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This paper appears in the publication, International Journal of Enterprise Information Systems, Volume 4, Issue 1 edited by Angappa Gunasekaran 2008, IGI Global

Enterprise resource Planning (ErP) Implementations:

theory and Practice
Joseph R. Muscatello, Kent State University, USA Injazz J. Chen, Cleveland State University, USA

abStraCt
Enterprise resource planning (ERP) systems have been widely implemented by numerous firms throughout the industrial world. While success stories of ERP implementation abound due to its potential in resolving the problem of fragmented information, a substantial number of these implementations fail to meet the goals of the organization. Some are abandoned altogether and others contribute to the failure of an organization. This article seeks to identify the critical factors of ERP implementation and uses statistical analysis to further delineate the patterns of adoption of the various concepts. A cross-sectional mail survey was mailed to business executives who have experience in the implementation of ERP systems. The results of this study provide empirical evidence that the theoretical constructs of ERP implementation are followed at varying levels. It offers some fresh insights into the current practice of ERP implementation. In addition, this study fills the need for ERP implementation constructs that can be utilized for further study of this important topic. Keywords: enterprise resource planning (ERP); project implementation; success factors; mail survey

INtroDUCtIoN

Enterprise resource planning (ERP) systems are widely implemented as the backbone of many manufacturing and service firms. They are designed to address the problem of information fragmentation or islands of information in business organizations (Muscatello, Small, & Chen, 2003). A typical ERP system integrates all of a companys functions by allowing the modules to share and transfer information freely (Hicks & Stecke, 1995; Chen, 2001). In addition, all information is centralized in a single relational

database accessible by all modules, eliminating the need for multiple entries of the same data. Customers and suppliers with network security clearance are allowed to access certain types of information by way of an external communication interface. ERP systems offer tremendous opportunities to more consistently provide information to organizations in a standardized, centralized, and cost efficient manner (Olson, Chae, & Sheu, 2005). Many industry reports extol the virtues of ERP and its multiple benefits for those firms that

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4 International Journal of Enterprise Information Systems, 4(1), -78, January-March 2008

can successfully implement these systems. One of the primary objectives for installing ERP is the ability to integrate business processes (Brakely, 1999; Davenport, 1998, 2000). ERP has also been found to be effective in reducing inventory costs, improving efficiency, and increasing profitability (Appleton, 1997; Brakely, 1999). In addition, ERP has been credited with reducing manufacturing lead times (Goodpasture, 1995; Davenport & Brooks, 2004). Other potential benefits of ERP include drastic declines in inventory, breakthrough reductions in working capital, abundant information about customer wants and needs, and the ability to view and manage the extended enterprise of suppliers, alliances, and customers as an integrated whole (Muscatello, Small, & Chen, 2003). Clearly, the integrated information technology of ERP software has the potential to provide manufacturing firms with extensive new competitive capabilities, especially since the real-time information can improve the speed and precision of enterprise response. Given the widespread popularity of ERP software, and the spectacular successes achieved by a few firms, an open question remains: Why has the effective deployment of ERP systems proven to be elusive for the majority of firms (Stratman & Roth, 2002)? Implementation of an ERP does not come without significant technical and managerial challenges, huge financial investments, and a great deal of organizational change. Operational problems at Hershey Foods, Whirlpool, FoxMeyer Drugs, and more recently Hewlett Packard, have been blamed on poor implementations of ERP solutions (Becerra-Ferandez et al., 2005). ERP also has the reputation of being notoriously over-sold and under-delivered (Millman, 2004). Cliffe (1999) even reported that 65% of executives believed that ERP could be harmful to their organizations. Researchers have attempted to identify the set of factors that are critical for ensuring success with ERP implementations. Most of these authors, however, have developed their list of critical success factors from a small number of case studies. For example, Holland and Light (1999) and Motwani, Mirchandani,

Madan, and Gunasekaran (2002) offered a list of critical factors using two case studies. More recently, Kumar, Maheshwari and Kumar (2003) identified several success factors based on data collected from 20 Canadian firms. Employing a large scale survey, this article seeks to ascertain how businesses receive these concepts and, more specifically, which concepts are practiced widely and which are not. With this goal in mind, pertinent constructs of ERP implementations based on a critical review of business and managerial literature are first identified and developed in the second section. The research design, including data collection is then explained in the third section. The fourth section presents the results along with implications of the study findings. In the concluding section, the limitations of the study are highlighted along with guidelines for future research.

tHEorEtICal CoNStrUCtS

This section identifies key factors of ERP implementations based on a critical review of both scholarly and managerial literature. These constructs include strategic initiatives, executive commitment, human resources, project management, information technology, business process, training, project support and communications, and software selection and support. The constructs developed by the authors are very similar to the ones developed by Stratman and Roth (2002), further validating the research effort undertaken here.

