ERP Success Failure Pijush Gupta

Critical Success and Failure Factors of ERP Implementations: A Market
Perspective
Critical Success and Failure Factors of ERP

Implementations
By- Pijush Gupta (www.pigtale.co.in)
1 Copyright: Pijush Gupta | www.pigtale.co.in

Critical Success and Failure Factors of ERP Implementations: A Market
Perspective
Table of Contents
1. Abstract ................................................................................................................................................. 3
2. Introduction ........................................................................................................................................... 4
3. Literature Review .................................................................................................................................. 6
3.1 The Implementation Methodology ................................................................................................. 9
3.2. Making the Process Successful.................................................................................................... 10
3.3. Implementation Review ............................................................................................................... 10
3.4. Executing Implementation Activities .......................................................................................... 11
3.5. ERP implementation strategies .................................................................................................... 12
3.6. Knowledge formulation phase ..................................................................................................... 12
3.7. Strategy implementation phase .................................................................................................... 13
3.8. Status evaluation phase ................................................................................................................ 13
3.9. Reasons for Failure ...................................................................................................................... 13
4. Market Trends ..................................................................................................................................... 17
4.1. Report Findings and Analysis...................................................................................................... 17
5. Market Study & Analysis .................................................................................................................... 22
5.1. ERP Implementation.................................................................................................................... 22
5.2. Critical Success Factors ............................................................................................................... 23
5.3. Research Framework ................................................................................................................... 23
5.4. ERP Implementation Success (1η): Dependent Variable ............................................................ 24
5.5. CSF’s & Organizational Culture: Independent Variables ........................................................... 26
5.6. Research Methodology ................................................................................................................ 30
5.7. Questionnaire Development ........................................................................................................ 30
5.8. Partial Least Squares ................................................................................................................... 31
5.9. ERP Implementation Success Index (ERP-ISI)........................................................................... 32
5.10. Results and Discussion .............................................................................................................. 33
5.11. Research Constraints ................................................................................................................. 35
6. Recommendation ................................................................................................................................. 37
6.1. Change Management Program .................................................................................................... 37
6.2. Secure Management Support and Commitment .......................................................................... 38
6.3. Picking the Implementation Team Wisely .................................................................................. 38
7. Conclusion ........................................................................................................................................... 40
8. References ........................................................................................................................................... 42
9. Appendix ............................................................................................................................................. 46
9.1. Questionnaire ............................................................................................................................... 46

1. Abstract
Every year, according to the Project Management Institute (PMI), nearly 70-80% of
all Enterprise Resource Planning implementation projects fail, go over-budget or go
live past the original deadline (A. Roman, 2005). There are various reasons attributed
to the success or failure of ERP Implementations. One of the reasons is resistance to
change and top management comes across a feeling of apprehension from potential
users who have certain reservations for the new application. The fundamental causes
of failure are of a wide-range and are often discovered late in the process, if they are
discovered at all. Highly skilled and experienced implementation consultants are the
better choice because they have the capacity to provide an unbiased analysis that
gives consideration to the big picture. Having a clear view with wider aspects is
important to successful implementation. Using a method of survey through
questionnaire, a study was conducted to find out the factors that really matter when it
comes to successful ERP implementations. Varying results were drawn from the
survey. It showed various reasons that ultimately result in the success or failure of an
ERP implementation and showed that these factors were manageable. This paper
attempts to find the real answer to problems being faced in ERP implementations and
what really makes an ERP implementation successful.
Critical Success and Failure Factors of ERP Implementations:
A Market Perspective
2. Introduction
Failure has been common among ERP implementations are not new to the business
world. The business world has seen ERP implementations fail in big companies like
Hershey and the result of it being lawsuits against ERP software vendors (Kimberling,
2006).
So, how can we increase the possibility of an ERP implementation being successful
and realize its benefits? The success or failure of ERP implementations is assumed to
be the fault of the software a company purchases, but in reality, 95% of a project's
success or failure depends on the company implementing the software rather that the
software vendor. (Kimberling, 2006). It is not always that the ERP package vendor or
the consulting company is to be blamed for the ERP implementation failure. If the
organization implementing the ERP fails to document their business requirements
properly then the entire implementation project may fail.
Market analysis reports show that the high percentage of ERP implementation failures
are due to many reasons and are sometimes discovered very late during the
implementation phase. ERP implementations require highly skilled consultants who
have worked on a number of projects and are familiar with mapping of various
business processes or an organization to the ERP package. The key is to understand
the big picture and align the ERP implementation to the vision, goals and objectives
of the organization. Every ERP implementation project should ideally have some
consultants with prior experience.
ERP has become the latest buzzword in the IT industry and almost every company is
trying to follow the trend but not without reason. An ERP package can be of great
benefit in implemented properly (Henderson, 2007). Earlier, organizations used to
have heterogeneous legacy systems that were complex and difficult to incorporate but
with ERP all the business functions and processes can be integrated to function in
sync. But companies need to understand and accept the fact that ERP does not work
miracles by taking away all the defects in business processes. If companies continue
to follow their old business processes post implementation, then they are bound to

fail. ERP is all about re-engineering the business processes and mapping them to the
ERP application to streamline the operations (Gould, 2007).
Some organizations have issues and apprehensions about end-of-living their legacy
application which is understandable. It should be understood that it is not easy for the
employees of an organization to suddenly adapt to a new application. This might
prove to be a disaster for organizations as legacy systems have critical data. Hence, it
is the responsibility of the ERP vendor or the consultants to build confidence in the
staff to using ERP applications.

3. Literature Review
The Enterprise Resource Planning (ERP) system is a unified set of programs and
applications that provides support for core organizational activities such as supply
chain, operations, manufacturing, distribution, finance and accounting, sales and
marketing and human resources (Prasad Bingi, 1999). In a nutshell, an ERP system
helps the different corporate functions of the organization share data and knowledge,
reduce costs and improve management of business processes. An ERP application
streamlines the entire business flow of an organization so that it is automated and
there is less scope for human error. Business functions like inventory management,
order management, MRP, finance, supply chain management, customer relationship
management and human resources among others are taken care of by the ERP system.
What we need to understand here is that Enterprise Resource Planning (ERP) is not
software. Improper terminologies such as enterprise-wide transaction processing
software systems are being labeled as ERP.Software Packages such as these help in
efficient resource planning and cannot be completely depended upon for accuracy.
These packages not only contain resource planning but also contain other business
processes. As a matter of fact, they do not come as a complete package which helps in
streamlining its operations entirety unlike ERP packages. Therefore, we need to coin
another acronym that does refer to software: ES. This stands for Enterprise System or
Enterprise Software. In the book “Mission Critical” (Davenport, 2000) author Thomas
H. Davenport describes enterprise systems as “packages of computer applications that
support many, even most, aspects of a company’s information needs.” This is more
relevant to today’s business scenario. Another distinctive feature is that: Not all ERP
business functions are contained in the typical Enterprise Software (ES) Suite. ERP
packages address the entire range of business processes that are required for operating
an organization. Figure 1.1 represents this in totality:

Figure 1.1- ERP Business Functions (Davenport, 2000)
As the above figure graphically shows, the typical Enterprise System contains
software support and components for business processes that are not a part of ERP.
There are three areas on the above diagram. The circular figure to the right shows the
operations that are not a part of ERP; the circular figure to the left is not part of the
Enterprise System and supports ERP functions; the intersecting area between the two
refers to those ERP functions typically supported by Enterprise Software. The above
diagram therefore shows that Enterprise Systems do not cover all the areas that ERP
takes care of and hence one should not get confused with the terminologies.
As we have a clear understanding of the difference between ES and ERP, it is

necessary to further understand what ERP is all about. Enterprise Resource Planning
(ERP)—and its predecessor, Manufacturing Resource Planning—are helping
transform our business landscape in way that’s helping organizations manage their
business processes better. Enterprise Resource Planning (ERP) as the name suggests,
is a system that encompasses the basic processes existing in an organization. It started
with the need to capture the processes in an organization and map it into the system
for smoother transaction and it eliminates the hassles and the chances of error
drastically comes down.

