erp success failure pijush gupta

Critical Success and Failure Factors of ERP Implementations: A Market

Perspective

1 Copyright: Pijush Gupta | www.pigtale.co.in

Critical Success and Failure Factors of ERP

Implementations

By- Pijush Gupta (www.pigtale.co.in)

Critical Success and Failure Factors of ERP Implementations: A Market

Perspective


Table of Contents

1. Abstract ................................................................................................................................................. 3

2. Introduction ........................................................................................................................................... 4

3. Literature Review .................................................................................................................................. 6

3.1 The Implementation Methodology ................................................................................................. 9

3.2. Making the Process Successful .................................................................................................... 10

3.3. Implementation Review ............................................................................................................... 10

3.4. Executing Implementation Activities .......................................................................................... 11

3.5. ERP implementation strategies .................................................................................................... 12

3.6. Knowledge formulation phase ..................................................................................................... 12

3.7. Strategy implementation phase .................................................................................................... 13

3.8. Status evaluation phase ................................................................................................................ 13

3.9. Reasons for Failure ...................................................................................................................... 13

4. Market Trends ..................................................................................................................................... 17

4.1. Report Findings and Analysis ...................................................................................................... 17

5. Market Study & Analysis .................................................................................................................... 22

5.1. ERP Implementation .................................................................................................................... 22

5.2. Critical Success Factors ............................................................................................................... 23

5.3. Research Framework ................................................................................................................... 23

5.4. ERP Implementation Success (1η): Dependent Variable ............................................................ 24

5.5. CSF’s & Organizational Culture: Independent Variables ........................................................... 26

5.6. Research Methodology ................................................................................................................ 30

5.7. Questionnaire Development ........................................................................................................ 30

5.8. Partial Least Squares ................................................................................................................... 31

5.9. ERP Implementation Success Index (ERP-ISI) ........................................................................... 32

5.10. Results and Discussion .............................................................................................................. 33

5.11. Research Constraints ................................................................................................................. 35

6. Recommendation ................................................................................................................................. 37

6.1. Change Management Program .................................................................................................... 37

6.2. Secure Management Support and Commitment .......................................................................... 38

6.3. Picking the Implementation Team Wisely .................................................................................. 38

7. Conclusion ........................................................................................................................................... 40

8. References ........................................................................................................................................... 42

9. Appendix ............................................................................................................................................. 46

9.1. Questionnaire ............................................................................................................................... 46

1. Abstract

Every year, according to the Project Management Institute (PMI), nearly 70-80% of

all Enterprise Resource Planning implementation projects fail, go over-budget or go

live past the original deadline (A. Roman, 2005). There are various reasons attributed

to the success or failure of ERP Implementations. One of the reasons is resistance to

change and top management comes across a feeling of apprehension from potential

users who have certain reservations for the new application. The fundamental causes

of failure are of a wide-range and are often discovered late in the process, if they are

discovered at all. Highly skilled and experienced implementation consultants are the

better choice because they have the capacity to provide an unbiased analysis that

gives consideration to the big picture. Having a clear view with wider aspects is

important to successful implementation. Using a method of survey through

questionnaire, a study was conducted to find out the factors that really matter when it

comes to successful ERP implementations. Varying results were drawn from the

survey. It showed various reasons that ultimately result in the success or failure of an

ERP implementation and showed that these factors were manageable. This paper

attempts to find the real answer to problems being faced in ERP implementations and

what really makes an ERP implementation successful.

Critical Success and Failure Factors of ERP Implementations:

A Market Perspective


2. Introduction

Failure has been common among ERP implementations are not new to the business

world. The business world has seen ERP implementations fail in big companies like

Hershey and the result of it being lawsuits against ERP software vendors (Kimberling,

2006).

So, how can we increase the possibility of an ERP implementation being successful

and realize its benefits? The success or failure of ERP implementations is assumed to

be the fault of the software a company purchases, but in reality, 95% of a project's

success or failure depends on the company implementing the software rather that the

software vendor. (Kimberling, 2006). It is not always that the ERP package vendor or

the consulting company is to be blamed for the ERP implementation failure. If the

organization implementing the ERP fails to document their business requirements

properly then the entire implementation project may fail.

Market analysis reports show that the high percentage of ERP implementation failures

are due to many reasons and are sometimes discovered very late during the

implementation phase. ERP implementations require highly skilled consultants who

have worked on a number of projects and are familiar with mapping of various

business processes or an organization to the ERP package. The key is to understand

the big picture and align the ERP implementation to the vision, goals and objectives

of the organization. Every ERP implementation project should ideally have some

consultants with prior experience.

ERP has become the latest buzzword in the IT industry and almost every company is

trying to follow the trend but not without reason. An ERP package can be of great

benefit in implemented properly (Henderson, 2007). Earlier, organizations used to

have heterogeneous legacy systems that were complex and difficult to incorporate but

with ERP all the business functions and processes can be integrated to function in

sync. But companies need to understand and accept the fact that ERP does not work

miracles by taking away all the defects in business processes. If companies continue

to follow their old business processes post implementation, then they are bound to




fail. ERP is all about re-engineering the business processes and mapping them to the

ERP application to streamline the operations (Gould, 2007).

Some organizations have issues and apprehensions about end-of-living their legacy

application which is understandable. It should be understood that it is not easy for the

employees of an organization to suddenly adapt to a new application. This might

prove to be a disaster for organizations as legacy systems have critical data. Hence, it

is the responsibility of the ERP vendor or the consultants to build confidence in the

staff to using ERP applications.




3. Literature Review

The Enterprise Resource Planning (ERP) system is a unified set of programs and

applications that provides support for core organizational activities such as supply

chain, operations, manufacturing, distribution, finance and accounting, sales and

marketing and human resources (Prasad Bingi, 1999). In a nutshell, an ERP system

helps the different corporate functions of the organization share data and knowledge,

reduce costs and improve management of business processes. An ERP application

streamlines the entire business flow of an organization so that it is automated and

there is less scope for human error. Business functions like inventory management,

order management, MRP, finance, supply chain management, customer relationship

management and human resources among others are taken care of by the ERP system.

What we need to understand here is that Enterprise Resource Planning (ERP) is not

software. Improper terminologies such as enterprise-wide transaction processing

software systems are being labeled as ERP.Software Packages such as these help in

efficient resource planning and cannot be completely depended upon for accuracy.