Strategic Initiatives

Successful integration of the internal functions of the business does not necessarily guarantee business success. End-to-end processes that transfer information from module to module will not in themselves improve cost effectiveness and efficiency. The ability to use the information to drive the business is the key to successful integration. Performance measurements must be developed to measure the impact of the ERP system on the business. It has been suggested that an ERP system that is not strategically tied into the supply chain will lack the ability to provide the type of business intelligence

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International Journal of Enterprise Information Systems, 4(1), -78, January-March 2008 

that is needed to grow the business (Hickes & Stecke, 1995; Koch, 1999; Carr, 1999; Melnyk & Stewart, 2002; Davenport & Brooks, 2004). Therefore, it is essential that firms must have strategic goals in place before undertaking an ERP implementation (Motwani et al., 2002).

profound impact on the entire supply chain (Chen, 2001).

Human resources

Executive Commitment

Top management is often advised to look beyond the technical aspects of the project to the organizational requirements for a successful implementation. It is consistently identified as the most important success factor in ERP system implementations (Bancroft, Seip, & Sprengel, 1998; Davenport 1998; Sumner, 1999; Bingi, Sharma, & Godla, 1999; Welti, 1999; Gupta, 2000; Rao, 2000). It can be inferred from the literature that executives and managers believe that ERP systems help their company achieve greater business benefits. However, they are mystified as to how to design, implement, and manage an ERP project. When it comes to ERP projects, Fortune 500 companies are beginning to sound like children in the back seat of a car on a long driveAre we there yet? Are we done yet? No! Were not there and we are not done. And we may never be done (Koch, 1999). Any executive planning the implementation of an ERP system needs to make some savvy decisions, from identifying what business needs the ERP system must meet to preparing for postimplementation maintenance and user support (Musson, 1998). Many executives are having a hard time understanding that ERP implementation is not simply a package installation. It is a long journey of fine-tuning, upgrading, and continual learning, not a sprint. Therefore, it may lead to a sense of frustration and anger at the system and in some cases total abandonment. Unlike any other software project, an ERP system does not merely change employees computer screens the way previous generations of software did; it changes the way they do their jobs and how the company does business. Top management, therefore, must fully understand the degree of the changes and supports needed for the new project and be comfortable with the fact that the decisions their planners make will have a

The most recurring theme in management literature concerning the failure of ERP systems is the inability of firms to take into account the new organizational, interdepartmental, and personnel aspects of work organizations. Unintended consequences include the emotional fallout when employees are suddenly given much greater responsibilities. Managers sometimes neglect to assess not only the skill development needed by employees but also the organizational changes required of them (Appleton, 1997). Small firms often lack financial resources and may be forced to adopt, at best, a piecemeal approach to integrating the typically expensive ERP systems into their facilities (Ferman, 1999). This can be very difficult for employees as the project seems to be never ending. It is also felt that the low information technology (IT) staff levels in smaller enterprises are inadequate for the rigorous and extensive IT training and development requirements of an ERP project (Hill, 1997). In many cases of ERP implementations, consultants are required to help meet the projects needs (Muscatello et al., 2003).

