Journal of Enterprise Information ManagementFactors affecting ERP system implementation effectivenessDimitrios Maditinos Dimitrios Chatzoudes Charalampos Tsairidis

Article information:To cite this document:Dimitrios Maditinos Dimitrios Chatzoudes Charalampos Tsairidis, (2011),"Factors affecting ERP systemimplementation effectiveness", Journal of Enterprise Information Management, Vol. 25 Iss 1 pp. 60 - 78Permanent link to this document:http://dx.doi.org/10.1108/17410391211192161

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Factors affecting ERP systemimplementation effectiveness

Dimitrios MaditinosDepartment of Business Administration,

Technological Educational Institute of Kavala, Kavala, Greece

Dimitrios ChatzoudesDepartment of Production and Management Engineering,Democritus University of Thrace, Xanthi, Greece, and

Charalampos TsairidisDepartment of Social Administration, Democritus University of Thrace,

Komotini, Greece

Abstract

Purpose – Enterprise resource planning (ERP) systems enhance productivity and working qualityby offering integration, standardization and simplification of multiple business transactions. Thepresent study seeks to introduce a conceptual framework that investigates the way that human inputs(top management, users, external consultants) are linked to communication effectiveness, conflictresolution and knowledge transfer in the ERP consulting process, as well as the effects of these factorson ERP system effective implementation.

Design/methodology/approach – The examination of the proposed conceptual framework wasmade with the use of a newly developed questionnaire. The questionnaire was distributed to a group of361 Greek companies that have implemented an ERP system. Information technology (IT) managerswere selected as the key respondents of the questionnaire. After the completion of the four monthresearch period (September to December 2008), 108 usable questionnaires were returned (responserate ¼ 31 percent approximately). The empirical data were analyzed using the structural equationmodelling technique (Lisrel 8.74).

Findings – The main findings of the empirical study can be summarized in the following categories:the assistance provided by external consultants during the ERP implementation process is essential;knowledge transfer is an extremely significant factor for ERP system success; knowledge transferconcerning technical aspects of ERP systems is more important than effective handling ofcommunication, as well as conflict resolution among organizational members; the role of topmanagement support seems to be of less importance that the one provided by users.

Research limitations/implications – The present study is limited by the poor definition of itspopulation (due to lack of available data) and the relatively small size of the sample.

Practical implications – The paper points out areas that adopting companies should emphasize inorder to successfully implement an ERP system and, therefore, harvest its potential benefits.

Originality/value – The paper proposes an enhanced conceptual framework that examines vitalissues concerning ERP system effective implementation, thus, providing valuable outcomes fordecision makers and academics. The originality of the paper lies in its three dimensionalapproach.

Keywords Enterprise resource planning, Internal support, External support,ERP system effective implementation, Linear structure equation modelling, Cost effectiveness,Resource efficiency

Paper type Research paper

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1741-0398.htm

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Received 27 August 2010Revised 27 September 2010Accepted 23 March 2011

Journal of Enterprise InformationManagementVol. 25 No. 1, 2012pp. 60-78q Emerald Group Publishing Limited1741-0398DOI 10.1108/17410391211192161

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1. IntroductionIndividuals, companies and managers often face difficulties in comprehending the fullspectrum of capabilities and attributes of ERP systems, due to the system’scomplicated nature (Finney and Corbett, 2007; Markus and Tanis, 2000; Somers andNelson, 2004). Marnewick and Labuschagne (2005) argue that an ERP system shouldnot only be regarded as an information system (IS), but also, in order to be effectivelyimplemented should be regarded as an integrated business system that surrounds allbusiness functions. The same scientists define ERP as a software package thatcombines both business processes and information technology (IT) features.

Nowadays, ERP systems are being increasingly adopted by organizations of anykind and size, in order to avoid technical obsolesce and create sustainable competitiveadvantages (Al-Mashari et al., 2003; Willis and Willis-Brown, 2002). Dillard and Yuthas(2006) note that most multinational firms are using ERP software packages and evenmore small and midsize companies are on the route of adopting them.

ERP system acquisition and implementation generally enhance productivity andworking quality, since the system offers standardization and simplification in multiple,complicated operational procedures across the company (Nah et al., 2001). Moreover,information can easily be transferred, shared and exchanged among users who areworking at different business divisions (Amoako-Gyampah, 2007; Kemp and Low,2008). In general, the literature has identified the following potential benefits of ERPsystem implementation (Al-Mashari et al., 2003; Amoako-Gyampah, 2007; Chang, 2004;King, 2005; Scott and Kaindl, 2000; Umble et al., 2003):

. improved coordination across functional departments;

. increased efficiency in doing business;

. reduced operating costs (lower inventory control cost, lower production costs,lower marketing costs, lower help desk support costs);

. facilitation of day-to-day management;

. rapid access to information for decision making and managerial control; and

. support of strategic planning (through the planning of available resources).