These packages not only contain resource planning but also contain other business

processes. As a matter of fact, they do not come as a complete package which helps in

streamlining its operations entirety unlike ERP packages. Therefore, we need to coin

another acronym that does refer to software: ES. This stands for Enterprise System or

Enterprise Software. In the book “Mission Critical” (Davenport, 2000) author Thomas

H. Davenport describes enterprise systems as “packages of computer applications that

support many, even most, aspects of a company’s information needs.” This is more

relevant to today’s business scenario. Another distinctive feature is that: Not all ERP

business functions are contained in the typical Enterprise Software (ES) Suite. ERP

packages address the entire range of business processes that are required for operating

an organization. Figure 1.1 represents this in totality:




Figure 1.1- ERP Business Functions (Davenport, 2000)

As the above figure graphically shows, the typical Enterprise System contains

software support and components for business processes that are not a part of ERP.

There are three areas on the above diagram. The circular figure to the right shows the

operations that are not a part of ERP; the circular figure to the left is not part of the

Enterprise System and supports ERP functions; the intersecting area between the two

refers to those ERP functions typically supported by Enterprise Software. The above

diagram therefore shows that Enterprise Systems do not cover all the areas that ERP

takes care of and hence one should not get confused with the terminologies.

As we have a clear understanding of the difference between ES and ERP, it is

necessary to further understand what ERP is all about. Enterprise Resource Planning

(ERP)—and its predecessor, Manufacturing Resource Planning—are helping

transform our business landscape in way that’s helping organizations manage their

business processes better. Enterprise Resource Planning (ERP) as the name suggests,

is a system that encompasses the basic processes existing in an organization. It started

with the need to capture the processes in an organization and map it into the system

for smoother transaction and it eliminates the hassles and the chances of error

drastically comes down.




ERP packages generally include functions like:

• Finance which in turn can capture modules like General Ledger, Accounts

Payable, Accounts Receivables, Cash Management etc

• Manufacturing which captures transaction in Bills of Material, Scheduling,

Cost Management etc

• Supply Chain Management (SCM) which captures transaction happening in

Inventory, Order Management, Purchasing etc

• Human Resources (HRMS) having modules like Payroll, Training and other

HR related modules.

• Customer Relationship Management (CRM) which can again be categorized

into three sections:

• Marketing

• Sales

• Service having modules like Contracts, Call Center modules.

Enterprise Resource Planning packages have a database which contains the data for

all the modules. The modules within the package are closely integrated with each

other. All the modules are inter-linked with eachother.Therefore; any transaction

happening in one of the modules takes help of other modules, processes them and

gives the desired output. So considering an example, if we need to ship across an item

to the customer and generate an invoice to bill the customer, the process adopted

would look as mentioned below.

The items are procured in the inventory using Supply Chain modules like purchasing

and routing it to the correct sub-inventory through Inventory and then ship the item to

the customer using Order Management and finally bill the customer by generating an

invoice using Finance modules. It the customer expects more service on a particular

item, the Customer Relationship Management modules comes into involvement. So,

being closely integrated, the information passed in one of the modules gets shared

across various modules for smooth transaction for effectively handling the complex

business requirements which varies across the industry.




Organizations should ensure that current processes are in place and that they capture

all the functions in a detailed manner in order to make sure that ERP package can

handle the transactions effectively. If required, the current processes can be re-

engineered which can then be mapped into the ERP package. In case of an existing

legacy system, it is important to understand the functions of the system clearly before

mapping it in the ERP package .ERP packages can be customized and integrated with

other modules if is beyond standard functionality of the package.

Not only is ERP benefiting manufacturing companies but also changing the way

service oriented companies are managed. ERP provides organizations with the ability

to forecast demand and supply and reach out to its customers. It is providing a high

level of business intelligence so that business functions like manufacturing, SCM,

finance, human resources and CRM to name a few function efficiently.

3.1 The Implementation Methodology

ERP implementations are usually set to be in the process of implementation once the

package has been bought but in reality, it starts with the crutial steps that an

organization takes before buying the ERP package. Primarily, the end users must be

open to change and be willing to shift from a manual to an automatic system.

Essentially, the business processes of an organization needs to be reviewed at every

step for successful ERP implementation. Given the fact that ERP handles complex

business processes, it goes without saying that ERP implementations should be

handled with utmost caution. In a typical implementation scenario, the following

multi-stage strategy is employed (Kimberling, 2006):

• Business requirement planning

• Hardware acquisition

• Design Analysis

• Business process analysis

• Setup and Build

• Data conversion and migration from legacy systems

• Business Simulation




• Pilot test

• User acceptance testing

• Rollout

• Go live

3.2. Making the Process Successful

As mentioned earlier, reviewing is the best possible way to minimize the failure rate

of ERP implementations. A check at each phase is necessary from the very beginning

of the implementation cycle.ERP implementation process is prone to being

unsuccessful if not reviewed at each stage. This failure can occur due to a number of

reasons but one of the common reasons of occurrence is when organizations do not do

their research and often look for the shortest possible path. To minimize the chances

of failure, it is important to have highly skilled and experienced project managers and

consultants on staff. This is the reason why organizations prefer to take services from

experiences consultants who have previous implementation experience. To diversify

the risk, organizations should not leave the decision of package selection only to the

vendor who might be more interested in getting paid. The organization’s IT staff

should ask proper questions and spend time with the vendor and the consulting

company to do a fit-gap analysis and then only select an ERP package.

3.3. Implementation Review

The most important thing that an ERP implementation brings about in an organization

is change and this change could be in the way the business functions or in the way the

company performs. Needless to say, no standard ERP package could cater to the

business requirements of an organization fully. So it is imperative that either the

business process has to be changed or the application package has to be tweaked.

Successful implementations employ a combination of both but ensure that a lot of

package customization isn’t done since it is costs a lot of money. Ideally, the business

processes should be aligned to meet the requirements of the ERP package. The ERP

applications needs to b changed only when a particular organizational process cannot




be changed. These are the processes that give organizations its edge in the market. For

example, an FMCG company has a credit related business process that is so good that

its distributors and dealers have a lot of confidence on it which gives them an edge

over its competitors. If this credit related business process cannot be mapped to any

existing ERP package in the market it is recommended not to change the business

process. This would affect the performance of the company. This is when

customizations come into picture and it makes absolute sense of going for tweaking

the application package to fit to the business process.

3.4. Executing Implementation Activities

Eventhough the odds are always stacked against it, ERP implementations can still

succeed by following the steps that have been used for many a successful

implementation projects. These include:

• Proper 'As-Is' and 'To-Be' analysis

• Effective business process analysis

• Effective change management

• Careful package selection

• Fit- Gap analysis

• Minimal package customizations

Many ERP systems fail inspite of their immense benefits (Roth. A, 1999). Experts

feel that the end user resistance is the major cause of these failures and that successful

and effective ERP implementation entails consideration of an organization's core

competencies (Zairi, 2000). One of these is effective change management but

sometimes this too doesn’t ensure success due to resistance (Edgewater Technology,

2006).