Project Management

A project team must be flexible and deal with the problems as they arise in the implementation process. Anyone who revisits the charter documents of a large-scale ERP project will see that the ultimate product is almost always shaped by unanticipated and late breaking circumstances. It is a fact of business life that important things come up later rather than earlier in complex new projects (Cliffe, 1999). However, these interruptions should not encourage scope creep, when processes or functions are added after the project has begun. As mentioned, unanticipated circumstances are the norm; however, wholesale changes such as adding an additional process, module, or department after the project has been scoped and started may lead to a never ending project. To prevent scope problems, firms need to make sure a project charter or

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 International Journal of Enterprise Information Systems, 4(1), -78, January-March 2008

mission statement exists. It is paramount to nail down the project requirements and have them documented and signed by the senior management and users. Furthermore, it is essential for firms to clearly define change control procedures and hold everyone to them. Tight change control procedures may end up causing tension between the project team and those who do not get the changes they want. Ultimately, though, the project will not be successful if the project team is trying to hit a constantly moving target (Trepper, 1999). A survey by the Meta Group found that it takes an average of 31 months before an ERP system will show benefits (Muscatello, 1999). There is no magic in implementing ERP systems, but, when they are carefully conceived and executed, ERP systems can radically changed the way companies do business. In many companies, it would now be unthinkable to manage financials, customer relationships, and supply chains without ERP (Oliver, 1999).

a complete technology change. An upgrade of current software usually includes new file structures, report writers, functional modules, and other changes. An upgrade of current hardware usually involves a re-installation of the operating system or at least installing the operating system changes, new functionality, and new modules. If a complete technology change (hardware and/or software) is required, then a much larger commitment must be undertaken to insure that the proper employees can manage the technology after going live. In either case, managers must be proactive in securing the technology training to insure that their technical employees can run the ERP system effectively. The consequences of not having enough technical training can be catastrophic and lead to outright failure of the ERP system (Evangelista, 1998; Hill, 1997).

business Process

Information technology

Deloitte Consulting (2000) reports that the second largest ERP implementation challenge related to people issues is internal staff adequacy. If a firms existing technology will run the new ERP system, then the technology training may be an upgrade of the skill set. If a wholesale change is required, such as moving from an IBM mainframe to a Sun Microsystem, then an in-depth hardware and software training program must be implemented. In fact, some firms have selected their ERP systems based on their current technology and business process, and research has showed this approach to be a mistake since it is very limiting (Anderson, 2000). Because some firms may not be willing to change current technology, they may consequently report a lower significance on technology training for ERP implementation. Firms who account for business processes first and technology fit second reflect IT training positively (Davenport, 2000). Managers cannot minimize the importance of technology training regardless if it is an upgrade of current software and hardware or

As suggested by Hammer and Champy (1993), reengineering of business process activities focuses the firm on identifying and improving the efficiency of critical operations, on restructuring important non-value-adding operations, and on eliminating inefficient processes. Reengineering should be undertaken to insure that the strategic objectives mentioned earlier are feasible. The reengineering effort should create a uniform response from all aspects of the business. When goals are common, improvement becomes a shared task (Hill, 2000). Using reengineering techniques to develop a homogeneous vision depicting the companys processes after the ERP implementation, a firm is more likely to minimize uncertainty and achieve success. Researchers have found a strong correlation between the attention paid to business process improvement and the likelihood of ERP success (Muscatello et al., 2003; Motwani et al., 2002; Carton & Adams 2003; Millman, 2004; Olson et al., 2005).

training

ERP skills have been in acute shortage because of the high demand for people with good understanding of business and ERP systems. This

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International Journal of Enterprise Information Systems, 4(1), -78, January-March 2008 7

and the radical process changes brought about by ERP implementation have made providing sufficient and timely training to project persons and users a critical requirement in ERP implementation (Davenport, 2000). Assessing the needs for training usually uncovers several training and skills deficiencies. Rectification of training deficiencies can be accomplished in three ways: reassignment, outsourcing or replacement of staff, hiring of new personnel with substantial knowledge in ERP systems, or training of managers and key employees. In most cases, a firm implementing ERP engages in two types of training: fundamental ERP systems education and technical training in the usage of the ERP software (Evangelista, 1998; Muscatello, 2002; Yusuf, 2004; Sarkis & Sundarraj, 2003). In international cases, language and cultural barriers can be a technical hindrance that requires additional training (Al-Mashari, 2000).