Despite the attributes and major advantages provided by ERP systems, theimplementation of such systems is not always effective. Most enterprises are not ableto fully justify their investments in ERP software, since the bulk of ERP benefitsremain hidden. In their survey, Marnewick and Labuschagne (2005) reported that 25percent of ERP installations exceed the initial cost and about 20 percent cannot becompleted. Moreover, ERP systems often fail to meet organizational goals soon aftertheir implementation. The cause of the general disappointment regarding ERP systemeffectiveness lies in a number of reasons, including a misconception about the system’spotential (Bradford and Florin, 2003; Hong and Kim, 2002; Marnewick andLabuschagne, 2005; Motwani et al., 2005).

The present study aims to develop a conceptual framework that incorporates themain factors leading in the effective implementation of an ERP system. Motivated bythe theoretical importance of ERP systems and the empirical failure in fully harvestingtheir potential, the proposed conceptual framework includes variables that, accordingto the best of our knowledge, have never been collectively examined before.

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Built on the argument that the success of most ERP systems is decided during theinitial steps of their implementation (Gargeya and Brady, 2005; Hong and Kim, 2002)and significantly depends on the cooperation with an external consulting group(Akkermans and van Helden, 2002), the present study develops an “ERPimplementation process model” that investigates the impact of internal and externalhuman inputs on ERP implementation effectiveness (see Figure 1).

The need to fully incorporate the role of external consulting support in the proposedconceptual framework is imposed by its wide accepted significance in the ERPimplementation process (Wang and Chen, 2006). On the other hand, the influence ofinternal stakeholders (top management and users) in the ERP consulting process isequally important, since they are the ones that must understand and learn to use what

Figure 1.ERP implementationprocess model

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is embedded in the system. By including both internal and external support, thepresent paper takes account of all the critical entities that could significantly impactthe process and outcome of an ERP system implementation (Reimers, 2003).

More analytically, the proposed “ERP implementation process model” investigateswhether external and internal human inputs affect the consulting implementationprocess related to effective communication, conflict resolution and knowledge transferand whether these factors lead to ERP system effective implementation. Such anintegrative approach has never been attempted in the literature before and is expectedto yield significant findings for companies that are about to adopt ERP systems. Ingeneral, it is argued that the proposed conceptual framework adopts a holisticapproach to ERP system implementation, sheds light in areas rarely investigated andleads to interesting practical implications.

The present study makes two contributions to the ERP implementation literature.First, it develops a conceptual framework that places the centre of attention on the ERPconsulting process, arguing that the success of most ERP systems is decided upon theirinitial implementation and depends significantly on external consultation. Second, thestudy highlights the contribution of “people” (top management, users, externalconsultants) to the process of ERP implementation, based on the concept that mostERP systems, however how intelligent, need to be thoroughly adjusted to everybusiness environment in order to be crystallized into workable ERP solutions.

The following section includes the presentation of the proposed conceptualframework of the study. In the third and fourth section, the research methodology andthe results are being presented. The conclusions and the impact of the research arediscussed in sections 5 and 6 respectively and, finally, section 7 includes studylimitations and proposals for future research.

2. The conceptual framework of the studyThe present study introduces a newly developed conceptual framework that places theERP consulting process on the center of attention. According to Wang and Chen (2006,p. 1031), “one key to a successful ERP implementation is to maintain an effective andsmooth consulting process”. The proposed “ERP implementation process model”consists of three dimensions (see Figure 1): human inputs; ERP consulting process; andconsequence. The human input dimension includes variables about internal andexternal support; the ERP consulting process dimension includes variables that arelikely to affect the ERP consulting process; while the consequence is the effectivenessof the implemented ERP, as it is perceived by its actual users.

The aim of the study is to examine the causal relationships between seven researchvariables that belong to these three dimensions:

(1) top management support (human input . internal support);

(2) user support (human input . internal support);

(3) consultant support (human input . external support);

(4) communication effectiveness (ERP consulting process);

(5) conflict resolution (ERP consulting process);

(6) knowledge transfer (ERP consulting process); and

(7) ERP system effective implementation (consequence).

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The proposed conceptual framework is based on previous studies by Wang and Chen(2006), Wang et al. (2007) and Thong (2001). The hypotheses of the study are presentedbelow.

2.1 ERP consulting processThe consulting process that takes place during and after the implementation of an ERPsystem is of vital significance for every company (Wang and Chen, 2006). Thefollowing paragraphs discuss the three main factors that relate to the ERP consultingprocess: communication effectiveness (Bloomfield and Danieli, 1995; Wang and Chen,2006); conflict resolution (King, 2005; Robey et al., 1993; Wang and Chen, 2006); andknowledge transfer (Wang et al., 2007), as well as their effect on ERP system effectiveimplementation.

