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PARISGRADUATE SCHOOL OF MANAGEMENT

International Executive MBA

I hereby make this declaration that this is my own and does not contain any unacknowledged work from other sources.

Print Name: STUDENTS REGISTRATION No: TITLE OF DISSERTATION:

JOSEPH ANNAN WA 09001

CHALLENGES OF IMPLEMENTING ENTERPRISE RESOURCE PLANNING (ERP) PROJECTS IN MANUFACTURING INDUSTRIES

WORD COUNT:

18,796

DATE DISSERTATION DUE:

15/11/10

DATE OF SUBMITTING DISSERTATION: 05/11/10

. STUDENTS SIGNATURE / DATE


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Students Declaration I hereby declare that the project entitled Challenges of implementing ERP systems in manufacturing industries submitted to Paris Graduate School of Management, is a record of an original work done by me under the guidance of Dr. F.Y Banuro, Head of Operations and Management information systems of University of Ghana Business School and Mr. Bernard Dodoo, ERP Project Manager / Consultant of Ibit soft limited. This project work has not formed the basis for the award of any degree, diploma, associate ship, fellowship or any other similar titles.

.. Signature of Student

Supervisors Certification This is to certify that this research project was carried out by Mr. Joseph Annan under my direct supervision in partial fulfillment of the requirements for the award of International Executive MBA of Paris Graduate School of Management.

.. Supervisor Name & Signature

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APPROVAL PAGE This thesis is hereby approved for defense as part of the requirement for the award of the International Executive MBA.

. Prof. Mike Wooi Head, International Executive MBA Paris Graduate School of Management France

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ABSTRACT
Improved communications has seen growth in industrial activities globally. In an effort to improve their operations many companies are implementing information systems in particular enterprise resource planning systems (ERP). Companies are faced with a number of complexities when implementing these systems in industries and considerable research has been conducted on critical success factors associated with ERP implementations, however very little research has been conducted on manufacturing industries specifically. This research utilizes a single case study to identify the critical success factors, critical challenges and the most challenging departments in a manufacturing setting during ERP implementation. The identified factors and challenging departments provide a guideline for similar companies and also a foundation for further investigation.

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ACKNOWLEDGEMENT
I would like to express my gratitude to my supervisors, Dr F.Y.Banuro the Head of Operations and Management Information Systems, University of Ghana and Mr. Bernard Dodoo an ERP project Manager/Consultant with Ibit Soft Ghana for their support and guidance during the writing of this thesis. Also I would like to thank my family especially my Dad and Mum, Mr. and Mrs. Annan for their words of encouragement throughout the thesis. Last but not the least I would like to thank God for being there for me when I needed him the most.

TABLE OF CONTENTS Students Declaration ............................................................................................................. ii Supervisors Certification...................................................................................................... ii ABSTRACT ........................................................................................................................ iv ACKNOWLEDGEMENT..................................................................................................... v TABLE OF CONTENTS ..................................................................................................... vi LIST OF TABLES ............................................................................................................... ix LIST OF FIGURES .............................................................................................................. x LIST OF ABBREVIATIONS............................................................................................... xi INTRODUCTION............................................................................................................. xii PREAMBLE ....................................................................................................................... xii STATEMENT OF PROBLEM........................................................................................... xiii SPECIFIC OBJECTIVES .................................................................................................. xiii RESEARCH QUESTION .................................................................................................. xiii THE PURPOSE AND SIGNIFICANCE OF THE STUDY ................................................ xiv
PURPOSE.................................................................................................................................. xiv SIGNIFICANCE ........................................................................................................................ xiv

RESEARCH METHODOLOGY........................................................................................ xiv SCOPE AND LIMITATION OF STUDY .......................................................................... xiv ORGANIZATION OF STUDY........................................................................................... xv 1.0 GENERAL OVERVIEW............................................................................................. 1
1.1 Brief History on ERP ............................................................................................................... 1 1.2 Growth of the Enterprise Software Industry ............................................................................. 2 1.3 TOP 5 ERP SOFTWARE VENDORS................................................................................ 3

1.4 OVERVIEW OF ERP ..................................................................................................... 5


1.5 ADVANTAGES AND DISADVANTAGES ERP ................................................................... 6
1.5.1 Industry Wise Advantages ...............................................................................................................6 1.5.2 Advantages in a Corporate Entity.....................................................................................................7 1.5.3 Disadvantages .................................................................................................................................8

1.6 COMPONENTS OF ERP ........................................................................................................ 8 vi

1.9.1 How can ERP improve a companys business performance?................................................ 14

2.0 ARTICLE REVIEW ................................................................................................... 16


2.1 ERP IMPLEMENTATION .................................................................................................... 16
ERP implementation process..................................................................................................................19 Strategic ................................................................................................................................................19 Tactical..................................................................................................................................................20

2.2 CRITICAL SUCCESS FACTORS IN E.R.P IMPLEMENTATION....................................... 20


Top Management ...................................................................................................................................22 Business Plan and Vision .......................................................................................................................22 Re-engineering Business Process............................................................................................................23 Project Management and Project Champion............................................................................................23 Teamwork and Composition...................................................................................................................24 ERP System Selection ............................................................................................................................24 User Involvement...................................................................................................................................25 Education and Training ..........................................................................................................................25

2.3 CHALLENGES OF ERP IMPLEMENTATION .................................................................... 26 2.4 BENEFITS OF ERP .............................................................................................................. 28

3.0 CASE STUDY NEXANS KABELMETAL GHANA LIMITED (NKG)................ 30


3.1 HISTORY ............................................................................................................................. 30 3.2 MISSION OF NKG ............................................................................................................... 30 3.3 VISION OF NKG.................................................................................................................. 30 3.4 COMPANY PROFILE .......................................................................................................... 31
3.4.1 NKG PRODUCTION PROGRAM ................................................................................................31 3.4.2 INDUSTRY SCOPE......................................................................................................................32 3.4.3 MAJOR COMPETITORS OF NKG IN GHANA...........................................................................32 3.4.4 STAFF STRENGTH AND DEPARTMENTS................................................................................32 3.5.1 NKG Strengths rests on: ................................................................................................................33

3.6 SEARCH FOR SOLUTION .................................................................................................. 33 3.7 ERP SELECTION ................................................................................................................. 34 3.8 IMPLEMENTATION OF ERP BY EXTERNAL CONSULTANT (Cbb Business Ltd).......... 35

4.0 METHODOLOGY...................................................................................................... 38 4.1 OVERVIEW ................................................................................................................. 38 4.2 RESEARCH OBJECTIVES .......................................................................................... 38 4.3 RESEARCH DESIGN................................................................................................... 39 4.4 PARTICIPANTS........................................................................................................... 42
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4.8 RESULTS AND DISCUSSIONS .................................................................................. 47


4.8.1 SECTION 1...................................................................................................................................49 4.8.2 SECTION 2...................................................................................................................................53 4.8.3 SECTION 3...................................................................................................................................56 4.8.4 SECTION 4...................................................................................................................................62 4.8.5 INTERVIEWS ..............................................................................................................................65

5.0

CONCLUSION AND RECOMMENDATIONS ................................................... 67

REFERENCES.................................................................................................................. 69 APPENDIX A.................................................................................................................... 72 APPENDIX B .................................................................................................................... 76 APPENDIX C.................................................................................................................... 77 APPENDIX D.................................................................................................................... 78

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LIST OF TABLES Table 1 CRITICAL SUCCESS FACTORS REFERENCE TABLE................................................. 21


Table 2 SHOWS THE STATUS OF THE 35 QUESTIONNAIRES THAT WERE ISSUED OUT IN NEXANS KABELMETAL. ............................................................................................................ 47 Table 3 REPRESENTS QUESTIONS FROM SECTION 3 WHICH WERE SHORTENED IN THE PRESENTATION. ........................................................................................................................................................ 49 Table 4 FRIEDMANS TEST FOR CRITICAL SUCCESS FACTORS. .......................................................... 50 Table 5 MEAN RANK OF CRITICAL SUCCESS FACTORS........................................................ 51 Table 6 RANKING OF CSF................................................................................................................ 52 Table 7 FRIEDMAN TEST FOR CRITICAL CHALLENGE FACTORS ......................................................... 54 Table 8 QUESTIONS IN SECTION 3 OF QUESTIONNAIRES .................................................................... 56 Table 9 FRIEDMANS TEST TO RANK DEPARTMENTS AT NKG .......................................................... 62 Table 10 NKG DEPARTMENTS ......................................................................................................... 63 Table 11 DESCRIPTIVE STATISTICS FOR SECTION1............................................................................ 76 Table 12 DESCRIPTIVE STATISTICS FOR SECTION2............................................................................ 77 Table 13 DESCRIPTIVE STATISTICS FOR SECTION4............................................................................ 78

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LIST OF FIGURES Figure 1 A GRAPHICAL REPRESENTATION OF TABLE 2 ............................................ 48 Figure 2 GRAPHICAL REPRESENTATION OF CRITICAL SUCCESS FACTORS RANKED BY FRIEDMANS TEST ................................................................................................................ 51 Figure 3 GRAPHICAL REPRESENTATION OF CRITICAL CHALLENGES RANKED BY FRIEDMANS TEST .................................................................................................................................... 55 Figure 4 MEAN RANK OF CRITICAL CHALLENGES .................................................... 55 Figure 5 GRAPH SHOWING RESPONSES FOR Q1 OF SECTION 3................................................. 57 Figure 6 GRAPH SHOWING RESPONSES FOR Q2 OF SECTION 3................................................. 57 Figure 7 GRAPH SHOWING RESPONSES FOR Q3 OF SECTION 3................................................. 58 Figure 8 GRAPH SHOWING RESPONSES FOR Q4 OF SECTION 3................................................. 58 Figure 9 GRAPH SHOWING RESPONSES FOR Q5 OF SECTION 3................................................. 59 Figure 10 GRAPH SHOWING RESPONSES FOR Q6 OF SECTION 3............................................... 59 Figure 11 GRAPH SHOWING RESPONSES FOR Q7 OF SECTION 3............................................... 60 Figure 12 GRAPH SHOWING RESPONSES FOR Q8 OF SECTION 3............................................... 60 Figure 13 GRAPH SHOWING RESPONSES FOR Q9 OF SECTION 3............................................... 61 Figure 14 GRAPHICAL REPRESENTATION OF NKG DEPARTMENTS RANKED BY FRIEDMANS TEST .................................................................................................................................... 63 Figure 15 MEAN RANKING OF NKG DEPARTMENTS............................................................... 63

LIST OF ABBREVIATIONS TMS- TOP MANAGEMENT SUPPORT UTE- USER TRAINING & EDUCATION BPR- BUSINESS PROCESS RE-ENGINEERING TC- TEAM COMPETENCE PM- PROJECT MANAGEMENT OC- ORGANISATIONAL COMMUNICATION CGO- CLEAR GOALS & OBJECTIVES CM- CHANGE MANAGEMENT PC- PROJECT CHAMPION VS- VENDOR SUPPORT UIP- USER INVOLVEMENT & PARTICIPATION EC- EXTERNAL CONSULTANT CT- COMPATIBILITY OF TECHNOLOGY MG & SS- MARKETING & SALES FE- FINANCE WE- WAREHOUSE C.S.F- CRITICAL SUCCESS FACTORS C.C- CRITICAL CHALLENGES PN- PRODUCTION PG- PURCHASING AN- ADMINISTRATION ERP- ENTERPRISE RESOURCE PLANNING NKG- NEXANS KABELMETAL GHANA

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INTRODUCTION PREAMBLE

A recent IT innovation that is enhancing organizational performance through providing endto-end connectivity is Enterprise Resource Planning (ERP) Systems. ERP attempts to integrate all departments and functions across a company into a single computer system, it is one of the fastest growing segments in the software market, and one of the most important developments in information technology in the last decade. ERP systems have become vital strategic tools in todays competitive business environment. In spite of rendering great services, ERP encounters a great deal of challenges during its implementation stage. ERP projects generally involve a voluminous investment of time and money. The amount of cash required would even be more over whelming on the management given the fact that such an outlay is not a guarantee to the said benefits but subject to proper implementation procedures. This research study attempts to identify the main ERP challenges and the critical success factors encountered during implementation. The project topic is about the challenges of implementing ERP projects in manufacturing industries, specifically Nexans Kabelmetal Ghana that recently implemented such a project. The objectives and significance of the project will be stated. The potential challenges that are encountered will be discussed. It will cover the key activities that constitute the implementation of the ERP project and the major business drivers behind the ERP implementation. Literature on ERP implementation and critical success factors will be reviewed after which a case study methodology will be used identify the major challenges encountered as well as benefits derived from its implementation. The concluding part will show how this study can guide similar ERP project implementations in other organizations. This project will show how with the right integration plan and supporting ERP in place an organization can streamline and improve its core processes.

