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Critical factors for successful ERP implementation: Exploratory findings from four case studies Jaideep Motwani a, * , Ram Subramanian a , Pradeep Gopalakrishna b a Seidman School of Business, Grand Valley State University, Department of Management, 401 West Fulton, Grand Rapids, MI 49504, USA b Department of Marketing and International Business, Lubin School of Business, Pace University, New York, NY 10038, USA Received 29 March 2004; received in revised form 14 December 2004; accepted 13 February 2005 Available online 21 July 2005 Abstract As more and more organizations move from functional to process-based IT infrastructure, ERP systems are becoming one of today’s most widespread IT solutions. However, not all firms have been successful in their ERP implementations. Using a case study methodology grounded in business process change theory, this research tries to understand the factors that lead to the success or failure of ERP projects. The results from our comparative case study of 4 firms that implemented an ERP system suggest that a cautious, evolutionary, bureaucratic implementation process backed with careful change management, network relationships, and cultural readiness have a positive impact on several ERP implementations. Understanding such effects will enable managers to be more proactive and better prepared for ERP implementation. Managerial implications of the findings and future research directions are discussed. # 2005 Elsevier B.V. All rights reserved. Keywords: Case studies; Critical factors; ERP; Implementation 1. Introduction The myriad challenges faced today by global businesses are expected to grow in intensity and complexity as we go further into this century. Expanded global competition has become the norm rather than the exception, with an unprecedented number and variety of products available to satisfy consumer needs and desires. In particular, many firms have implemented company-wide systems called Enterprise Resource Planning (ERP) systems, which are designed to integrate and optimize various business processes such as order entry and production planning across the entire firm [1]. According to Davenport [2], the business world’s embrace of enterprise systems may in fact be the most important development in the corporate use of information technology in the 1990s. When used appropriately, ERP software integrates information used by the accounting, manufacturing, distribution, and human resources departments into a www.elsevier.com/locate/compind Computers in Industry 56 (2005) 529–544 * Corresponding author. Tel.: +1 616 331 7467. E-mail addresses: [email protected] (J. Motwani), [email protected] (R. Subramanian). 0166-3615/$ – see front matter # 2005 Elsevier B.V. All rights reserved. doi:10.1016/j.compind.2005.02.005

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Page 1: Critical factors for successful ERP implementation: Exploratory

www.elsevier.com/locate/compind

Computers in Industry 56 (2005) 529–544

Critical factors for successful ERP implementation:

Exploratory findings from four case studies

Jaideep Motwani a,*, Ram Subramanian a, Pradeep Gopalakrishna b

a Seidman School of Business, Grand Valley State University, Department of Management,

401 West Fulton, Grand Rapids, MI 49504, USAb Department of Marketing and International Business, Lubin School of Business, Pace University, New York, NY 10038, USA

Received 29 March 2004; received in revised form 14 December 2004; accepted 13 February 2005

Available online 21 July 2005

Abstract

As more and more organizations move from functional to process-based IT infrastructure, ERP systems are becoming one of

today’s most widespread IT solutions. However, not all firms have been successful in their ERP implementations. Using a case

study methodology grounded in business process change theory, this research tries to understand the factors that lead to the

success or failure of ERP projects. The results from our comparative case study of 4 firms that implemented an ERP system

suggest that a cautious, evolutionary, bureaucratic implementation process backed with careful change management, network

relationships, and cultural readiness have a positive impact on several ERP implementations. Understanding such effects will

enable managers to be more proactive and better prepared for ERP implementation. Managerial implications of the findings and

future research directions are discussed.

# 2005 Elsevier B.V. All rights reserved.

Keywords: Case studies; Critical factors; ERP; Implementation

1. Introduction

The myriad challenges faced today by global

businesses are expected to grow in intensity and

complexity aswe go further into this century. Expanded

global competition has become the norm rather than

the exception, with an unprecedented number and

variety of products available to satisfy consumer needs

* Corresponding author. Tel.: +1 616 331 7467.

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

[email protected] (R. Subramanian).

0166-3615/$ – see front matter # 2005 Elsevier B.V. All rights reserved

doi:10.1016/j.compind.2005.02.005

and desires. In particular,manyfirmshave implemented

company-wide systems called Enterprise Resource

Planning (ERP) systems, which are designed to

integrate and optimize various business processes such

as order entry and production planning across the entire

firm [1]. According to Davenport [2], the business

world’s embrace of enterprise systems may in fact be

the most important development in the corporate use of

information technology in the 1990s.

When used appropriately, ERP software integrates

information used by the accounting, manufacturing,

distribution, and human resources departments into a

.

Page 2: Critical factors for successful ERP implementation: Exploratory

J. Motwani et al. / Computers in Industry 56 (2005) 529–544530

seamless computing system. A successful ERP can be

the backbone of business intelligence for an organiza-

tion, giving management a unified view of its

processes [3]. Unfortunately, ERPs have a reputation

for costing a lot of money and providing meager

results, because the people who are expected to use the

application do not know what it is or how it works.

When ERP software fails, it is usually because the

company did not dedicate enough time or money to

training and managing culture-change issues. ‘‘Faulty

technology is often blamed, but eight out of nine times,

ERP problems are performance related,’’ says Pat

Begley, senior vice president of educational services at

SAP, an ERP software company in Newtown Square,

Pennsylvania [4].