Software Selection and Support

Project Support and Communications

ERP systems are software packages generically designed, keeping the industry-wide needs and best practices in mind (Kumar et al., 2003). One of the major challenges an adopting organization faces is that software does not fit all their requirements (Davenport, 1998). A systematic needs assessment therefore must be commissioned to determine the specific ERP modules, subsystems, and hardware that are required to achieve the desired level of systems integration. Where there is a lack of internal knowledge of ERP systems and their operating requirements (either at the corporate or division level), management should solicit the help of knowledgeable outside consultants for the assessment (Chen, 2001; Davenport, 2000; Booker, 1999). Firms that analyze their software fit and individual module needs can enhance the likelihood of a successful ERP implementation (Yusuf, Gunasekaran, & Althorpe, 2004).

ERP applications lock the operating principles and processes of the adopting organization into software systems. If organizations fail to reconcile the technological imperatives of the enterprise systems with their business needs, the logic of the system may conflict with the logic of business processes (Davenport, 1998). Needless to say, managers have found ERP implementation projects the most difficult systems development projects (Kumar et al., 2003). Thus, upfront and ongoing communication to all employees affected by the new ERP system is a must. Olsen et al. (2005) found that it is necessary to inform organizational employees of how the system can help them do their jobs better. They also found that all retained employees are going to find their jobs changed. People are naturally resistant to change and it is very difficult to implement a system within an organization without some cooperation. Effective communication and ongoing support has also been noted by several researchers (e.g., Motwani et al., 2002; Muscatello et al., 2003; Sarkis & Sundarraj, 2003).

rESEarCH DESIGN
Data Collection
Based on a thorough review of the literature, the theoretical constructs identified by this study are well grounded in existing theory (Muscatello et al., 2003). The theoretical constructs are made up of four or more items using a 7 point Likert scale with a score of 1 labeled not important and a score of 7 labeled very important. A cross sectional mail survey was conducted in the United States, during 2006, drawing from members of the American Production and Inventory Control Society (APICS), The National Association of Accountants (NAA), the American Productivity and Quality Center (APQC), and the Institute for Supply Management (ISM) because of their potential involvement in an ERP implementation. The survey was very clear that only those with ERP implementation experience should respond. A modified version of Dillmans total design method was followed in order to increase the response rate (Dillman, 1978). All mailings were first class mail including a cover letter,

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8 International Journal of Enterprise Information Systems, 4(1), -78, January-March 2008

survey, and postage paid return envelope. Three weeks after the initial mailing, reminder cards were sent to all potential respondents. Of the 973 surveys mailed, 28 came back due to address discrepancies. From the new sample size of 945, 203 were received resulting in a response rate of 21.5%. A total of six were discarded for incompleteness/damage for an effective response rate of 197/945 or 20.8%. Considering that this is a lengthy survey, this response rate is acceptable and correlates well with recent empirical studies in operations management (OM) and supply chain management (SCM) (e.g., Paulraj & Chen, 2005, 23.2%; Krause et al., 2001, 19.6%).

(6%), and under $10M (8%). Most firms employed 500 or more employees (81%). The vast majority of the respondents were working on their first ERP system (78%) with some (22%) on their second or third system. Furthermore, most had not worked on multiple ERP systems (87%), but some had multiple systems in the same facility (13%). The distribution of the sample regarding respondent and firm profiles is presented in Tables 1 and 2, respectively.

rESUltS aND DISCUSSIoNS

Respondent and Firm Profiles

The profile of the final sample of 197 included top executives (17%), middle managers (73%), and others (10%). Almost half of the firms had been in business for over 30 years (48%) and most were engaged in end product manufacturing (49%), followed by subassembly (30%), components (19%), and others (2%). Firm size was fairly evenly distributed between large and small firms with respondents with sales of over $20B (6%), $1B~$20B (31%), $500M~$1B (30%), $100M~$500M (19%), $10M~$100M

Exploratory factor analysis (EFA) was performed to empirically test the nine strategic ERP constructs included in this study using the principle component method. Items with a factor loading of 0.3 or greater were retained for further analysis (Flynn, Schroeder, & Sakakibara, 1994; Hair, Anderson, Tatham, & Black, 1998). Reliability analyses were performed to test whether random measurement errors varied from one question to another (Judd, Smith, & Kidder, 1991). Reliability was measured using Cronbachs alpha internal consistency method where reliability coefficients of 0.60 or higher are considered acceptable (Cronbach, 1951). All of the reliability coefficients are greater than 0.658 after the removal of questions 2 and 3 from the Human Resource construct