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STATEMENT OF PROBLEM

Although ERP projects render a great deal of benefits, their implementation process involves a voluminous investment of time and money which does not necessarily yield the said benefits due to implementation challenges. It has become very critical for companies to understand the possible challenges involved in ERP projects as well as the key success factors needed to overcome the challenges.

SPECIFIC OBJECTIVES 1. To determine the critical challenges encountered in implementing ERP in Nexans. 2. To identify the most challenging departments. 3. To determine the critical factors needed for a successful implementation. 4. Identify ERP impact in Nexans. 5. To rank the critical successes and critical challenges identified in order of importance using Friedmans rank test. 6. To highlight the critical success factors and challenges that would need extra attention during similar ERP implementation.

RESEARCH QUESTION

What are the challenges of implementing ERP projects in manufacturing industries?

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THE PURPOSE AND SIGNIFICANCE OF THE STUDY

PURPOSE
The purpose of this research is to provide a set of guidelines for a successful ERP implementation in manufacturing industries that decide to embark on an ERP project. It will also iterate the real time benefits that could be derived from such a project.

SIGNIFICANCE
This study will benefit small and medium enterprises wishing to implement ERP. The support from the literature and experiences of Nexans Kabelmetal Ghana during the ERP implementation will add to existing literature on the subject area. It will also be a source of reference for future work in the subject area.

RESEARCH METHODOLOGY A single case study methodology will be used due to limited time to address the statement of problem. Data will be collected through questionnaires and interviews, the data collected will then finally be analysed by using statistical software.

SCOPE AND LIMITATION OF STUDY

Due to limited time this project was based on a single case study methodology, therefore findings may be limited to mostly small and medium enterprises. The major hurdle was capturing the workers views from all departments in a relatively short time at the time when they were focusing on completing a large production order. However, the survey proved to be an effective method of gathering data given the restricted time frame.

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ORGANIZATION OF STUDY

The study will be organized into five chapters. The first chapter will give the general overview of .RP systems. The second chapter shall review relevant literature on ERP implementation, benefits and critical success factors. The third chapter will examine NKG as a case study to determine specific objectives. The fourth chapter will commence with research methodology, going down to presentation and analysis of data and then finally it will end with discussions and interpretations of findings. The fifth chapter will include recommendations, summary and conclusion of the thesis.

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CHAPTER 1

1.0 GENERAL OVERVIEW

1.1 Brief History on ERP


Information in large organizations is often spread across numerous homegrown computer systems, housed in different functions or organizational units. While each of these information islands can ably support a specific business activity, enterprise-wide performance is hampered by the lack of integrated information. Further, the maintenance of these systems can result in substantial costs. With the advent of E-Business and the need to leverage multiple sources of information within the enterprise, ERP software has emerged as a major area of interest for many businesses. Back-office enterprise software has its roots in the 1960s and 1970s, as computing power became affordable enough for companies to automate materials planning through Material Requirements Planning (MRP) and financial processing through payroll and general ledger software. MRP was developed in the early 1960s at IBM and had become the principal production control paradigm in the U.S. MRP consists of a set of procedures that convert forecasted demand for a manufactured product into a requirements schedule for the components, subassemblies and raw materials comprising that product. MRP is limited to controlling the flow of components and materials, and does not lend itself to more complete production control and coordination. The next generation of manufacturing software, known as MRP II, was developed to address this shortcoming and to further integrate business activities into a common framework. MRP II divides the production control problem into a hierarchy based on time scale and product aggregation. It coordinates the manufacturing process, allowing a variety of tasks such as capacity planning, demand management, production scheduling and distribution to be linked together. However, even MRP II is primarily a specialized tool designed to serve the needs of the manufacturing function within a company. Its data and processes are not integrated with those in the rest of the enterprise, such as marketing, finance and human resources.

ERP entered the scene to facilitate information sharing and integration across these different functions and to operate the enterprise more efficiently and effectively, using a unified data store and consistent processes.

1.2 Growth of the Enterprise Software Industry

A number of trends drove the growth of the enterprise software market. First, the integrated information architecture improves business performance. Once a major company in an industry adopts enterprise software, competitors may be compelled to follow suit to stay competitive. Second, there was a major shift towards the use of packaged applications. This was partly related the European Unions conversion to a single currency, which induced companies to replace their legacy systems with packaged software effectively. Third, many companies were abandoning legacy software due to the demands of electronic commerce and front office applications on the front end and linking to suppliers and business partners at the back end. Similarly, the emergence of ERP-based vertical applications that address the enterprise software needs of a specific industry have caused many companies to purchase ERP packages. Finally, rapid advances in computer and software technologies combined with the explosive growth of the Internet led many companies to rethink their business practices, to put a greater emphasis on their use of IT, and to invest in more robust enterprise architecture. Competition in the enterprise software business is fierce, with hundreds of software producers fighting for market share. The market has both companies that offer an integrated suite of applications and those that address specific business process. The first group consists of five companies namely J.D.Edwards, Baan, Oracle, PeopleSoft, and SAP AG. This group was also known as JBOPS for short. These companies attempted to create end-to-end solutions for the entire enterprise, hoping that corporate customers will purchase almost all of their critical enterprise applications from a single vendor. The reasoning behind this strategy is twofold.
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First, it is increasingly important for enterprise applications to communicate and interact with each other seamlessly. For example, a company can commit to a more reliable delivery time if its sales order entry and manufacturing software packages are integrated; if the same vendor produces all of the software, applications can integrate more tightly. Second, customers may prefer to rely on one major vendor for most of their software needs, because having a single vendor simplifies contracting and relationship management and creates a single point of accountability for all software problems. On the other hand, scores of companies that make innovative products compete to provide software solutions for customer relationship management, supply chain management, electronic commerce and purchasing. These companies offer software that can be bolted on to the existing ERP backbone and, together, provide a flexible best of- breed portfolio of solutions in different areas. Players in the area of customer relationship management include Siebel Systems, Clarify, Remedy, Epiphany, Broadvision and Trilogy. These firms produce software to help with customer support, product configuration, one-to-one marketing and sales-force automation. Leaders in ecommerce software are too numerous to list. Some of the larger ERP companies are acquiring smaller players to fill the gaps in their end-to-end solutions, whereas others focus on developing interfaces at the front and back end of their ERP offerings.

1.3 TOP 5 ERP SOFTWARE VENDORS

2. SAP AG: The leading ERP package vendor, with a 32% market share in 1999, is SAP AG (SAP stands for Systeme, Anwendungen, und Prudukte in Datenverarbeltung or Systems, Applications and Products in Data Processing). SAP AG was founded in Germany in 1972 by five engineers. They wanted to produce integrated business application software for the manufacturing enterprise. Seven years later, the company launched its first enterprise software, R/2, which was designed around a centralized, mainframe-based database. SAPs client/software product, R/3, was introduced in 1992 and quickly came to dominate the ERP software market. In 1999, SAP AG was the third-largest independent software vendor in the world, serving over 11,000 customers (with more than 20,000 installations) in over 100 countries. Leveraging its leading position in the ERP market, SAP developed vertical, industry-specific
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business solutions for 19 industries. These industry solution maps provide functionality from SAP and its partners for complete, end-to-end industry- specific processes. SAP followed the lead of focused niche players, and in 1999 it extended its ERP offering to include customer relationship management, data warehousing and supply chain management modules. SAP recast its entire set of offerings around the Internet, borrowing the business portal concept (called mySAP.com Workplace in SAP parlance) to organize all information around the users role in the enterprise, and adding functionality for business-to-business and business-to-consumer electronic commerce. SAP started the mySAP.com Marketplace, an electronic inter-company trading community for buying, selling and collaborating within and across industries. 3. Oracle: The heavyweight of the database software market, Silicon-Valley-based Oracle is the worlds second largest software company. It has built a solid enterprise application business, which accounted for $2.5 billion of the firms $9.3 billion 1999 revenues. Second to SAP in the enterprise software market, Oracle applications serve over 5,000 customers in 140 countries. Oracle has been a leader in refocusing its ERP solutions around the Internet, and it launched a barrage of electronic-commerce and Internet-based business-to-business software applications while the other JBOPS companies were slow to react to the changing marketplace. Further, Oracle was the first JBOPS Company to integrate front-office applications with its ERP offering. 4. PeopleSoft: Started as a software firm for human resource management in 1987, PeopleSoft gradually expanded its software to cater to other corporate functions. The companys revenues grew to $1.3 billion in 1998, up forty-fold from $32 million in 1992 (sales are expected to remain flat in 1999). PeopleSofts ERP system provides enterprise solutions for finance, materials management, distribution, supply chain planning, manufacturing and human resources. In 1996, PeopleSoft acquired Red Pepper, a producer of supply chain management software and in 1999 it acquired Vantive for its customer relationship management offering. 5. J.D. Edwards: Founded in 1977 by three partners from an accounting firm, Denver based J.D. Edwards addresses business processes in finance, manufacturing, distribution/logistics and human resources, and encompasses the entire supply chain from planning and scheduling through execution. Growing from $120 million in
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revenues in 1992 to $944 million in 1999, the software maker has served over 5,000 customers in over 100 countries. Its One World system is considered to be more flexible than its competitors, and the company made headway in smaller enterprises. And, rather than build its own customer relationship management system, J.D. Edwards developed tight integration with Siebels leading offering. 6. Baan: The Baan Company was founded in The Netherlands in 1978 making financial software. Baans products have been simpler to use than SAPs, leading to the companys growth in the early nineties. Today, the company operates in 80 countries, serving more than 2,800 customers. Baans net revenues have increased from $47 million in 1992 to $736 million in 1998. The Baan Series is its primary enterprise system, which incorporates a variety of functionalities from sale order management and manufacturing to supply chain management. Since October of 1998, Baan suffered a series of setbacks including management turmoil, accounting irregularities, multiple-quarter losses and CEO turnover.

1.4 OVERVIEW OF ERP

ERP is a software architecture that facilitates the flow of information among the different functions within an enterprise. Similarly, ERP facilitates information sharing across organizational units and geographical locations. It enables decision-makers to have an enterprise-wide view of the information they need in a timely, reliable and consistent fashion. ERP provides the backbone for an enterprise-wide information system. At the core of this enterprise software is a central database which draws data from and feeds data into modular applications that operate on a common computing platform, thus standardizing business processes and data definitions into a unified environment. With an ERP system, data needs to be entered only once. The system provides consistency and transparency across the entire enterprise. A primary benefit of ERP is easier access to reliable, integrated information. A related benefit is the

elimination of redundant data and the rationalization of processes, which result in substantial cost savings. The integration among business functions facilitates communication and information sharing, leading to dramatic gains in productivity and speed. Cisco Systems, for example, harnessed ERP to help it become the market leader in the global networking industry. Ciscos ERP system was the backbone that enabled its new business Model (Global Networked Business) based on the use of electronic communications to build interactive, knowledge-based relationships with its customers, business partners, suppliers and employees. In the process, Cisco doubled in size each year and reaped hundreds of millions of dollars in both cost savings and revenue enhancements. 1.5 ADVANTAGES AND DISADVANTAGES ERP

The advantages and disadvantages of ERP is an interesting Study. The foremost advantage of an ERP system is bringing down the costs and saving the valuable time which would have otherwise been wasted in procedural maneuvers and unwanted delays. Different software programs maintained in the departments were proving to be a great hurdle. Since ERP is a uniform platform it ensures that there is no discrepancy in the information that is processed. 1.5.1 Industry Wise Advantages Manufacturing Sector: It speeds up the whole manufacturing process thereby bringing about a significant amount of cost reduction. It also helps improve upon production planning as well as production stock replenishment. Distribution and retail Sector: It enables the status of the goods to be accessed by coordinating the actions of supply chains. It provides both warehouse and logistics with up to date information at all times to ensure customer satisfaction. Transport Sector: It provides the possibility of transporting commodities through online transactions. Project Service Sector: It facilitates faster compilation of project reports.