Given the large financial commitment that an ERP

project requires and the potential benefits it can offer if

successfully implemented, it is important to under-

stand what is needed to ensure a successful ERP

implementation. There are two major objectives of

this study. First, using a methodology grounded in

business process change theory, this research reports

on a comparative case study of 4 U.S. firms that

implemented an ERP system. According to Tarafdar

and Roy [5], there has been no research that analyzes

and generalizes the characteristics and problems of the

ERP implementation experience, on the basis of a

systematic empirical study. Second, based on the

lessons learnt from the literature and case studies, we

than propose a framework be considered for success-

ful implementation of ERP. This framework illustrates

the critical factors/issues that need to be addressed at

all three phases of the implementation process: pre-

implementation or setting-up phase, implementation,

and post-implementation or evaluation phase.

The reasons for selecting the business process

change framework for providing a systematic com-

parative analysis are as follows: First, since ERP

implementation has come to involve changing the

business processes of companies that implement such

software [6], we felt that business process change

(BPC) theory may prove useful in explaining the

outcomes of our case studies. BPC is defined as an

organizational initiative to design business processes

to achieve significant (breakthrough) improvement in

performance (e.g. quality, responsiveness, cost, flex-

ibility, satisfaction, shareholder value, and other critical

process measures) through changes in the relationships

between management, information technology, orga-

nizational structure, and people [7]. These initiatives

may differ in scope from process improvement to

radical new process designs depending on the degree of

change undertaken in each organizational subsystem

and their interactions. Second, the seven constructs and

24 variables covered by Kettinger et al. [7] in their

framework incorporate all the critical success factors

suggested in the ERP literature (Al-Mashari et al. 2003,

[8–11]).

2. Classification of ERP literature

In order to better understand this burgeoning field,

the ERP literature is classified into the following two

categories: conceptual/theory building and empirical/

theory testing.

2.1. Conceptual/theory building

In reviewing the conceptual research on ERP, three

distinct research streams emerged. The first provides

comprehensive overview of ERP systems (Appleton

1997, Bowman 1997, [12–16]) and focuses on the

fundamental corporate capabilities driving ERP as a

strategic concept [17–23]. These articles cover such

aspects as research agendas; motivations and expecta-

tions; and proposals on how to analyze the value of

ERP systems [24].

A second stream focuses on the details associated

with implementing ERP systems and their relative

success and cost. Specifically, the articles in this stream

include topics such as the implementation procedures

[25–28], critical success factors [29,8–10,30,11], pit-

falls and complexities in ERP implementation [31–33],

and successful strategies for effective ERP implemen-

tation [34,35,1,36–41].

The third stream focuses on the theoretical research

models that have been developed. The theoretical re-

searchmodels covers aspects such as usage ofmodeling

tools applied in ERP contexts, new business modeling

approaches, and comparison between processes. The

major studies done under this stream include:

� A

l-Mudimigh et al. [26] propose an integrative

framework for ERP implementation based on an

extensive review of literature and the essential

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J. Motwani et al. / Computers in Industry 56 (2005) 529–544 531

elements that contribute to success in the context of

ERP implementation.

� A

rinze and Anandarajan [42] show how object-

oriented mapping methods can be used to rapidly

configure ERP systems.

� H

edman [43] presents a competing value approach

enterprise systems framework to discuss enterprise

systems from an organizational effectiveness

perspective.

� P

ark et al. [44] present an object class extraction

methodology of production planning and control

system as a part of ERP environment.

� S

ock et al. [45] suggest a technological evolution

approach to ERP adoption.

� S

tensrud and Myrtveit [46] propose the use of data

envelopment analysis variable return to scale to

measure the productivity of software projects.

� S

tewart and Rosemann [47] discuss the design of a

problem-based learning approach that seeks to

embed industrial knowledge in the ERP-related

curriculum of universities.

� S

tirna [48] analyzes the acquisition of enterprise

modeling tools.

2.2. Empirical/theory testing

This section deals with the assessment and specific

ERP implementations. Most of the research under this

stream done through field studies, questionnaire

surveys or case studies illustrates the extent of ERP

implementation and the effects of various factors on

ERP implementation. Specifically, these studies cover

different perspectives in particular situations such as:

ERP impacts, applied theories to specific ERP issues,

organizational change management, business process

reengineering, people roles, and decision-making [24].

The major empirical studies on theory testing include:

� A

kkermans and van Helden [49] analyze and

explain project performance in one ERP imple-

mentation in the aviation industry.

� A

kkermans et al. [50] present results from a Delphi

study on the future impact of ERP on supply chain

management.

� A

l-Mashari and Al-Mudimigh [51] describes a

case study of a failed implementation of ERP to

reengineer the business processes of a major

manufacturer.

� A

sh and Burn [52] demonstrate the integration

of ERP and non-ERP systems using web-based

technologies.

� B

ernroider and Koch [53] detail the ERP selection

process in midsized and large organizations.

� E

verdingen et al. [54] discuss the ERP adoption by

European midsize companies.

� H

uang and Palvia [55] identify a range of issues

concerning ERP implementation by making a

comparison of advanced and developing countries.

� K

och and Buhl [56] discuss and study the concept of

ERP-supported teamworking in Danish manufac-

turing.

� M

irchandani and Motwani [57] examine the end-

user perception of ERP systems at an international

automobile supplier.

� M

otwani et al. [58] uses a case study methodology

to compare a successful ERP implementation with

an unsuccessful one.

� O

lhager and Selldin [59] present a survey of ERP

implementation in Swedish manufacturing firms.

� R

obey et al. [60] report on a comparative case study

of 13 industrial firms that implemented an ERP

system. They compare firms on their dialectic

learning process.