Table 1. Respondent profile

Title Manufacturing/Business Executives CEO, CFO, COO, CIO President, Vice-President, Director Manufacturing/Business Middle Manager Purchasing Manager Operations/production Manager Other Buyers, Planners Supervisors 20 10% 143 73% Count 34 Percent 17%

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International Journal of Enterprise Information Systems, 4(1), -78, January-March 2008 

Table 2. Company profile

Years in Operation Less than 5 6-15 16-30 30 or more Types of Products Produced Components Sub Assemblies End Products Other Annual Sales Volume Less than $10m $10m-$100m $100m-$500m $500m-$1b $1b-$20b Greater than $20b Number of Employees Less Than 100 101-250 251-500 501- Up Number of ERP Implementations 1 2 3 or more Count 55 39 8 95 Count 37 59 97 4 Count 16 12 37 59 61 12 Count 14 14 10 159 Percent 28% 20% 04% 48% Percent 19% 30% 49% 02% Percent 08% 06% 19% 30% 31% 06% Percent 07% 07% 05% 81%

and question 9 from the Software Selection and Support construct. Reliability statistics and factor loadings are shown in Appendix A. All questions were analyzed using a seven point Likert scale with a score of 1 labeled not important, a score of 4 labeled neither important nor unimportant, and a scale of 7 labeled very important. This study uses simple mean-based ranking of the indicators within each theoretical construct. Further analysis was conducted to provide additional insight into the results. The following sub-sections present the current state of practice for each of the theoretical constructs.

Strategic Initiatives

Count 154 35 8

Percent 78% 18% 04%

Table 3 presents the results for strategic initiatives. The mean response for the seven indicators ranged from 5.33 to 5.79. This result is a pleasant surprise in that many researchers have written about ERP implementations being relegated to the information technology departments; to the contrary, this research shows that firms are now attaching a strategic component to their ERP implementations and that the decision to implement an ERP system is now being made at a cross functional executive level which includes inputs from all functional business areas. Further, the respondents concur that the ERP implementation should be tied to achieving strategic goals. The fact that two-thirds (67%) of the respondents came from firms with sales in excess of $500 million may further explain the increased desire for a strategic component. Larger firms have the resources to fully integrate ERP systems as opposed to just automating processes (Muscatello, 2002). These larger firms may have access to information and research that smaller firms do not and thus have common strategic goals and when goals are common, improvement becomes a shared task (Hill, 2000). The low standard deviation further shows the uniformity of this opinion.

Multiple ERP Systems in the Same Facility No Yes

Count 171 26

Percent 87% 13%

Executive Commitment

Executive commitment has been documented to be of great importance in achieving any major business improvement project. The response to this survey re-confirms the need for executive commitment for ERP implementations identi-

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70 International Journal of Enterprise Information Systems, 4(1), -78, January-March 2008

Table 3. Strategic initiatives

Indicator 1) 2) 3) 4) 5) 6) 7) IT capabilities are constantly reviewed against strategic goals Strategic IT planning is a continuous process Written guidelines exist to structure strategic IT planning in our organization Strategic IT planning includes inputs from all business functional areas ERP is integrated into the strategic plans of all business functional areas ERP was chosen to support the organizations strategic plans Managers evaluate the potential of ERP when building strategic plans Mean 5.79 5.60 5.33 5.49 5.53 5.59 5.40 Std Dev 1.148 1.260 1.369 1.244 1.210 1.124 1.181

fied by on past research. Seventy three percent (73%) of the respondents classified themselves as middle-managers and 17% classified themselves as director or above. However, a test of the means between the respondents produced no discernable difference, verifying that all levels of management consider executive commitment important. Table 4 presents the results for executive commitment and support. The mean response for the seven indicators ranged from 4.68 to 5.53. The highest responses came from the question on long-term executive commitment showing the high regard they have for executives who realize the complexity and time commitment necessary for a successful implementation. The lowest indicator showed that while executives deemed the ERP implementation very important, they still expected the operational concerns to be addressed in the interim.