The advantage of ERP is best understood by studying them under different categories. Hence the next paragraph presents information on corporate as a whole because the advantage of ERP systems in a company is different when compared industry wise. 1.5.2 Advantages in a Corporate Entity Effective use of ERP helps a corporate entity to reduce lead-time and on-time in-full delivery (OTIF) due to the following advantages: Reduction in manufacturing cost achieved also as a result of more efficient use of people and equipment as well as productivity. ERP also helps in making the maximum use of technological advancements It also gives the organization information on current status of sales orders, inventory control, production and finance. The sales department for example will be able to respond to a customer query immediately by making out the status of the production order. It also enables the accounts department personnel to act independently. They dont have to depend on the technical persons every time to record to financial transactions. It ensures quicker processing of information and reduces the burden of paperwork. It helps in serving the customers efficiently by way of prompt response and follow-up and disposing queries immediately and facilitating the payments from customers with ease and well ahead of stipulated time. It also helps in having a say over your competitor and adapting to the whims and fancies of the market and business fluctuations. Swift movement of goods to rural areas and in lesser-known places has now become a reality with the use of ERP. The database of ERP is user friendly and helps do away with unwanted ambiguity. It is suitable for global operations as it encompasses all domestic jargons, currency conversions, diverse accounting standards and multilingual facilities. It helps control data and facilitates the necessary contracts to acquire competitive advantage. In short it is the perfect scientific and commercial epitome of the verse Think local and Act global.

1.5.3 Disadvantages In spite of rendering marvelous services ERP is not free from its own limitations. ERP calls for a voluminous and exorbitant investment of time and money. The amount of cash required would even be looming on the management given the fact that such an outlay is not a guarantee to the said benefits but subject to proper implementation, training and use. In the ever expanding era of information theft ERP is no exception. It is alarming to note the time taken to implement the system in the organization. This means large amounts of workers have to shun their regular labor and undertake training. This not only disturbs the regular functioning of the organization but also runs the organization in the huge risk of losing potential business in that particular period. Further, when one thinks of this information reach in the hands of undeserving persons who could do more than misuse it, it is evident that there is no way of ensuring secrecy of information and larger chances of risk will be generated as long as they are in the public domain. 1.6 COMPONENTS OF ERP To enable the easy handling of the system, ERP has been divided into the following Core subsystems: Sales and Marketing - This module implements functions of order placement, order scheduling, shipping and invoicing and other marketing functions Master Scheduling - The Master Scheduling module provides management with the visibility of future load, inventory investment, production, and delivery commitments. Material Requirement Planning -It is a production planning and inventory control module used to manage manufacturing processes. Capacity Requirement Planning - It is the process of determining the production capacity needed by an organization to meet changing demands for its products. Bill of Materials - A structured list of the items used in making a parent assembly that reflects the actual production process in terms of timing and quantities consumed. Purchasing - It provides complete purchasing control to generate and track purchase orders from purchase order issue to receipts. Shop floor control - It is a module used to control all activities on the shop floor.
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Accounts Payable/Receivable - are used by businesses to record sales for which they are not immediately paid, or to record bills that they have received, but might not pay until later.

Logistics - It is used to manage a database containing the logistics equipment and supplies.

Asset Management - It is fully integrated with other financial modules to provide the mechanism to accurately record and track the states investment in infrastructure, capital purchases, historically significant items and valuable donations. It is also used to add assets, adjust and transfer assets, process depreciation, conduct physical inventory, and report on agency assets.

Financial Accounting Performs all the necessary accounting functions of the firm.

1.7 IMPORTANT ISSUES TO CONSIDER BEFORE IMPLEMENTATION

Before integrating business functions, managers must consider several important issues that will help them decide whether an ERP integration is the right choice for their organization. These pertinent issues are classified under the following categories: fundamental issues, organizational change process, people, and the different approaches to implementing ERP.

1.7.1 Fundamental Issues First, managers must consider the fundamental issues of system integration by analyzing the organizations vision and corporate objectives. For instance, does management fully understand its current business processes, and can it make implementation decisions in a timely manner? Is management ready to undertake drastic business process reengineering efforts to yield dramatic outcomes? Is management ready to make any changes in the structure, operations, and cultural environment to accommodate the options configured in the ERP system? Is the organization financially and economically prepared to invest heavily in an ERP implementation? Next, management needs to decide on the key related implementation and business issues and how to proceed. Certainly, ERP is not suitable for companies that are experiencing rapid
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growth and change in an unstable environment are undergoing change in the corporate management and philosophy, or that will be experiencing merger or liquidation in the near future. Understandably, there will be more foreseeable system integration problems if one of the merging companies is in the midst of an ERP upgrade because it must deal with scalability, a new IT infrastructure, and a different corporate culture simultaneously. Further, ERP integration is not recommended for companies which require a lot of flexibility to succeed or which manufacture products that are constantly changing (4). Similarly, companies that have very little experience with formal information systems or have constantly changing information systems requirements will not benefit from an ERP implementation. Finally, organizations need to exploit future communication and computing technology to integrate the ERP system with e-business applications. Oftentimes, additional new hardware and specialized professionals are needed to run the powerful software system. Depending on the size of the company and the modules installed, the cost of implementation can range from one million to five hundred million dollars, and will take as long as two years for a mid-size company and seven years for a large, multinational corporation to complete.

1.7.2 People People-related issues such as corporate philosophy and leadership style can play an important role in the ERP implementation process. Research has concluded that active top management support and commitment are essential to the success of any system implementation. Frequently, executive councils and steering committees consisting of top managers are developed to plan and manage the IT initiatives (8). Such senior managerial involvement tends to increase the optimization of IT business values. Employees can be quite wary of any kind of change in the business processes, particularly during periods of economic downturn. Ill-trained employees who fight the changes in the business process tend to be poor performers. Therefore, to increase the chance of a successful ERP implementation and to reduce users resistance to change, end users, especially those who are very knowledgeable with the operations, must be involved in all stages of the implementation process. Employees must also be educated about the ERP installation. Such educational endeavor should include a concise introduction to the basic concepts and architecture of ERP systems, including actual screen shots of the function modules. During
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these training sessions, it is important to discuss the managerial issues involved and to build a basic understanding of the integration concepts prior to the actual installation of the ERP system. Further, any Business-toBusiness initiatives, reengineering projects, alliances, and the introduction of new technologies should also be addressed. Project managers must take charge of the implementation process at all times. They must oversee the reengineering of the key business processes, reassign job responsibilities, restructure the organizations chart, and redefine work relationships. Further, they must also learn how to manage the software vendors and any outside consultants.

1.7.3 The Organizational Change Process ERP implementation requires organizations to reengineer their key business processes in fundamental ways, revamping old ways of conducting business, redefining job responsibilities, and restructuring the organization. For major multinational corporations (MNC), the ERP systems must be customized to address global issues where different countries have different ways of doing business, and to incorporate country-specific business practices pertaining to accounting, tax requirements, environmental regulations, human resources, manufacturing, and currency conversion into the integrated systems. While integrating the information systems across various countries, three types of misfits (relating to data, process, and output) can occur due to incompatibilities between software functionality and organizational requirements as well as differences in cultural and regulatory environments (9). The unique context of each country in which an organization operates must be carefully enmeshed into the traditionally Western-biased business practices inherent in the ERP systems. Diese, et al. (2000) describes an eight-level process that managers can use to manage change. The first step is to create a comprehensive change vision and to make the vision operational. Then, a change strategy is defined to assess readiness change within the organization, to select the best change configuration, and to establish change governance. The third process is to develop leadership, in order to lead the change program and to develop leadership capability.

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Commitment from teams is built through communication, managing resistance, and transferring of knowledge and skills. The fifth process is to manage employee and stakeholders performance by establishing needs, and implementing performance management and people practices. Business benefits are delivered through the building of business cases, and quantifying and sustaining benefits. The next process is to develop culture in the organization by understanding the current culture, and then to design the target culture and to implement cultural change. The final process is to design the organization by understanding the current organization, and then to design the target organization and to implement organizational change.

1.7.4 Different Approaches to Implementing ERP Another important question for managers to consider is how much to implement. Depending on the tasks and processes involved in the installation process, there are several approaches to implementing ERP. For instance, is the organization embarking on an ambitious journey of revamping the whole enterprise using a complete integration, or is the organization employing a franchising strategy of implementing a partial integration across a few divisions with uncommon processes? The complete integration approach was quite popular during the 1990s among the Fortune 500 corporations because ERP implementation was touted as the perfect solution to the Y2K problem. On the contrary, the franchise approach is employed by large or diverse companies that do not have many common processes across the organizations. Individual ERP software packages with its own database are installed in each business division, while common processes sharing common information are installed across the organization. This is a good strategy for companies who would like to ease into ERP implementation, by starting with a pilot installation and slowly moving into other business units. Another approach is for small companies interested in experimenting with ERP, by starting with a few key processes or a particular module. Such canned processes would require little reengineering, thereby maintaining minimal disruption to the daily business operations. However, such IT endeavors seldom result in extensive benefits to the organizations. The bigger the organization, the more complex the business processes are and the greater the difficulties in implementing the ERP system. Organizations considering a partial implementation must deal with the problems associated with using multiple vendors. They
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also need to consider simultaneous versus piecemeal implementation because of the ripple effect caused by decisions made in one module. In general, in order to maintain a smooth transition of the business processes and operations, simultaneous integration of the whole system, instead of functional or departmental integration, is highly recommended.

1.8 ERP CHALLENGES When implementing ERP systems, most organizations will encounter different kinds of challenges. A problematic ERP implementation in Mid-August of 2002 costs Agilent Technologies Inc. $105 million in revenue and $70 million in profits. The major problems encountered by Agilent include the need to convert all orders in the legacy systems to an Oracle friendly format, problems in the configuration process, and the managements inability to prepare for a fundamental transformation of the companys key business processes. A-DEC Inc., a dental equipment maker located in Newberg, Oregon, installed Baans ERP system to integrate manufacturing, distribution and financial information processing. Unfortunately, the company lost a lot of business because employees were falling behind on processing orders, building products, and shipping goods to dealers. Many of the people-related problems include employees not understanding the newly installed system, which subsequently led to low performance; end users resisting and fighting the changes in the business process; and end users receiving insufficient training. In 1999, a failed companywide rollout installation of SAP AGs ERP applications caused teddy bear maker Russ Berrie and Co.$10.3 million and three years. Subsequently, in 2002, Russ Berrie and Co. implemented a new departmental phased installation using J.D. Edwards & Co.s OneWorld Xe suite of ERP, CRM, and financial applications.