ERP packages generally include functions like:

• Finance which in turn can capture modules like General Ledger, Accounts
Payable, Accounts Receivables, Cash Management etc
• Manufacturing which captures transaction in Bills of Material, Scheduling,
Cost Management etc
• Supply Chain Management (SCM) which captures transaction happening in
Inventory, Order Management, Purchasing etc
• Human Resources (HRMS) having modules like Payroll, Training and other
HR related modules.
• Customer Relationship Management (CRM) which can again be categorized
into three sections:
• Marketing
• Sales
• Service having modules like Contracts, Call Center modules.
Enterprise Resource Planning packages have a database which contains the data for
all the modules. The modules within the package are closely integrated with each
other. All the modules are inter-linked with eachother.Therefore; any transaction
happening in one of the modules takes help of other modules, processes them and
gives the desired output. So considering an example, if we need to ship across an item
to the customer and generate an invoice to bill the customer, the process adopted
would look as mentioned below.
The items are procured in the inventory using Supply Chain modules like purchasing
and routing it to the correct sub-inventory through Inventory and then ship the item to
the customer using Order Management and finally bill the customer by generating an
invoice using Finance modules. It the customer expects more service on a particular
item, the Customer Relationship Management modules comes into involvement. So,
being closely integrated, the information passed in one of the modules gets shared
across various modules for smooth transaction for effectively handling the complex
business requirements which varies across the industry.

Organizations should ensure that current processes are in place and that they capture
all the functions in a detailed manner in order to make sure that ERP package can
handle the transactions effectively. If required, the current processes can be re-
engineered which can then be mapped into the ERP package. In case of an existing
legacy system, it is important to understand the functions of the system clearly before
mapping it in the ERP package .ERP packages can be customized and integrated with
other modules if is beyond standard functionality of the package.
Not only is ERP benefiting manufacturing companies but also changing the way
service oriented companies are managed. ERP provides organizations with the ability
to forecast demand and supply and reach out to its customers. It is providing a high
level of business intelligence so that business functions like manufacturing, SCM,
finance, human resources and CRM to name a few function efficiently.
3.1 The Implementation Methodology
ERP implementations are usually set to be in the process of implementation once the
package has been bought but in reality, it starts with the crutial steps that an
organization takes before buying the ERP package. Primarily, the end users must be
open to change and be willing to shift from a manual to an automatic system.
Essentially, the business processes of an organization needs to be reviewed at every
step for successful ERP implementation. Given the fact that ERP handles complex
business processes, it goes without saying that ERP implementations should be
handled with utmost caution. In a typical implementation scenario, the following
multi-stage strategy is employed (Kimberling, 2006):
• Business requirement planning

• Hardware acquisition
• Design Analysis
• Business process analysis
• Setup and Build
• Data conversion and migration from legacy systems
• Business Simulation
• Pilot test
• User acceptance testing
• Rollout
• Go live
3.2. Making the Process Successful
As mentioned earlier, reviewing is the best possible way to minimize the failure rate
of ERP implementations. A check at each phase is necessary from the very beginning
of the implementation cycle.ERP implementation process is prone to being
unsuccessful if not reviewed at each stage. This failure can occur due to a number of
reasons but one of the common reasons of occurrence is when organizations do not do
their research and often look for the shortest possible path. To minimize the chances
of failure, it is important to have highly skilled and experienced project managers and
consultants on staff. This is the reason why organizations prefer to take services from
experiences consultants who have previous implementation experience. To diversify
the risk, organizations should not leave the decision of package selection only to the
vendor who might be more interested in getting paid. The organization’s IT staff
should ask proper questions and spend time with the vendor and the consulting
company to do a fit-gap analysis and then only select an ERP package.
3.3. Implementation Review
The most important thing that an ERP implementation brings about in an organization
is change and this change could be in the way the business functions or in the way the
company performs. Needless to say, no standard ERP package could cater to the
business requirements of an organization fully. So it is imperative that either the
business process has to be changed or the application package has to be tweaked.
Successful implementations employ a combination of both but ensure that a lot of

package customization isn’t done since it is costs a lot of money. Ideally, the business
processes should be aligned to meet the requirements of the ERP package. The ERP
applications needs to b changed only when a particular organizational process cannot

be changed. These are the processes that give organizations its edge in the market. For
example, an FMCG company has a credit related business process that is so good that
its distributors and dealers have a lot of confidence on it which gives them an edge
over its competitors. If this credit related business process cannot be mapped to any
existing ERP package in the market it is recommended not to change the business
process. This would affect the performance of the company. This is when
customizations come into picture and it makes absolute sense of going for tweaking
the application package to fit to the business process.
3.4. Executing Implementation Activities
Eventhough the odds are always stacked against it, ERP implementations can still
succeed by following the steps that have been used for many a successful
implementation projects. These include:
• Proper 'As-Is' and 'To-Be' analysis

• Effective business process analysis
• Effective change management
• Careful package selection
• Fit- Gap analysis
• Minimal package customizations
Many ERP systems fail inspite of their immense benefits (Roth. A, 1999). Experts
feel that the end user resistance is the major cause of these failures and that successful
and effective ERP implementation entails consideration of an organization's core
competencies (Zairi, 2000). One of these is effective change management but
sometimes this too doesn’t ensure success due to resistance (Edgewater Technology,
2006).
Another school of thought stresses that despite the introduction of new products and
processes introduced each year, companies could still achieve success by
implementation of effective strategies and techniques. Formulating these strategies

and techniques is the responsibility of all the concerned parties.
3.5. ERP implementation strategies
A number of strategies can be applied to implementing ERP successfully and

according to research, various implementation strategies fall into one of the following
categories: technical, organizational and people.
Organizational strategies for successful ERP implementations include process

development and deployment, effective change and project management,
communication and information system integration needs (Sarker, 2000). Technical
strategies for successful ERP implementations include technical aspects, complexity,
adequate in-house IT capabilities and time, effort and cost of the implementation
(Pastor, 2001). People strategies are for bringing the employees together and taking
them into confidence by showing them the big picture of benefits of a successful ERP
implementation. This would minimize the employee’s resistance to change from an
old and familiar system to a new unfamiliar system.
3.6. Knowledge formulation phase
Effective change management starts with identifying and understanding the needs and
concerns of the end users {Vaughan, 2001). The analysis should consist of (Vaughan,
2001):
• Who are the entities resisting the change?