Human resources

training and education of current employees or hiring of outside consulting help. Significant research has noted that ERP education and training is required for successful implementation. This research offers a new insight: respondents saw little difference between gaining the knowledge via education and training or through consulting help. The lowest responses came from the idea of replacing ineffective employees or managers who are not able to adapt to the new system. This could present a problem in some smaller firms where key managers have multiple tasks. Possible explanations for the low response rate for employee replacement includes the reluctance of many firms to terminate people for incompetence if they are well liked and committed. It is noted that Hammer and Champy (1993) also openly reject the idea of eliminating jobs through reengineering. Thus, many managers and consultants may still hold true to this idea.

Indicator number 2, low IT skills are an obstacle to successful ERP implementations and Indicator 3, executives with little knowledge of ERP should be minimally involved were eliminated from the research to improve the Cronbachs alpha to 0.677 from 0.606. The mean responses of the remaining six indicators ranged from 4.57 to 5.76 and are presented in table 5. From the human resource side, there appears to be strong commitment to gaining the knowledge required to successfully implement ERP systems via

Project Management

Respondents were asked about ERP project management issues including the responsibilities of project team members and the capabilities of the project leader. Table 6 presents the results for project management. The mean response for the seven indicators ranged from 5.51 to 5.64. This shows a strong commitment for project management skills in project definition, scope, tracking, and status. It reveals that project management skills were grossly underestimated in

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International Journal of Enterprise Information Systems, 4(1), -78, January-March 2008 71

Table 4. Executive commitment

Indicator 1) 2) 3) 4) 5) 6) 7) The need for long term ERP support resources is recognized by management Mean 5.53 Std Dev 1.100 1.144 1.222 1.387 1.378 1.313 1.356

Executive management is enthusiastic about the possibilities of 5.29 ERP Executives have invested the time needed to understand ERPs 5.23 benefits Executives mandate that ERP requirements have priority over functional concerns 4.68

Top management has clearly defined the ERP entitys business 5.31 goals All levels of management support the overall goals of the ERP 5.24 entity Executives continuously champion the ERP project 5.07

Table 5. Human resources

Indicator 1) 2) 3) 4) 5) 6) 7) 8) The ability of the IT workforce to learn is critical to an ERP implementation Low IT skills are an obstacle to successful ERP implementations Executives with little knowledge of ERP should be minimally involved Ineffective employees are moved or replaced if they are not able to adapt Ineffective managers are moved or replaced if they are not able to adapt The ERP team members need to understand the project has priority Mean 5.64 5.35 4.86 4.57 4.83 5.74 Std Dev 1.076 1.179 1.711 1.396 1.445 1.040 1.135 1.170

Consultants are used where in-house knowledge is inadequate or not avail- 5.76 able Compensation and incentives should be given to high achieving team 5.57 members

ERP implementation in the past and are now becoming a critical skill set for ever changing business needs. The fact that 81% of the responding firms had more than 500 employees could also explain this response. Larger firms have more internal expertise to draw from and thus are more likely to be equipped with project management champions.

Information technology

Software and hardware expertise has been documented to be of great importance to a successful ERP implementation and this survey shows the same high level of importance with a range of the means from 5.41 to 5.69 with very low standard deviations. The results are presented in Table 7. Somewhat unique to this research is the attempt to find out the importance of the skill sets of the current information technology (IT) staff, which are deemed very important,

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72 International Journal of Enterprise Information Systems, 4(1), -78, January-March 2008

Table 6. Project management

Indicator 1) 2) 3) 4) 5) 6) 7) The tasks to be performed during the ERP project are clearly defined The responsibilities of project team members are clearly defined There is a formal management process to track external contractor activities Measurements are used to determine the status of project tasks The ERP project leader is able to track project tasks to completion The ERP project leader is experienced in project management The ERP project leader is able to minimize project scope creep Mean 5.61 5.64 5.59 5.51 5.58 5.60 5.57 Std Dev 1.149 1.167 1.173 1.105 1.102 1.128 1.031

and the use of consultants if the skill sets are not internal. The results show that firms are willing to supplement their IT staff with consultants when necessary. This acceptance of outside help shows an understanding of internal limitations of a firm and a sense of urgency and willingness to acquire it externally.