� S

heu et al. [61] investigate the relationships

between national differences and multi-national

ERP implementation.

� T

arafdar and Roy [5] analyze the adoption of ERP

systems in Indian organizations.

� T

atsiopoulos et al. [62] propose a structured risk

management approach for the successful imple-

mentation of ERP systems. The application of the

proposed methodology is demonstrated with a case

study company from the oil industry.

� T

rimmer et al. [63] indicate support for the

continuing use of critical success factors to help

focus on the benefits of ERPs in rural health

care.

� S

chniederjans and Kim [64] discuss survey results

on implementing ERPs with total quality manage-

ment and business process reengineering.

� S

heng et al. [65] examine the relationship between

organizational culture and employees’ self-efficacy

for a sample of 352 subjects.

� V

oordijk et al. [66] discuss the factors that lead to

the success or failure of ERP in large construction

firms.

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J. Motwani et al. / Computers in Industry 56 (2005) 529–544532

It is clear from the review of the literature that

much work has been done in the area of ERP

implementation. However, what is lacking in the

extant literature is a systematic, theory-linked study of

characteristics of successful and unsuccessful ERP

implementation.

3. Methodology

A case study approach was employed to identify

the factors that facilitate and inhibit the success of

ERP implementation. The criterion used to select the

case study companies was that each of the case studies

should use ERP software from the same vendor. Data

was collected primarily through interviews, observa-

tions, and archival sources. Interviews were conducted

with executives who were familiar with the ERP

implementation progress. Archival documentation

was the third major source of data used in the

research. Feasibility studies, reports, memos, minutes

of meetings, proposals, newspaper articles, and books

that were available were reviewed and the contents

analyzed. These documents were collected and

analyzed to identify and/or validate data.

During the data collection, special attention was

given to ascertaining whether evidence from different

sources converged on a similar set of facts. Guidelines

in the existing literature on the enhancement of

retrospective data accuracy were followed in the

process of data collection. When all the evidence had

been reviewed, and after an initial case study narrative

was documented, the factual portion of the case study

was reviewed by the major informants in the company.

Such a review was not only a minimal procedure

for validating the data collection process, but also

a courtesy to those who had cooperated with the

research.

4. Case analysis

4.1. Background of case study companies and

identification of business need

In this section, a brief background of the four

companies and the need for implementing ERP is

provided.

4.1.1. Company A (pharmaceutical)

Company A is one of the nation’s largest

manufacturers of over-the-counter (non-prescription)

pharmaceutical and nutritional products for the

store brand market. The company’s products include

over-the-counter pharmaceuticals such as analgesics,

coughs and cold remedies, antacids, laxatives,

feminine hygiene, smoking cessation products,

vitamins, nutritional supplements and nutritional

drinks. Over the years, Company A has seen

substantial growth with net sales now exceeding

$900 million. To serve its customers better, the

company recently decided to upgrade its inventory

management process that ran on an AS/400

system. An ERP solution seemed to be the logical

answer, providing the ability to integrate account-

ing, inventory, production planning and materials

management.

4.1.2. Company B (footwear)

Company B is a leading designer, manufacturer,

and marketer of a broad line of casual shoes, work

footwear, and constructed slippers and moccasins. The

company employs approximately 6600 production,

office and sales employees. Products are distributed

domestically to over 65,000 department stores, foot-

wear chains, catalogs, specialty retailers, and mass

merchant accounts. The products are also distributed

worldwide in 134 markets through licensees and

distributors. The company sold over 38 million pairs

of its footwear in 1999. Prior to the implementation of

ERP, the sales, marketing and operations functions of

the company ran on an AS/400 system. The system

required an extremely long time to complete a task,

from shipping an order to entering a production

schedule for the factory. To obtain even the most basic

information, a 6–8 h process was necessary. Also, the

inventory reports would only show current on hand

inventory unadjusted for orders already in the system.

Promises were made to customers without knowing

if the gross available inventory was earmarked for

another customer. The drawbacks of the legacy AS/

400 system were the driving forces behind the

implementation of the ERP system.

4.1.3. Company C (energy)

Company C is a global energy company with

revenues exceeding 50 billion dollars. The company is

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J. Motwani et al. / Computers in Industry 56 (2005) 529–544 533

engaged in exploration, production, refining, market-

ing, and distribution of energy products and technol-

ogies. Prior to the implementation of ERP, the sales,

marketing and operations functions of the company

ran on about 30 different legacy systems. The mix of

aging legacy systems that led to high cost support and

lack of data visibility was the driving forces behind the

implementation of the ERP system.

4.1.4. Company D (automobile)

Case company D is primarily a supplier of wiring

harnesses for the automotive industry. It was formed

in 1986 as a result of a joint venture between 2

Japanese companies. The company has 28 facilities

in the United States, Mexico and Canada. The

company is broken down into three divisions:

wireless, components, and electronics. Case com-

pany D began operations with an information system

that was owned by one of the parent companies in

Japan. This system was designed to work well in a

decentralized manufacturing environment. As com-

pany D rapidly grew, it developed a centralized

supply chain. Since the original system was written

and supported by the parent company it was difficult

for the case company to tailor the existing system to

support its own unique business needs. Another

weakness with the system included the fact that the

general ledger system was not year 2000 compliant.

The more important fact was that the parent company

had abandoned development of the system and it

would not be made year 2000 compliant. The

programming language used for the legacy system

was not mainstream, and therefore, it was difficult to

find and retain experts to support the system. These

were the two primary factors that lead the senior

management to determine in 1996 that changes were

in order.