Another school of thought stresses that despite the introduction of new products and

processes introduced each year, companies could still achieve success by

implementation of effective strategies and techniques. Formulating these strategies




and techniques is the responsibility of all the concerned parties.

3.5. ERP implementation strategies

A number of strategies can be applied to implementing ERP successfully and

according to research, various implementation strategies fall into one of the following

categories: technical, organizational and people.

Organizational strategies for successful ERP implementations include process

development and deployment, effective change and project management,

communication and information system integration needs (Sarker, 2000). Technical

strategies for successful ERP implementations include technical aspects, complexity,

adequate in-house IT capabilities and time, effort and cost of the implementation

(Pastor, 2001). People strategies are for bringing the employees together and taking

them into confidence by showing them the big picture of benefits of a successful ERP

implementation. This would minimize the employee’s resistance to change from an

old and familiar system to a new unfamiliar system.

3.6. Knowledge formulation phase

Effective change management starts with identifying and understanding the needs and

concerns of the end users {Vaughan, 2001). The analysis should consist of (Vaughan,

2001):

• Who are the entities resisting the change?

• What are the needs of these entities?

• What expectations do they have in terms of the software package?

The answers to the above questions would set the expectations right and would help in

determining the sources of the end user's resistance to the ERP system. According to

Hultman (Aladwani, 2001), the user’s beliefs, expectations and values indicates some

of the prime reasons for their resistance.




Some user's fear that their jobs may be threatened or their computer illiteracy may

affect their productivity. Others feel that the some organizational values may pose a

threat by the introduction of the ERP package. These reasons could be used for

effective implementation of the ERP package. This view of employees is valid in

most cases as organizational values do get altered during the process of ERP

implementation (Group, 2003).

3.7. Strategy implementation phase

The results from the previous phase may help the steering committee to develop

strategies and plans to minimize the resistance of the users to the ERP system so that

their apprehensions are put to rest (Vaughan, 2001). This is an important phase as the

apprehensions of the end users have to be put to rest before proceeding any further.

The steering committee should do constant monitoring of their strategies and if

needed rethink about them.

3.8. Status evaluation phase

The top management should have an effective system in place that would monitor the

change management phase till its logical end. It is important that the management is

effective in putting the fears of the end users to rest by taking stock of the situation

through constant feedback. Often, the fears of the employees are justified and they are

right. If their fears are justified, then it should also be taken into consideration.

Overlooking the justified fears is a big mistake during change management process

(Tucci, 2005). Due importance should be given to the feedback mechanism in terms

of its effectiveness and timeliness. This is important as the apprehensions of the users

should be laid to rest by constantly evaluating the implementation process.

3.9. Reasons for Failure

Organizations can have a number of reasons for failing an ERP implementation. The




tendency of the management to delegate the task of ERP implementation to lower

management levels often results in a disaster as the lower management are not in

constant touch with the critical events and they lack understanding of the detailed

scope of the ERP project.

According to various surveys and reports, about 60% of ERP implementation failures

are due to improper functional requirements. Business requirement definition is the

one of the most important steps for effective ERP implementation. The second being

improper package selection.

Poor package selection is considered to be a part of improper business requirement

definitions. This usually occurs when the application engineers who are in charge of

selecting the appropriate package do not check if it suits their business requirements.

Another reason for failure is the fact that consultants try and implement a package

because they are familiar with a package they had used in their earlier company and

therefore implement the same without considering the business requirements of the

current company. They usually consider one package to fit in familiar situations and

this can lead to an implementation failure.

The third reason is proper resource allocation to the ERP implementation project.

Some companies allocate minimal staff for the project and save money by over

burdening the staff. This is another reason for ERP implementation failures (Fornadel,

2007).

The unrealistic expectations and Return On Investment (ROI) too leads to ERP

implementation {Toni M. Somers, 2004). ERP package vendors are known to set

unrealistic expectations and ROI which don't take into account the costs of consulting,

training, testing, data conversion and migration, documentation and staffing. When

this happens, a company doesn't stand a chance of achieving the ROI it anticipated in

the first place.

Inadequate training and education too plays a significant role in the success or failure




of ERP implementation (J. Esteves, 2001). ERP application training is very crucial as

all the users need to understand the functionality of the application and the business

processes which affect the organization (Liang Zhang, 2003) (Moon, 2007).

Sometimes companies skip important implementation steps like documentation,

redefining and integrating processes before the final go live which too is damaging for

the success of the ERP implementation {Kumar K, Hillegersberg, 2000).

If an organization wants all its business procedures to be integrated into common

single solution based application, its business procedures need to been standardized,

and if it already has legacy applications (stand alone systems) which require heavy

and seamless interfaces between ERP and the existing systems, then it should try to

minimize them. Organizations should always stick to the vendor’s recommendations

and the functionality provided by them and take their consultation before customizing

the functionality.

There is always a chance for gap between the “AS IS” and “TO BE” key business

requirements and the same will be achieved through the seeded configurations, work

around and customizations during the implementation process.

The business process owners have to be involved in every step of the implementation

from process finalization, willingness to migrate to new ERP systems and procedures

to testing the new ERP application functionality and also be involved in migrating the

existing data from legacy application into a new ERP system.

One of the major step before an organization goes for ERP implementation is to have

a budget approval. Middle management spend days defining the selection process

plan and the approvals from the top management. It should develop key performance

indicators to measure the successful implementation. There should be set time lines

and targets for these key performance indicators and should be reviewed after post-

implementation and only then can it realize the success of the ERP implementation

and healthy ROI.




Though the ERP system may have been implemented and the system is in working

condition, failure may occur when the Power user / End user groups are not

comfortable in migrating form the existing system and not willing to integrate with

the alien system. Post ERP implementation requires change in people and the systems.

Organizations have to invest time and money on end user training, change

management, etc.

Failures happen when there is an error in selecting the right ERP package for the right

industry. While in the implementation process heavy customized ERP packages may

have huge maintenance (support to the ERP package application, upgradation, process

fine tune, or some times a new implementation for new processes), as the support

from the vendor is usually minimal. It is recommended to keep the customizations to

a minimal.

Another reason for failure is when the management is not involved or has not been

involved in the decision making process or the management is not interested in the

change of existing procedures, which may or may not be the industry's best practices.

A survey could be undertaken to find out the reasons for success or failure of an ERP

implementation. The approach could be to use either a large sample size or a small

one. According to Thorn, a survey of a large sample size requires a lot of time and

effort. A large survey also requires a lot of attention as to follow ups on non-

respondents and also less accurate than a smaller but responsive sample (Thorn,

2001).An understanding of this literature along with constraints made it possible to

analyze a small sample size.




