Critical factors for successful ERP implementation

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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

    aSeidman School of Business, Grand Valley State University, Department of Management,

    401 West Fulton, Grand Rapids, MI 49504, USAbDepartment 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

    todays 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 willenable 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. Expandedglobal 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, manyfirmshaveimplemented

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

    worlds 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) 529544

    * 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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    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 reputationfor 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 asystematic 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 ERPimplementation 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 ofchange 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,

    [811]).

    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, [1216]) and focuses on the

    fundamental corporate capabilities driving ERP as a

    strategic concept [1723]. These articles cover suchaspects 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

    [2528], critical success factors[29,810,30,11], pit-

    falls and complexities in ERP implementation [3133],

    and successful strategies for effective ERP implemen-

    tation[34,35,1,3641].The third stream focuses on the theoretical research

    models that have been developed. The theoretical re-

    search models covers aspects such as usage of modeling

    tools applied in ERP contexts, new business modeling

    approaches, and comparison between processes. The

    major studies done under this stream include:

    Al-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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    elements that contribute to success in the context of

    ERP implementation.

    Arinze and Anandarajan [42] show how object-

    oriented mapping methods can be used to rapidlyconfigure ERP systems.

    Hedman[43]presents a competing value approach

    enterprise systems framework to discuss enterprise

    systems from an organizational effectiveness

    perspective.

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

    methodology of production planning and control

    system as a part of ERP environment.

    Sock et al. [45]suggest a technological evolution

    approach to ERP adoption.

    Stensrud and Myrtveit[46]propose the use of data

    envelopment analysis variable return to scale to

    measure the productivity of software projects.

    Stewart 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.

    Stirna [48] analyzes the acquisition of enterprise

    modeling tools.

    2.2. Empirical/theory testing

    This section deals with the assessment and specificERP 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:

    Akkermans and van Helden [49] analyze and

    explain project performance in one ERP imple-

    mentation in the aviation industry.

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

    study on the future impact of ERP on supply chain

    management.

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

    case study of a failed implementation of ERP to

    reengineer the business processes of a major

    manufacturer.

    Ash and Burn [52] demonstrate the integration

    of ERP and non-ERP systems using web-based

    technologies.

    Bernroider and Koch[53]detail the ERP selectionprocess in midsized and large organizations.

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

    European midsize companies.

    Huang and Palvia [55] identify a range of issues

    concerning ERP implementation by making a

    comparison of advanced and developing countries.

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

    ERP-supported teamworking in Danish manufac-

    turing.

    Mirchandani and Motwani [57] examine the end-

    user perception of ERP systems at an international

    automobile supplier.

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

    to compare a successful ERP implementation with

    an unsuccessful one.

    Olhager and Selldin[59]present a survey of ERP

    implementation in Swedish manufacturing firms.

    Robey 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.

    Sheu et al. [61] investigate the relationships

    between national differences and multi-nationalERP implementation.

    Tarafdar and Roy[5] analyze the adoption of ERP

    systems in Indian organizations.

    Tatsiopoulos 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.

    Trimmer et al. [63] indicate support for the

    continuing use of critical success factors to help

    focus on the benefits of ERPs in rural healthcare.

    Schniederjans and Kim[64]discuss survey results

    on implementing ERPs with total quality manage-

    ment and business process reengineering.

    Sheng et al.[65]examine the relationship between

    organizational culture and employees self-efficacy

    for a sample of 352 subjects.

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

    the success or failure of ERP in large construction

    firms.

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    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 ofcharacteristics 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 differentsources 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 nations largest

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

    pharmaceutical and nutritional products for thestore brand market. The companys 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 massmerchant 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 68 h process was necessary. Also, the

    inventory reports would only show current on handinventory 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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    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 companyran 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 thegeneral 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 inTable 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]. Thesecould be a reaction to a need (e.g., companys 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 Cs scope emulated A while Ds scope was

    more in keeping with B.