4.2. Constructs: definition and analysis

This section briefly describes each construct of the

research model [67] and then provides summative

findings of our case studies for each variable under the

construct. Whenever appropriate, respondents’ state-

ments are quoted to illustrate the construct. Consistent

with the research objectives, specific questions were

asked concerning each construct. The research

findings are summarized in Table 1.

4.2.1. Construct 1: strategic initiatives

Process change typically begins with strategic

initiatives (often included in the corporate strategic

plan) from the senior management team [68]. These

could be a reaction to a need (e.g., company’s inability

to provide adequate customer service) or a proactive

push to leverage potential opportunities [69]. Evi-

dence also exists that strategic change, and arguably

process change, is often incremental, informal,

emergent, and is based on learning through small

gains [70] versus being revolutionary and radical. This

construct consists of four variables discussed below.

4.2.1.1. Stimuli. Both companies A and B were

strategically reactive to the environment and the

needs of their customers. Company A realized that it

needed a new inventory system to keep track of its

more that 30,000 stock keeping units. Company B

realized a need to reduce production lead times and to

provide real time order information to customers. In

contrast, Companies C and D realized the problems

with their legacy systems and therefore, were more

proactive in their desire for ERP systems.

4.2.1.2. Formulation scope. Company A formulated

and maintained a strategy of revolutionary change

from the start. They envisioned a sweeping ‘‘all-at-

once’’ approach of replacing the legacy system with

the ERP system. Company B on the other hand started

out by implementing the ERP system in only their

Marketing and Finance functions on advise from the

ERP vendor. They envisioned an incremental, phased

approach of introducing the system into the company.

Company C’s scope emulated A while D’s scope was

more in keeping with B.

4.2.1.3. Decision making. This construct indicates an

important difference in the top management styles of

the two companies. Company A’s managerial style

may be described as autocratic with the top manage-

ment mandating initiative without taking into con-

sideration the majority sentiment of the company. As

one interviewee candidly remarked:

‘‘We (Company A) tried to prepare ourselves for the

implementation in every means possible. Thousands

of hours of training classes were completed and

selected individuals were polled for their opinion of

Page 6: Critical factors for successful ERP implementation: Exploratory

J.M

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44

534Table 1

Comparative analysis

Construct Company A Company B Company C Company D

Strategic Initiatives

Stimuli Reactive Reactive Proactive Proactive

Formulation scope Revolutionary Incremental Revolutionary Incremental

Decision making Autocratic Bureaucratic Semi bureaucratic Bureaucratic

Strategy led Not strategy led From onset (tied in with BPC

and ERP efforts)

From onset From onset (tied in with

BPC and ERP efforts)

Learning capacity

Adaptation Response to technology

change, however,

underestimated the complexity

Response to technology change Response to technology change Response to technology

change

Improved efficiency Learning by doing Learning by doing and consultants’

prior knowledge

Learnt more from others Learning by doing and

consultants’ prior knowledge

Declarative knowledge Did not develop knowledge base Developed knowledge base Developed partial knowledge base Developed knowledge base

External information use Boundary spanners (consultants)

and customers

Technology gatekeepers (employees),

boundary spanners, customers

Less of employees and customers,

more of consultants

Employees, consultants and

voice of customers

Learning type Deutero type of learning Deutero type of learning Deutero type of learning Deutero type of learning

Cultural readiness

Change agents and leadership

(initiative for ERP)

Senior management and CEO Senior management and middle

management teams

More Senior management and less

middle management.

Senior management and

middle management teams.

Risk aversion Aggressive Cautious Semi aggressive Semi cautious

Open communications Low High Medium Medium to high

Cross-training Very minimal Some Some Some

IT leveragibility and knowledge-sharing

IT role Enabling Enabling Enabling Enabling

Use of communication technology Medium High High High

Network relationships

Interorganizational linkages Low (focused on IT staff) High (with vendor) Medium (with vendor) High (with vendor)

Cross-functional cooperation Medium High High High

Change management

Pattern of change Semiformal process Formal phased process Formal phased process Formal phased process

Management readiness to change Committed Committed Committed Committed

Scope of change Radical Improvement Semi radical Improvement

Management of change Inadequate (ignored employees) Adequate Semi adequate (involved

employees partially)

Adequate

Process management

Process measurement Little (process mapping and

diagnostic techniques)

Use of process metrics Use of process metrics Use of process metrics

Tools and techniques High High High High

Team based No Yes Semi Yes

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J. Motwani et al. / Computers in Industry 56 (2005) 529–544 535

readiness for the ‘‘go-live’’ date. However, upper

management ultimately made the decision to throw

the ‘‘ON’’ switch before the employees believed in or

understood the software. The result was extremely

costly, not only in dollars, but also in lost customers

and customer service. Many employees wondered

why the switch was ever made from the legacy AS/400

system to the ERP. Employees were disturbed and

frightened by the new and complicated ERP system.’’

On the other hand, a team-approach was followed

at Companies B, C, and D that eventually received a

bureaucratic consensus to proceed at a corporate-level.

4.2.1.4. Strategy led. Company A’s approach to

implementing the ERP in retrospect seems to be

hurried and not strategically thought out. The company

tried to introduce a complex new system ‘‘all-at-once’’

within a time frame of only 6 months of preparation

(January 1998 through July 1998). They did not take

into account that disruptions to the information systems

in their peak production season of September through

December could prove fatal. Company B, as was the

case with C andD, on the other hand devised a strategic

plan tied inwith itsERPandBPCefforts that focused on

incremental improvements.