• What are the needs of these entities?
• What expectations do they have in terms of the software package?
The answers to the above questions would set the expectations right and would help in
determining the sources of the end user's resistance to the ERP system. According to
Hultman (Aladwani, 2001), the user’s beliefs, expectations and values indicates some
of the prime reasons for their resistance.

Some user's fear that their jobs may be threatened or their computer illiteracy may
affect their productivity. Others feel that the some organizational values may pose a
threat by the introduction of the ERP package. These reasons could be used for
effective implementation of the ERP package. This view of employees is valid in
most cases as organizational values do get altered during the process of ERP
implementation (Group, 2003).
3.7. Strategy implementation phase
The results from the previous phase may help the steering committee to develop
strategies and plans to minimize the resistance of the users to the ERP system so that
their apprehensions are put to rest (Vaughan, 2001). This is an important phase as the
apprehensions of the end users have to be put to rest before proceeding any further.
The steering committee should do constant monitoring of their strategies and if
needed rethink about them.
3.8. Status evaluation phase
The top management should have an effective system in place that would monitor the
change management phase till its logical end. It is important that the management is
effective in putting the fears of the end users to rest by taking stock of the situation
through constant feedback. Often, the fears of the employees are justified and they are
right. If their fears are justified, then it should also be taken into consideration.
Overlooking the justified fears is a big mistake during change management process
(Tucci, 2005). Due importance should be given to the feedback mechanism in terms
of its effectiveness and timeliness. This is important as the apprehensions of the users
should be laid to rest by constantly evaluating the implementation process.
3.9. Reasons for Failure
Organizations can have a number of reasons for failing an ERP implementation. The

tendency of the management to delegate the task of ERP implementation to lower

management levels often results in a disaster as the lower management are not in
constant touch with the critical events and they lack understanding of the detailed
scope of the ERP project.
According to various surveys and reports, about 60% of ERP implementation failures
are due to improper functional requirements. Business requirement definition is the
one of the most important steps for effective ERP implementation. The second being
improper package selection.
Poor package selection is considered to be a part of improper business requirement

definitions. This usually occurs when the application engineers who are in charge of
selecting the appropriate package do not check if it suits their business requirements.
Another reason for failure is the fact that consultants try and implement a package
because they are familiar with a package they had used in their earlier company and
therefore implement the same without considering the business requirements of the
current company. They usually consider one package to fit in familiar situations and
this can lead to an implementation failure.
The third reason is proper resource allocation to the ERP implementation project.
Some companies allocate minimal staff for the project and save money by over
burdening the staff. This is another reason for ERP implementation failures (Fornadel,
2007).
The unrealistic expectations and Return On Investment (ROI) too leads to ERP
implementation {Toni M. Somers, 2004). ERP package vendors are known to set
unrealistic expectations and ROI which don't take into account the costs of consulting,
training, testing, data conversion and migration, documentation and staffing. When
this happens, a company doesn't stand a chance of achieving the ROI it anticipated in
the first place.
Inadequate training and education too plays a significant role in the success or failure
of ERP implementation (J. Esteves, 2001). ERP application training is very crucial as
all the users need to understand the functionality of the application and the business
processes which affect the organization (Liang Zhang, 2003) (Moon, 2007).
Sometimes companies skip important implementation steps like documentation,

redefining and integrating processes before the final go live which too is damaging for
the success of the ERP implementation {Kumar K, Hillegersberg, 2000).
If an organization wants all its business procedures to be integrated into common

single solution based application, its business procedures need to been standardized,
and if it already has legacy applications (stand alone systems) which require heavy
and seamless interfaces between ERP and the existing systems, then it should try to
minimize them. Organizations should always stick to the vendor’s recommendations
and the functionality provided by them and take their consultation before customizing
the functionality.
There is always a chance for gap between the “AS IS” and “TO BE” key business
requirements and the same will be achieved through the seeded configurations, work
around and customizations during the implementation process.
The business process owners have to be involved in every step of the implementation
from process finalization, willingness to migrate to new ERP systems and procedures
to testing the new ERP application functionality and also be involved in migrating the
existing data from legacy application into a new ERP system.
One of the major step before an organization goes for ERP implementation is to have
a budget approval. Middle management spend days defining the selection process
plan and the approvals from the top management. It should develop key performance
indicators to measure the successful implementation. There should be set time lines
and targets for these key performance indicators and should be reviewed after post-
implementation and only then can it realize the success of the ERP implementation
and healthy ROI.

Though the ERP system may have been implemented and the system is in working
condition, failure may occur when the Power user / End user groups are not
comfortable in migrating form the existing system and not willing to integrate with
the alien system. Post ERP implementation requires change in people and the systems.
Organizations have to invest time and money on end user training, change
management, etc.
Failures happen when there is an error in selecting the right ERP package for the right
industry. While in the implementation process heavy customized ERP packages may
have huge maintenance (support to the ERP package application, upgradation, process
fine tune, or some times a new implementation for new processes), as the support
from the vendor is usually minimal. It is recommended to keep the customizations to
a minimal.
Another reason for failure is when the management is not involved or has not been
involved in the decision making process or the management is not interested in the
change of existing procedures, which may or may not be the industry's best practices.
A survey could be undertaken to find out the reasons for success or failure of an ERP
implementation. The approach could be to use either a large sample size or a small
one. According to Thorn, a survey of a large sample size requires a lot of time and
effort. A large survey also requires a lot of attention as to follow ups on non-
respondents and also less accurate than a smaller but responsive sample (Thorn,
2001).An understanding of this literature along with constraints made it possible to
analyze a small sample size.

4. Market Trends
According to the Market Analytix Enterprise Resource Planning, 2004-2009 report,

ERP market revenues increased 14% in 2004 which was very impressive. The report
goes on to reveal that nearly one-third of the growth in the overall ERP market was
due to fluctuations in forex exchange rates (Reilly, 2005).
The ERP market in 2004 showed good growth as the IT spending of companies
improved and the market was also affected by consolidation, as well as ERP vendors
acquiring other businesses to broaden their portfolios and service offerings. ERP
vendors are now taking the inorganic growth path so that they save on the research
and development for creating new solutions. And they are doing this by acquiring
other product companies.
The report revealed that while many ERP product vendors struggled in 2004, SAP
increased its overall revenues by 17% and license revenues by 20% and that too
without any acquisitions. Needless to mention, SAP’s ERP market share increased to
more than 40%. Oracle in the meanwhile nearly doubled the size of its e-Business
Application business through the acquisition of PeopleSoft and the recent Siebel
(Reilly, 2005).
4.1. Report Findings and Analysis

The report goes on to forecast solid revenue and growth rates for the top ERP players
through 2009. The chart below lists out the top 10 ERP vendors based on their
revenues (Reilly, 2005):
Top 10 ERP Vendors