1.9 THE ERP IMPLEMENTATION PLAN The flowchart in Figure 1 depicts several activities that must be performed before implementing an ERP system. First, managers must conduct a feasibility study of the current situation to assess the organizations needs by analyzing the availability of hardware, software, databases, and in-house computer expertise, and make the decision to implement ERP where integration is essential . They must also set goals for improvement and establish objectives for the implementation, and calculate the break-even points and benefits to be
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received from this expensive IT investment. The second major activity involves educating and recruiting end users to be involved throughout the implementation process. Third, managers will form a project team or steering committee that consists of experts from all functional areas to lead the project. After a decision is made, a team of system consultants will be hired to evaluate the appropriateness of implementing an ERP system, and to help select the best enterprise software provider and the best approach to implementing ERP. In most situations, the consultant team will also recommend the modules that are best suited to the companys operations (manufacturing, financials, human resources, logistics, forecasting, etc.), system configurations, and Business-to-Business applications such as supply-chain management, customer relationship management, e-procurement, and e-marketplace. The importance of adequate employee and manager training can never be overestimated. IT analysts usually recommend that managers reserve 11% of the projects budget for training. Different kinds and different levels of training must be provided to all business stakeholders, including managers, end users, customers, and vendors, before the system is implemented. Such training are usually customized and can be provided by either internal or outside trainers. The system installation process will address issues such as software configuration, hardware acquisition, and software testing. Data and information in the databases must be converted to the format used in the new ERP system and servers and networks need to be upgraded. System maintenance will address issues and problems that arise during operations. A post implementation review is recommended to ensure that all business objectives established during the planning phase are achieved. Needed modifications are tackled during this phase too. 1.9.1 How can ERP improve a companys business performance? ERPs best hope for demonstrating value is as a sort of battering ram for improving the way your company takes a customer order and processes it into an invoice and revenue otherwise known as the order fulfillment process. That is why ERP is often referred to as back-office software. It doesnt handle the up-front selling process (although most ERP vendors have developed CRM software or acquired pure-play CRM providers that can do this); rather, ERP takes a customer order and provides a software road map for automating the different steps along the path to fulfilling it. When a customer service representative
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enters a customer order into an ERP system, he has all the information necessary to complete the order (the customers credit rating and order history from the finance module, the companys inventory levels from the warehouse module and the shipping docks trucking schedule from the logistics module, for example). People in these different departments all see the same information and can update it. When one department finishes with the order it is automatically routed via the ERP system to the next department. To find out where the order is at any point, you need only log in to the ERP system and track it down. With luck, the order process moves like a bolt of lightning through the organization, and customers get their orders faster and with fewer errors than before. ERP can apply that same magic to the other major business processes, such as employee benefits or financial reporting.

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CHAPTER TWO

2.0 ARTICLE REVIEW

This chapter reviews articles on ERP projects in four categories. First and foremost articles on implementation issues of ERP will be reviewed, the review will continue with articles on key success factors, then third section reviews articles on identified challenges of ERP implementation and finally articles on the benefits of ERP will be reviewed. 2.1 ERP IMPLEMENTATION

The implementation of an ERP system in an organisation is a very complex one. The implementation of such systems is difficult and involves high costs, as well as considerable time and resources. Organizations contemplating such a project must be aware of the necessary commitments. Many researchers have proposed stage models of ERP implementation (Bancroft et al.1998; Davenport, 2000; Langenwalter, 2000; Mandal and Gunasekaran, 2003; Umble et al., 2003; Gupta et al., 2004; Yusuf et al. 2004 and Kakouris and Polychronopoulos, 2005) in order to provide guidelines for successful implementation. It is thus argued that the stages of ERP implementation can be characterized as a journey with six stages. The first stage conducts feasibility studies. At this stage, it is vitally important to examine the practicability of introducing an ERP system into an organization. The second stage in implementing ERP in an organization is to plan for the system; this stage should be conducted in an early stage. The third stage is assessing the various systems available to an organization. The fourth stage is where organizations should select the right ERP package that supports their business needs. This is very important in the early stages of ERP implementation. As no ERP package is completely suitable for any specific business.

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The fifth stage is the pre-implementation stage, this where the whole project is planned out along with schedules and deadlines, resources are allocated and all business is restructured to fit an ERP package (Gupta et al., 2004). The final stage is the post-implementation process. Following the implementation of the system, an organization should engage in a post-implementation review. Nicolaou (2004) classified post-implementation activities for ERP systems into two major tasks. 1. In the first task, a company may experience a 3 to 6 month productivity decline, which is overcome by redefining jobs, establishing new procedures, fine-tuning ERP software, and taking charge of the new streams of information created by the ERP system. 2. The second task, which lasts from 6 to 18 months, involves skills development, structural changes, process integration, and add-on technologies to expand ERP functionality.

Campbell, Doug (2000) wrote an article on Successful ERP Implementation Strategies. In this article, the author points out an important factor to a successful ERP implementation project, from an organizational perspective, that is gaining top-down project support. This includes the CEO and the most important managers of the company. The author argues that the critical nature and broad potential impact of the ERP system demand attention from the highest levels of the organization. Anything less simply will not do. Mousseau (1998) wrote an article titled ERP Projects Call for Multi-Talented Managers. This article identifies characteristics of good project managers in ERP implementation projects. The author is an experienced ERP consultant at Ernst & Young. According to him, ERP project managers can be effective if they are able to do the following: Be credible in technical and business knowledge; Stay calm under stress and make quick and effective decisions; Compromise flexibly when appropriate to accomplish project goals;

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Manage expectations of managers and end-users properly, i.e., balancing the need to stimulate project team members and keep project manageable and within scope; Demonstrate good people skills in dealing with various factions and coaching own team members; Market the projects benefits to the entire organization and create positive perceptions of the project. Project management can stay only a theory without capable project managers. Thats why the article is significant to this study because the practices of effective project managers often equate good project management techniques. In this article, these techniques primarily relate to expectations, scope, as well as the environment surrounding an ERP project. An ERP system is much more than just another IT project. Selection of ERP systems must be based primarily on business needs. Project management does not operate in a vacuum. Working closely with the CEO and key managers of the company helps the implementation team understand the scope, needs and expectations of stakeholders, and is therefore critical to ERP project success. Meanwhile, ERP system is a piece of computer software after all. As a result, the involvement of the organizations IT department is necessary. However, a balance must be stricken to avoid placing too much emphasis on ERPs IT aspect. The British Computer Society (2000) published an article on IT Projects titled sink or swim? . In this article a survey was conducted to identify whether these (IT project) successes are just exceptions, to understand where failure can occur, to examine whether a single issue repeatedly causes failure, and to discover what skills a project manager needs to give a project the best chance of success. Out of the 1027 IT projects surveyed, only 130, or 12.7% were completed successfully. The top 3 reasons cited for failure with respect to management activities are poor scope management, poor project management and poor change management. As to where the failures occur, the most problematic stages are requirements definition and implementation. Among the critical success factors cited, survey respondents list clear and detailed requirements, clear project change control and strong business commitment at the top. Planning and vendor selection are both crucial foundations to ERP implementation success. Brown, Jennifer (2001). Wrote a short article based on an interview with an ERP implementation consultant.

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The main focus is on working with ERP vendors before and during the implementation. The key points and their relationship to project management problem areas are as follows: 1. Companies should plan carefully before searching for ERP systems. This is equivalent to establishing a scope of project before getting started. 2. A vendor should be selected only after a thorough review process and their promises must be documented in writing. As the article points out, implementation consulting can cost as much as or more than the software licenses. Therefore its important to know exactly what will be delivered before entering into a contract with the vendor. Building on the principle of managing scope, this point also deals with the relationship between quality and cost of an ERP implementation project. Holland and Light (1999a) performed their research by a company case, although they did not mention CSFs directly, when the analyzed the case. Elements include IT legacy, business legacy, IT strategic review, project management strategy, business process reengineering strategy, and IT strategy. In their paper, besides the previous business and management factors, the IT factors are emphasized, though these IT factors are different from later researchers views. Since Holland and Light only noticed that the legacy system are no longer efficient, the systems are fragments and need to be combined and improved to meet new business necessary. They did not comment on the impact of legacy system to implement new ERP systems. Later Holland and Light (1999b) design a model to group the CSFs into strategic and tactical factors as shown below. ERP implementation process Strategic Legacy systems Business vision ERP strategy Top management support Project schedule and plans

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Tactical Client consultation Personnel BPC and software configuration Monitoring and feedback Communication Trouble shooting

2.2 CRITICAL SUCCESS FACTORS IN E.R.P IMPLEMENTATION

Critical success factors have become a very important topic when it comes to successful ERP implementations. Table1 presents the main factors revealed from the previous articles and have been found to be vital for successful ERP implementation:

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Table 1 Critical Success Factors Reference table Critical Success Factor References

Top management support

Al-Mashari et al. (2003); (Umble et al., 2003); Zhang et al. (2002)

Business plan and vision

Loh and Koh (2004); Schwalbe, (2000); Somers and Nelson (2004); Nah (2003)

Re-engineering business process

Davison (2002); Hammer and Champy (2001); Somers and Nelson (2004); Nah (2003); Murray and Coffin (2001)

Effective project management and project champion

Zhang et al.,( 2002); Somers and Nelson (2004); Remus (2006); Loh and Koh, (2004)

Teamwork and composition

Loh and Koh (2004); AlMashari et al., (2006); Remus (2006); Nah (2003); Rosario (2000)

ERP system selection

Wei and Wang (2004); Shehab et al., (2004); Everdingen et al. (2000); Sprott (2000)

User involvement

Esteves et al., (2003); Zhang el at (2002)

Support Education and training

(Woo 2007); Nah et al., (2003); Zhang et al. (2002)

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Top Management

Top management support has been identified as the most important success factor in ERP system implementation projects. According to Zhang et al. (2002) top management support in ERP implementation has two main aspects: providing leadership and providing the necessary resources. Additionally, the roles of top management in ERP implementation comprise of developing an understanding of the capabilities and limitations, establishing reasonable objectives for ERP system, exhibiting commitment, and communicating the corporate strategy to all employees (Umble et al., 2003). Al-Mashari et al. (2003) argued that top management support does not end with initiation and facilitation, but must extend to the full implementation of an ERP system. Furthermore, top management support should provide direction to the implementation teams and monitor the progress of the project.

Business Plan and Vision

A clear business plan and vision is needed to guide the project throughout the ERP life cycle (Loh and Koh, 2004). Project management identifies three competing and interrelated goals namely; scope, time, and cost goals (Schwalbe, 2000). The primary stage of any project should begin with a conceptualization of the goals and possible ways to achieve these goals. Additionally, goals should be explained so they are specific and operational, and to indicate the general directions of the project (Somers and Nelson 2004). Nah (2003) stated that one of the biggest problems ERP project leaders face comes not from the implementation itself, but from expectations of board members, senior staff, and other key stakeholders. It is important to set the goals of the project before even seeking top management support. Many ERP implementations have failed as a result of lacking clear plans (Somers and Nelson 2004).

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Re-engineering Business Process

Hammer and Champy (2001) defined Business process re-engineering (BPR) as the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed. Somers and Nelson (2004) stated that BPR plays a significant role in the early stages of implementation. Furthermore, it is important in the acceptance stage and tends to be less important when the technology becomes routine. Nah (2003) noted that reengineering should continue with new ideas and updates to take full advantage of the ERP system when the system is in use. Organizations should be willing to change their businesses to fit the software in order to reduce the degree of customizations (Murray and Coffin, 2001). Many organizations have made unnecessary, complex customizations to ERP software because the people making the changes do not fully understand the organizations business practices (Nah 2003). According to Somers and Nelson (2004) the new business model and reengineering that drives technology choice is an enabling factor that can give to ERP success. Furthermore, Davison (2002) argued that ERP implementation often requires changes in job descriptions and essential skills.

Project Management and Project Champion

ERP systems implementation is a set of complex activities thus organizations should have an effective project management strategy to control the implementation process (Zhang etal., 2002). Project management activities span from the first stage of the ERP life cycle to closing it. Project planning and control is a function of the projects characteristics such as project size, experiences with the technology, and project structure (Somers and Nelson, 2004). Remus (2006) noted that project champion is one of the most important factors in the implementation of ERP systems. Project champions should own the role of change champion for the life of the project and understand the technology as well as the business and
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organizational context. Furthermore, project champion must attempt to manage resistance towards positive change in the old system (Loh and Koh, 2004).