4. Market Trends

According to the Market Analytix Enterprise Resource Planning, 2004-2009 report,

ERP market revenues increased 14% in 2004 which was very impressive. The report

goes on to reveal that nearly one-third of the growth in the overall ERP market was

due to fluctuations in forex exchange rates (Reilly, 2005).

The ERP market in 2004 showed good growth as the IT spending of companies

improved and the market was also affected by consolidation, as well as ERP vendors

acquiring other businesses to broaden their portfolios and service offerings. ERP

vendors are now taking the inorganic growth path so that they save on the research

and development for creating new solutions. And they are doing this by acquiring

other product companies.

The report revealed that while many ERP product vendors struggled in 2004, SAP

increased its overall revenues by 17% and license revenues by 20% and that too

without any acquisitions. Needless to mention, SAP’s ERP market share increased to

more than 40%. Oracle in the meanwhile nearly doubled the size of its e-Business

Application business through the acquisition of PeopleSoft and the recent Siebel

(Reilly, 2005).

4.1. Report Findings and Analysis

The report goes on to forecast solid revenue and growth rates for the top ERP players

through 2009. The chart below lists out the top 10 ERP vendors based on their

revenues (Reilly, 2005):

Top 10 ERP Vendors




The report revealed several trends that affected the ERP market in 2004, including:

Acquisitions are the order of the day with Oracle’s purchase of PeopleSoft, JD

Edwards, Retek and Siebel and other vendors being active in the mergers and

acquisition space. This move has suddenly opened up the market.

The major focus of ERP applications companies continue to be midrange and SMB

markets as this is important for foray into important markets like India, China, Eastern

Europe and Latin America.

According to the CIO, magazine executive resistance to change is the biggest barrier

to successful ERP implementation as shown in the figure below:

ERP Failure Factors (Thornton, 2007)




A couple of years back, during 2007/08, post- "go live" ERP organizations mainly

focused on total cost of ownership, value of delivery, ease of use and continuous

business improvement. ERP vendors used to offer post-implementation or support

services to ERP customers. But during 2007-2010, ERP vendors will redouble their

efforts to penetrate the mid market and SMB market, thereby, competing with each

other and a shrinking set of small ERP vendors.

A market study based on responses from across the IT industry (94 firms) was

conducted by the META group. This study revealed that less than 30% of the top

management has the requisite knowledge about ERP implementation. The study also

found that the readiness index for ERP implementation was 63% for the IT staff while

it was 9% for the end users (see figure below) (Doane, 2004).

ERP Readiness Matrix (Doane, 2004)

In this same study, META Group asked 152 respondents to list the key mistakes made

in the course of the project and who they blamed for those mistakes (see figure below)

(Doane, 2004).




ERP Failure Reasons (Doane, 2004)

The 3 mistakes listed below are direct results of the previously discussed erroneous

presumptions:

• Measurement of benefits not quantifiable (40.8%)

• Insufficient knowledge transfer (38.8%)

• Disbanding of the implementation team post go live (36.2%)

The following key elements of ERP implementation success must be addressed before

undertaking the actual ERP implementation (Doane, 2004):

• Long-term business and IT alignment should be in place

• Senior management must take more interest and should become more

enlightened regarding the whole of an ERP endeavor

While senior management commitment to an ERP endeavor must include both

sufficient funding and executive sponsorship, it is imperative that such sponsorship be

more enlightened about ERP issues before the implementation commences to ensure

that important business issues do not become lost in the fog of an IT shuffle. Unless

and until the top management and the steering committee believe that the ERP

implementation can be a success, the initiative should not be taken. If the senior

management themselves are unconvinced about the success of the initiative, then they

would not be able to convince the other employees who would ultimately be the end

users of the ERP application.




The ERP market is now witnessing a change recently as acquisitions are the order of

the day. Oracle is on a merger and acquisition spree and so are other companies. They

already have acquired other ERP practices like J D Edwards, PeopleSoft, Siebel and

Retek. This trend would see the merging of some of the best packages into one single

package which would cater to every section of the market (Doane, 2004).It is quite

possible that the near future might see only Oracle and SAP competing with each

other.

When an ERP vendor takes over a best-of-breed provider, it usually integrates

functionality from the acquisition's product into its own software over an extended

period and its customers reap the benefits of that improvement. However, when one

large enterprise software provider purchases another, end users of the acquired

company's product may face considerable disruption and expense, even if that product

continues to be marketed. They may need to move to a more advanced technology

platform, upgrading their hardware, software and operating systems along the way.

But in the long run, they may stand to gain because the new product would comprise

of all the best applications from the acquired companies.

The ERP package is an important step in implementation as this would determine the

fitment between the organization's business processes and the ERP package.

Organizations should do through due diligence before the package selection. This

could include evaluation is credit reports and meetings with ERP consultants.

Organizations should even consult with other organizations who have already

implemented the ERP package to get an understanding of the benefits.

Many observers believe that the ERP software market's rapid consolidation will

continue for the next few years. In business, as in life, there are no guarantees that

change will be for the better. But CFO’s can plan to meet it head-on.




5. Market Study & Analysis

Enterprise Resource Planning (ERP) systems have always been highly complex

information systems. ERP implementation is a very difficult and expensive project an

organization can ever take. It was reported that 75% of the ERP projects are classified

as failures (Aiman-Smith, 1999). A market survey and research based on the inputs

from ERP implementation consultants from various IT companies was undertaken to

analyze the causes for these failures. This research has explanatory and predictive

orientations. The first step is to evaluate and explain the impact of a set of interrelated

Critical Success Factors (CSF’s) on the success or failure of an ERP implementation.

The second step involved prediction of the ERP implementation success rate or index

by using the American Customer Satisfaction Index.

Based on the above, a conceptual model has been developed and analyzed for gauging

the ERP implementation success. Collected data are analyzed using Partial Least

Squares (PLS) technique of PLS-Graph. Finally, results and discussions are presented.

ERP systems are integrated, enterprise wide systems, which automate core

organizational activities such as forecasting, operations, manufacturing, human

resource, finance and supply chain management (Prasad Bingi, 1999).

Implementation of an ERP system in an organization leads to benefits that ultimately

translate into reduction in cycle time, reduced operational costs and increased

efficiency (Liang Zhang, 2003). However, it was reported that three quarters of the

ERP projects are considered failures and many ERP projects ended catastrophically.

5.1. ERP Implementation

Shanks and Parr (G.Shanks, 2000) defined ERP implementation as "the process of

developing the initial business case and planning the project, configuring and

implementing the packaged software and subsequent improvements to business

processes". It is important to note that ERP implementation is very different from the

implementation steps and phases of other information system applications.