The report revealed several trends that affected the ERP market in 2004, including:
Acquisitions are the order of the day with Oracle’s purchase of PeopleSoft, JD
Edwards, Retek and Siebel and other vendors being active in the mergers and
acquisition space. This move has suddenly opened up the market.
The major focus of ERP applications companies continue to be midrange and SMB
markets as this is important for foray into important markets like India, China, Eastern
Europe and Latin America.
According to the CIO, magazine executive resistance to change is the biggest barrier
to successful ERP implementation as shown in the figure below:
ERP Failure Factors (Thornton, 2007)

A couple of years back, during 2007/08, post- "go live" ERP organizations mainly
focused on total cost of ownership, value of delivery, ease of use and continuous
business improvement. ERP vendors used to offer post-implementation or support
services to ERP customers. But during 2007-2010, ERP vendors will redouble their
efforts to penetrate the mid market and SMB market, thereby, competing with each
other and a shrinking set of small ERP vendors.
A market study based on responses from across the IT industry (94 firms) was
conducted by the META group. This study revealed that less than 30% of the top
management has the requisite knowledge about ERP implementation. The study also
found that the readiness index for ERP implementation was 63% for the IT staff while
it was 9% for the end users (see figure below) (Doane, 2004).
ERP Readiness Matrix (Doane, 2004)
In this same study, META Group asked 152 respondents to list the key mistakes made
in the course of the project and who they blamed for those mistakes (see figure below)
(Doane, 2004).

ERP Failure Reasons (Doane, 2004)
The 3 mistakes listed below are direct results of the previously discussed erroneous
presumptions:
• Measurement of benefits not quantifiable (40.8%)

• Insufficient knowledge transfer (38.8%)
• Disbanding of the implementation team post go live (36.2%)
The following key elements of ERP implementation success must be addressed before
undertaking the actual ERP implementation (Doane, 2004):
• Long-term business and IT alignment should be in place

• Senior management must take more interest and should become more
enlightened regarding the whole of an ERP endeavor
While senior management commitment to an ERP endeavor must include both

sufficient funding and executive sponsorship, it is imperative that such sponsorship be
more enlightened about ERP issues before the implementation commences to ensure
that important business issues do not become lost in the fog of an IT shuffle. Unless
and until the top management and the steering committee believe that the ERP
implementation can be a success, the initiative should not be taken. If the senior
management themselves are unconvinced about the success of the initiative, then they
would not be able to convince the other employees who would ultimately be the end
users of the ERP application.

The ERP market is now witnessing a change recently as acquisitions are the order of
the day. Oracle is on a merger and acquisition spree and so are other companies. They
already have acquired other ERP practices like J D Edwards, PeopleSoft, Siebel and
Retek. This trend would see the merging of some of the best packages into one single
package which would cater to every section of the market (Doane, 2004).It is quite
possible that the near future might see only Oracle and SAP competing with each
other.
When an ERP vendor takes over a best-of-breed provider, it usually integrates

functionality from the acquisition's product into its own software over an extended
period and its customers reap the benefits of that improvement. However, when one
large enterprise software provider purchases another, end users of the acquired
company's product may face considerable disruption and expense, even if that product
continues to be marketed. They may need to move to a more advanced technology
platform, upgrading their hardware, software and operating systems along the way.
But in the long run, they may stand to gain because the new product would comprise
of all the best applications from the acquired companies.
The ERP package is an important step in implementation as this would determine the
fitment between the organization's business processes and the ERP package.
Organizations should do through due diligence before the package selection. This
could include evaluation is credit reports and meetings with ERP consultants.
Organizations should even consult with other organizations who have already
implemented the ERP package to get an understanding of the benefits.
Many observers believe that the ERP software market's rapid consolidation will
continue for the next few years. In business, as in life, there are no guarantees that
change will be for the better. But CFO’s can plan to meet it head-on.

5. Market Study & Analysis

Enterprise Resource Planning (ERP) systems have always been highly complex
information systems. ERP implementation is a very difficult and expensive project an
organization can ever take. It was reported that 75% of the ERP projects are classified
as failures (Aiman-Smith, 1999). A market survey and research based on the inputs
from ERP implementation consultants from various IT companies was undertaken to
analyze the causes for these failures. This research has explanatory and predictive
orientations. The first step is to evaluate and explain the impact of a set of interrelated
Critical Success Factors (CSF’s) on the success or failure of an ERP implementation.
The second step involved prediction of the ERP implementation success rate or index
by using the American Customer Satisfaction Index.
Based on the above, a conceptual model has been developed and analyzed for gauging
the ERP implementation success. Collected data are analyzed using Partial Least
Squares (PLS) technique of PLS-Graph. Finally, results and discussions are presented.
ERP systems are integrated, enterprise wide systems, which automate core
organizational activities such as forecasting, operations, manufacturing, human
resource, finance and supply chain management (Prasad Bingi, 1999).
Implementation of an ERP system in an organization leads to benefits that ultimately
translate into reduction in cycle time, reduced operational costs and increased
efficiency (Liang Zhang, 2003). However, it was reported that three quarters of the
ERP projects are considered failures and many ERP projects ended catastrophically.
5.1. ERP Implementation
Shanks and Parr (G.Shanks, 2000) defined ERP implementation as "the process of
developing the initial business case and planning the project, configuring and
implementing the packaged software and subsequent improvements to business
processes". It is important to note that ERP implementation is very different from the
implementation steps and phases of other information system applications.

One of the main differences between ERP and other application implementations lies
in the emphasis on the business process of an organization in the former (Rockart,
1979). This makes ERP implementation all the more difficult and time consuming.
5.2. Critical Success Factors
Critical Success Factors (CSF’s) approach was first used by Rockhart (1979)
(Bancroft, 1996) in the IS area. The CSF’s were earlier used to measure success of
project management initiatives, manufacturing, and business process re-engineering.
But now they are being applied to ERP implementations as well (Rockart, 1979),
(Bancroft, 1996). In the context of ERP implementation, CSF’s are defined as "factors
needed to ensure a successful ERP project" (Rockart, 1979). There has been extensive
research to identify the factors that allow top management to successfully implement
ERP. Some of the critical factors are same as other IT initiatives like end user's and
top management's support. But some of the critical factors are exclusive for high level
initiatives like ERP implementation in which BPR (Bancroft, 1996) is one of the most
important factor. Studies have shown that the factor study approach has it’s own
limitations and this view was supported by Pare and Elam (Elam, 1997). They
observed that these studies have limited scope as they evaluate only a part of the
problem and that it has limited capability of evaluating the ERP implementation
dynamics.
According to Pare and Elam, researchers have: "…built models that identify a limited
set of critical factors affecting IT implementation success, but [researchers] know
very little about how and why the factors included in these models interact and work
together to produce success or failure. As a result, [management information systems]
researchers lack a full understanding of the IT implementation process that is
necessary to guide practitioners to attain positive outcomes"(Elam, 1997,pg.543).
5.3. Research Framework
The proposed model describes ERP implementation success as function of interrelated

CSF’s and organizational culture. The model was formulated in two steps where:

• Literature relevant to IS implementation, ERP implementation, project management

and Business Process re-engineering was reviewed to extract a long list of all the
critical factors affecting implementation success.
• This list was synthesized and operationalized through a series of interviews with key
persons (i.e. project managers, consultants and vendor representatives) involved in
ERP implementations
5.4. ERP Implementation Success (1η): Dependent Variable
ERP success is a multidimensional, dynamic and relative concept. Until now there is
no one generic definition for ERP success, however there are some attempts to define
success in ERP literature. Based on their observations of enterprise systems projects,
Tanis and Markus {M. Lynne Markus, 2000) argued that there are three main
categories of success metrics:
(1) Project Metrics: The project metrics measures the performance of the ES of
an organization in relation to functional scope, cost and project schedule.
(2) Early Operational Metrics: This is a measure of the performance of business
operations from the time the ERP becomes live to the time normal operation
commences. This early operational metrics gives an idea as to how smooth the
operation would work out in future.
(3) Longer Term Business Results: This is the measure of the organization's
performance after the early operation. This measure takes into consideration
the long term business goals like ROI for measuring the implementation
success.

Independent Variable Flowchart (Kyung-Kwon, Hong, 2001)
The most famous framework to define implementation success was developed by DeLone
and McLean's (McLean, W. H. D. E. R. (1992)), (Sarker, 2000). The authors found that
there is no ‘one measure’ for an information system success and thus they identified six
different factors: system quality, information quality, use, user satisfaction, individual
impact and organizational impact. Based on both the studies, a framework is developed
to address different dimensions at different points of time (early operational metrics and
long term business results). Table (1) presents the proposed success dimensions and
measures.

5.5. CSF’s & Organizational Culture: Independent Variables
1. Fitment of Business process with ERP Package (2η)
Hong and Kim (Kyung-Kwon ,Hong , 2001) found that the organizational fit of ERP
system in terms of business processes and practices is very important for ERP
implementation success. Organizational fit of ERP package is defined as "congruence
between the original artifact of ERP and its organizational context"{M. Lynne
Markus, 2000). It has always been seen that the ERP packages are developed with the
industry best practices in mind and they have their own definition of best business
practices. Additionally, every organization has its own set of best practices that is a
part of their organizational culture. Therefore, it requires extreme care while selecting
an ERP package. The closer the gap between an organization's business process and
the ERP package, the higher the success rate of the ERP implementation. In real
world situation, it is impossible to get a perfect fit between the business processes and
the ERP package. There would always be a trade-off between using the aligning the
business process of an organization to the ERP package and customizing the package.
According to expert ERP consultants, it is not recommended to customize the ERP
package too much as the organization would lose out on taking advantage of utilizing
the application to its fullest. The organization should undertake business process re-
engineering for mapping them to the ERP application. For this, the mapping between
the organization's business processes and the ERP application should fit into one of
the multidimensional variable of the following Critical Success Factors (CSF’s):
i. Prudent ERP package selection: ERP packages have a set of standard

functionality for standard business processes. As already mentioned, ERP
vendors have their own definition of best practices which may or may not
match with the organization implementing it. So the packages have to be
studied first before going ahead with the implementation.
ii. Business Process Re-engineering: BPR is the “fundamental rethinking and
the radical redesign of an organizations' business processes to achieve
exceptional improvements in the measures of performance such as cost,
quality, service and speed of delivery“(Champy, 2001). Since ERP vendors

have their own definition of best practices which reflect in the ERP packages,
organizations have to re-engineer their business processes so that the mapping
is perfect (Champy, 2001), (Henri Barki, 2005 ).
iii. Customizations: The ERP packages incorporate the best practices and hence
they should be used as much as possible with minimal customization.
Organizations should align their processes to fit with the ERP package and
refrain from additional customizations as they increase the costs.
If an organization after careful study of various ERP application, selects one, then it
has to undertake minimal customization. This could mean that the organization has to
undergo extensive business process re-engineering. This leads to the following
hypotheses:
L1: Fitment of the Business process of an organization to the ERP package has a
positive impact on overall ERP implementation success.
2. Involvement and training of End Users (3η)
An important cause for ERP implementation failure is that the users either are not
involved during the business requirements planning or they are not trained enough to
use the system after the implementation. Either way, it translates into user resistance
which is very detrimental for the organization as it ultimately leads to failure. End
user's involvement is required in the definition and the implementation phase and is
very critical (Liang Zhang, 2003).
Failure of an ERP implementation is a surety if the entire process is not supported by

the end users. The organization implementing the ERP package should always take
the end users into confidence before even thinking of implementing the application.
These are the people who would ultimately use the system to streamline the business
process of the organization and it is imperative that they are involved in the
implementation from start till the end. During the definition phase of the
implementation, the end users are needed to customize the product according to the
needs and the business processes of the organization. If the involvement is high
during the initial phases, then it translates into high acceptability after the go live. End
user training has a positive impact on the outcome of ERP implementation as they are
the final users of the system (Kimberling, 2006). The hypothesis is:
L2: Involvement and training of end users have a positive impact on ERP
implementation success.
3. Commitment of the organization from all quarters (1ξ)
ERP systems after successful implementation affect all the stakeholders and are
instrumental in integrating the information as well as the business processes within an
organization. Hence it is required that the implementation gets support from all
quarters and functional units of the organization (Chee-Chuong Sum, 1997).
Company wide support is the key to a successful ERP implementation. The
hypothesis is:
L3: Support from every functional units of a company has a positive impact on ERP
4. Senior Management Support & Involvement (3ξ)
It has been noticed that majority of ERP implementations fail, cancelled or delayed
when the top management delegates project management and status evaluation of the
project to the technical team members who don't have the requisite expertise in terms
of clear organizational vision and objectives (Chee-Chuong Sum, 1997).
Management’s support is paramount as it assures monetary and staffing resources
which are very important for any ERP implementation to go on smoothly. ERP
implementations bring about a cultural change in the organization and top managers
are needed to oversee that the change is aligned to the goals and objectives of the
organization. Hence their involvement in every stage of the ERP implementation is
required (Pollyanne S.Frantz, 2002). Thus, we get the following hypothesis:
L4: Senior management support and involvement has a positive impact on ERP
implementation success
5. Project Management Effectiveness (4η)
ERP implementations are never short term initiatives. It comprises of long drawn
events of business processes re-engineering involving all the business units and their
staff. The complexity of the ERP implementations is increased by the involvement of
many factors like human resources, hardware, software, finances (Vital Roy, 2006).
Project management skills are a must for managing the hugely complex set up as the
system and the process have to be aligned towards the success of the ERP
implementation. The advantage of employing efficient project management is that the
implementation becomes process driven and that it sets a realistic time frame. The
implementation is assured of success only if the project management teams who are
the stakeholders in the organizational wellbeing are involved for constant progress
monitoring. Thus, we get the following hypothesis:
L5: Measure of project management effectiveness has a positive impact on ERP