For example, the project leader in Company D was

tasked with developing the master plan and imple-

mentation deadline. The first step was to determine

which modules of Business Process Change System

(BPCS) to implement. BPCS is like many ERP

systems in that it has a modular design. The project

team determined that the finance function (Configur-

able Enterprise Financials including sub-modules for

accounts payable, accounts receivable, general ledger

and fixed assets) would be the first to be converted to

the new system, giving users time to get used to the

new system. Converting the operations function to the

ERP system would follow (Supply Chain Manage-

ment including sub-modules for configurable order

management and out-bound logistics management,

Manufacturing Data Management, Shop Floor Con-

trol, Master Production Scheduling, Manufacturing

Resource Management, Distribution Resource Plan-

ning, Purchasing, Inventory Control, and various other

implied support modules).

The modules were selected in conjunction with the

determination of which facilities would be imple-

mented first. Senior management further determined

that BPCS would be installed concurrently in the main

components division plant in Kentucky. This plant was

selected because of the unique business needs of this

plant compared to a wire harness division plant. This

facility was different in that it performed its own

material control functions and directly shipped to the

end customer. Wire harness plants relied on centra-

lized distribution facilities for the material control

functions and shipped finished goods to centralized

customer service centers. The legacy system was

designed to support wire harness needs and was a poor

fit for the components division plant.

At the time of implementation, the project team

was modified to include more individuals who were

going to be directly using or supervising those who

would be using the software. The final project team

consisted of forty associates. They were divided into

eight functional teams that focused on one aspect or

module for implementation. These teams met weekly

during the implementation. The team captains met

collectively once per month. In addition to the asso-

ciates there were three fulltime consultants from New

Century Systems (NCS) that worked with the teams to

organize activity and provide product expertise.

4.2.2. Construct 2: learning capacity

The major goal of learning is to provide positive

outcomes through effective adaptation to environmen-

tal changes and improved efficiency in the process of

learning [71]. Adaptation involves making appropriate

responses to technological changes and learning from

other organizations that have achieved the best practices

in the industry [72]. Increased efficiency can come from

‘‘learning by doing’’ [73] and accumulation of knowl-

edge through cross-functional interfaces [74]. Learning

can also be brought about by scanning external

information [71]. This can come from organizational

employees who constantly review the environment

for new developments and opportunities (technology

gatekeepers), consultants who span the boundary

between the environment and the organization

(boundary spanners), and from customers. Construct

2 consists of five variables that are discussed below.

4.2.2.1. Adaptation. All the companies showed some

tendency to create a learning environment based on

appropriately responding to technological changes or

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J. Motwani et al. / Computers in Industry 56 (2005) 529–544536

learning from other organizations that had achieved

best practices in the industry. Though company Awas

aware of the ERP mishaps of other companies they

assumed they would be easily able to adapt to the

new technology with the help of ERP consultants,

some training and a ‘‘live’’ system in place. But they

seriously underestimated the complexity of the new

technology.

4.2.2.2. Improved efficiency. Company A as well as

B and D had a tendency to improve learning efficiency

through ‘‘learning by doing.’’ After the initial shock of

being ‘‘thrown into’’ the new system, Company A’s

employees gradually became more comfortable with

the system. By February of 1999, they were starting to

master the transactions needed to complete normal

business operations, and production and shipment

levels returned to normal levels. Company B’s

employees were ready in time for Phase two of the

implementation process. This involved ‘‘bringing

live’’ additional features the ERP system had to offer

that had not been fully recognized in Phase one. In

contrast, Company C learnt from others, primarily

from consultants.

4.2.2.3. Declarative knowledge. Company A’s

approach of bringing the ERP system live ‘‘all-at-

once’’ did not allow for the building of a collective

knowledge base (of experiences) for the company. On

the other hand, the other three companies phased

implementation of the ERP system into the Marketing

and Finance areas in Phase one allowed for the

Operations area to learn from their experiences in

Phase two of the implementation.

4.2.2.4. External information use. All four compa-

nies made use of external information to enhance their

learning capacity. While Company A used consultants

who acted as ‘‘boundary spanners,’’ they also listened

to the ‘‘voice of the customer.’’ Company B made

use of technology gatekeepers who were company

employees aware of the advantages and pitfalls of

new technology. They too widely used consultants

(boundary spanners) and surveyed customers to assess

gaps in customer service.

4.2.2.5. Learning type. All four companies adopted a

deutero type of learning, and were willing to adopt a

strategy for learning based on past failures. Deutero

learning can be defined as higher-level learning that

occurs when members reflect on past learning

experiences to discover new strategies for learning.

For example, an employee of Company A commented:

‘‘In retrospect, the implementation should have been

pushed back to January of 1999. In turn, customer

service during the busy season would not have been

as adversely affected. It also would have given more

time for the employees to gain knowledge and become

comfortable with the new applications. Upper man-

agement even admitted they were in error when they

decided to ‘‘go live’’ in September and apologized to

the employees.’’

4.2.3. Construct 3: cultural readiness

Organizational culture facilitates (or inhibits) the

integration of individual learning with organizational

learning by influencing the organization’s ability to

learn, share information, and make decisions [75].

According to [71], leadership (top management)

support or change agents (e.g., BPCS team) may be

considered important prerequisites for business

process change. Open communication and informa-

tion sharing can promote a common culture and

innovative behavior in the organization. So also can

cross-functional training and personnel movement

within the organization [71]. This construct comprises

of the following four variables.