2.1.1 Communication effectiveness. Effective communication is a strong foundationof a trustworthy relationship between external consultants and organizationalmembers (Attewell, 1992). The more consultants and users understand each other, themore effective the communication becomes during the consulting process. Insufficientcommunication of users’ needs, goals and aspirations to the consultants mayundermine the implementation of the ERP system (Fleck, 1993; Wang and Chen, 2006).Thus, we hypothesize that:

H1. A positive relationship exists between communication effectiveness and ERPsystem effective implementation.

The consulting process is an undertaking that, in order to be effective, constantcommunication with the client is needed (Lee and Kim, 1999). With effectivecommunication, information can be transferred and exchanged easier between bothparties who realize, in that way, that sustaining this relationship is at their bestinterest. Such relationship, accordingly, generates trust between the client companyand the consultant company. As a result, the two companies become allies in a commoneffort to minimize conflicts that may arise in their cooperation (Lee and Kim, 1999;Morgan and Hunt, 1994; Wang and Chen, 2006). Thus, we hypothesize that:

H2. A positive relationship exists between communication effectiveness andconflict resolution.

2.1.2 Conflict resolution. The implementation of an ERP system is a time-consumingprocess. During that process certain conflicts may occur between users and consultants(King, 2005). Such conflicts will possibly affect in an adverse way the output of theconsultant-client relationship (McGivern, 1983). However, the emergence ofdisagreements during the implementation period should not be considered as anegative turn in the cooperation, but rather as a common incident during a long-lastingcollaboration (Green, 1998). Effective management of conflicts may lead in an enhancedlevel of information exchange and group work, thus, improving the implementation ofthe ERP system (Scott and Kaindl, 2000). Thus, we hypothesize that:

H3. A positive relationship exists between conflict resolution and ERP systemeffective implementation.

2.1.3 Knowledge transfer. Knowledge transfer in the ERP consulting process can bedescribed as a gradual procedure in which knowledge is being transferred from

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external consultants and vendors to the internal environment of the company (Wanget al., 2007). An increased level of knowledge concerning the ERP system will enablethe company to exploit the new technology to its full potential and continue to achievebenefits from the use of the system in the future. Thus, we hypothesize that:

H4. A positive relationship exists between knowledge transfer and ERP systemeffective implementation.

2.2 External consultant supportConsultants play a major part in the ERP implementation challenge, since they havethe technical knowledge and expertise to assist users in filling the unavoidableknowledge gab that derives from implementing a new ERP system. Under that logic,the consulting process becomes a necessity for any company that is willing toimplement an ERP system (Freeman and Dart, 1993; Wang and Chen, 2006). Thesolutions that consultants offer during and after the configuration of the ERP systemdirectly influence the effectiveness of the implemented ERP, independent of theirinteractions with their client (Wang and Chen, 2006). Thus, we hypothesize that:

H5. A positive relationship exists between consultant support and ERP systemeffective implementation.

In order to achieve high-level communication with each client and be able to resolveconflicts that may probably arise, a consultant should be particularly skilled(McLachlin, 1999). A successful consultant possesses both sufficient technicalbackground, as well as the ability to communicate knowledge and experience, in a waythat he gains the client’s trust (McGivern, 1983; Wang and Chen, 2006). Only in such acase, the client feels safe and, as a consequence, a good level of communication and aneffective negotiation procedure during the whole implementation process is achieved(Wang and Chen, 2006). Therefore, we hypothesize that:

H6. A positive relationship exists between consultant support and communicationeffectiveness.

H7. A positive relationship exists between consultant support and conflict resolution.

ERP systems are complex in their nature, as well as in their implementation. Therefore,each company must acquire the adequate know-how and understanding of the systemin order to fully exploit its potential. Consultant support from specialists who know indetail the ERP system and have the experience of how the system operates is crucial inorder to achieve the required knowledge transfer to the company. The more extendedthe consultant support is, the more successful the transfer of knowledge to theadopting company will be (Bessant and Rush, 1995; Wang et al., 2007). Therefore, wehypothesize that:

H8. A positive relationship exists between consultant support and knowledgetransfer.

2.3 Internal consultant supportHowever competent a consultant may be, ERP implementation will not run smoothlyunless the members of the client organization (top management and users) arecommitted to the adoption and the use of the ERP system (Wang and Chen, 2006).