Teamwork and Composition

The ERP team should involve the best people in the organization (Loh and Koh 2004). AlMashari et al (2006) observed that the success of projects is related to the knowledge, skills, abilities, and experiences of the project manager as well as the selection of the right team members. Also the team should not only be technologically competent but also understand the company and its business requirements (Remus 2006). An ERP project involves all of the functional departments in an enterprise. It demands the effort and cooperation of technical and business experts as well as end-users (Loh and Koh 2004). Both business experts and technical knowledge are important for success (Nah 2003). The sharing of information between the implementation partners is essential and requires partnership trust (Loh and Koh 2004). Moreover, the team should be familiar with the business functions and products so that they know what needs to be improved to the current system (Rosario 2000).

ERP System Selection

The selection of a suitable ERP system is a challenging and time-consuming process. Wei and Wang (2004) stated that there is no one single ERP package that could provide all the functionalities required for the business. There are various ERP packages in the market with similar functionality but different designs including, SAP, Oracle, JD Edwards and Baan (Shehab et al., 2004). Therefore, an organization must select an appropriate vendor that is able to provide a flexible ERP system. Various authors identified important criteria that need to be taken into account when selecting a new ERP system. For example, a study by Everdingen et al. (2000) stressed that the ERP system selected has to closely fit with most of the current business procedures. Additionally, the system has to be flexible, user-friendly and easy to implement. Another similar research study by Sprott (2000) reported that
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applicability, integration, adaptability and upgradeability are essential factors that have to be considered in ERP adoption.

User Involvement

User involvement is one of the most cited critical success factors in ERP implementation projects. User involvement increases user satisfaction and acceptance by developing realistic expectations about system capabilities (Esteves et al., 2003). User involvement is essential because it improves perceived control through participating in the whole project plan. According to Zhang el at (2002) there are two areas for user involvement when the company decides to implement an ERP system: user involvement in the stage of definition of the organizations ERP system needs, and user participates in the implementation of ERP systems.

Education and Training

Educating and training users to use ERP is important because ERP is not easy to use even with good IT skills (Woo 2007). Nah et al., (2003) argued that sufficient training can assist increase success for ERP systems. However, lack of training may lead to failure. According to Zhang et al. (2002) the main reason for education and training is to increase the expertise and knowledge level of the users within the company. To adapt to todays challenging and competitive business environment, organizations are implementing ERP systems to achieve a capability to plan and integrate enterprise-wide resources in order to shorten lead times, and to be more responsive to customer demands. Most of the articles stressed that each organization must assess itself, to see if it is ready for ERP. Many organizations that attempt to implement ERP systems run into difficulty because such organizations may not be ready for integration and the various departments within it have their own agendas and objectives that conflict with each other. Despite the fact that ERP integrates and optimises the flow of information across the entire organizations supply chain, the implementation of such software packages can be costly, and
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may even require reengineering of the entire business operations. Combinations of factors have to be considered when undertaking an ERP implementation including: top management support, business plan and vision, re-engineering business process, effective project management and project champion, careful package selection process, teamwork and composition, user involvement and also education and training.

2.3 CHALLENGES OF ERP IMPLEMENTATION Smyth (2001) observed that after most large industrial companies have installed ERP, the managerial concern is moving to the long-term ERP challenges related to maintenance, support, continuous improvement and changes, continuous training, continuous learning, spreading the systems throughout the company beyond first installation, using the system to its complete potential, and realizing the expected benefits. Although these activities can be considered as part of the post-implementation phases, they are tightly connected to the way the initial implementation phases were carried out (Markus et. al. 2000). For instance, how extensively the ERP was assimilated over initial implementation stages in order to support continuous improvement and the deployment to further departments and locations (Markus and Tanis 2000). These types of concerns have resulted in organizations revisiting the business case for ERP (James and Wolf 2000). An interesting subject related to the assimilation of the ERP is looking at the implementation as a learning process. The ERP implementation success metrics should include indicators of organizational learning (Markus 2000). However, little attention has been given to this concern. By looking at the ERP literature, key learning challenges can be derived. Such challenges are presented below:

1. Learning about skills for carrying out ERP implementation activities. In the terms given by Kim (1993), this refers to abilities for producing action (know-how). This encompasses skills such as modelling business processes, configuring and tailoring the system, training endusers, using the system, and rolling out the system to other locations.

2. Learning about an organization's own business processes and the business practices embedded in the ERP. Users do not necessarily fully understand the business processes
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constructed around their own functions. A major learning challenge in designing and modeling business processes is to understand how the organization actually runs its processes and what its needs are. At the same time, as the ERP project moves onward, users have to learn about ERP functionality. It follows that the implementation process requires both comprehensive understanding of the organizational needs and detailed knowledge of a complex system (Soh 2000).

3. Learning about the ERP integration philosophy; since cross-functional integration is still a new concept to many organizations (Markus 2000), users can effectively understand and apply this concept only after working thorough several learning cycles. Without a clear understanding of the integration concept, diffusion occurs slowly and ineffectively. In fact, failure to completely understand how ERP affect business processes appears to be responsible for many failure ERP implementations (Crowley 1999). Long-term requirements and challenges are new concerns that require more attention from scholars and specialists. Mainly, it is the research firms (e.g. AMR Research) that are considering the topic in depth. AMR's report, signed by Shepherd (2001), proposes the following important missions to support the long-term ERP requirements and challenges in organizations:

1) Continue the deployment of the ERP to additional departments, divisions, and locations, 2) Reconfigure and enhance the applications to support changing business processes and organization structures, 3) Provide continuing education and training for existing and new employees, 4) Monitor new releases and add-on products and evaluate their potential benefit to company, 5) Coordinate internal and external technical support resources, 6) Plan and manage the rollout of periodic release upgrades. For Shepherd (2001)

The above activities should be part of a full-time function and it should not be part of the IT function. This new function might be also responsible for business process design and maintenance. In the light of the above evidence it is plausible to claim that the ERP implementation research is a novel research field with a huge potential and opportunities. In its short life, considerable progress and important findings have occurred. Most of the
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existing research has borrowed models, theories and constructs from the IS implementation research (e.g. factors research, emergent process theories, and task-technology fit). This has allowed ERP implementation research to evolve quickly. However, our understanding of ERP implementation is yet incomplete. Some criticisms are as follows: There is not a consistent definition of ERP implementation. Implementation does not seem to have the same interpretation for everyone. In many cases implementation is considered as constituted just by the project stage. In addition, other authors have their own model of implementation stages. The ERP implementation research remains fragmented with most studies following the factors research stream and descriptive case studies. In addition, some works are focused on a single stage or phase of the implementation process (e.g. mainly the project phase). Little research attempts to generalize the findings. In fact, most of the research works are focused on just one ERP provider (e.g. SAP). Few works have considered the challenges around the ERP implementation. (E.g. new larger issues related to diffusion, learning, continuous improvements, and infusion of the ERP throughout a company). It is not yet known, for example, how widely these technologies have been diffused and assimilated in organizations, how learning process occurs, how extensively they are used inside organizations, or how effectively they are used.

2.4 BENEFITS OF ERP

Since the investment and collective efforts required to implement and run ERP systems are significant to any organisation, the fundamental question of the ERP systems ultimate benefits remains a key priority to many organisations. The articles under this theme mainly address these fundamental questions: Is an ERP system of any value to an organisation? What benefits does an ERP system brings to an organisation? How do we measure the value of an ERP system? These articles tend to investigate these issues in a more systematic and rigorous fashion backed with some statistical evidence, beyond simple enumerating commonly believed benefits. The benefits that ERP systems may generate are multifaceted: operational benefits, financial benefits, benefits for investors, user satisfaction, etc. Sometimes, the value may be measured by observing market reactions to the mere announcement of the ERP project.
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The value assessment methods can be numerous and complex. For example, the benefits may be measured by cost savings, return on investment, asset turnover, return on assets, perceptions by the market, etc. Some articles address relationships between different measurements while others focus on longitudinal study of the ERP system on companys performance. As more companies have implemented ERP systems and more is known about the implementation processes and the questions on the benefits of ERP systems seem to be investigated more often and rigorously. This is an indication that the practices and understanding of the field have matured enough to warrant some serious reflections on its fundamental questions. Several research studies have identified various important benefits the ERP systems bring to organizations. OLeary (2000) stated that an ERP system integrates the majority of the business processes and allows access to the data in real time. Furthermore, ERP improves the performance level of a supply chain by helping to reduce cycle times (Gardiner et al., 2002). There are also some intangible benefits that an organization may enjoy by implementing an ERP system including, better customer satisfaction, improved vendor performance, increased flexibility, reduced quality costs, improved resource utility, improved information accuracy and improved decision-making capability (Siriginidi, 2000).

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CHAPTER 3

3.0 CASE STUDY NEXANS KABELMETAL GHANA LIMITED (NKG) 3.1 HISTORY

The plant of NKG was opened on 31st July 1970, after feasibility study conducted by a German company, Planungsgruppe Juergen Richter, with the backing of the National Investment Bank (NIB) of Ghana. After the study that also involved Kabel und Metalwerke (Kabelmetal) of Hanover, Germany, the group recommended that wire drawing and cable manufacture would be a viable enterprise in Ghana, hence the establishment of NKG.

3.2 MISSION OF NKG The mission of NKG is to achieve and maintain a reputation for the quality in the manufacture of electric and telecommunications cables, wires and conductors for domestic, industrial and general use both in the Ghanaian and international markets. 3.3 VISION OF NKG The vision of the company is to become the leading producer of electrical cables in Africa

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3.4 COMPANY PROFILE Nexans is a global player in the infrastructure, industry, building and Local Area Network (LAN) markets. As a worldwide leader in the cable industry, it offers an extensive range of cables and cabling systems to raise industrial productivity, improve business performance, enhance security, enrich the quality of life, and assures long-term network reliability. Nexans has industrial presence in 39 countries and commercial activities worldwide, Nexans employs 22,700 people and had sales in 2009 of 5 billion euros. In Ghana Nexans is represented by the subsidiary company NKG, the leading cable manufacturer in this country and the first in West Africa. 3.4.1 NKG PRODUCTION PROGRAM PVC insulated and PVC insulated and sheathed single core and multi core cables Unarmoured PVC insulated and sheathed underground cables High temperature and normal temperature PVC insulated flexible cables Aerial Bundled Cables (ABC) - Cable de facade Solid and stranded bare copper and bare aluminium conductors Overhead line conductors Welding Cables 10mm2 - 240mm2 Automobile Cables Earth wires Binding wires Internal/External Telephone cables up to 30 pairs Drop wires for telephone connections Telecom Jumper wires Garden hoses Armoured XLPE insulated and PVC sheathed underground cables

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3.4.2 INDUSTRY SCOPE NKG produces cables that are categorized under the following product segments:

INDUSTRIAL Cables used for installations in industries. TELECOMMUNICATION Cables used by telecommunication companies as communication lines. POWER Cables used to for power transmission. BUILDING - Cables used for domestic and house wiring.

3.4.3 MAJOR COMPETITORS OF NKG IN GHANA TROPICAL CABLES AND CONDUCTORS REROY CABLES

3.4.4 STAFF STRENGTH AND DEPARTMENTS NKG has staff strength of 109 workers.

It has 7 departments. PRODUCTION & MAINTENANCE MARKETING & SALES PURCHASING FINANCE WAREHOUSE ADMINISTRATION / HUMAN RESOURCE QUALITY CONTROL

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3.5 COMPETITIVENESS

COST Affordable pricing and flexible payment terms ensures keen competitiveness. Negotiated part payment is available and the remaining amount is comfortably spread over a period without any interest.

QUALITY- NKG sets a high priority of meeting the Standards of the International Electro-technical Commission, Delivering on Schedule and in full and using materials of the highest quality.