6. Support from External Sources (2ξ)
ERP implementations are not only about just installing the software and customizing
it but also about business process mapping, technical support, maintenance and end
user training. All these cannot be done by the ERP vendor or organization single
handedly and hence the need for support from external sources. Organizations also
make use of external consultants who facilitate the implementation process as they
have in depth understanding of the product and can map the business process to the
application package. These consultants are highly skilled and experts in their field and
organizations should use them optimally for the best outcome as they bring with them
a process oriented approach for ERP implementations. Organizations would learn to
use the consultants effectively and at the same time, try to keep the fees to a
minimum. Thus we get the hypothesis:

L6: Support from external sources has a positive impact on ERP implementation
success.
5.6. Research Methodology
To test the proposed research model, empirically, a cross sectional survey was
conducted. Survey is one of the most prevalent research methodology used in
information system (IS) research (Alain Pinsonneault, 1992), (Douglas R.Vogel,
1984). The benefit of using surveys is that the researcher can easily cover large
populations quickly at a relatively low cost. Before conducting the survey, one should
choose the appropriate methodology taking into consideration the constraints, design
issues, sources of data and collection methodologies. Care should be taken to keep the
error to a minimum. The surveyed sample included some ERP adopters and
implementers. The respondents included IT managers, project managers and system
administrators as they are identified as the most appropriate informants for this study.
5 ERP consultants were administered the questionnaire (see appendix) personally
(face to face) and 3 were interviewed over the telephone.
5.7. Questionnaire Development
Special emphasis was given for this measurement development to obtain a reliable
and valid scale. Utmost care was taken to develop a professional looking
questionnaire that was well-crafted, which evoked honest answers from the
respondents. The adopted process was similar to that proposed by Churchill and used
by T. S Bhatti (Bhatti, 2005) as follows:

Churchill’s Questionnaire development Strategy
5.8. Partial Least Squares
Partial Least Squares (PLS) latent path modeling technique is used to model causal
links and test hypothesized relationships. PLS is a non-parametric estimation
procedure (Wold, 1982). The core of the concept of PLS is an iterative combination of
components which are analyzed. In this analysis the measures are related to the
constructs. Subsequently the structural model of the above constructs is captured
using a path analysis. A detailed description of the PLS model is provided by Wold
(Wold, 1982) and Lohmöller (Lohmöller, 1989). The main advantage of PLS over
other structural models such as LISREL is that it can be used for smaller sample sizes
(Chin, 2000). Since our sample size is small so PLS fits better and the analysis is
more accurate than using LISREL. Also, the predictive orientation on PLS is better
than other structural equation modeling tools and hence our choice.
Developing the best fit PLS model is equivalent to reaching the best fit measurement
and structural models. PLS graph (version 3.0) was used to estimate loading and paths
coefficients (Chin, 1997). In evaluating the measurement model, item loadings of 0.7
or higher are considered acceptable. All items show very acceptable reliability except
that for two items with loadings approximately 0.65. During the evaluation, it was
found that the loading for some instrument items were below 0.7 which is common

according to Hulland (Hulland, 1999). This is common when either new items or
newly developed scales or measures are employed. The examination of the factor or
cross loadings assured the discriminant validity (Chin, 2000), (Hulland, 1999).
The measures should not load higher on another construct than the one it is intended
to measure. Internal consistency of constructs was assured by calculating the two
measures composite reliability and the Average Extracted Variance (AVE).
Composite scale reliability ranged from 0.86 and 0.97 exceeding the cutoff value of
0.7 suggested by Nunally and Bernstein {Nunnally J.C, 1994). AVE ranged between
0.59 and 0.91exceeding the 0.5 threshold. The structural model is evaluated by testing
the significance of the path coefficients (Bouchaib Bahli, 2005). Some paths turned up
to be insignificant at 95% confidence level. The final form of the structural model is
specified in terms of PLS equations as follows:
PLS Equation (Chin, 1997)
5.9. ERP Implementation Success Index (ERP-ISI)
There are various methods of estimating the ERP implementation success index.
Some models estimate it by considering the variance of failure and some use the
variance of success. We have used the latter approach. The general form of the ERP-
ISI is proposed as follows (Bouchaib Bahli, 2005):
General ERP ISI Formula (Bouchaib Bahli, 2005)

According to the above equation of ERP Implementation Success Index depends on

factors like expected value of Success (E [.]), maximum value of success (min [.]) and
the maximum value of success (max [.]) The following equation shows the calculation
method of Min and Max values of ERP implementation.
Max/Min. Formula (Bouchaib Bahli, 2005)
Following is the explanation for the above equation:

w j’ : Weightage for the variable
K: Number of measurement variables
The variables are calculated from the results of the survey and are used for calculating
the Min and Max values and subsequently the ERP Implementation Success Index.
The equation helps us in calculating the success index and also the reasons for failure
and success.
5.10. Results and Discussion
Our results demonstrate that ERP implementation success is a function of a set of

interrelated Critical Success Factors (CSF’s) and organizational culture. While CSF’s
positively reinforce implementation success, organizational culture hinders its
progress. Most of the research hypotheses are supported by the returned empirical
data. According to the study conducted, it was found that if the CSF's are taken care
of, then it ultimately leads to a successful ERP implementation. But on the other hand,
if the organizational culture is not aligned properly, then it could lead to a failed
implementation.
It was inferred from the study that organizational fit to ERP package one of the most
important determinant of ERP implementation success. Although Top management
support was always the major success factor in the implementation of large

customized systems (Kaiser, 1987), the organizational fit to ERP has been superior in
the implementation of packaged systems such as ERP. Unless and until an
organization realizes the fact that business process mapping is an important part of
ERP implementation, it doesn't matter whether there is support of the senior
management or an efficient ERP package is selected. The project is bound to fail.
The study shows that there is adequate support from the top management in terms of
conveying the business goals and ensuring proper process goals to the ERP package.
They are also instrumental in keeping tab on the project management process.
When it is clear that a particular IT project has the interest, the support and the
commitment of the organization's senior management, everyone involved in the
project will have a sharper focus. External support including vendor and consultants
support do not show any effect on the implementation success.
This supports the findings of the conducted survey about the problems facing
implementers. The problem with ERP package vendors is that they set expectations
that cannot be fulfilled by the application. Another issue is the high consultation fees
that burden the overall project expenditure. Sometimes the vendors or external
consulting firms are slack in transferring the knowledge to the end users. This leads to
a scenario where the ERP application is in place but there is no adequate knowledge
of operating it.
Surprisingly, User's involvement and training are not found to have direct influence
on the implementation success. The tentative explanation may be due to the
centralized nature of some organizations which block the effective role of users in
implementation. This may also reveal deficiency in the set of questions measuring this
construct. Finally, empirical data revealed the negative impact of organizational
culture on implementation success. Successful ERP implementation in enterprises
faces major challenges such as centralized decision making, hierarchical structure,
communication gaps, and access to top management and ill-defined documentation
cycle.