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2.3.1 Top management support. Top management support describes the extent towhich executive managers of the adopting firm provide the attention, resources, andauthority required for ERP implementation (Wang and Chen, 2006). Top managementsupport is a prerequisite for the successful ERP system implementation. Top managerssupervise the whole implementation procedure, enable resource distribution, andsupport conflict management (Wang and Chen, 2006). Moreover, top management hasthe responsibility to align the new ERP system with the current business practices andprepare the employees for the change brought by the new technology. When topmanagement works closely with various ERP users in the direction of the successfulimplementation of the ERP system, the communication between business groups isbeing enhanced and conflict resolution becomes attainable (Thong et al., 1996; Thong,2001). Thus, we hypothesize that:

H9. A positive relationship exists between top management support andcommunication effectiveness.

H10. A positive relationship exists between top management support and conflictresolution.

Moreover, we hypothesize that a strong support from the top management towards theimplemented ERP system will lead to enhanced knowledge transfer inside the adoptingorganization (Boynton et al., 1994; Cohen and Levinthal, 1990):

H11. A positive relationship exists between top management support andknowledge transfer.

2.3.2 User support. User support refers to the psychological state of business userstoward the changes caused by the implemented ERP system, as well as toward the useof the system for performing their tasks (Wang and Chen, 2006). The users of an ERPsystem are usually the ones required to adjust their daily working practices to the newsystem’s requirements. Apparently, becoming familiar with a new ERP system is notan easy task and involves hard working and patience from the part of users(McLachlin, 1999; Soh et al., 2000; Wang and Chen, 2006).

In order to favorably affect users’ perceptions about new technology, the real benefitsand advantages of using the ERP system need to be continuously reminded (Umble et al.,2003). Otherwise, users are not motivated to support the ERP system in that they are notwilling to cooperate with the consultants and assimilate the knowledge transferred tothem. This situation provokes conflicts in the consultant-client relationship and hinderscommunication (Wang and Chen, 2006). Therefore, we hypothesize that a high degree ofuser support will strengthen communication effectiveness and conflict resolution:

H12. A positive relationship exists between user support and communicationeffectiveness.

H13. A positive relationship exists between user support and conflict resolution.

Finally, we hypothesize, with alignment to H11, that a strong user support towards theimplemented ERP system will lead to enhanced knowledge transfer inside the adoptingorganization (Boynton et al., 1994; Cohen and Levinthal, 1990):

H14. A positive relationship exists between user support and knowledge transfer.

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Figure 1 summarizes all the above hypotheses, thus, presenting the proposedconceptual framework of the study.

3. Research methodology3.1 Sample of the studyThe conceptual framework of the present study was tested with the use of a newlydeveloped questionnaire on a sample of Greek companies that have implemented anERP system. Data concerning companies that could possibly be included in the sampleof the study were obtained via the web sites of the leading ERP system providers thatoperate in Greece (e.g. Sap Hellas, Oracle Hellas, Synergy Hellas). Since no otherdatabase including companies using ERP systems exists, the use of the certain methodwas the only one able to provide usable information. Totally, 517 companies that haveimplemented an ERP system were identified.

3.2 MeasuresThe questionnaire of the present study is based on items (questions) that have beenused by various previous researchers (Davison, 1997; Freeman and Dart, 1993; Jianget al., 2000; Lee and Kim, 1992; Shin and Lee, 1996; Simonin, 1999; Sussman andGuinan, 1999; Wang and Chen, 2006; Wang et al., 2007). All questions were translatedto Greek and then back to English by another person, so the detection and consequentimprovement of any discrepancies was possible. The five-point Likert scale was usedfor the measurement of all variables (1 ¼ “strongly disagree” to 5 ¼ “strongly agree”).Table I demonstrates the seven research variables, the number of items used for theirmeasurement and the studies from which they where adapted.

3.3 Data collectionThe final questionnaire and a cover letter including all necessary clarifications, wassent to the IT managers of the companies of the sample. IT managers were selected asthe key respondents, due to their experience and expertise. Questionnaires were sentonly after telephonic contact with the IT manager in each company has beenestablished. In order to send the questionnaire and the necessary clarifications to theperson contacted by telephone, fax, traditional mail, or electronic mail services wereutilized.

After making all necessary telephone calls, 361 questionnaires were distributed to361 companies that agreed to participate in the survey. The research period lasted four

Variables Number of items Adapted from

Top management support 7 Lee and Kim (1992)User support 6 Jiang et al. (2000)Consultant support 10 Freeman and Dart (1993)Communication effectiveness 4 Davison (1997)Conflict resolution 4 Sussman and Guinan (1999)Knowledge transfer 4 Simonin (1999), Wang et al. (2007)ERP effective implementation 5 Shin and Lee (1996)Total 40

Table I.The measurement of the

variables of the study

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months (September to December 2008). Totally, 112 questionnaires were returned, andafter realizing all necessary controls 108 were used for data analysis (data analysis wasconducted with the use of the statistical packages SPSS 14.0 and Lisrel 8.74). The 112returned questionnaires represent a very satisfactory response rate of 31 percent.