RESPONSIVENESS- Ability to produce any type of cables/conductors within our production program at short notice. Customers need not stock different types of products, which could be very expensive. If there are any cables types requested which are not in its local production program they are ready to import them from any factory of its mother company.

3.5.1 NKG Strengths rests on:


Highly Qualified and Motivated Staff The use of First Grade Raw Materials The Continuous Development of our Production Processes and Product Scope The Continuous Review and Improvement of our Quality Management System Global Expertise and Support

3.6 SEARCH FOR SOLUTION

After many years in business, inventory was growing faster than revenue, on-time delivery was slipping and a general lack of information was negatively impacting financial and operational performance. The solution for NKG which is a small-sized manufacturer was Microsoft Navision.
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Below are the main reasons that propelled the decision: CORPORATE DECISION- After several years of experience in cable manufacturing, NKG corporate had realized that in order to have a consolidated group, all its subsidiaries must work in the same way to ease knowledge transfer and also to increase efficiency by receiving all the benefits of using an ERP. In view of this, corporate decided to develop a software called cable solution and embedded it into the Microsoft ERP system Navision. This system had been tailored to encompass all the processes in a cable manufacturing industry. This was also a way for the corporate office to ensure that the best practices that yielded high returns would be practiced globally by process re-engineering to suit the ERP system. It also ensured that at anytime they could monitor their investment from their offices overseas with just a click on the button.

TO ELMINATE THE MULTIPLE SYSTEMS THAT WERE BEING USED NKG was running multiple systems within the company; this made reconciliation very cumbersome during stock-taking. The multiple systems also slowed monthly report generation. Some of the systems in use were: WAREHOUSE- Oracle FINANCE- Systematic PRODUCTION- Excel

TO HAVE A COMPUTER SYSTEM MONITORING MANUFACTURING-When Nexans decided to implement an ERP system that had a manufacturing module, they wanted an integrated ERP solution that would support their growth and address a number of operational problems.

. 3.7 ERP SELECTION Nexans Corporate was responsible for the selection of the ERP software. The corporate office made their selections with respect to the size of the plant. Small to mid-sized subsidiaries were to use Microsoft Navision, whereas the large subsidiaries used S.A.P. The systems were judged based on overall functionality, ease of use, scalability and underlying technology. In order to ensure a flexible response to changing market conditions, NKG must become
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customer-focused by supplying customized products and services that match specific customer profiles

3.8 IMPLEMENTATION OF ERP BY EXTERNAL CONSULTANT (Cbb Business Ltd) System analysis and design Cbb business Ltd. first conducted Business Requirement Analysis with NKG to define all business requirements for the system. This included: Assessing the computing infrastructure and platform requirements Defining system operations processes Defining functional business requirements Assessing current data models and how they are used strategically within NKG. The system requirements is then analyzed to determine the computing infrastructure requirements, systems operations processes, interfaces to external services, interfaces to internal systems and the natural language to be used (screens, reports, help files, and documentation). The system requirements provided: A clear understanding of NKG vision and objectives for the final product. A clear understanding of the required business functionality A clear list of all requirements for the system.

The goal of the design phase was to blueprint the final solution. This phase consisted of using information compiled during the analysis of the system requirements to develop a strategy that constitutes a new system specification. The design phase included the following major steps: Defining overall system architecture, in which experts in database and system operation and technical architecture define the most effective way to use the architectural options to implement the business requirements. Documenting design work for business functionality, system operation
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processes, infrastructure, and external and internal interface requirements. Writing test scripts or scenarios for each feature being developed.

System Development

During this phase all programs were developed or modified, internal system interfaces were developed and data conversion programs developed as required. Meanwhile, continuous unit testing was performed; quality assurance issues were found, documented, tracked and repaired. The development phase included:

Setting up the development environment Production of all programs and databases Establishing operations and overnight procedures (if required) and any automated tools to conduct these procedures as required.

Creation of a system acceptance test plan.

Training Training would occur prior to System Installation and going live. It would consist of training and mentoring during the development process and testing phase, formal training on operating and maintaining the system, and on the job training after going live. Data Integration Existing data such as customer information, product details etc were downloaded from current applications, reformatted and uploaded. Implementation This phase included providing project management plans showing all NKG responsibilities and requirements and a detailed execution plan, software quality control plan, file creation and conversion plans, change over and handover plans. System Performance evaluation

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This phase included testing the solution such that NKG would validate and take ownership of the developed solution. During this phase user acceptance and integration testing were completed. These activities were carried out jointly with NKG staff to ensure that NKG is satisfied that the system met all of their business requirements. Testing also provided a forum to ensure that NKG staff was familiar with the operation of the system prior to it going live. Documentation Operational documents and flowcharts were produced showing the various processes and procedures .These documents covered all aspects of NKG operations.

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CHAPTER 4

4.0 METHODOLOGY

4.1 OVERVIEW This research is to provide a set of guidelines for a successful ERP implementation in manufacturing industries that decide to embark on an ERP project. In order to answer these research goals, the researcher opted to obtain the view of Management and Non management work force and ERP consultants. Specifically, a total of 20 respondents from Nexans were randomly selected to make up the sample. Selected participants answered a survey questionnaire structure in Likert format and also semi-structured interviews with on-site ERP consultants. Data gathered from this research instrument were then computed for interpretation. Along with primary data, this research made use of secondary resources in the form of published articles and literatures to support the survey results.

4.2 RESEARCH OBJECTIVES To determine the critical challenges encountered in implementing ERP in Nexans. To identify the most challenging departments. To determine the critical factors needed for a successful implementation. Identify ERP impact in Nexans.

To rank the critical successes and critical challenges identified in order of importance using Friedmans rank test.

To highlight the critical success factors and challenges that would need extra attention during similar ERP implementation.

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4.3 RESEARCH DESIGN

The descriptive method of research was used for this study. To define the descriptive type of research, Creswell (1994) stated that the descriptive method of research is to gather information about the present existing condition. The emphasis is on describing rather than on judging or interpreting. The aim of descriptive research is to verify formulated hypotheses that refer to the present situation in order to elucidate it. The descriptive approach is quick and practical in terms of the financial aspect. Moreover, this method allows a flexible approach, thus, when important new issues and questions arise during the duration of the study, further investigation may be conducted. Descriptive research on the other hand is a type of research that is mainly concerned with describing the nature or condition and the degree in detail of the present situation. This method is used to describe the nature of a situation, as it exists at the time of the study and to explore the cause/s of particular a phenomenon. The aim of descriptive research is to obtain an accurate profile of the people, events or situations. With this research type, it is essential that the researcher already has a clear view or picture of the phenomena being investigated before the data collection procedure is carried out. This method of research was used to obtain first hand data from the respondents so as to formulate rational and sound conclusions and recommendations for the study. The descriptive approach is quick and practical in terms of the financial aspect.

In this study, the descriptive research method was employed so as to identify the critical success factors and critical challenges during ERP implementation. This research method was chosen considering the objective to obtain first hand data from the respondents. The descriptive method is advantageous for the researcher due to its flexibility; this method can use either qualitative or quantitative data or both, giving the researcher greater options in selecting the instrument for data-gathering. The aim of the research is to identify the critical success factors and critical challenges during ERP implementation so as to provide a set of guidelines for a successful ERP implementation in manufacturing industries that decide to embark on an ERP project; the descriptive method is then appropriate for this research since this method is used for gathering prevailing conditions.

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For this research, two types of data were gathered. These included the primary and secondary data types. The primary data were derived from the answers the participants gave during the survey process. The secondary data on the other hand, were obtained from published articles that were relevant to this study. With the use of the survey questionnaire and published literatures, this study took on the combined quantitative and qualitative approach of research. By means of employing this combined approach, the researcher was able to obtain the advantages of both quantitative and qualitative approaches and overcome their limitations.

Quantitative data collection methods are centered on the quantification of relationships between variables. Quantitative data-gathering instruments establish relationship between measured variables. When these methods are used, the researcher is usually detached from the study and the final output is context free. Measurement, numerical data and statistics are the main substance of quantitative instruments. With these instruments, an explicit description of data collection and analysis of procedures are necessary. An approach that is primarily deductive reasoning, it prefers the least complicated explanation and gives a statement of statistical probability. The quantitative approach is more on the detailed description of a phenomenon. It basically gives a generalization of the gathered data with tentative synthesized interpretations. Quantitative approach is useful as it helps the researcher to prevent bias in gathering and presenting research data. Quantitative data collection procedures create epistemological postulations that reality is objective and unitary, which can only be realized by means of transcending individual perspective. This phenomenon in turn should be discussed or explained by means of data analysis gathered through objective forms of measurement. The quantitative data gathering methods are useful especially when a study needs to measure the cause and effect relationships evident between pre-selected and discrete variables. The purpose of the quantitative approach is to avoid subjectivity by means of collecting and exploring information which describes the experience being studied. Quantitative methods establish very specific research problem and terms. The controlled observations, mass surveys, laboratory experiments and other means of research manipulation in qualitative method makes gathered data more reliable. In other words, subjectivity of
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judgment, which is not needed in a thesis discussion, can be avoided through quantitative methods. Thus, conclusions, discussion and experimentation involved in the process are more objective. Variables, both dependent and independent, that are needed in the study are clearly and precisely specified in a quantitative study. In addition, quantitative method enables longitudinal measures of subsequent performance of the respondents. Fryer (1991) noted that qualitative researchers aim to decode, describe, analyze and interpret accurately the meaning of a certain phenomena happening in their customary social contexts. The focus of the researchers utilizing the framework of the interpretative paradigm is on the investigation of authenticity, complexity, contextualization, mutual subjectivity of the researcher and the respondent as well as the reduction of illusion. Contrary to the quantitative method, qualitative approach generates verbal information rather than numerical values (Polgar & Thomas, 1995). Instead of using statistical analysis, the qualitative approach utilizes content or holistic analysis; to explain and comprehend the research findings, inductive and not deductive reasoning is used. The main point of the quantitative research method is that measurement is valid, reliable and can be generalized with its clear anticipation of cause and effect (Cassell & Symon, 1994). Being particularistic and deductive in nature, quantitative method is dependent on the formulation of a research hypothesis and confirming them empirically using a specific data set (Frankfort-Nachmias & Nachmias, 1992). The scientific hypothesis of a quantitative method holds no value. This means that the researchers personal thoughts, subjective preferences and biases are not applicable to this type of research method. The researcher opted to integrate the qualitative approach in this study due to its significant advantages. The use of qualitative data gathering method is advantageous as they are more open to changes and refinement of research ideas as the study progresses; this implies that qualitative data gathering tools are highly flexible. Moreover, no manipulation of the research setting is necessary with this method; rather than employ various research controls such as in experimental approaches, the qualitative data gathering methods are only centered on understanding the occurring phenomena in their naturally occurring states. Aside from these advantages, researchers use qualitative data-gathering tools as some previous researchers believe that qualitative data are particularly attractive as they provide rich and well-grounded descriptions and explanations as well as unforeseen findings for new theory construction.
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One of the notable strengths of the qualitative instruments is that they evoke a more realistic feeling of the research setting which cannot be obtained from statistical analysis and numerical data utilized through quantitative means. These data collection methods allow flexibility in conducting data gathering, research analysis and interpretation of gathered information. In addition, qualitative method allows the presentation of the phenomenon being investigated in a more holistic view.