5.11. Research Constraints
Even though we have tried to be accurate in terms of data collection and their
subsequent analysis, there were several constraints. It is important to remember that
the survey results predicted here does not predict the future; the economy may
improve even more, there might be a new ERP product launch or there might be more
consolidation in terms of ERP product vendors. It is also possible that industry best
practices might undergo a sea change and become standardized across a vertical.
This market survey takes into consideration a very small sample size. Surveying a
sample instead of the entire population allows one to obtain valid information at a
reasonable cost. However, care has been taken to get information that is statistically
valid and reliable. But since the information is statistically valid and reliable, the
results from the small sample size can be extrapolated.
This market survey could have taken other variables for consideration. These
variables were not considered explicitly because they broadly fell into one or the other
variable already considered in this research paper. They might be broadly categorized
as following (Edgewater Technology, 2006):
1. The Right Core

2. Creating Buy-In
3. Setting the Target
4. The Proving Ground
5. Right Sizing
6. Common Pitfalls
However, due to the small sample size of the survey, there are some limitations in the
generalization of the research results to a larger population. The ERP consultants are
very busy individuals and it was very difficult to get appointments for conducting the
interview and administering the questionnaire. The interviewees answered the
questionnaire in their personal capacity and the views do not represent those of the
companies. It is quite possible that the views of the individual may or may not match

with those of the organization. Further research is required to address the mentioned
limitations. It is recommended to conduct in-depth case studies to gain more insights
about ERP implementation. The combination of a detailed case study and a large
survey would have been an ideal method for getting conclusive results. A more
detailed research involving the top management can be done as these are people who
have more clarity in terms of organizational needs, culture, vision, mission, goals and
objectives. Another approach could be to get information from a cross-section of
people ranging from the top management, IT staff, end users, ERP vendors and
consulting companies. That would give a more detailed picture of the ERP
implementation scenario. Moreover, other soft modeling techniques such as Neuro-
fuzzy and Bayesian Belief Network (BBN) can be used to model causal relationships.
To survey a large sample size requires a lot of time and effort. A large survey also
requires a lot of attention as to follow ups on non-respondents and also less accurate
than a smaller but responsive sample (Thorn, 2001). Respondents of my survey were
responsive and have therefore been considered to be statistically valid for my
research.

6. Recommendation
At some point or other an organization contemplates on doing away with their
heterogeneous legacy systems and implementing an ERP package. The options are
many namely SAP, Oracle Applications or erstwhile PeopleSoft or JD Edwards.
Successful ERP implementations not only demands the right package selection but
also aligning the business processes. Some organizations undertake this initiative to
streamline their operations while others to have effective business intelligence. But it
has been found that there are 5 areas where ERP projects are most vulnerable. These
are:
• Understanding what integration means
• Managing communication
• Knowing the decision-making process
• Testing and managing infrastructure
• Living with the ERP
Whether it is ERP or any comparable initiative, if a company is taking on a high-

impact implementation that could result in organizational shifts, there are many things
to be remembered.
6.1. Change Management Program
Path breaking initiatives like change in business processes of an organization due to

an ERP implementation have widespread impact on the organization’s culture and
hence it is imperative that effective change management should be in place to execute
the implementation strategy. Change management is all about adapting to the
changing business conditions, controlling the change in a systematic manner and
effecting the change. Change management is a very critical initiative since it not only
affects the organization, but the individual as well. Organizations are affected as the
business processes are altered while an individual is affected because of the overall
change in the organization's culture. Organizations should be prepared for issues such
as these:
• Resistance
• Fear of Failure
• Non-Visionaries
The key to any change management program is communication, communication and

communication! Management needs to communicate the importance of the project
throughout the organization. Since the senior management has clarity on the vision
and objectives of an organization, they are the best persons to communicate the same
to the employees. Employees should always be kept in the loop for successful and
smooth ERP implementation.
6.2. Secure Management Support and Commitment
An important step in ERP implementation is to secure top management support and

this demand the presence of a project champion who is well aware of the
organizational goals and objectives. This consultant should have access to the top
management and should be able to act as a passage between the end users and the
management. The top management support and commitment can be secured by
putting forth the long term benefits of the ERP implementation that would ease the
realization of the goals and objectives of the organization. An effective strategy would
be to identify the business processes that are aligned with the vision of the
organization and then move forward to mapping these business processes to the ERP
package. It is not always easy to change an organization’s business process which
invariably changes the culture too, hence it is the responsibility of the senior
management to initiate the process and take it forward.
6.3. Picking the Implementation Team Wisely
Organizations have several options when it comes to choosing the implementation

team. They could choose between internal staff, IT consulting entities or the software
vendors themselves. Ideally, internal IT staff is suited to do the job as they know the
business processes better than anyone else. But then there are issues of dedicated
resource allocation limitation and the steep learning curve forces organizations to

employ consulting firms.
The consulting firms provide an unbiased solution for the organizations as they have
great product knowledge. But the product knowledge too could be the cause of bias
while recommending packages. There's a lot to be learned from past successes and
failures that can make ERP successful. There are several key insights about
implementing and integrating an ERP into the environment. To act on some of these
insights, one has to be a development manager or a project leader, but any ERP team
member can benefit from knowing the lessons of the past (Vessey, 1999).
This research focuses on ERP implementation. More specifically, we developed and

empirically tested a model that investigates ERP implementation success as a function
of interrelated CSF’s extracted from literature and organizational culture. The survey
threw up some interesting results in terms of our understanding of the literature and
organizational culture. This study therefore aims to depict the relationship among
different CSF’s. The research could have been more detailed, if more CSF’s were
taken into consideration. This research will thus add to the growing body of
knowledge on ERP implementations, an explanatory study of ERP implementations.
On the practical side, this research improves understanding for organizations on how
to implement large IS such as ERP within the challenging organizational culture. In
essence, the paper recognizes critical issues that must be carefully considered to
ensure a “happy ending” implementation. Moreover, it pays attention to hosting
enterprises especially multinational corporations, vendors and consultants to carefully
consider cultural issues when planning for ERP implementation. Finally, the study
presents a self-assessment tool for ERP implementers. The proposed tool is targeted
to serve those who passed or still in the implementation experience. The equation
mentioned in the paper can be used by any organization to gauge the success rate of
an ERP implementation. This would surely help them to change their business
processes and take care of the organizational culture issues for smooth ERP
implementation.