business Process

ERP implementation has been referred to as an organization wide revolution due to the large number of changes it brings to an organization (Hammer & Stanton, 1999; Bingi et al., 1999). The strong connections that researchers have proposed between business process redesigns

and successful ERP implementation have been confirmed by our results. The means ranged from 5.45 to 5.74 with low standard deviations are presented in Table 8. Interestingly, the high means for all seven indicators suggest that the connection researchers have preached is being accepted by the practitioners. Ross (1999) suggested that firms believed that ERP software would solve their problems by imposing discipline and process integration on their organization. This research confirms that practitioners now disagree with that assessment and realize that software is not a substitute for good business processes. The business process indicators indicate that process knowledge and redesign,

Table 7. Information technology

Indicator 1) 2) 3) 4) 5) 6) 7) There is a high degree of technical expertise in the IT organization Internal It members understand custom ERP software programs The IT staff are able to efficiently implement ERP system upgrades The IT staff are able to analyze the technical impact of proposed system changes The IT organization provides a service to the business Consultants are hired to supplement internal IT staff when necessary The IT staff is continuously updating their technical skills through training Mean 5.49 5.52 5.65 5.53 5.47 5.63 5.74 Std Dev 1.137 1.062 1.036 1.268 1.296 1.165 1.092

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International Journal of Enterprise Information Systems, 4(1), -78, January-March 2008 7

Table 8. Business process

Indicator 1) 2) 3) 4) 5) 6) 7) Employees understand how their actions impact the operations of other functions There is a high level of business process knowledge within the ERP entity Managers are skilled at analyzing business processes for customer benefits Business process redesign is performed before ERP implementation The operational processes of the ERP entity are formally documented Business process redesign teams are cross functional Redesigned business processes are used to drive out inefficiency Mean 5.45 5.52 5.65 5.53 5.47 5.63 5.74 Std Dev 1.171 1.123 1.036 1.268 1.296 1.165 1.092

cross functional management and driving out inefficiencies that improve customer benefits are all strongly accepted as necessary for a successful implementation. Hammer and Champys (1993) work on reengineering and the wide-spread use of their practices as a change enabling tool helps confirm the positive use of reengineering in ERP implementations.

training

The importance of training was echoed by most of our respondents. As expected, based on current research, training was a highly regarded

component of ERP implementations. The means of the eight indicators ranged from 5.45 to 5.70 with low standard deviations and are presented in Table 9. Again, the question if external expertise in the form of consulting should be used to supplement internal knowledge was asked and the answer was strongly yes. Firms supported the need for formal, customized training on both ERP knowledge and specific job duties. They also strongly supported on-going education programs which has not always been the case for some firms who are risk adverse. The high percentage of respondents in larger firms

Table 9. Training
Indicator 1) 2) 3) 4) 5) 6) 7) 8) Specific user training needs were identified early in the implementation A formal training program has been developed to meet the ERP users requirements Training materials have been customized for each specific job Training materials target the entire business task, not just the ERP screens/ reports Employees are tracked to insure they have received the appropriate ERP training All users have been trained in basic ERP system skills Consultants are used to supplement training when internal expertise does not exist ERP training and education is ongoing and available to refresh users skills Mean 5.70 5.53 5.45 5.49 5.51 5.69 5.55 5.60 Std Dev 1.020 1.276 1.158 1.284 1.194 1.130 1.239 1.194

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74 International Journal of Enterprise Information Systems, 4(1), -78, January-March 2008

Table 10. Project support & communications

Indicator Employees understand how they fit into the new ERP entity Management actively works to alleviate employee concerns about ERP The roles of all employees under the ERP system have been clearly communicated An ERP support group is available to answer concerns about ERP job changes Effective communication is critical to ERP implementations User input should include requirements, comments, reactions and approvals Enterprise wide culture and structure change should be managed A culture with shared values and common aims is conducive to success Mean 5.71 5.65 5.57 5.57 5.63 5.86 5.77 5.66 Std Dev 1.112 1.153 1.161 1.093 1.110 1.025 1.033 1.111

(81% had 500 or more employees, and 86% had sales over $100 million) may explain the high level of interest in outside consulting help, since larger firms usually have greater access to resources. Smaller firms, without the access to ERP resources, need to establish whether or not they can obtain the resources or postpone the implementation since it is documented that overcoming an ERP failure is difficult and often fatal (Muscatello et al, 2003).

should be used to help employees manage through the cultural changes.