The majority (24.7 percent) of the companies of the sample belong to the “Informatics”industry (sector), while 14.8 percent to the “Electronic” and 12.3 percent to the “Food”industry. Moreover, the 37 percent of the companies of the sample employ 101 to 500employees, 30.9 percent employ 51 to 100 employees, while only 6.2 percent and 12.3percent of the companies employ less that 50 and more that 1,000 employeesrespectively. Accordingly, the results indicate that the annual sales of the 32.1 percent ofthe companies of the sample are between 10,000,000 and 50,000,000 Euros, while thesecond larger category (29.6 percent) includes companies that have annual sales between1,000,000 and 10,000,000 Euros. The majority of the respondent companies (34.6 percent)have been using an ERP system for more than two years, 29.6 percent less than twoyears and 35.8 percent less that one year. Finally, about half of the Greek companies ofthe sample (49.6 percent) have chosen “SAP Ltd” as their ERP system provider, 26.7percent “Oracle Ltd” and 23,7 percent have chosen another supplier.

3.4 Reliability and validityThe instrument (questionnaire) that was used in the present study was tested for bothits content and construct validity. The control for the content validity was conductedprior to the beginning of the survey and included consultation with academics of thefield, consultation with experienced practitioners, and pilot testing.

The control for the construct validity was conducted in two steps. Each of the sevenresearch variables was evaluated for its unidimensionality and reliability, for thegoodness of fit to the proposed research model.

The estimation of the unidimensionality of each of the seven variables wasconducted using explanatory factor analysis with the method of principal componentanalysis. Moreover, for the estimation of the reliability of the research variables, thestatistical measure Cronbach’s alpha was used (the statistical package SPSS was usedin both cases).

All tests concluded that all the scales used, after minor amendments (extraction ofitems), are valid and reliable (see Table II for the main results).

Furthermore, the evaluation of the goodness of fit of each of the seven researchvariables to the proposed model was conducted using confirmatory factor analysis,with the use of the statistical package LISREL 8.71.

All tests conducted produced satisfactory results (see Table III for the main resultsconcerning the estimation of the goodness of fit). Finally, after the successfulcompletion of the control for the construct validity of the questionnaire, the final scoreof each variable was calculated using the mean of the items used in each case.

4. ResultsThe conceptual framework of the present study suggests that top managementsupport, user support and consultant support are positively related with ERP systemeffective implementation, through communication effectiveness, conflict resolution andknowledge transfer (see Figure 1). The examination of the conceptual framework andthe verification of the 14 hypotheses were conducted with the use of the “structural

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equation modeling technique”. the certain multivariate technique was used because ofits ability to simultaneously examine a number of depended linear relations, where oneor more construct (variable) is both dependent and independent according to therelation it belongs (Hair et al., 1995; Kelloway, 1998). For the conduction of theappropriate analysis the statistical package LISREL 8.74 was used.

The estimation of the structural model was conducted with the maximum likelihoodestimation method, which is the most widespread method of estimation (Anderson andGerbing, 1988; Kelloway, 1998). The covariance matrix was used as the table of entry,because the control of the hypotheses in the structural equation modeling technique isbased on the hypothesis that the matrix that will be analyzed is the covariance matrix.Thus, even though the use of the correlation matrix has widespread use in a lot ofapplications, the use of the covariance matrix is recommended (Kelloway, 1996).Finally, the extraction of the standardized completely solution was requested.

To evaluate the fit of the overall model the chi-square value (X 2 ¼ 712:69 with 447degrees of freedom) and the p-value (p ¼ 0:05060) were estimated. These valuesindicate a good fit of the data to the overall model. However, the sensitivity of the X 2

statistic to the sample size enforces to control other supplementary measures ofevaluating the overall model, such as the “Normed-X 2” index (1.59), the RSMEA index(0.087) the CFI (0.95) and the GFI (0.93), that all indicate a very good fit. For the control

VariablesKaiser-

Mayer-OlkinBartlett’s testof sphericity Eigenvalue Variance

Cronbachalpha

Top managementsupport 0.691 144.9 * 2.656 77.31% 0.846User support 0.716 169.5 * 3.003 79.63% 0.894Consultant support 0.663 91.9 * 2.013 66.34% 0.736Communicationeffectiveness 0.763 163.2 * 2.520 63.85% 0.766Conflict resolution 0.712 96.3 * 2.112 58.58 0.736Knowledge transfer 0.836 23.3 * 2.963 75.09 0.891ERP system effectiveimplementation 0.779 163.3 * 2.367 76.84 0.821