One of the main differences between ERP and other application implementations lies

in the emphasis on the business process of an organization in the former (Rockart,

1979). This makes ERP implementation all the more difficult and time consuming.

5.2. Critical Success Factors

Critical Success Factors (CSF’s) approach was first used by Rockhart (1979)

(Bancroft, 1996) in the IS area. The CSF’s were earlier used to measure success of

project management initiatives, manufacturing, and business process re-engineering.

But now they are being applied to ERP implementations as well (Rockart, 1979),

(Bancroft, 1996). In the context of ERP implementation, CSF’s are defined as "factors

needed to ensure a successful ERP project" (Rockart, 1979). There has been extensive

research to identify the factors that allow top management to successfully implement

ERP. Some of the critical factors are same as other IT initiatives like end user's and

top management's support. But some of the critical factors are exclusive for high level

initiatives like ERP implementation in which BPR (Bancroft, 1996) is one of the most

important factor. Studies have shown that the factor study approach has it’s own

limitations and this view was supported by Pare and Elam (Elam, 1997). They

observed that these studies have limited scope as they evaluate only a part of the

problem and that it has limited capability of evaluating the ERP implementation

dynamics.

According to Pare and Elam, researchers have: "…built models that identify a limited

set of critical factors affecting IT implementation success, but [researchers] know

very little about how and why the factors included in these models interact and work

together to produce success or failure. As a result, [management information systems]

researchers lack a full understanding of the IT implementation process that is

necessary to guide practitioners to attain positive outcomes"(Elam, 1997,pg.543).

5.3. Research Framework

The proposed model describes ERP implementation success as function of interrelated

CSF’s and organizational culture. The model was formulated in two steps where:




• Literature relevant to IS implementation, ERP implementation, project management

and Business Process re-engineering was reviewed to extract a long list of all the

critical factors affecting implementation success.

• This list was synthesized and operationalized through a series of interviews with key

persons (i.e. project managers, consultants and vendor representatives) involved in

ERP implementations

5.4. ERP Implementation Success (1η): Dependent Variable

ERP success is a multidimensional, dynamic and relative concept. Until now there is

no one generic definition for ERP success, however there are some attempts to define

success in ERP literature. Based on their observations of enterprise systems projects,

Tanis and Markus {M. Lynne Markus, 2000) argued that there are three main

categories of success metrics:

(1) Project Metrics: The project metrics measures the performance of the ES of

an organization in relation to functional scope, cost and project schedule.

(2) Early Operational Metrics: This is a measure of the performance of business

operations from the time the ERP becomes live to the time normal operation

commences. This early operational metrics gives an idea as to how smooth the

operation would work out in future.

(3) Longer Term Business Results: This is the measure of the organization's

performance after the early operation. This measure takes into consideration

the long term business goals like ROI for measuring the implementation

success.




Independent Variable Flowchart (Kyung-Kwon, Hong, 2001)

The most famous framework to define implementation success was developed by DeLone

and McLean's (McLean, W. H. D. E. R. (1992)), (Sarker, 2000). The authors found that

there is no ‘one measure’ for an information system success and thus they identified six

different factors: system quality, information quality, use, user satisfaction, individual

impact and organizational impact. Based on both the studies, a framework is developed

to address different dimensions at different points of time (early operational metrics and

long term business results). Table (1) presents the proposed success dimensions and

measures.




5.5. CSF’s & Organizational Culture: Independent Variables

1. Fitment of Business process with ERP Package (2η)

Hong and Kim (Kyung-Kwon ,Hong , 2001) found that the organizational fit of ERP

system in terms of business processes and practices is very important for ERP

implementation success. Organizational fit of ERP package is defined as "congruence

between the original artifact of ERP and its organizational context"{M. Lynne

Markus, 2000). It has always been seen that the ERP packages are developed with the

industry best practices in mind and they have their own definition of best business

practices. Additionally, every organization has its own set of best practices that is a

part of their organizational culture. Therefore, it requires extreme care while selecting

an ERP package. The closer the gap between an organization's business process and

the ERP package, the higher the success rate of the ERP implementation. In real

world situation, it is impossible to get a perfect fit between the business processes and

the ERP package. There would always be a trade-off between using the aligning the

business process of an organization to the ERP package and customizing the package.

According to expert ERP consultants, it is not recommended to customize the ERP

package too much as the organization would lose out on taking advantage of utilizing

the application to its fullest. The organization should undertake business process re-

engineering for mapping them to the ERP application. For this, the mapping between

the organization's business processes and the ERP application should fit into one of

the multidimensional variable of the following Critical Success Factors (CSF’s):

i. Prudent ERP package selection: ERP packages have a set of standard

functionality for standard business processes. As already mentioned, ERP

vendors have their own definition of best practices which may or may not

match with the organization implementing it. So the packages have to be

studied first before going ahead with the implementation.

ii. Business Process Re-engineering: BPR is the “fundamental rethinking and

the radical redesign of an organizations' business processes to achieve

exceptional improvements in the measures of performance such as cost,

quality, service and speed of delivery“(Champy, 2001). Since ERP vendors




have their own definition of best practices which reflect in the ERP packages,

organizations have to re-engineer their business processes so that the mapping

is perfect (Champy, 2001), (Henri Barki, 2005 ).

iii. Customizations: The ERP packages incorporate the best practices and hence

they should be used as much as possible with minimal customization.

Organizations should align their processes to fit with the ERP package and

refrain from additional customizations as they increase the costs.

If an organization after careful study of various ERP application, selects one, then it

has to undertake minimal customization. This could mean that the organization has to

undergo extensive business process re-engineering. This leads to the following

hypotheses:

L1: Fitment of the Business process of an organization to the ERP package has a

positive impact on overall ERP implementation success.

2. Involvement and training of End Users (3η)

An important cause for ERP implementation failure is that the users either are not

involved during the business requirements planning or they are not trained enough to

use the system after the implementation. Either way, it translates into user resistance

which is very detrimental for the organization as it ultimately leads to failure. End

user's involvement is required in the definition and the implementation phase and is

very critical (Liang Zhang, 2003).

Failure of an ERP implementation is a surety if the entire process is not supported by

the end users. The organization implementing the ERP package should always take

the end users into confidence before even thinking of implementing the application.

These are the people who would ultimately use the system to streamline the business

process of the organization and it is imperative that they are involved in the

implementation from start till the end. During the definition phase of the

implementation, the end users are needed to customize the product according to the

needs and the business processes of the organization. If the involvement is high




during the initial phases, then it translates into high acceptability after the go live. End

user training has a positive impact on the outcome of ERP implementation as they are

the final users of the system (Kimberling, 2006). The hypothesis is:

L2: Involvement and training of end users have a positive impact on ERP

implementation success.