Software Selection and Support

Project Support and Communications

Lack of strong support for a massive project like ERP creates enormous challenges for the project team such as buy-in from users. A recent study revealed that 25% of organizations adopting ERP systems faced significant resistance from staff and that 10% of the organizations also encountered resistance from managers (Kumar et al., 2003). Table 10 presents the results for project support and communication. The means range from 5.57 to 5.86. This research supports extant research on employee relations and change management in that the respondents felt it very important to actively communicate how employees fit into the new ERP-oriented environment and to actively work to alleviate employee concerns. Respondents also agree that cultural changes need to be managed to ensure shared values and common aims conducive to both employee and firm success. A user support group with employee comments and reactions

Even with todays state of the art technology, organizations find that not all their requirements are met by the ERP systems they adopt. The remaining nine indicators are strong with means from 5.64 to 5.86 and the results are presented in Table 11. These indicators confirm current research that shows a strong relationship between successful ERP implementations and software fit. Interestingly, the research again confirms that firms are willing to use outside consultants if software selection experience is not available internally. Again, this set of indicators show a new willingness amongst ERP implementers to realize their firms limitations in this difficult endeavor. Also of note is a strong resolve to work with vendors to ensure proper module and process fit, as well as vigorous software testing, troubleshooting, and a plan for migrating and data clean up after the initial installation.

CoNClUSIoN

Enterprise resource planning systems have experienced a phenomenal growth over the past decade. While some firms declared their ERP implementation success, many others reported negative results. With these developments, there has been a significant amount of research that seeks to identify the success factors associated

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International Journal of Enterprise Information Systems, 4(1), -78, January-March 2008 7

Table 11. Software selection & support

Indicator 1) 2) 3) 4) 5) 6) 7) 8) 9) An analysis should be performed to select the appropriate business modules The modules selected should be able to share information freely The ERP system should eliminate the need for redundant entry of data If ERP experience does not reside in house then consultants should be used The overall ERP architecture should be established before deployment The firm should work well with vendors and consultants to resolve software issues Vigorous and sophisticated software testing eases implementation There should be a plan for migrating and cleaning up data ERP software development, testing and troubleshooting is essential Mean 5.86 5.80 5.79 5.79 5.66 5.64 5.85 5.64 5.83 Std Dev 1.079 1.137 1.033 1.135 1.134 1.101 1.085 1.062 1.310

with the implementation of ERP systems. Most of these authors, however, have based their research on a small number of case studies. This study, therefore, aimed to understand the critical constructs of ERP implementation using a large scale survey. A cross sectional mail survey of business executives with ERP implementation experience was used to capture the degree of adoption of these concepts. Basic statistical methodology was used on this empirical data to examine the adaptation of the various concepts. Although this analysis was based on simple statistical methods, it provides a clear picture of the beliefs of current ERP implementation. These constructs can also help guide future research for academics and practitioners in the ERP environment. In summary, the results show that the implementation of ERP systems has grown from the belief that it was a simple information system implementation of new software into a realization that it is a strategic and tactical revolution which requires a total commitment from all involved. This is in stark contrast to studies as recent as 5 years ago, which concluded that firms believed that the ERP software would automatically drive the strategic and tactical changes. Firms now realize that business process changes and project management are strongly

linked to the success of the ERP implementation. Moreover, they are as important as software and hardware knowledge. Another new finding is that firms now strongly believe that the use of outside consultants to supplement internal staff is an acceptable and desirable practice. This is likely a result of the documented cases of ERP implementation failure where firms failed to take stock of their internal competencies and shortcomings. Taken together, these results suggest that firms are realizing that ERP implementations are a long journey and that results may not be readily apparent until well into the future. This research has provided insight into the current practice of ERP implementations. It has paved a solid foundation on which to build future research in this area. Nevertheless, it is realized that this effort cannot completely explain all of the issues surrounding an ERP implementation. Additional insights may be revealed through longitudinal studies and by building empirical models.

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