4.4 PARTICIPANTS In order to determine the critical success factors and critical challenges in ERP implementation, a total of 35 questionnaires were distributed. To achieve pertinent information, certain inclusion criteria were imposed. The participants that qualified to receive the questionnaires were either part of the management team or non management workers that work directly with the ERP system. This qualification ensured that the participants understood the nature of ERP challenges and factors that influence its success, making the survey items easy for them to accomplish. The respondents were selected from seven departments, thus, a total of five employees were selected for every department.Out of the 35 questionnaires issued only 30 were returned, 25 of the 30 were adequately filled to suit the purpose of this thesis.Simple random sampling was done for the sample selection. This sampling method is conducted where each member of a population has an equal opportunity to become part of the sample. As all members of the population have an equal chance of becoming a research participant, this is said to be the most efficient sampling procedure. In order to conduct this sampling strategy, the researcher defined the population first, listed down all the members of the population and then selected members to make the sample. For this procedure, the lottery sampling or the fish bowl technique was employed. This method involves the selection of the sample at random from the sampling frame through the use of random number tables (Saunders, Lewis & Thornhill, 2003). Numbers were assigned for each employee in the master list. These numbers were written on pieces of paper and drawn from a box; the process was repeated until the sample size of 20 was reached.

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4.5 INSTRUMENTS The survey questionnaire was used as the main data-gathering instrument for this study (See Appendix A 4.5.1 Questionnaire The aim of the survey was to obtain the views of ERP users, so participants selected to complete the surveys were those who directly used ERP or directly relied on the data from ERP and therefore a convenient choice. By choosing ERP users, the researcher is almost guaranteed to get a higher response rate because chance presents itself and is available to the researcher by virtue of its accessibility allowing the researcher to gather data from convenient samples. (Bryman and Bell, 2003) This method was chosen as it appeared to be the only feasible way of guaranteeing a response from a group users and benefactors. In order to be selective in a way to ensure the feedback came from a cross selection of departments. Companywide interviews and surveys are only permitted if approved by top management as a whole; therefore my strategy was to capture the views of workers during their lunch break, as this was the only way the researcher could obtain permission to carry out this research. Conducting a survey was the preferred method for obtaining the views of workers because of time constraints. Workers were nearing completion of a large project which would have made it difficult to set up interviews. Using an intranet survey was initially considered but this was ruled out because of the lack of IT resources available to the shop floor workers, therefore it decided that it was more appropriate to use a paper based survey which would be user friendly for all employees. An introduction at the beginning of the questionnaire informed workers of the researchers name, degree being studied and the purpose of the research. The questionnaire consisted of 3 personal data questions and 4 multiple choice questions which surveyed their responses to the challenges, critical success factors and impact of ERP system. The personal data questions were used to inform the researcher of the worker profile. Sections one to three were structured using the Likert format. In this survey, seven choices are provided for every question or statement. The choices represent the degree of agreement each respondent has on the given question. The scale below was used to interpret the total responses of all the respondents for every survey question by computing with statistical software:
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Section 1-3 Value 6 5 4 3 2 1 0 Section 4 EASY 1 < 2 < 3 < 4 < 5 < 6 < 7 < 8 < 9 < 10 VERY DIFFICULT Interpretation Absolutely Agree Strongly Agree To Large Extent Fairly Agree Hardly Agree Definitely Not Agree Cant Say

The Likert survey was the selected questionnaire type as this enabled the respondents to answer the survey easily. In addition, this research instrument allowed the research to carry out the quantitative approach effectively with the use of statistics for data interpretation. In order to test the validity of the questionnaire used for the study, the researcher tested the questionnaire to five respondents. These respondents as well as their answers were not part of the actual study process and were only used for testing purposes. After the questions have been answered, the respondents were asked for their suggestions or any necessary corrections to ensure further improvement and validity of the instrument. The questionnaire was then revised based on the suggestion of the respondents. Irrelevant questions were excluded and vague or difficult terminologies were changed into simpler ones in order to ensure comprehension. Data generated from the questionnaires gave an overall view of Critical success factors, challenges and impact of ERP systems in Nexans Kabelmetal Ghana.

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4.5.2 Interviews Semi-structured interviews were the preferred method for obtaining the views of the ERP consultants because it was easier to arrange a time to sit down and interview them to get quality in-depth answers rather than rely on answers given on a questionnaire without a lot of thought. Since Nexans employees were busy rounding up their large production order, therefore the researcher felt it would be more useful to interview only the ERP consultants who were on contract and get guaranteed answers rather than risk a handful of responses from a questionnaire. Two consultants were on site on a full time basis and they both volunteered to cooperate with the research. A sample of six questions was devised, which was piloted on one of the consultants; this pilot went very well and required no changes. Interviewing the consultants allowed me to add value to the set questions whilst leaving room for the inclusion of areas that may have been missed. Semi-structured interviews were used to obtain data from ERP consultants on the challenges faced and the most challenging area during the implementation. The researcher wanted to ascertain if their point of view was similar to that of the workers. The interviews were also used to ascertain which factors were most critical during the implementation stage. ERP consultants involved in the interviews were contacted by telephone to arrange convenient times to conduct the interviews. They were briefed on the objectives of the interview and were given the list of questions beforehand in order to allow them to prepare in advance. Due to their work commitments, all interviews were carried out on site during the lunch period. Each interview lasted 30 minutes; notes were then fully transcribed by researcher as soon as possible after each interview had taken place. At the beginning of each interview, they were asked if they preferred a one-to-one interview or answering a questionnaire, this was because they knew questionnaires had been carried out with the employees and were asking questions about why there were differences so the researcher asked their preference, they all said interviews as they found it more relaxing to be able to think before answering and clarify questions if they were unsure. Two consultants were interviewed. (Objectives 1,2,3,5 & 6) Using semi-structured interviews allowed the researcher to probe more deeply and explore responses that may have had significance to the research topic but werent necessarily in the

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original questions. Before each interview, staffs were informed that any information that wasnt relevant to the questions would not be used. The use of a questionnaire aimed to capture a large response from workers whilst the use of semi-structured interviews with on-site ERP consultants allowed the researcher to plan times and locations and guarantee an in-depth response. Both these methods allowed the researcher to capture specific answers and also allowed for original input from the participants.

4.6 DATA PROCESSING AND ANALYSIS After gathering all the completed questionnaires from the respondents, total responses for each item were obtained and tabulated. In order to use the Likert-scale for interpretation, Friedmans rank test was performed by using statistical software called SPSS statistics 17. As this study required the participation of human respondents, specifically NKG staff, certain ethical issues was addressed. The consideration of these ethical issues was necessary for the purpose of ensuring the privacy as well as the safety of the participants. Among the significant ethical issues that were considered in the research process include consent and confidentiality. In order to secure the consent of the selected participants, all important details of the study, including its aim and purpose was relayed to participants. By explaining these important details, the respondents were able to understand the importance of their role in the completion of the research. The respondents were also advised that they could withdraw from the study even during the process. With this, the participants were not forced to participate in the research. The confidentiality of the participants was also ensured by not disclosing their names or personal information in the research. Only relevant details that helped in answering the research questions were included. 4.7 LIMITATIONS OF THE RESEARCH The major hurdle was capturing the workers views from all departments in a relatively short time at the time when they were focusing on completing a large production order. However, the survey proved to be an effective method of gathering data given the restricted time frame.

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4.8 RESULTS AND DISCUSSIONS

The Questionnaires that were given out had 5 sections: 1. 2. 3. 4. 5. Classified the critical success factors that were eminent in NKG. Classified the critical challenges encountered in NKG. Described the impact of Navision in NKG. Identified the most Challenging department in NKG. General comments or contributions.

Table 2 SHOWS THE STATUS OF THE 35 QUESTIONNAIRES THAT WERE ISSUED OUT IN NEXANS KABELMETAL.

No. OF QUESTIONNAIRE STATUS RETURNED & CORRECTLY FILLED RETURNED & INCORRECTLY FILLED NOT RETURNED 5 5 35 14% 14% 25 71% WORKERS

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.
Figure 1 A GRAPHICAL REPRESENTATION OF TABLE 2

Abbreviations used in the presentation; TMS- Top Management Support UTE- User Training & Education BPR- Business Process Re-engineering TC- Team Competence PM- Project Management OC- Organisational Communication CGO- Clear Goals & Objectives CM- Change Management PC- Project Champion VS- Vendor Support UIP- User Involvement & Participation EC- External consultant CT- Compatibility of Technology MG & SS- Marketing & Sales FE- Finance WE- Warehouse C.S.F- Critical Success Factors C.C- Critical Challenges
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PN- Production PG- Purchasing AN- Administration

.Navision has altered the way we do work in my area My area or department had to change to fit Navision Navision has hurt my areas ability co-ordinate with other areas Compared to our old system Navision makes my area more aware of important info about other areas Compared to our old system Navision makes it easier to get the information I need Important information that our old system provided is difficult to get with Navision Our old system fits my area or department needs better than Navision In my area, Navision makes it easier to get things done I feel that my area or department is better off with Navision
Table 3 REPRESENTS QUESTIONS FROM SECTION 3 WHICH WERE SHORTENED IN THE PRESENTATION.

Q1 Q2 Q3 Q4

Q5 Q6 Q7 Q8 Q9

4.8.1 SECTION 1 Workers were asked the following question to ascertain their views on the critical success factors identified in the literature. This section was to address objectives 1 and 5. Classify the following critical success factors that were eminent in Nexans? Top Management Support User Training & Education Business Process Re-engineering Team Competence Project Management Organisational Communication Clear Goals & Objectives Change Management Project Champion Vendor Support
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User Involvement & Participation External consultant

Compatibility of Technology

REFER TO APPENDIX B (DESCRIPTIVE STATISTIC TABLE FOR SECTION 1)

Friedman Test
Ranks

Mean Rank TMS UTE BPR TC PM OC CGO CM PC VS UIP EC CT 2.05 7.35 11.20 7.20 7.20 5.00 11.20 7.15 7.45 4.50 7.25 11.20 2.25

Table 4 FRIEDMANS TEST FOR CRITICAL SUCCESS FACTORS.

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Figure 2 GRAPHICAL REPRESENTATION OF CRITICAL SUCCESS FACTORS RANKED BY FRIEDMANS TEST

Table 5 MEAN RANK OF CRITICAL SUCCESS FACTORS

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CSF
TMS CT VS OC CM TC PM UIP UTE PC BPR CGO EC

Mean Rank 2.05 2.25 4.5 5 7.15 7.2 7.2 7.25 7.35 7.45 11.2 11.2 11.2

10th 9th 8th 7th 6th 5th 4th 3rd 2nd 1st

Table 6 RANKING OF CSF

From the analysis of the responses given by the employees, 3 factors were adjudged as the most eminent factors that influenced success during the implementation in Nexans Kabelmetal.

These factors are: 1. Business Process Re-engineering: It was very evident that NKG re- engineered their business processes before going live. (Murray and Coffin, 2001) stated that Organizations should be willing to change their businesses to fit the software in order to reduce the degree of customizations. The interview with the consultant revealed that during the pre-implementation stage regular meeting were held between the departmental heads and the consultants, this was where the consultants explained the processes of standard Navision to each department. After that presentation he advised departmental heads that process re-engineering was more likely to yield better results than customization. These kinds of meeting went on for months before going live. The main purpose of these meetings was to agree on how the system will operate and what had to be changed to suit the system. From the opinion of the system users and ERP consultants this factor was very critical in ensuring success at NKG.
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2. Clears Goals and Objectives: Nah (2003) stated that one of the biggest problems ERP project leaders face comes not from the implementation itself, but from expectations of board members, senior staff, and other key stakeholders. It is important to set the goals of the project before even seeking top management support. Many ERP implementations have failed as a result of lacking clear goals (Somers and Nelson 2004). From the responses given in the questionnaire, Clear goals and objectives were assigned at NKG and this also formed a basis of the successful implementation.