Note: *p , 0:01

Table II.Estimation of

unidimensionality andreliability

VEVariables X 2 CR (%) RMSEA CFI GFI

Top management support 37.71 * 0.81 63 0.0967 0.97 0.98User support 13.58 * 0.83 68 0.097 0.99 0.99Consultant support 21.66 * 0.73 56 0.095 0.96 0.99Communication effectiveness 13.23 * 0.89 64 0.096 0.99 0.97Conflict resolution 19.49 * 0.91 78 0.097 0.96 0.99Knowledge transfer 9.69 * 0.87 64 0.086 0.96 0.99ERP system effective implementation 25.32 * 0.86 73 0.099 0.97 0.97

Note: *p , 0:05

Table III.Estimation of the

goodness of fit

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of the measurement model the significance of the factor loadings, the constructreliability and the variance extracted were estimated. Results indicated that allloadings are significant at the p , 0:05 level. Additionally, the construct reliability andthe variance extracted measures for all constructs are satisfactory.

Table IV illustrates all relations between research variables, as they have beendetermined by the hypotheses of the study (see paragraph 2). For the verification (orthe rejection) of every research hypothesis, two controls have been conducted: the valueand the direction of the relation between the two latent variables; and the significanceof the relation, indicated by the t-value, were examined. According to Hair et al. (1995),when the t-value is above 1.96 and below 21.96, the hypothesis is significant at thesignificance level of 5 percent. Otherwise, the hypothesis is statistically insignificant.

Results offer support to 8 research hypotheses (H2, H4, H5, H7, H8, H10, H12,H14), while six hypotheses are not verified by the empirical data (H1, H3, H6, H9,H11, H13). The analysis of the results gives room for interesting observations andoffers guidelines to ERP implementing companies.

4.1 General observationsIn general, it should be highlighted that the empirical results suggest that onlyknowledge transfer and consultant support can directly and positively influence ERPeffective implementation (H4 and H5), while the postulated effect of communicationeffectiveness and conflict resolution is insignificant (H1 and H3). Between these twosignificant paths, consultant support seems to be of greater importance that knowledgetransfer (0.41 and 0.25 respectively).

4.2 “ERP consulting process” dimensionThe only variable of the “ERP consulting process” dimension that has a direct positiveimpact on ERP effective implementation is knowledge transfer (H4). Results failed to

Hypothesis Path Effect t-value Result

H1 Communication effectiveness ! ERP systemeffective implementation

20.76 21.46 Rejected

H2 Communication effectiveness ! conflict resolution 0.73 3.09 AcceptedH3 Conflict resolution ! ERP system effective

implementation1.20 1.90 Rejected

H4 Knowledge transfer ! ERP system effectiveimplementation

0.25 2.36 Accepted

H5 Consultant support ! ERP system effectiveimplementation

0.41 2.46 Accepted

H6 Consultant support ! communication effectiveness 20.09 20.71 RejectedH7 Consultant support ! conflict resolution 0.49 3.26 AcceptedH8 Consultant support ! knowledge transfer 0.22 2.35 AcceptedH9 Top management support ! communication

effectiveness20.28 22.00 Rejected

H10 Top management support ! conflict resolution 0.19 1.99 AcceptedH11 Top management support ! knowledge transfer 0.01 0.14 RejectedH12 User support ! communication effectiveness 0.53 3.53 AcceptedH13 User support ! conflict resolution 0.04 0.29 RejectedH14 User support ! knowledge transfer 0.22 2.46 Accepted

Table IV.Direct effects betweenresearch variables (test ofhypotheses)

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establish a significant relationship between communication effectiveness and conflictresolution, on the one hand and ERP system effective implementation on the other (H1and H3). It seems that these two variables do not have the capacity to directly influencethe outcome of the ERP implementation process, mostly because they are not asequally significant as knowledge transfer and consultant support. They may benecessary for maintaining a good working environment while the implementationprocess takes place, but they fail to directly influence the overall success of thisprocess.

Moreover, communication effectiveness has a quite large effect (0.73) on conflictresolution (H2). This is quite logical, since the higher the communication betweenbusiness entities, the better the possibility to resolve the problems that occur duringthe implementation of an ERP system.

4.3 “Human input” dimensionUser support is the only variable of the “human input” dimension that has an influenceon communication effectiveness (H12). This finding indicates that the willingness ofusers to support the project and accept the corresponding organizational changesmotivates them to openly express themselves regarding their thoughts andrequirements during the implementation process.

Moreover, both consultant support and top management support are positivelyassociated with conflict resolution (H7, H10). Consultants can enhance the ERPimplementation process by facilitating conflict resolution, thus, reducing theoccurrence of persistent conflicts. Top management support is also critical tointer-unit conflict resolution, since top managers are responsible for coordinating thevarious business departments and provide compulsory guidelines and instructions.