3. Commitment of the organization from all quarters (1ξ)

ERP systems after successful implementation affect all the stakeholders and are

instrumental in integrating the information as well as the business processes within an

organization. Hence it is required that the implementation gets support from all

quarters and functional units of the organization (Chee-Chuong Sum, 1997).

Company wide support is the key to a successful ERP implementation. The

hypothesis is:

L3: Support from every functional units of a company has a positive impact on ERP


4. Senior Management Support & Involvement (3ξ)

It has been noticed that majority of ERP implementations fail, cancelled or delayed

when the top management delegates project management and status evaluation of the

project to the technical team members who don't have the requisite expertise in terms

of clear organizational vision and objectives (Chee-Chuong Sum, 1997).

Management’s support is paramount as it assures monetary and staffing resources

which are very important for any ERP implementation to go on smoothly. ERP

implementations bring about a cultural change in the organization and top managers

are needed to oversee that the change is aligned to the goals and objectives of the

organization. Hence their involvement in every stage of the ERP implementation is

required (Pollyanne S.Frantz, 2002). Thus, we get the following hypothesis:

L4: Senior management support and involvement has a positive impact on ERP




implementation success

5. Project Management Effectiveness (4η)

ERP implementations are never short term initiatives. It comprises of long drawn

events of business processes re-engineering involving all the business units and their

staff. The complexity of the ERP implementations is increased by the involvement of

many factors like human resources, hardware, software, finances (Vital Roy, 2006).

Project management skills are a must for managing the hugely complex set up as the

system and the process have to be aligned towards the success of the ERP

implementation. The advantage of employing efficient project management is that the

implementation becomes process driven and that it sets a realistic time frame. The

implementation is assured of success only if the project management teams who are

the stakeholders in the organizational wellbeing are involved for constant progress

monitoring. Thus, we get the following hypothesis:

L5: Measure of project management effectiveness has a positive impact on ERP


6. Support from External Sources (2ξ)

ERP implementations are not only about just installing the software and customizing

it but also about business process mapping, technical support, maintenance and end

user training. All these cannot be done by the ERP vendor or organization single

handedly and hence the need for support from external sources. Organizations also

make use of external consultants who facilitate the implementation process as they

have in depth understanding of the product and can map the business process to the

application package. These consultants are highly skilled and experts in their field and

organizations should use them optimally for the best outcome as they bring with them

a process oriented approach for ERP implementations. Organizations would learn to

use the consultants effectively and at the same time, try to keep the fees to a

minimum. Thus we get the hypothesis:




L6: Support from external sources has a positive impact on ERP implementation

success.

5.6. Research Methodology

To test the proposed research model, empirically, a cross sectional survey was

conducted. Survey is one of the most prevalent research methodology used in

information system (IS) research (Alain Pinsonneault, 1992), (Douglas R.Vogel,

1984). The benefit of using surveys is that the researcher can easily cover large

populations quickly at a relatively low cost. Before conducting the survey, one should

choose the appropriate methodology taking into consideration the constraints, design

issues, sources of data and collection methodologies. Care should be taken to keep the

error to a minimum. The surveyed sample included some ERP adopters and

implementers. The respondents included IT managers, project managers and system

administrators as they are identified as the most appropriate informants for this study.

5 ERP consultants were administered the questionnaire (see appendix) personally

(face to face) and 3 were interviewed over the telephone.

5.7. Questionnaire Development

Special emphasis was given for this measurement development to obtain a reliable

and valid scale. Utmost care was taken to develop a professional looking

questionnaire that was well-crafted, which evoked honest answers from the

respondents. The adopted process was similar to that proposed by Churchill and used

by T. S Bhatti (Bhatti, 2005) as follows:




Churchill’s Questionnaire development Strategy

5.8. Partial Least Squares

Partial Least Squares (PLS) latent path modeling technique is used to model causal

links and test hypothesized relationships. PLS is a non-parametric estimation

procedure (Wold, 1982). The core of the concept of PLS is an iterative combination of

components which are analyzed. In this analysis the measures are related to the

constructs. Subsequently the structural model of the above constructs is captured

using a path analysis. A detailed description of the PLS model is provided by Wold

(Wold, 1982) and Lohmöller (Lohmöller, 1989). The main advantage of PLS over

other structural models such as LISREL is that it can be used for smaller sample sizes

(Chin, 2000). Since our sample size is small so PLS fits better and the analysis is

more accurate than using LISREL. Also, the predictive orientation on PLS is better

than other structural equation modeling tools and hence our choice.

Developing the best fit PLS model is equivalent to reaching the best fit measurement

and structural models. PLS graph (version 3.0) was used to estimate loading and paths

coefficients (Chin, 1997). In evaluating the measurement model, item loadings of 0.7

or higher are considered acceptable. All items show very acceptable reliability except

that for two items with loadings approximately 0.65. During the evaluation, it was

found that the loading for some instrument items were below 0.7 which is common




according to Hulland (Hulland, 1999). This is common when either new items or

newly developed scales or measures are employed. The examination of the factor or

cross loadings assured the discriminant validity (Chin, 2000), (Hulland, 1999).

The measures should not load higher on another construct than the one it is intended

to measure. Internal consistency of constructs was assured by calculating the two

measures composite reliability and the Average Extracted Variance (AVE).

Composite scale reliability ranged from 0.86 and 0.97 exceeding the cutoff value of

0.7 suggested by Nunally and Bernstein {Nunnally J.C, 1994). AVE ranged between

0.59 and 0.91exceeding the 0.5 threshold. The structural model is evaluated by testing

the significance of the path coefficients (Bouchaib Bahli, 2005). Some paths turned up

to be insignificant at 95% confidence level. The final form of the structural model is

specified in terms of PLS equations as follows:

PLS Equation (Chin, 1997)

5.9. ERP Implementation Success Index (ERP-ISI)

There are various methods of estimating the ERP implementation success index.

Some models estimate it by considering the variance of failure and some use the

variance of success. We have used the latter approach. The general form of the ERP-

ISI is proposed as follows (Bouchaib Bahli, 2005):

General ERP ISI Formula (Bouchaib Bahli, 2005)




According to the above equation of ERP Implementation Success Index depends on

factors like expected value of Success (E [.]), maximum value of success (min [.]) and

the maximum value of success (max [.]) The following equation shows the calculation

method of Min and Max values of ERP implementation.

Max/Min. Formula (Bouchaib Bahli, 2005)

Following is the explanation for the above equation:

w j’ : Weightage for the variable

K: Number of measurement variables

The variables are calculated from the results of the survey and are used for calculating

the Min and Max values and subsequently the ERP Implementation Success Index.