3. External Consultant: This factor was also revealed from the questionnaires as part of the three most important factors of implementation. It was because the ERP consultants dedicated two of their staff to be stationed at NKG a year before the implementation and two years after implementation The remaining rankings of the critical success factors eminent in Nexans are as stated below in order of decreasing importance. Project Champion User Training & Education User Involvement & Participation Project Management Team Competence Change Management Organisational Communication Vendor Support Compatibility of Technology Top Management Support Low Importance High Importance

4.8.2 SECTION 2 To ascertain the level of impact of critical challenges identified from the literature review, respondents were asked the following this was to determine objective 3 & 5) Classify the following critical Challenge factors that were eminent in Nexans?
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External Consultant Project Management Team Competence Business Process Re-engineering Organisational Communication Top Management Support

REFER TO APPENDIX C (DESCRIPTIVE STATISTICS TABLE FOR SECTION 2)


Friedman Test
Ranks

Mean Rank TMS UTE BPR TC PM EC OC 1.45 2.70 3.95 5.25 5.25 6.70 2.70

Table 7 FRIEDMAN TEST FOR CRITICAL CHALLENGE FACTORS

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Figure 3 GRAPHICAL REPRESENTATION OF CRITICAL CHALLENGES RANKED BY FRIEDMANS TEST


Mean Rank

TMS OC UTE BPR PM TC EC 0 2 4 6 8 Mean Rank

Figure 4 MEAN RANK OF CRITICAL CHALLENGES


Ranks

C.C
EC TC PM BPR UTE OC TMS

Mean Rank 6.7 5.25 5.25 3.95 2.7 2.7 1.45

5th 4th 3rd 2nd 1st

The major critical challenges observed are as follows in order of increasing severity: External Consultant that was ranked as the least critical challenge in NKG.
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Team Competence Project Management Business Process Re-engineering Organisational Communication Top Management Support- this was adjudged as the greatest challenge encountered in NKG 4.8.3 SECTION 3 Workers were also given the option to rate a number of statements on a scale of 1-5, (Disagree) 1-2-3-4-5 (Definitely Agree) to address objective 4. ERP Impact: Navision has altered the way we do work in my area My area or department had to change to fit Navision Navision has hurt my areas ability co-ordinate with other areas Compared to our old system Navision makes my area more aware of important info about other areas Compared to our old system Navision makes it easier to get the information I need Important information that our old system provided is difficult to get with Navision Our old system fits my area or department needs better than Navision In my area, Navision makes it easier to get things done I feel that my area or department is better off with Navision
Table 8 QUESTIONS IN SECTION 3 OF QUESTIONNAIRES

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Figure 5 GRAPH SHOWING RESPONSES FOR Q1 OF SECTION 3

Figure 6 GRAPH SHOWING RESPONSES FOR Q2 OF SECTION 3

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Figure 7 GRAPH SHOWING RESPONSES FOR Q3 OF SECTION 3

Figure 8 GRAPH SHOWING RESPONSES FOR Q4 OF SECTION 3

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Figure 9 GRAPH SHOWING RESPONSES FOR Q5 OF SECTION 3

Figure 10 GRAPH SHOWING RESPONSES FOR Q6 OF SECTION 3

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Figure 11 GRAPH SHOWING RESPONSES FOR Q7 OF SECTION 3

Figure 12 GRAPH SHOWING RESPONSES FOR Q8 OF SECTION 3

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Figure 13 GRAPH SHOWING RESPONSES FOR Q9 OF SECTION 3

4.8.3.1 Interpretation of figures 5 13

a. Staff participating in the questionnaire agreed that Navision makes it easier to get things done in their areas. They feel better off with Navision in their departments. That compared to the old system, Navision makes it easier to get things done. Navision makes their departments or areas more aware of important information about other areas.

b. However respondents of the survey disagreed with the following: That Navision has altered the way they work in their areas and departments That Navision has hurt their departments ability to coordinate with other areas That important information that their old system provided is difficult to get with Navision That the old system fits the needs of their departments better than Navision

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4.8.4 SECTION 4 To ascertain the most challenging departments during implementation: (objective 2 & 6) Workers were asked to classify the following Departments in NKG? Marketing & Sales Finance Warehouse Production Purchasing Administration

REFER TO APPENDIX D (DESCRIPTIVE STATISTIC TABLE FOR SECTION 4)

Friedman Test
Ranks

Mean Rank MG & SS FE WE PN PG AN 2.30 4.85 3.70 6.00 3.15 1.00

Table 9 FRIEDMANS TEST TO RANK DEPARTMENTS AT NKG

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Figure 14 GRAPHICAL REPRESENTATION OF NKG DEPARTMENTS RANKED BY FRIEDMANS TEST


Mean Rank

AN MG & SS PG Mean Rank WE FE PN 0 2 4 6 8

Figure 15 MEAN RANKING OF NKG DEPARTMENTS


Ranks

Departments
PN FE WE PG MG & SS AN

Mean Rank 6 4.85 3.7 3.15 2.3 1

1st 2nd 3rd 4th 5th 6th

MOST CHALLENGING

LEAST CHALLENGING

Table 10 NKG DEPARTMENTS

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4.8.4.1 Most challenging Departments

In the opinion of respondents the most challenging departments are: 1. Production and 2. Finance The least challenging departments are: administration, Marketing/Sales, Purchasing and then Warehouse in that order.

5. Other Comments and Contribution In the open-ended questions, comments and contributions are as follows: Respondents felt that resistance to change was a major problem in their implementation effort. An increase in time spent on planning activities and giving guidance to subordinates. ERP has led to better coordination in terms of accessing information. ERP has changed the business processes they use to work to a large extent. ERP has had an impact on the culture and goal setting in the organization to a large extent

With ERP implementation considerable decrease has occurred in ordering and shipping time. It was observed that the flexibility of the organization had increased substantially.

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4.8.5 INTERVIEWS Question 1: Challenges and impediments to ERP implementation factors? The interviewees were asked about challenges and impediments to ERP implementation success and as to how much of a problem they were in the implementation process. Their responses were mainly focused on lack of data accuracy and lack of companywide support and involvement.

Question 2: In your opinion what represented the success of an ERP implementation? The first consultant defined success in terms of completing the project on time and within budget, without disruptions to normal business and with user acceptance of the implemented system. The second one defined success to achieving a short duration of implementation he also felt that an ERP system that was on-time and within budget, maintained data integrity and facilitated the organization to reap a rate on investment as an important factor to measuring ERP success. Question 3: What departments were most challenging during implementation? They both pointed out that production was the most challenging department because of the various processes that existed. They also made known of the fact that the production department would have been less challenging if an automated means of getting the data was employed, and then they gave an example of installing SCADA systems on the plant which would be linked directly to the ERP to capture real time data. Question 4: Which factors would they recommend to be scrutinized during ERP implementation stages? They pointed out the following factors as being very vital during ERP implementation, they went further to say that these factors could help a company achieve success at the same time it could be the down fall of an implementation process.

Below is the list of factors identified by the ERP consultants.


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1. Top Management Support 2. User Training and education 3. Competency and Dedication of External Consultant 4. Project Management 5. Clear Goals and Objectives 6. Business Process re-engineering These factors can either propel success or failure depending on the extent to which they are prioritized.

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CHAPTER 5

5.0 CONCLUSION AND RECOMMENDATIONS


ERP implementation represents high risk projects that need to be managed properly. This study aims to improve understanding the challenges and critical success factors affecting ERP implementation in manufacturing industries. Understanding the challenges and critical success factors may ensure effective ERP implementation and a realization of the promised benefits. Factors affecting ERP implementation are complex and abundant. A total of 13 critical success factors for ERP implementation have been identified based on a review of the related literature. From the analysis of the data by employees at NKG, 3 factors were selected to be very important. The factors are Business Process Re-engineering, Clear Goals and Objectives and External Consultants. Six critical challenges were identified from the literature review and the major critical challenges observed at NKG were Top Management, Organisational Communication and Business Process Re-engineering. The interview with the ERP consultants also brought to light the fact that the critical challenging factors could also become critical success factors if utmost priority is given to them. In the opinion of respondents the most challenging departments during ERP implementation in the manufacturing set-up is Production and Finance. Staff participating in the questionnaire agreed that ERP makes it easier and faster to get things done in their respective areas, staff however disagreed that ERP had altered the way they work in their departments.

The value of this paper is to present small and medium sized enterprises wishing to implement ERP with a set of critical success factors and their order of importance which can guide their implementation. Understanding the challenges and critical success factors would lead to a smoother implementation path. As a single case study the ability to generalize the findings is limited, however the support from literature and experiences at NKG during the ERP implementation will add to the knowledge of ERP for small and medium sized companies.

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Future research could focus on how these challenges and critical success factors differ among various implementation partners such as employees, managers, IT specialists, vendors and consultants.

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APPENDIX A

EXECUTIVE MBA THESIS QUESTIONNAIRE PROJECT STUDENT: JOSEPH ANNAN PROJECT TOPIC: CHALLENGES OF IMPLEMENTING E.R.P (ENTERPRISE RESOURCE PLANNING) PROJECTS IN MANUFACTURING INDUSTRIES.

SURVEY ON MICROSOFT NAVISION IMPLEMENTATION IN NEXANS GHANA NAME :

DEPARTMENT: POSITION :

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SECTION 1 1. Classify the critical success factors eminent in your institution (NEXANS KABELMETAL GH)? Please type OK one box per row

Absolutely agree Top Management Support User training & education Business process re-engineering Team competence Project Management Organisational communication Clear goals & objectives Change management Project Champion Vendor support User involvement & participation External consultant Compatibility of technology

Strongly agree

To large extent

Fairly agree

Hardly agree

Definitely Not agree

Cant say

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SECTION 2 2. Classify the critical challenges encountered? Please type OK one box per row

Absolutely agree Top Management Commitment User training & education Process Reengineering Team competence External Consultant Organisational Change

Strongly agree

To large extent

Fairly agree

Hardly agree

Definitely Not agree

Cant say

SECTION 3 3. To what extent do you agree or disagree with the following statements? Please enter on a scale of 1 5. DISAGREE 1 <2 <3 <4 <5 AGREE Navision has altered the way we do work in my area My area or department had to change to fit Navision Navision has hurt my areas ability co-ordinate with other areas Compared to our old system Navision makes my area more aware of important info about other areas Compared to our old system Navision makes it easier to get the information I need Important information that our old system provided is difficult to get with Navision Our old system fits my area or department needs better than Navision In my area, Navision makes it easier to get things done I feel that my area or department is better off with Navision

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SECTION 4 4. In your opinion which department was the most challenging during the implementation? Please enter on a scale of 1 10.

EASY 1 <2 <3 <4 <5<6<7<8<9<10 VERY DIFFICULT

MARKETING / SALES FINANCE WAREHOUSE PRODUCTION PURCHASING ADMINISTRATION

5.

Do you have any other comments to make about the content of this questionnaire or any contribution? Please write in below

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APPENDIX B
Descriptive Statistics

N TMS UTE BPR TC PM OC CGO CM PC VS UIP EC CT 20 20 20 20 20 20 20 20 20 20 20 20 20

Mean 3.00 5.00 6.00 5.00 5.00 4.00 6.00 4.90 5.00 4.00 5.00 6.00 3.00

Std. Deviation .795 .649 .000 .649 .459 1.589 .000 .852 .795 1.026 .459 .000 .649

Minimum 2 4 6 4 4 2 6 4 4 2 4 6 2

Maximum 4 6 6 6 6 6 6 6 6 6 6 6 4

Table 11 DESCRIPTIVE STATISTICS FOR SECTION1

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APPENDIX C
Descriptive Statistics

N TMS UTE BPR TC PM EC OC 20 20 20 20 20 20 20

Mean 2.00 3.00 4.00 5.00 5.00 6.00 3.00

Std. Deviation .000 .795 1.589 .649 .459 .000 .795

Minimum 2 2 2 4 4 6 2

Maximum 2 4 6 6 6 6 4

Table 12 DESCRIPTIVE STATISTICS FOR SECTION2

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APPENDIX D
Descriptive Statistics

N MG & SS FE WE PN PG AN 20 20 20 20 20 20

Mean 2.00 6.00 4.00 10.00 3.00 1.00

Std. Deviation .000 .000 1.589 .000 .795 .000

Minimum 2 6 2 10 2 1

Maximum 2 6 6 10 4 1

Table 13 DESCRIPTIVE STATISTICS FOR SECTION4

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