt a strategy forlearning based on past failures. An employee ofCompany A commented:

In retrospect, the implementation should havebeen pushed back to January of 1999. In turn,customer service during the busy season wouldnot have been as adversely aected. It alsowould have given more time for the employeesto gain knowledge and become comfortablewith the new applications. Upper management


even admitted they were in error when theydecided to go live in September and apol-ogized to the employees.

4.3. Cultural readiness

4.3.1. Change agents and leadershipCompany As initiative for the ERP system

came directly from the senior management and thechief executive ocer. The CEO commented:

The implementation of the new softwaresystem is a key element in the long-term processimprovements we have initiated to improvecustomer service and reduce costs...while theimplementation challenges we have experiencedhave been frustrating and dicult forcustomers, suppliers and employees, I believethe long-range benets the new systemoers remain appealing. The competitive ad-vantage we gain from this sophisticated systemwill help us to continue to compete successfullyin the dynamic market for store brandproducts.

On the other hand, Company Bs initiative forthe ERP system came from both senior manage-ment and middle management teams. Threecrucial teams were assembled to ensure successfulimplementation a strategic thinking team, abusiness analysts group, and an operations group.

4.3.2. Risk aversionWith respect to risk aversion, Company A was

clearly more aggressive than Company Bin deciding to implement the ERP system in ashort time frame and also all-at-once.Company B cautiously chose to follow a phasedimplementation of a chosen few features of theERP system.

4.3.3. Open communicationsCompany B encouraged participation of its

employees in the process of ERP implementationmuch more than Company A did. In fact, one ofCompany Bs managers commented:

Everyone, at all levels of the business,is encouraged to speak out about the systemsperformance and make suggestions. Ibelieve the reason our company was ableto pull o such a successful implementationis the high level of involvement of ouremployees.

4.3.4. Cross-trainingNeither company A nor B attached much

importance to cross-training and personnel move-ment within the organization. In fact the re-distribution of job responsibilities caused by theERP system greatly confused Company Asemployees.

4.4. IT leveragibility and knowledge-sharing

4.4.1. IT roleBoth companies used their information technol-

ogy departments as facilitators of the process ofERP implementation. Company B took steps toensure that users and all functional areas wereconsidered in the systems development process. Asenior manager of Company B described this asfollows:

A business analyst group was formed toprovide additional feedback to the ERP experts.This group was involved with piloting. Theywere given access to the ERP virtual screens.They would spend time entering orders andtracking them as they downloaded to thewarehouse. Financial reports and transactionswere also included in the dry run. Thisprocess began as soon as the ERP crew set upthe system and continued through until twomonths before the go live date date. Whenthe business analysts were comfortable with thesystem, trainers were brought on board fromeach divisions dierent functional areas. Teamleaders were assigned to each area of thebusiness and were responsible for coordinatingtraining sessions. Hundreds of hours were spenton training the trainers. The trainers wereresponsible for teaching the other members of


their division. Again many hours were spentbringing all employees of the company up tospeed with the ERP.

4.4.2. Use of communication technologyCommunications technology such as e-mail

enabled eective communication and team work.Company B used teams eectively during theimplementation, and thus leveraged communica-tion technology better in the process.

4.5. Network relationships

4.5.1. Interorganizational linkagesCompany B worked very closely with the ERP

vendor during the implementation process, evenallowing vendor consultants remote access to theirsystem. When any problems were discovered,managers would meet to discuss the same andcontact vendor consultants for xes. One managerdescribed this:

The project managers would convene todiscuss each problem. If they felt it was anissue they could remedy immediately, theywould again call upon the vendor consultants.Vendor consultants could remotely access ourERP system to make the changes requested.

Company A chose to rely on its own IT sta andhired external consultants to work in-house tocorrect problems.

4.5.2. Cross-functional cooperationCompany Bs phased implementation plan

mandated close cooperation between the func-tional areas that rst implemented the ERP systemwith those that implemented the system later.Company As all-at-once implementation led tolower cross-functional cooperation.

4.6. Change management

4.6.1. Pattern of changeCompany A showed little or no formality in the

process of change whereas Company B followed astructured methodology recommended by the ERPvendor.

4.6.2. Management readiness for changeThe management of both Company A and B

were committed and ready for the change process.However while Company As management under-estimated the complexity of the process, CompanyBs management had taken into consideration thatglitches would occur in the process and were notalarmed when they did occur.

4.6.3. Scope of changeThe radical scope of the ERP project at

Company A created expectations for immediateimproved performance. When this did not happen,frustration and disappointment crept into thecompany. Company B, however was not preparedto make any radical changes to the organizationand quickly found out that the best way to succeedwas through incremental change. Credibility es-tablished with these small successes eventuallypaved the way for larger-scale changes.

4.6.4. Management of changeClearly, Company A inadequately managed the

change process. They did not take into accountemployee readiness or satisfaction with the newsystem. Top management was unable to convey tothe employees their vision for change. Mostemployees did not understand the need for changefrom the legacy system. The process of change toowas not well managed with the aid of a formalmethodology. The revolutionary change scared theemployees and left them confused. Company Bfollowed just the opposite approach and manage-ment was able to take all employees in their fold.Employees were willing to allocate a large amountof their time to the project. They were aided bytraining sessions that were available both day andnight. The open communication encouraged bymanagement gave users a sense of ownership ofthe system.