4.2.3.1. Change agents and leadership. Company

A’s initiative for the ERP system came directly from

the senior management and the chief executive officer.

On the other hand, Company B’s initiative, similar to

C and D, for the ERP system came from both senior

management and middle management teams. Three

crucial teams were assembled to ensure successful

implementation—a strategic thinking team, a business

analysts group, and an operations group.

4.2.3.2. Risk aversion. With respect to risk aversion,

Company A was clearly more aggressive than

Company B as was C in relation to D in deciding

to implement the ERP system in a short time frame

and also ‘‘all-at-once.’’ Company B cautiously chose

to follow a phased implementation of a chosen few

features of the ERP system.

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4.2.3.3. Open communications. Company B encour-

aged participation of its employees in the process of

ERP implementation much more than Company A

did. In fact, A scored the lowest in all four companies.

4.2.3.4. Cross-training. None of the four companies

attached much importance to cross-training and

personnel movement within the organization. In fact

the re-distribution of job responsibilities caused by the

ERP system greatly confused CompanyA’s employees.

4.2.4. Construct 4: information technology

leveragability and knowledge-sharing capability

The role of IT in the business process change project

could be either dominant or as an enabler. Evidence

suggests that IT led projects often fail to capture the

business and human dimensions of processes, and are

likely to fail ([76,77]). A case is often made for the

socio-technical design approach that suggests a mutual,

bi-directional relationship between IT and the organi-

zation (Mumford, 1994). Such an approach recom-

mends synergy between the business, human and IT

dimensions of an organization and could be promoted

through cross-functional teams. The following two

variables represent this construct.

4.2.4.1. IT role. All companies used their information

technology departments as facilitators of the process

of ERP implementation. Company B took steps to

ensure that users and all functional areas were

considered in the systems development process.

For example, at Company A, interface to existing

systems was created at two levels. The IT department

played a very active role at both these levels. The first

being interfaces of the systems at non-BPCS facilities

into the financial elements of the BPCS general ledger

system. This was accomplished via a mechanism that

is supplied with the BPCS for performing this type of

integration. It is referred to as Batch Transaction

Processing (BTP). The second level was the interfa-

cing of the new data collection system dcServ into

the BPCS inventory and shop floor control modules.

Since a vendor, dcServ, was selected because of the

pre-existing relationship with BPCS this interface

was purchased as a component of the data collection

system. The individual shop floor and inventory control

transactions were defined and configured during this

phase. In addition to these on-going interfaces, there

was a need to convert data from existing financial

applications over to BPCS. Examples of these files

were: item master, bills of material, customer master,

vendor master, andmany others. In all therewere about

thirty files that required conversion. There was no

existing tool to accomplish this so the case company

hired a consultant familiar with theBPCS file structures

to write the programs necessary to convert this data.

Company C also used their IT department as

facilitators of the process of ERP implementation.

They took steps to ensure that users and all functional

areas were considered in the systems development

process. A business analyst group was formed to

provide additional feedback to the ERP experts. This

group was involved with piloting. They were given

access to the ERP virtual screens. They would spend

time entering orders and tracking them as they

downloaded to the warehouse. Financial reports and

transactions were also included in the ‘‘dry run’’. This

process began as soon as the ERP crew set up the

system and continued through until 2 months before

the ‘‘go live date’’ date. When the business analysts

were comfortable with the system, trainers were

brought on board from each division’s different

functional areas. Team leaders were assigned to each

area of the business and were responsible for coordi-

nating training sessions. Hundreds of hours were

spent on ‘‘training the trainers’’. The trainers were

responsible for teaching the other members of their

division. Again many hours were spent bringing all

employees of the company up to speed with the ERP.

4.2.4.2. Use of communication technology. Commu-

nications technology such as e-mail enabled effective

communication and team work. Companies B, C, and

D used teams effectively during the implementation,

and thus leveraged communication technology better

in the process.

4.2.5. Construct 5: network relationships

Research indicates that under most circumstances

cooperative, interpersonal and group behavior results

in superior performance [78]. In terms of inter-

organizational processes, research indicates the

benefits of partnering with external suppliers [79].

Organizations that can manage these aspects of

competition and cooperation continuously can benefit

from employee incentives and controls, as well as

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instill change more effectively [71]. Two variables

account for this construct.

4.2.5.1. Interorganizational linkages. Company B

(similar to C and D) worked very closely with the

ERP vendor during the implementation process,

even allowing vendor consultants remote access to

their system. When any problems were discovered,

managers would meet to discuss the same and contact

vendor consultants for fixes. One manager described

this:

‘‘The project managers would convene to discuss each

problem. If they felt it was an issue they could remedy

immediately, they would again call upon the vendor

consultants. Vendor consultants could remotely access

our ERP system to make the changes requested.’’

On the other hand, Company A chose to rely on its

own IT staff and hired external consultants to work in-

house to correct problems. For example, at company

A, the project team and NCS initially worked with the

various software and hardware vendors to develop

the project budget. The initial project budget would

include the cost of the AS/400 system, the BPCS

software, dcServ software, a full education curriculum,

consulting services, and multitude of incidental

expenses. The initial implementation was $1.9 million.

They tentatively defined the phase II costs thatwould be

incurred when expanding the system to the other

facilities. The phase II budget was $4.93 million to

expand BPCS to all facilities in North America.

4.2.5.2. Cross-functional cooperation. Company B’s

phased implementation plan mandated close coopera-

tion between the functional areas that first imple-

mented the ERP system with those that implemented

the system later. Company A’s ‘‘all-at-once’’ imple-

mentation led to lower cross-functional cooperation. C

and D were similar to B.