7. Conclusion
There is no set formula for ERP implementation success and the failure or success
does not depend on a single factor. Each step of the ERP implementation has to be
carefully monitored so that all the business processes are properly mapped to the ERP
package. The steering committee should be watchful enough to ensure proper checks
and balances. The top management should also ensure that the apprehensions and
thereby the end user’s resistance to change is taken care of by showing them the
bigger picture. This can be done by studying the potential causes of resistance and
using proven and effective strategies for ERP implementation. The key here is to keep
abreast of the entire change management process. At no point in the entire ERP
implementation process should the top management loose track of the progress. This
is important because ERP implementations are very prone to mishaps if not monitored
by competent resources.
Enterprise Resource Planning applications are known to be tough to tame and there
are numerous ways in which things can go wrong leading to total failure of the entire
implementation. If the ERP package is implemented properly, then the company
stands to benefit in the long run. These benefits could be in the form of operations
efficiency, enhanced delivery and effective business intelligence (Rao, 2006). But the
entire process of ERP implementation is resource intensive and process oriented and
this is the reason why many ERP implementations fail and the success rate is low.
ERP and supply chain management are both interrelated and go hand in hand. For the
well-prepared, new supply chain management systems based on ERP have become
significant competitive differentiators (Donovan, 2005). Implementing ERP can
become a thought altering experience for those involved. Following a proven and
effective methodology will greatly increase an organization's likelihood of success the
first time itself.
Apart from quick implementation time, operational benefits and ROI are key
indicators of success. The new ERP system should start showing quantifiable benefits

immediately, ROI occurring within a year or so. Since the ERP package keeps track
of all the business process at each and every stage across all business units, it would
be easier for an organization to know if their customers are satisfied or not.
To sum up, the key to successful implementation of an enterprise software solution is

to apply people, process and product initiatives within a structured methodology
framework. The most difficult task in an ERP implementation is to bring all the above
together and align them toward the goals of an organization. When people, processes
and the product are aligned towards the organizational goals then the ERP
implementations are bound to be a success thereby reaping benefits and rapid return
on investments.

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9. Appendix
9.1. Questionnaire
1. What is your position in the company?

2. Sector that the company works for: Public/Private
3. Product type of company: Goods/Service
4. Annual Sales of company in 2009.
5. Number of employees
6. Decision making system in the company
• Centralized decisions made at the corporate level
• Decentralized at the corporate level, centralized decisions made at the divisional level
• Decentralized at the corporate and divisional level, decisions made at lower operating levels
• Some decisions
7. Which organization structure exists in the company?

• Functional Structure (classical hierarchical structured organization having several levels arranged in a
tree-like structure)
• Matrix Structure (Functional organization for increasing the efficiency interdepartmental business)
• Pure project structure (project manager maintains complete line authority over the entire project and
associated resources)
• Other
8. Which ERP software does the company use or implement?

9. How long does an implementation take? (in months)
10. Which was the implementation time that was planned before starting? (in
months)
11. At what percent was the Data in the old system transferred to the new system?
12. During BPR, what percent of the work processes were redefined?
13. What percent of your ERP software were satisfied after implementation?
14. What percent of the ERP software was redesigned to be adopted to the
company?
15. Evaluate these uses of ERP in terms of the importance. 5:very
important,4:moderately important,3:little important,2:very little
important,1:not important

4 3 2 1 5
Flexibility of the software in responding to the changes in the company’s

processes or how adaptable is the ERP software in accommodating
business process changes? *
Having the proper tools for the company does the ERP software
functionality satisfy the company’s business processing requirements? *
Business process integration (i.e. common accessibility of data, report and

performance measure) *
Standardization of the processes; what degree of business process

standardization did you achieve? *
The "ease of use" of the ERP system modules *
The effectiveness and the completeness of reporting functionality within

the system *
The ability to satisfy customer demand *
16. Evaluate these uses of ERP in terms of the degree of obtaining them after
implementation. 5: totally, 4: partially, 3: little. 2:very little, 1:none
4 3 2 1 5
Flexibility of the software in responding to the changes in the company’s

processes or how adaptable is the ERP software in accommodating

business process changes? *
Having the proper tools for the company does the ERP software
functionality satisfy the company’s business processing requirements? *
What degree of business process integration has been achieved

(i.e.common accesebility of data, report and performance measure)? *
Standardization of the processes; what degree of business process

standardization did you achieve? *
Rate the "ease of use" of the ERP system modules *
Rate the effectiveness and the completeness of reporting functionality

within the system *
Rate the ability to satisfy customer demand *
17. Total success of the ERP implementation. (5:very, 4:partially, 3:little, 2:very
little, 1:not at all)
5 4 3 2 1
Rate the success of your ERP

Implementation. *

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Critical Success and Failure Factors of ERP Implementations: A Market

Critical Success and Failure Factors of ERP

By- Pijush Gupta (www.pigtale.co.in)

1 Copyright: Pijush Gupta | www.pigtale.co.in

2 Copyright: Pijush Gupta | www.pigtale.co.in

4 Copyright: Pijush Gupta | www.pigtale.co.in

5 Copyright: Pijush Gupta | www.pigtale.co.in

6 Copyright: Pijush Gupta | www.pigtale.co.in

Figure 1.1- ERP Business Functions (Davenport, 2000)

As we have a clear understanding of the difference between ES and ERP, it is

7 Copyright: Pijush Gupta | www.pigtale.co.in

ERP packages generally include functions like:

8 Copyright: Pijush Gupta | www.pigtale.co.in

3.1 The Implementation Methodology

• Business requirement planning

3.2. Making the Process Successful

3.3. Implementation Review

Successful implementations employ a combination of both but ensure that a lot of

10 Copyright: Pijush Gupta | www.pigtale.co.in

3.4. Executing Implementation Activities

• Proper 'As-Is' and 'To-Be' analysis

11 Copyright: Pijush Gupta | www.pigtale.co.in

and techniques is the responsibility of all the concerned parties.

3.5. ERP implementation strategies

A number of strategies can be applied to implementing ERP successfully and

Organizational strategies for successful ERP implementations include process

3.6. Knowledge formulation phase

• Who are the entities resisting the change?

12 Copyright: Pijush Gupta | www.pigtale.co.in

3.7. Strategy implementation phase

3.8. Status evaluation phase

3.9. Reasons for Failure

13 Copyright: Pijush Gupta | www.pigtale.co.in

tendency of the management to delegate the task of ERP implementation to lower

Poor package selection is considered to be a part of improper business requirement

Sometimes companies skip important implementation steps like documentation,

If an organization wants all its business procedures to be integrated into common

15 Copyright: Pijush Gupta | www.pigtale.co.in

16 Copyright: Pijush Gupta | www.pigtale.co.in

According to the Market Analytix Enterprise Resource Planning, 2004-2009 report,

4.1. Report Findings and Analysis

Top 10 ERP Vendors

17 Copyright: Pijush Gupta | www.pigtale.co.in

ERP Failure Factors (Thornton, 2007)

18 Copyright: Pijush Gupta | www.pigtale.co.in

ERP Readiness Matrix (Doane, 2004)

19 Copyright: Pijush Gupta | www.pigtale.co.in

ERP Failure Reasons (Doane, 2004)

• Measurement of benefits not quantifiable (40.8%)

• Long-term business and IT alignment should be in place

While senior management commitment to an ERP endeavor must include both

20 Copyright: Pijush Gupta | www.pigtale.co.in

When an ERP vendor takes over a best-of-breed provider, it usually integrates

21 Copyright: Pijush Gupta | www.pigtale.co.in

5. Market Study & Analysis

5.1. ERP Implementation

22 Copyright: Pijush Gupta | www.pigtale.co.in

5.2. Critical Success Factors

5.3. Research Framework

The proposed model describes ERP implementation success as function of interrelated

23 Copyright: Pijush Gupta | www.pigtale.co.in

• Literature relevant to IS implementation, ERP implementation, project management

5.4. ERP Implementation Success (1η): Dependent Variable

24 Copyright: Pijush Gupta | www.pigtale.co.in