    4.2.1.3. Decision making. This construct indicates an

    important difference in the top management styles ofthe two companies. Company As 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

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    Table 1

    Comparative analysis

    Construct Company A Company B Company C

    Strategic Initiatives

    Stimuli Reactive Reactive Proactive

    Formulation scope Revolutionary Incremental Revolutionary

    Decision making Autocratic Bureaucratic Semi bureaucratic

    Strategy led Not strategy led From onset (tied in with BPCand ERP efforts) From onset

    Learning capacity

    Adaptation Response to technology

    change, however,

    underestimated the complexity

    Response to technology change Response to technology chang

    Improved efficiency Learning by doing Learning by doing and consultants

    prior knowledge

    Learnt more from others

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

    External information use Boundary spanners (consultants)

    and customers

    Technology gatekeepers (employees),

    boundary spanners, customers

    Less of employees and custom

    more of consultants

    Learning type 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 middlemanagement teams

    More Senior management andmiddle management.

    Risk aversion Aggressive Cautious Semi aggressive

    Open communications Low High Medium

    Cross-training Very minimal Some Some

    IT leveragibility and knowledge-sharing

    IT role Enabling Enabling Enabling

    Use of communication technology Medium High High

    Network relationships

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

    Cross-functional cooperation Medium High High

    Change management

    Pattern of change Semiformal process Formal phased process Formal phased process

    Management readiness to change Committed Committed Committed

    Scope of change Radical Improvement Semi radical

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

    employees partially)

    Process management

    Process measurement Little (process mapping and

    diagnostic techniques)

    Use of process metrics Use of process metrics

    Tools and techniques High High High

    Team based No Yes Semi

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    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 extremelycostly, 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 As 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 and D, on the other hand devised a strategic

    plan tied in with its ERP andBPC efforts that focused on

    incremental improvements.

    For example, the project leader in Company D wastasked 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 theERP 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 thisplant 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 capacityThe 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 organizationalemployees 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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    learning from other organizations that had achieved

    best practices in the industry. Though company A was

    aware of the ERP mishaps of other companies they

    assumed they would be easily able to adapt to thenew 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 As

    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 Bs

    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 As

    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 consultantswho 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 organizations 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 cancross-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

    As initiative for the ERP system came directly from

    the senior management and the chief executive officer.

    On the other hand, Company Bs 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 successfulimplementationa 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 Company As 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 informationtechnology 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 ofintegration. 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, and many others. In all there were aboutthirty files that required conversion. There was no

    existing tool to accomplish this so the case company

    hired a consultant familiar with the BPCS 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 divisions different

    functional areas. Team leaders were assigned to each

    area of the business and were responsible for coordi-

    nating training sessions. Hundreds of hours werespent 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 accessour 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 that would 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 Bs

    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 As all-at-once imple-

    mentation led to lower cross-functional cooperation. Cand 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 onthe type of employee involvement, communication

    about the change, and leadership nature.

    Thus, the pattern of change (formal versus

    informal), managements 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 managements

    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 As 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 glitches would 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 tosucceed 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 threecompanies 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. They were 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 companiesfor 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], A well-planned and

    well-executed ERP implementation, in conjunctionwith 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) Ross[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) The 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) The 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 eachof these in-turn have sub-modules). Of the four

    companies documented in this study, only one

    had opted for full functionality.

    (4) There 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 arelikely 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) As 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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    cases, some BPR did occur, it occurs more in

    situations where legacy systems were involved.

    (6) According to Esteves and Pastor [24], the

    implementation phase of the ERP cycle dealswith 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) The 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) The literature states that project management,

    process and systems integrity, and change man-

    agement are essential threads to ensure success-

    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) According 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) Project champion is critical to drive consensusand

    to oversee the entire life cycle of implementation

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    Fig. 1. Theoretical framework for ERP Implementation Management (adapted fromKettinger and Grovers model of BPC Management, 1995).

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

    sponsor was selected to be the project leader.

    (12) According to Holland and Light[88], organiza-

    tions implementing ERP should work well withvendors 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) The 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

    (SeeFig. 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 inFig. 2

    relate to the seven constructs illustrated inFig. 1and

    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 inFig. 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 systems 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 frameworkspresented 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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    Fig. 2. ERP implementation framework.

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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 identifyingcomparable 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 actualbenefits 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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