4.2.6. Construct 6: change management practice

Change management involves effectively balan-

cing forces in favor of a change over forces of

resistance [80]. Organizations, groups, or individuals

resist changes that they perceive threaten them [71]. It

has been suggested that corporate transformation

require a general dissatisfaction with the status quo by

employees who have to change (i.e. a readiness to

change), a vision of the future, and a well-managed

change process. Revolutionary and evolutionary

change theorists propose contrasting tactics for

accomplishing change [81] that vary depending on

the type of employee involvement, communication

about the change, and leadership nature.

Thus, the pattern of change (formal versus

informal), management’s readiness to change (i.e.

being committed to it, participative in the process, or

resistant to it), scope of change (continuous improve-

ment versus radical change), management of change

(alleviation of dissatisfaction, top management’s

vision for change, well managed process of change,

and use of evolutionary versus revolutionary change

tactics) are the key constructs in practicing change

management [67].

4.2.6.1. Pattern of change. Company A showed little

or no formality in the process of change whereas the

other three followed a structured methodology

recommended by the ERP vendor.

4.2.6.2. Management readiness for change. The

management of all four companies was committed

and ready for the change process. However while

Company A’s management underestimated the com-

plexity of the process, On the other hand, the man-

agement of the other three case study companies had

taken into consideration that glitcheswould occur in the

process and were not alarmed when they did occur.

4.2.6.3. Scope of change. The radical scope of the

ERP project at Company A created expectations for

immediate improved performance. When this did not

happen, frustration and disappointment crept into the

company. Company B, however was not prepared to

make any radical changes to the organization (as did C

and D) and quickly found out that the best way to

succeed was through incremental change. Credibility

established with these small successes eventually

paved the way for larger-scale changes.

4.2.6.4. Management of change. Clearly, Company

A inadequately managed the change process. They did

not take into account employee readiness or satisfac-

tion with the new system. Top management was

unable to convey to the employees their vision for

change. Most employees did not understand the need

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for change from the legacy system. The process of

change too was not well managed with the aid of a

formal methodology. The revolutionary change scared

the employees and left them confused. The other three

companies followed just the opposite approach and

management was able to take all employees in their

fold. Employees were willing to allocate a large

amount of their time to the project. Theywere aided by

training sessions that were available both day and

night. The open communication encouraged by

management gave users a sense of ownership of the

system.

4.2.7. Construct 7: process management practice

Process management is defined as a set of concepts

and practices aimed at better stewardship of business

processes [2]. It combines methodological approaches

with human resource management to improve the

outcome of business process change [71]. Successful

process management uses process measurement (use

of process metrics, process information capture,

improvement feedback loop, and process audit), tools

and techniques (e.g. quality control tools, data flow

diagrams, CASE tools, and simulation) and docu-

mentation (e.g. process flow chart analysis, fishbone

and root cause analysis). This construct comprises of

the following three variables.

4.2.7.1. Process measurement. Company A used

some process mapping and diagnosis techniques to

study the ‘‘as-is’’ process as well as measurements of

process performance. The others used formal techni-

ques and process metrics successfully for process

measurement. Business analyst teams would regularly

measure changed processes and articulate their value

to management and functional groups.

4.2.7.2. Tools and techniques. All four companies

for process analysis and design successfully used

techniques and methods such as CASE tools and

simulation.

4.2.7.3. Team basis. Company A did not choose to

use a team-approach for implementing or for designing

new processes. This however was fundamental to the

other three companies that used three core teams: a

strategic thinking team, a business analysts group, and

an operations group.

5. Lessons learnt from ERP implementation

According to Davenport [82], ‘‘Awell-planned and

well-executed ERP implementation, in conjunction

with a good change management program, can create

a dramatic turnaround for the company.’’ The

successful implementation of ERP at our case study

companies clearly support the point. There are several

lessons that can be learnt from the findings of the

comparative case analysis. These lessons are also

consistent with the findings of prior research

studies

(1) R

oss [83] noted that there are six reasons for a

company to implement ERP. The chief reason is

a need for a common IT platform. In our study, a

common IT platform was one of the primary

reasons for implementing ERP, according to the

experts interviewed.

(2) T

he implementation time at all four case studies

was between 12 months and 4 years. The project

length supports the findings of Bancroft et al.

[84] who estimated that an implementation

might vary between 6 months and several years.

(3) T

he literature states that it is unusual for a case

company to implement all modules (for exam-

ple, SAP R/3 has eleven core modules and each

of these in-turn have sub-modules). Of the four

companies documented in this study, only one

had opted for full functionality.

(4) T

here are two standard approaches to connecting

each module to existing systems: either imple-

ment module-by-module or alternatively imple-

ment all modules and than connect them to the

existing system(s) [3]. The literature clearly

suggest that a company which selects the full

functionality of the ERP are committing them-

selves to a radically more complex task and are

likely to use the implement all modules strategy.

The findings of our case study are consistent with

the literature as far as module implementation

strategy is concerned.

(5) A

s far as the nature of the change is concerned, it

is widely believed that BPR is a necessary

feature of ERP implementation. In our case

studies, the experts interviewed emphasized

this point and saw the adoption of ERP as an

opportunity for comprehensive BPR. In all four

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Fig. 1.

cases, some BPR did occur, it occurs more in

situations where legacy systems were involved.