4.7. Process management

4.7.1. Process measurementCompany A used some process mapping and

diagnosis techniques to study the as-is processas well as measurements of process performance.Company B used formal techniques and process


metrics successfully for process measurement.Business analyst teams would regularly measurechanged processes and articulate their value tomanagement and functional groups.

4.7.2. Tools and techniquesTechniques and methods such as DFD, CASE

tools, and simulation were successfully used byboth Company A and B for process analysis anddesign.

4.7.3. Team basisCompany A did not choose to use a team-

approach for implementing or for designing newprocesses. This however was fundamental toCompany B which used three core teams: astrategic thinking team, a business analysts group,and an operations group.

5. Discussion of research questions

5.1. What factors facilitate or inhibit the success ofERP projects?

The above case study analysis reveal that anincremental, bureaucratic, strategy led cautiousimplementation process backed with culturalreadiness, inter-organizational linkages (with thevendor), and careful change management arefactors that contribute to successful ERP imple-

mentations. On the other hand a revolutionaryproject scope that is mandated autocratically bytop management without cultural (organizational)readiness and proper change management is likelyto lead to troubled and unsuccessful ERP projects.

5.2. What actions can be taken to bring troubledERP projects under control?

The case analysis described above traces thedierent approaches of Company A and B forimplementing their ERP systems. What perhaps isnot clear is the way Company B monitored itsproject and what actions it took to ensure success.These actions are described below and summarizedin Table 2.Eight categories of actions classied as either

project management or resource management aredescribed below that can potentially bringtroubled ERP projects under control. These arederived from software project escalation theory [8].The project management category includes veactions. Among these are: redenition of theproject, an improvement in project management,a change in project leadership, subdivision of theproject into manageable portions, and resolvingspecic problems. Project redenition includesreducing the scope of projects, re-justifying themnancially, and focusing on the most importantfeatures and deliverables. Improvement in projectmanagement includes more regular meetings and

Table 2

Actions to take to bring troubled ERP projects under controla

Actions that can be taken to bring troubled ERP projects under control Company A s approach Company Bs approach

Project management

Redene the project |Improve project management |Change in project leadership No change No change

Subdivide the project |Resolve specic problems | |

Resource management

Adding and/or removing resources | |Layo and hiring | |Training | |

aNote: |: Action was performed, : Action was not performed.


reviews, more precise scheduling of delivery forsystem modules, and other means for exercisingtighter control over projects. Change in leadershipinvolves the replacement of project leaders asso-ciated with the escalation of the project with newleadership, either from inside or from outside anorganization. In many cases, this means replacingthe project manager, while in some instances,project management responsibilities are handedover to an external consultant. Subdivision of theproject into manageable portions involves identi-fying pieces of a larger project that can be workedon separately from the entire project. The nalproject management category is resolving specicproblems. Most often, such problems involveexternal relationships or technical issues. Externalissues could involve software licensing issues orother problems with software vendors. Technicaldiculties include the resolution of hardware orsoftware problems and the diculties that arefrequently associated with migration to new hard-ware and software architectures.The resource management category includes

three actions. The rst action, adding and/orremoving resources can bring troubled projects incontrol if the additional resources are morecarefully managed. Similarly, layo and hiringinvolve a change in human resources (e.g. bringingin external consultants). Finally, training is anaction that enhances existing resources but alsorequires additional investment.As seen in Table 2, Company B chose to redene

the ERP projects scope based on the recommen-dation of the ERP vendor. Not all features of thesystem were included from the start. The projectwas subdivided into manageable phases. Thecompany followed the practices of eective projectmanagement to resolve specic problems, usingtechniques such as PERT/CPM, cross-functionalteams that met regularly, and close cooperationwith the vendor. As one manager commented:

Only days after cut over, users discoveredsome problems with the system. The available-to-promise inventory system of the ERP wasnot functioning, as it should. Orders were beingfound stuck in the system with no apparentreason. Contract orders were not functioning

properly. Perhaps the most dangerous problemwas the disconnection of uploads from thedistribution centers. There was a period of timewhere the invoicing function was cut o. Theproject managers would convene to discuss eachproblem. If they felt it was an issue they couldremedy immediately, they would again callupon the vendor consultants.

If Company A had followed an approachsimilar to that of Company B, perhaps it mayhave been able to turn around its project to beeventually successful. Thus Company Bs ap-proach could serve as a guideline for othercompanies contemplating an ERP implementa-tion.

6. Conclusion

This research attempted to answer two ques-tions: (1) What factors facilitate or inhibit thesuccess of ERP projects? and (2) what actions canbe taken to bring troubled ERP projects undercontrol? Through a case study comparison of asuccessful ERP implementation with an unsuccess-ful implementation, it was determined that acautious, evolutionary, bureaucratic implementa-tion process backed with careful change manage-ment, network relationships, and culturalreadiness can lead to successful ERP implementa-tions. On the other hand, a revolutionary projectscope that is mandated autocratically by topmanagement without organizational readinessand proper change management is likely to leadto a troubled ERP implementation. Some actionsare recommended to bring troubled ERP projectsunder control. Primary among these are redeningor subdividing the project, improving projectmanagement through the use of formal tools andtechniques, and using a team-based approach tosolving specic problems.

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