Finally, it is found that user and consultant support influence knowledge transfer(H8, H14) with the same intensity (0.22). The support of users and consultants duringthe implementation period leads in higher levels of knowledge transfer, meaning thatthe organization absorbs more knowledge about the use of the system, the knowledgegap between users and consultants is eliminated and, thus, the ERP implementationbetter satisfies the requirements of the company. This finding is very important, sinceknowledge transfer is one of the two research variables that have a direct impact oneffective ERP implementation. Hence, it is supported that user and consultant supporthave an indirect impact on ERP system effective implementation, an impact that ismediated through knowledge transfer.

Figure 2 presents the revised form of the proposed conceptual framework, in whichonly the significant paths are shown.

5. ConclusionsThe present study has proposed a conceptual framework that investigates the mainfactors leading in the effective implementation of an ERP system. To the best of ourknowledge, it is the first empirical evidence that demonstrates the relationship betweenhuman inputs, variables that are connected with the ERP implementation process andthe final outcome of this process. The examination of the conceptual framework wasmade with the use of a newly developed structured questionnaire and the results offerinteresting implications to ERP adopting companies. The presentation of the

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conclusions follows a structured path, so as to enhance their clarity and avoid anypossible misinterpretation.

5.1. Consultant supportThe study empirically shows that the support of external consultants is crucial for theeffective implementation of ERP systems. The assistance provided by externalconsultants is essential, even more important than that provided by top managers. Thecontribution of the consultants’ involvement and support in the implementationprocess has also been verified in the studies of Wang and Chen (2006), Chang (2004)and Finney and Corbett (2007).

Since consultant support is a factor with such a significant influence on ERP systemeffective implementation, companies should focus on hiring the right consultant groupfor the specific business environment. Efforts towards consultant selection should notbe viewed as a time wasting procedure, since the experience of consultants in similarbusiness contexts, the commitment towards achieving mutual goals and the sharedmentality of the two contactors are of crucial importance for successfulimplementation.

Consultants should not only acquire technical skills, but should also have a broadunderstanding of the individual business practices and a genuine commitment towardsresolving every-day issues considering ERP system implementation. It would be

Figure 2.ERP implementationprocess model – results

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advisable for adopting companies to make a contractual connection between the feespaid to the consultant team and the improvement in certain areas of business activity.

In general, the consultant group should be viewed as a valuable “ally” in the ERPimplementation process: consultants need the support and the acceptance of thecompany personnel in order to be able to fully integrate their valuable expertise andmake a substantial difference in the implementation of ERPs. If system users adopt anegative attitude towards working together with a professional team of consultants,the implementation procedure will surely produce poor results.

5.2 Knowledge transferThe present survey has statistically indicated that knowledge transfer is a significantfactor for ERP system success. On the same vain, the study of Wang et al. (2007) hasproduced the same results. On the other hand, no significant relationship was foundbetween communication effectiveness, conflict resolution and ERP system effectiveimplementation. Wang and Chen (2006), also found no relationship betweencommunication effectiveness and ERP system success, but established a relationshipbetween conflict resolution and ERP system success. Apparently, the incorporation ofknowledge concerning technical aspects of ERP systems is more important thaneffective handling of communication, as well as conflict resolution amongorganizational members of Greek companies.

From the above, it is apparent that ERP adopting companies should build thenecessary structures in order to facilitate the procedure of knowledge transfer. Systemusers not only need to be taught the newly implemented ERP technology, but they,furthermore, need to learn more about their new organizational responsibilities.Moreover, they should actively try to acquire maximum results from the use of theERP system, since passive attitude is not a path that leads to successful ERPimplementation.

In order to do so, the adopting company should, firstly, understand that with the useof an ERP system every employee is being continuously trained. Therefore, companiesshould provide opportunities for employees to enhance their skills by providingtraining opportunities on a continuous basis, in order to meet the changing andcomplex needs of the business environment (Bingi et al., 1999).

Moreover, the adopting company should make sure that the knowledge transferprocedure is not short or inconclusive, since the literature recognizes the limitedconsultation period as a factor that undermines possible positive effects (Nah et al.,2001). Furthermore, since it is difficult for consultants to pass the knowledge tocomputer illiterate employees, the adopting company should organize computerseminars prior to the implementation of the new ERP system. Finally, the adoptingcompany should appoint its most prominent employees (from all functional businessareas) to follow the implementation procedure step by step, so as to be able to play therole of the “internal consultant” after the withdrawal of the professionals.

5.3 Top management supportAccording to the statistical analysis, the role of top management support seems to be ofless important that the one provided by users, since top managers assist only in theresolution of conflicts (a factor that has no relationship with ERP system effectiveimplementation), while user support influences both communication effectiveness and,

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more importantly, knowledge transfer (a factor that is related with ERP systemeffective implementation). These findings are in line with the corresponding ones in thestudies of Wang and Chen (2006) and Wang et al. (2007).