The equation helps us in calculating the success index and also the reasons for failure

and success.

5.10. Results and Discussion

Our results demonstrate that ERP implementation success is a function of a set of

interrelated Critical Success Factors (CSF’s) and organizational culture. While CSF’s

positively reinforce implementation success, organizational culture hinders its

progress. Most of the research hypotheses are supported by the returned empirical

data. According to the study conducted, it was found that if the CSF's are taken care

of, then it ultimately leads to a successful ERP implementation. But on the other hand,

if the organizational culture is not aligned properly, then it could lead to a failed

implementation.

It was inferred from the study that organizational fit to ERP package one of the most

important determinant of ERP implementation success. Although Top management

support was always the major success factor in the implementation of large




customized systems (Kaiser, 1987), the organizational fit to ERP has been superior in

the implementation of packaged systems such as ERP. Unless and until an

organization realizes the fact that business process mapping is an important part of

ERP implementation, it doesn't matter whether there is support of the senior

management or an efficient ERP package is selected. The project is bound to fail.

The study shows that there is adequate support from the top management in terms of

conveying the business goals and ensuring proper process goals to the ERP package.

They are also instrumental in keeping tab on the project management process.

When it is clear that a particular IT project has the interest, the support and the

commitment of the organization's senior management, everyone involved in the

project will have a sharper focus. External support including vendor and consultants

support do not show any effect on the implementation success.

This supports the findings of the conducted survey about the problems facing

implementers. The problem with ERP package vendors is that they set expectations

that cannot be fulfilled by the application. Another issue is the high consultation fees

that burden the overall project expenditure. Sometimes the vendors or external

consulting firms are slack in transferring the knowledge to the end users. This leads to

a scenario where the ERP application is in place but there is no adequate knowledge

of operating it.

Surprisingly, User's involvement and training are not found to have direct influence

on the implementation success. The tentative explanation may be due to the

centralized nature of some organizations which block the effective role of users in

implementation. This may also reveal deficiency in the set of questions measuring this

construct. Finally, empirical data revealed the negative impact of organizational

culture on implementation success. Successful ERP implementation in enterprises

faces major challenges such as centralized decision making, hierarchical structure,

communication gaps, and access to top management and ill-defined documentation

cycle.




5.11. Research Constraints

Even though we have tried to be accurate in terms of data collection and their

subsequent analysis, there were several constraints. It is important to remember that

the survey results predicted here does not predict the future; the economy may

improve even more, there might be a new ERP product launch or there might be more

consolidation in terms of ERP product vendors. It is also possible that industry best

practices might undergo a sea change and become standardized across a vertical.

This market survey takes into consideration a very small sample size. Surveying a

sample instead of the entire population allows one to obtain valid information at a

reasonable cost. However, care has been taken to get information that is statistically

valid and reliable. But since the information is statistically valid and reliable, the

results from the small sample size can be extrapolated.

This market survey could have taken other variables for consideration. These

variables were not considered explicitly because they broadly fell into one or the other

variable already considered in this research paper. They might be broadly categorized

as following (Edgewater Technology, 2006):

1. The Right Core

2. Creating Buy-In

3. Setting the Target

4. The Proving Ground

5. Right Sizing

6. Common Pitfalls

However, due to the small sample size of the survey, there are some limitations in the

generalization of the research results to a larger population. The ERP consultants are

very busy individuals and it was very difficult to get appointments for conducting the

interview and administering the questionnaire. The interviewees answered the

questionnaire in their personal capacity and the views do not represent those of the

companies. It is quite possible that the views of the individual may or may not match




with those of the organization. Further research is required to address the mentioned

limitations. It is recommended to conduct in-depth case studies to gain more insights

about ERP implementation. The combination of a detailed case study and a large

survey would have been an ideal method for getting conclusive results. A more

detailed research involving the top management can be done as these are people who

have more clarity in terms of organizational needs, culture, vision, mission, goals and

objectives. Another approach could be to get information from a cross-section of

people ranging from the top management, IT staff, end users, ERP vendors and

consulting companies. That would give a more detailed picture of the ERP

implementation scenario. Moreover, other soft modeling techniques such as Neuro-

fuzzy and Bayesian Belief Network (BBN) can be used to model causal relationships.

To survey a large sample size requires a lot of time and effort. A large survey also

requires a lot of attention as to follow ups on non-respondents and also less accurate

than a smaller but responsive sample (Thorn, 2001). Respondents of my survey were

responsive and have therefore been considered to be statistically valid for my

research.




6. Recommendation

At some point or other an organization contemplates on doing away with their

heterogeneous legacy systems and implementing an ERP package. The options are

many namely SAP, Oracle Applications or erstwhile PeopleSoft or JD Edwards.

Successful ERP implementations not only demands the right package selection but

also aligning the business processes. Some organizations undertake this initiative to

streamline their operations while others to have effective business intelligence. But it

has been found that there are 5 areas where ERP projects are most vulnerable. These

are:

• Understanding what integration means

• Managing communication

• Knowing the decision-making process

• Testing and managing infrastructure

• Living with the ERP

Whether it is ERP or any comparable initiative, if a company is taking on a high-

impact implementation that could result in organizational shifts, there are many things

to be remembered.

6.1. Change Management Program

Path breaking initiatives like change in business processes of an organization due to

an ERP implementation have widespread impact on the organization’s culture and

hence it is imperative that effective change management should be in place to execute

the implementation strategy. Change management is all about adapting to the

changing business conditions, controlling the change in a systematic manner and

effecting the change. Change management is a very critical initiative since it not only

affects the organization, but the individual as well. Organizations are affected as the

business processes are altered while an individual is affected because of the overall

change in the organization's culture. Organizations should be prepared for issues such

as these:




• Resistance

• Fear of Failure

• Non-Visionaries

The key to any change management program is communication, communication and

communication! Management needs to communicate the importance of the project

throughout the organization. Since the senior management has clarity on the vision

and objectives of an organization, they are the best persons to communicate the same

to the employees. Employees should always be kept in the loop for successful and

smooth ERP implementation.

6.2. Secure Management Support and Commitment

An important step in ERP implementation is to secure top management support and

this demand the presence of a project champion who is well aware of the

organizational goals and objectives. This consultant should have access to the top

management and should be able to act as a passage between the end users and the

management. The top management support and commitment can be secured by

putting forth the long term benefits of the ERP implementation that would ease the

realization of the goals and objectives of the organization. An effective strategy would

be to identify the business processes that are aligned with the vision of the

organization and then move forward to mapping these business processes to the ERP

package. It is not always easy to change an organization’s business process which

invariably changes the culture too, hence it is the responsibility of the senior

management to initiate the process and take it forward.