(6) A

ccording to Esteves and Pastor [24], the

implementation phase of the ERP cycle deals

with the customization or parameterization and

adaptation of ERP package acquired to meet the

needs of the organization. Usually this task is

performed with the help of consultants who

provide implementation methodologies, know-

how, and training. Experts interviewed in three

of our four case studies totally agreed with the

above viewpoint and also stated that the largest

training investments was made in the imple-

mentation phase.

(7) T

he composition of the project team is crucial

and must convey the strong will to ensure the

representatives of the various company functions

[85]. In all four instances, the project team did

represent the main processes of the company.

(8) T

he literature states that project management,

process and systems integrity, and change man-

agement are essential threads to ensure success-

Theoretical framework for ERP Implementation Management (adapted fro

ful ERP implementation. The experts interviewed

strongly agreed with the above statement and also

stated that a lack of attention to the above threads

could actually inhibit the project.

(9) A

ccording to Lee [22], top management needs to

publicly and explicitly identify the project as a top

priority. In all four cases, this was true. However,

the three case study companies that implemented

a cautious, evolutionary, and bureaucratic imple-

mentation strategy were more successful as the

top management was able to develop a shared

vision of the organization and was also able to

communicate the new system and structures more

effectively to their employees.

(10) A

clear business plan and vision to steer the

direction of the project is needed throughout the

ERP life cycle [86]. Of the four companies

documented in this study, three of them had a

clear business model of how the organization

should operate behind the implementation effort.

(11) P

roject champion is critical to drive consensus and

to oversee the entire life cycle of implementation

mKettinger and Grover’s model of BPCManagement, 1995).

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[87]. In all four cases, a high level executive

sponsor was selected to be the project leader.

(12) A

ccording to Holland and Light [88], organiza-

tions implementing ERP should work well with

vendors and consultants on software develop-

ment, testing, and troubleshooting. In three of

the four cases, the project teams worked very

closely with vendors to obtain interorganiza-

tional linkages.

(13) T

he progress of the project should be monitored

actively through set milestones and targets.

According to the experts interviewed, process

metrics and project management based criteria

was used to measure against completion dates,

costs, and quality.

Based on the lessons learnt from the literature and

case studies, we propose the following framework

(See Fig. 2) be considered for successful implementa-

tion of ERP. This framework illustrates the critical

factors/issues that need to be addressed at all three

phases: pre-implementation or setting-up phase,

implementation, and post-implementation or evalua-

tion phase. All the factors/issues proposed in Fig. 2

relate to the seven constructs illustrated in Fig. 1 and

Fig. 2. ERP implementation framework.

are consistent with the frameworks proposed by

Al-Mashari et al. (2003) and [28].

6. Conclusion

This research attempted to answer the following

two questions. First, ‘‘What factors facilitate and

inhibit the success of ERP projects?’’ Through a case

study comparison of four ERP implementations, it was

determined that a cautious, evolutionary, bureaucratic

implementation process backed with careful change

management, network relationships, and cultural

readiness can lead to successful ERP implementa-

tions. On the other hand, a revolutionary project scope

that is mandated autocratically by top management

without organizational readiness and proper change

management is likely to lead to a troubled ERP

implementation, as was in the case of Company A.

Second, ‘‘What critical factors/issues need to be

considered during each stage of the implementation?’’

Fig. 2 clearly depicts the critical factors/issues that

need to be addressed at all three phases: pre-

implementation or setting-up phase, implementation,

and post-implementation or evaluation phase. These

critical factors/issues are consistent with the seven

constructs proposed in Fig. 1.

The two frameworks presented in this study clearly

indicate that a clear vision and top management

commitment are fundamental for successful ERP

implementation. Also, the evaluation and proper

monitoring of ERP system’s implementation (post-

ERP implementation stage) can make an organization

more adaptable to the change programs and therefore,

help them derive maximum benefits from investing in

ERP.

The results of this study should assist both

practitioners and academicians. The frameworks

presented in the study, along with the lessons learnt,

should provide practitioners (especially non-technical

managers) with insights on how to better understand

and prepare for ERP implementation. Specifically, the

factors that help and hinder ERP success, the critical

factors that need to be focused on in each phase of

implementation and the wide arrays of benefits (both

tangible and intangible) that can be achieved from

ERP implementation are some areas that practitioners

can benefit from our findings. Also, the frameworks

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recommended in this study should assist academicians

who undertake studies that focus on rigorous theory

building and testing. For example, the results of our

case studies will be beneficial for identifying

comparable cases. We strongly believe that future

case study research would serve to reinforce and

validate the findings of this study. In the area of theory

building, the critical constructs identified can be used

by academicians as the basis of undertaking rigorous

empirical studies that test ERP success in relationship

to these factors.

ERP systems offer many potential areas for

research in both theory building and theory testing.

Five specific areas, which we feel are important, and

need to be addressed in the future. First, although

several theory testing articles dealing with case studies

exist in the literature, very few discuss ERP systems

other than SAP. It would be beneficial to generalize the

findings to other ERP systems. Second, more effort

should be put in the definition and subsequent

validation of critical success factors since majority

of these studies focus on only one case company. It

would also important to relate critical success factors

with implementation methodologies [24]. Thirdly, we

recommend that more comprehensive empirical

studies be conducted to study the direct and indirect

relationships among the critical factors and the actual

benefits of ERP implementation. Fourth, there is a

need for empirical studies to examine the approaches

adopted for the evaluation, selection and project

management of ERP systems and ERP success.

Lastly, we feel research needs to be conducted

to better understand the different roles played by

various stakeholders (steering committees, consul-

tants, vendors, among other) in ERP implementation

projects.

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