On a practical level, the above imply that a company needs to ensure user support inorder to be led into a successful ERP implementation. This can be achieved by allowingfuture users to:

. report their views on the necessity of the implementation;

. contribute to the specifications of the system;

. participate in the implementation process; and

. collect various rewards upon successful use of the implemented ERP system.

Without the active participation and the overall acceptance of its users, every ERPsystem, no matter how expensive and elegant, is destined to produce less positiveresults that the ones anticipated, or even fail miserably.

5.4 Overall conclusionsIn general, the present study argues that consultant support and knowledge transferare the two key factors for ERP system success. The consultants may improve theperformance of ERP systems directly, through their experience and technical expertiseand indirectly through the effective transfer and sharing of ERP system knowledgeamong various inter-organizational members. In other words, the transfer ofknowledge from the consultants may raise the level of user know-how, then userssubsequently should be able to successfully maintain and further modify the ERPsystem without consultant engagement.

Therefore, practical efforts in hiring the right consultants are essential, especiallysince the consulting fees are quite significant. Moreover, ERP adopting companiesshould improve their knowledge management capabilities in order to successfullyfacilitate the transfer of knowledge from consultants. In order to pursue a successfulERP implementation and gain sustainable competitive advantage, companies need todevelop their internal knowledge capabilities before implementing an ERP system.The building of these capabilities will ensure that the knowledge offered byconsultants is properly disseminated throughout the organization. Organizationalpractices, culture, and structure should be reinforced to address this necessity (Nonakaand Takeuchi, 1995).

6. Impact of the researchThe empirical research included in the present paper has a dual impact. On the onehand, offers important guidelines to companies implementing an ERP system and onthe other, develops a coherent conceptual framework that thoroughly investigates theprocess of the effective implementation of an ERP system, thus, broadening theunderstanding on the issue. Given the influence of ERP systems on business success,such a dual contribution seems rather significant for both practitioners and academics.

7. Limitations and future researchA limitation of the present study is the relatively small size of the sample. This may beattributed to the nature of the population of the study (Greek companies that have

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implemented an ERP system), which is rather small and difficult to be defined due tolack of available data. In addition, IT managers were often hesitant to reveal insideinformation about the company’s policies, as well as information regarding the ERPsystem performance. Given that companies in Greece are mostly small andmedium-sized, most of them do not have an autonomous IT department and are usingexternal IT specialists to assist with the system’s implementation and operation. As aresult, it was not always possible to contact the internal staff of each company, and,therefore, gather an overall and consistent evaluation of the ERP system implementation.

The present study has emphasized the vital role of the consultants in enhancing theperformance of the ERP system, by means of their experience and the transfer of theirknowledge and technical expertise to the ones that have acquired and are using theERP system. Further research on the effective implementation of the ERP systems issuggested with larger samples that would, probably, offer more information andstrengthen the initial outputs of the present research. Moreover, it would be interestingto include additional variables to the proposed conceptual framework of the presentstudy (e.g. change management, team morale and motivation, training, job redesign)and finally, gather empirical data from all company personnel, so as to achieve arounder view of the subject under investigation.

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Further reading

Law, C.C.H. and Ngai, E.W.T. (2007), “An investigation of the relationships betweenorganizational factors, business process improvement, and ERP success”, Benchmarking:An International Journal, Vol. 14 No. 3, pp. 387-406.

About the authorsDimitrios Maditinos is Assistant Professor of Information Technology, Finance and FinancialModeling in Kavala Institute of Technology, School of Business and Economics, Greece. He holdsdegrees in Business Administration with specialization in Information Technology from LundUniversity, Sweden, and a PhD from the Business School, Greenwich University, UK. Beforebecoming a full academic he worked in a senior position for the Greek Productivity Center,responsible for professional training in Information Technology and Management. His researchinterests are in financial modeling, performance measurement systems, investors’ behavior instock exchanges, financial information systems and electronic commerce. Dimitrios Maditinos isthe corresponding author and can be contacted at: dmadi@teikav.edu.gr

Dimitrios Chatzoudes is a PhD Candidate in the Department of Production and ManagementEngineering of Democritus University of Thrace, Xanthi, Greece. His bachelor degree is onbusiness administration and his postgraduate degree on international economics. His academicinterests include research methods, international relations and production management.

Dr Charalampos Tsairidis is an Assistant Professor in the Department of SocialAdministration of Democritus University of Thrace, Komotini, Greece. He studiedMathematics and completed his PhD thesis at the University of Ioannina, Ioannina, Greece.Topic of thesis: statistical information theory and censoring. His main research interests are inthe area of statistical information theory, statistical data analysis and social statistics.

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