6.3. Picking the Implementation Team Wisely

Organizations have several options when it comes to choosing the implementation

team. They could choose between internal staff, IT consulting entities or the software

vendors themselves. Ideally, internal IT staff is suited to do the job as they know the

business processes better than anyone else. But then there are issues of dedicated

resource allocation limitation and the steep learning curve forces organizations to




employ consulting firms.

The consulting firms provide an unbiased solution for the organizations as they have

great product knowledge. But the product knowledge too could be the cause of bias

while recommending packages. There's a lot to be learned from past successes and

failures that can make ERP successful. There are several key insights about

implementing and integrating an ERP into the environment. To act on some of these

insights, one has to be a development manager or a project leader, but any ERP team

member can benefit from knowing the lessons of the past (Vessey, 1999).

This research focuses on ERP implementation. More specifically, we developed and

empirically tested a model that investigates ERP implementation success as a function

of interrelated CSF’s extracted from literature and organizational culture. The survey

threw up some interesting results in terms of our understanding of the literature and

organizational culture. This study therefore aims to depict the relationship among

different CSF’s. The research could have been more detailed, if more CSF’s were

taken into consideration. This research will thus add to the growing body of

knowledge on ERP implementations, an explanatory study of ERP implementations.

On the practical side, this research improves understanding for organizations on how

to implement large IS such as ERP within the challenging organizational culture. In

essence, the paper recognizes critical issues that must be carefully considered to

ensure a “happy ending” implementation. Moreover, it pays attention to hosting

enterprises especially multinational corporations, vendors and consultants to carefully

consider cultural issues when planning for ERP implementation. Finally, the study

presents a self-assessment tool for ERP implementers. The proposed tool is targeted

to serve those who passed or still in the implementation experience. The equation

mentioned in the paper can be used by any organization to gauge the success rate of

an ERP implementation. This would surely help them to change their business

processes and take care of the organizational culture issues for smooth ERP

implementation.




7. Conclusion

There is no set formula for ERP implementation success and the failure or success

does not depend on a single factor. Each step of the ERP implementation has to be

carefully monitored so that all the business processes are properly mapped to the ERP

package. The steering committee should be watchful enough to ensure proper checks

and balances. The top management should also ensure that the apprehensions and

thereby the end user’s resistance to change is taken care of by showing them the

bigger picture. This can be done by studying the potential causes of resistance and

using proven and effective strategies for ERP implementation. The key here is to keep

abreast of the entire change management process. At no point in the entire ERP

implementation process should the top management loose track of the progress. This

is important because ERP implementations are very prone to mishaps if not monitored

by competent resources.

Enterprise Resource Planning applications are known to be tough to tame and there

are numerous ways in which things can go wrong leading to total failure of the entire

implementation. If the ERP package is implemented properly, then the company

stands to benefit in the long run. These benefits could be in the form of operations

efficiency, enhanced delivery and effective business intelligence (Rao, 2006). But the

entire process of ERP implementation is resource intensive and process oriented and

this is the reason why many ERP implementations fail and the success rate is low.

ERP and supply chain management are both interrelated and go hand in hand. For the

well-prepared, new supply chain management systems based on ERP have become

significant competitive differentiators (Donovan, 2005). Implementing ERP can

become a thought altering experience for those involved. Following a proven and

effective methodology will greatly increase an organization's likelihood of success the

first time itself.

Apart from quick implementation time, operational benefits and ROI are key

indicators of success. The new ERP system should start showing quantifiable benefits




immediately, ROI occurring within a year or so. Since the ERP package keeps track

of all the business process at each and every stage across all business units, it would

be easier for an organization to know if their customers are satisfied or not.

To sum up, the key to successful implementation of an enterprise software solution is

to apply people, process and product initiatives within a structured methodology

framework. The most difficult task in an ERP implementation is to bring all the above

together and align them toward the goals of an organization. When people, processes

and the product are aligned towards the organizational goals then the ERP

implementations are bound to be a success thereby reaping benefits and rapid return

on investments.




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9. Appendix

9.1. Questionnaire

1. What is your position in the company?

2. Sector that the company works for: Public/Private

3. Product type of company: Goods/Service

4. Annual Sales of company in 2009.

5. Number of employees

6. Decision making system in the company

• Centralized decisions made at the corporate level

• Decentralized at the corporate level, centralized decisions made at the divisional level

• Decentralized at the corporate and divisional level, decisions made at lower operating levels

• Some decisions

7. Which organization structure exists in the company?

• Functional Structure (classical hierarchical structured organization having several levels arranged in a

tree-like structure)

• Matrix Structure (Functional organization for increasing the efficiency interdepartmental business)

• Pure project structure (project manager maintains complete line authority over the entire project and

associated resources)

• Other

8. Which ERP software does the company use or implement?

9. How long does an implementation take? (in months)

10. Which was the implementation time that was planned before starting? (in

months)

11. At what percent was the Data in the old system transferred to the new system?

12. During BPR, what percent of the work processes were redefined?

13. What percent of your ERP software were satisfied after implementation?

14. What percent of the ERP software was redesigned to be adopted to the

company?

15. Evaluate these uses of ERP in terms of the importance. 5:very

important,4:moderately important,3:little important,2:very little

important,1:not important




4 3 2 1 5

Flexibility of the software in responding to the changes in the company’s

processes or how adaptable is the ERP software in accommodating

business process changes? *

Having the proper tools for the company does the ERP software

functionality satisfy the company’s business processing requirements? *

Business process integration (i.e. common accessibility of data, report and

performance measure) *

Standardization of the processes; what degree of business process

standardization did you achieve? *

The "ease of use" of the ERP system modules *

The effectiveness and the completeness of reporting functionality within

the system *

The ability to satisfy customer demand *

16. Evaluate these uses of ERP in terms of the degree of obtaining them after

implementation. 5: totally, 4: partially, 3: little. 2:very little, 1:none

4 3 2 1 5

Flexibility of the software in responding to the changes in the company’s

processes or how adaptable is the ERP software in accommodating




business process changes? *

Having the proper tools for the company does the ERP software

functionality satisfy the company’s business processing requirements? *

What degree of business process integration has been achieved

(i.e.common accesebility of data, report and performance measure)? *

Standardization of the processes; what degree of business process

standardization did you achieve? *

Rate the "ease of use" of the ERP system modules *

Rate the effectiveness and the completeness of reporting functionality

within the system *

Rate the ability to satisfy customer demand *

17. Total success of the ERP implementation. (5:very, 4:partially, 3:little, 2:very

little, 1:not at all)

5 4 3 2 1

Rate the success of your ERP

Implementation. *

erp success failure pijush gupta

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